Good governance could have saved GE

ON Jan 25, Larry Culp, chief executive officer (CEO) of GE, announced the first set of quarterly results since announcing the breakup of the American icon on Nov 9, 2021 into 3 separate businesses - aviation, healthcare and energy. GE reported gains in aviation and healthcare while flagging supply chain challenges and a clearer focus on renewable power. His clear message for 2022 is a focus on innovation. The shares still declined 6 per cent.

More than a century after its founding, the company admired around the world for its management expertise had thrown in the towel on its conglomerate structure. The breakup announcement came 20 years after the retirement of Jack Welch, GE's legendary CEO. Between 1981 and 2001, Welch had built GE into an industrial titan, admired and envied from Main Street to Wall Street. However, when asked how history should judge him, he replied that his legacy should be evaluated on the performance of his successor after a similar time in the role. By that standard, Welch failed. And with that came a loss of investor confidence.

Because GE's decline happened gradually - and the media and business community had so completely bought into the myth of "Neutron Jack's" leadership genius - much analysis has failed to identify root causes. Examined properly, the story of GE, once the world's most valuable company, is an important lesson for all who would aspire to build a generational business.