General Electric (GE) for many years was the go-to company for competitiveness, efficiency, and innovation. General Electric’s tagline was ‘Imagination at work.’
GE more recently has had a number of troubles. GE’s profitability tanked. GE is selling many of its assets and divisions. GE was also taken off the Dow after 110 years.
Context
Harvard Business Review recently published an article on: ‘Who Killed the GE (Business) Model?. This is a must-read for all consultants and corporate Executives.
The General Electric business model was considered the best practices business model during the 1990’s and maybe even up to 2005. This model focused on best practices including portfolio thinking, scalability, core competencies, professional management, lean manufacturing, Six Sigma, and lifelong learning.
The author of the HBR piece wrote:
“The GE conglomerate combined a wide range of industrial businesses under one roof. Unlike a pure holding company or a modern hedge fund, the GE model intended to create value by actively sharing capabilities among its disparate businesses, which, with one important exception, were all rooted in manufacturing.”1
And most companies globally adopted some variance of this business model.
What happened?
According to the author, GE fell victim to:
- China and other countries following the Chinese strategy of state-sponsored design and Manufacturing.
- Silicon Valley in the rise of Information Technology created new disruptive, business models .
- Private equity and New Capital markets allowed startups too quickly develop and Implement new technologies.
- Business Schools focused on the past not on the future in presenting old practices as best practices.
- Great Recession created new opportunities for business development and deployment.
GE begs the question: Do the best business practices taught in business school, shared by most consultants, and replicated by most businesses add real value in today’s disruptive times.
And:
What do you think happened to GE?
What should companies now adopt to stay competitive?
- Who Killed the GE Model?, HBR, July 8, 2018
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