The iconic American conglomerate’s incoming CEO, John Flannery, intends to keep GE’s focus on technology, while making deep cuts.
A 30-year veteran of General Electric, Flannery currently leads the healthcare unit, and is credited with improving its sales and profits. When he takes the helm on August 1, he will conduct what he described as a “fast but deliberate, methodical review of the whole company”, exercising “no constraint” regarding its vast business portfolio. Flannery also indicated that major changes are not needed, saying “We’re not starting from a weak position at all.” The company is keeping its target of cutting overhead costs by $2 billion by 2019 and boosting profits to $2 a share in 2018.
Flannery did not elaborate on his plans, but said that GE’s digital efforts and strategy of selling software-related services will continue to be the focus. GE has spent billions of dollars building a digital business which connects electronic sensors and analytic computing to industrial equipment – which supply chain management and tech blogger Kevin O'Marah describes as “blending operational technology (OT) and information technology (IT).”
O'Marah writes: “Our data on disruptive and important technologies for supply chain shows how quickly the cluster of emerging operational technologies like the internet of things, 3D printing and robotics is rising in business strategy.”
Flannery replaces Jeff Immelt, the long-time CEO who set GE on the path to digitisation when he took over from Jack Welch in 2001. While overseeing the divestment of the company’s lending unit, GE Capital, TV network NBCUniversal and its appliances business, Immelt also shifted its focus to technology, as well as healthcare and manufacturing. Heavy investments were made in digital; however for investors, the returns have been uncomfortably slow in coming.
Reuters reports that since Immelt became CEO, GE’s shares have declined 30 percent. Some say the timing of his departure is no coincidence, given the stock’s underperformance and investor fatigue setting in. However, the company says that Immelt's departure is unrelated to shareholder pressure, and is the result of six years of succession planning. The board planned Immelt’s departure for summer 2017 as far back as 2013, GE said.