When John Flannery took over as the chief executive of General Electric last August, he immediately declared that he wouldn’t be nostalgic about the industrial giant’s storied past when reshaping the company for the future.
He wasn’t kidding.
General Electric said on Tuesday that it planned to spin off its enormous health care business and sell its multibillion-dollar stake in Baker Hughes, a major producer of oil field equipment, as part of a sweeping reshaping of the embattled industrial titan.
The announcement provides a blueprint for G.E.’s future, and is the culmination of a top-to-bottom rethinking of the company led by Mr. Flannery. “This is the conclusion of that review,” he said in a conference call with analysts. “This is our path forward.”
Mr. Flannery’s latest moves are a last farewell to a bygone conglomerate vision. Over the years, G.E. added businesses as varied as television programming, with NBC Universal, and home-mortgage lending. And the company did not just manufacture products, but also a large corps of elite managers, who it trained to apply managerial skills to any business. G.E. was studied in business schools, extending its influence across American businesses.
While pulling out of the two businesses will take time, G.E.’s long-term strategy is now clear. It will hold onto three major operations — jet engines, electric power generators and wind turbines — that accounted for 60 percent the company’s $122 billion in revenue last year.
The current plan, Mr. Flannery said, is to create “a simpler, stronger and more focused company.”
G.E. is adapting to a changed business world, and its own missteps. G.E.’s big electrical power generator business is in the midst of a painful turnaround, having badly misjudged the market and produced too many gas turbines.
Image Credit: GE Healthcare