GE becomes G3… General Electric is the 129-year-old electricity giant founded by Thomas Edison, who invented the commercial light bulb. Over the years GE expanded to produce everything from microwaves to financial products, becoming the world’s most valuable company by 2000. But GE’s biz has declined since then. Now it’s worth less than a quarter of what it was 20 years ago. The plan: Yesterday GE said it would split into three smaller public companies to allow more focused growth. Shares jumped 5% on the news.
The light bulbs went out… but GE isn’t done yet. It pioneered the conglomerate model: It developed disciplined management practices in one industry — manufacturing — and applied them to others: insurance, finance, TV. But as industries grew more complex, they required more specialized leadership, and the old-school conglomerate model fell apart. So GE faced pressure from investors to “deconglomeratize:”
There’s a new kind of conglomerate in town… and it’s techy. Today tech conglomerates have taken the place of industrial conglomerates. Amazon is no longer just an ecomm platform — it’s a cloud computing, streaming, and ad powerhouse too. Microsoft has its OG business software, but also big gaming, cloud, and networking businesses. While tech giants expand into new industries, aging industrial behemoths GE, Siemens, and DuPont are focusing on fewer industries.