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Bill George

Harvard Business School Professor, former Medtronic CEO

‘The End of the GE We Knew’: Breakup Turns a Page in Modern Business History

General Electric Co., the company that for more than a century stood as a beacon of U.S. manufacturing might and management prowess, will split into three public companies, drawing the curtain on an era of modern business—the dominance of industrial conglomerates.

The decision, announced Tuesday by Chief Executive Larry Culp, ends the myth that GE wielded a magic touch to run companies better, and make everyone richer, through its management of varied enterprises around the world.

When Mr. Culp took over as CEO of a wounded GE three years ago, he faced calls from inside and outside to break it apart. He resisted the idea, saying he wanted to fix GE and just needed more time. He repaired company finances, but ultimately concluded that investors wanted a simpler structure. “It was clear this was the right path for GE,” he said Tuesday.

For decades, chief executives followed GE’s lead and were rewarded for looking far beyond their factories, TV networks and insurance empires. Like today’s technology giants, company boards believed they could allocate capital between business units to ride out market ups and downs.

GE pushed the idea further and for longer than most. Yet its complex structure only hid the company’s problems and missteps. Most manufacturers, including companies such as Siemens AG and DuPont, abandoned the conglomerate model after poor returns and investor pressure to simplify.

David Cote, a former GE executive who later ran rival conglomerate Honeywell International Inc. for 15 years, said he believed when Mr. Culp took over that a breakup was the only recourse for GE. It “just seemed too far gone to pull back together,” Mr. Cote said.

“The conglomerate is dead, and this is the end of the conglomerate,” said Bill George, a former chief executive of Medtronic PLC and now a senior fellow at Harvard Business School. GE units could likely invest more effectively on their own, he said.

GE once built the equipment that gave cities electricity, sold the appliances that modernized homes, broadcast the NBC TV network, financed home mortgages, invented the MRI machine and ushered in a jet age. Yet over the decades it abandoned many of those pursuits. The company barely survived the financial crisis, and its retreat took on greater urgency after 2018, when the company’s profit troubles prompted it to slash its dividend and change leaders.