Divided We Stand: The Fall and Fracture of General Electric
When Jack Welch took the helm of General Electric in 1981, he inherited a sprawling American industrial giant that was, in his own words, “bureaucratic, lethargic, and unprepared for the global competition ahead.” GE was then a $27 billion company, deeply rooted in its industrial heritage, manufacturing everything from light bulbs to jet engines. The company was profitable but sluggish, weighed down by layers of management and struggling to maintain its competitive edge in a rapidly changing global landscape.
What unfolded over the next two decades would become corporate America’s most celebrated transformation story. Welch, the chemical engineer turned executive, earned the nickname “Neutron Jack” for his radical restructuring approach — eliminating jobs while leaving buildings standing. His philosophy was brutally simple: every GE business had to be either number one or number two in its market, or face disposal. This wasn’t just corporate rhetoric; under his watch, GE shed 282 businesses and spent over $21 billion on acquisitions.
By the late 1980s, Welch had orchestrated GE’s expansion into financial services through GE Capital, which would become the company’s golden goose. He pioneered the “Six Sigma” quality program, making it a cornerstone of GE’s operational excellence. His infamous “vitality curve” — ranking employees and annually cutting the bottom 10% — became a management practice studied in business schools worldwide, though controversial in its implementation.
When Welch stepped down in 2001, GE’s market value had grown from $14 billion to an astounding $410 billion, making it the most valuable company in the world at the time. Annual revenues had grown to $130 billion, with profits soaring from $1.6 billion to $12.7 billion. More impressively, GE had delivered consistent earnings growth, meeting or exceeding Wall Street’s expectations for 80 consecutive quarters — a streak that seemed almost magical in its consistency.
The business media crowned Welch as the “Manager of the Century.” Under his leadership, GE had transformed into a hybrid industrial-financial powerhouse. Its portfolio now included everything from NBC Universal’s media empire to aircraft leasing, from sophisticated medical imaging equipment to complex financial derivatives. GE Capital had grown to generate nearly half of the company’s profits, turning from a unit that simply financed customers’ purchases of GE products into a financial services juggernaut in its own right.
When Welch handed over the reins to Jeffrey Immelt on September 7, 2001, GE seemed invincible. Its management training center at Crotonville was revered as a “Harvard of Corporate America,” producing leaders who would go on to run other major corporations. The company’s reputation for operational excellence and leadership development was unmatched. Its stock was a must-have in every serious investor’s portfolio, earning it the nickname “Old Faithful” for its reliable performance.
Yet, beneath this gleaming surface, the seeds of future challenges had been sown. The very complexity that made GE such a powerful force — its intricate web of businesses, its reliance on financial services for growth, its size and global reach — would soon become liabilities in a world about to be rocked by technological disruption, financial crisis, and changing market dynamics. The question that would haunt GE’s subsequent leaders was whether the company’s success was truly sustainable, or if Welch’s GE was, as some critics would later suggest, built on a foundation that was more fragile than it appeared.
The Strategic Shift and Early Decisions (2001–2003)
Jeffrey Immelt’s tenure at GE began under the darkest of circumstances. Just four days after taking the helm from Jack Welch, the September 11 attacks devastated America, sending shockwaves through the global economy. For GE, the impact was immediate and severe. The company’s aircraft engines division saw orders plummet as airlines struggled, with major customers like Boeing slashing production forecasts by over 40%. GE Capital, which had become one of the world’s largest aircraft lessors under Welch, suddenly faced a portfolio of planes nobody wanted to lease. Insurance losses from the World Trade Center destruction hit $600 million, revealing the first cracks in GE Capital’s seemingly impregnable facade.
The timing couldn’t have been worse for a leadership transition. Immelt had inherited a company that traded at 40 times earnings, with investors expecting the same clockwork performance they’d grown accustomed to under Welch. But the post-9/11 reality demanded immediate, difficult decisions. By October 2001, Immelt had to announce GE’s first major restructuring, cutting 75,000 jobs and taking a $1.4 billion charge against earnings — an unusual admission of vulnerability for a company known for its predictable performance.
As Immelt assessed GE’s portfolio in these early months, he discovered concerning realities beneath the surface of Welch’s success. GE Capital, which generated 45% of the company’s profits, had evolved far beyond its original mission of financing GE industrial equipment. It had ventured into increasingly complex financial products, including subprime mortgages and exotic derivatives. More troublingly, internal audits revealed that much of GE Capital’s profit growth came from aggressive tax strategies and financial engineering — practices that were drawing increased scrutiny in the post-Enron regulatory environment.
This realization drove Immelt’s controversial decision to gradually return GE to its industrial roots. His first major move in 2002 was selling the Employers Reinsurance Corporation (ERC), one of GE’s largest insurance operations, to Swiss Re for $6.8 billion. ERC had been a significant part of GE Capital’s insurance portfolio, providing reinsurance services to other insurance companies and handling complex risks in property, casualty, and life insurance markets. While financially successful, ERC represented exactly the kind of non-core financial business that made GE vulnerable to market volatility and regulatory scrutiny. The sale, though at a price lower than hoped, marked GE’s first strategic pivot away from complex financial services. However, it also exposed a crucial dilemma: how to replace the reliable earnings stream that financial services had provided while investing in slower-growing but more sustainable industrial businesses.
As Immelt began implementing these strategic changes, he recognized that GE needed a fundamental cultural transformation to succeed. Welch’s leadership style had been famously combative, demanding quarterly performance at any cost — an approach that had worked well for financial engineering but was less suited to long-term industrial innovation. To signal this cultural shift, Immelt launched the “Imagination at Work” campaign in 2003, replacing Welch’s long-standing “We Bring Good Things to Life” slogan. This wasn’t just a marketing change; it represented Immelt’s broader vision of transforming GE from a company focused on financial metrics and deal-making back to one centered on technological innovation and industrial excellence. The new slogan emphasized creativity and engineering prowess over financial acumen, reflecting Immelt’s belief that GE’s future lay in developing cutting-edge industrial technologies rather than complex financial products.
This philosophical transformation manifested most visibly in Immelt’s modification of Welch’s notorious “vitality curve” system. By 2003, the drawbacks of ranking employees and culling the bottom 10% annually had become apparent. Middle managers had learned to game the system, shuffling underperforming employees between divisions to avoid rankings. More concerning, the constant threat of being labeled a “bottom 10%” performer had created a risk-averse culture where managers focused more on avoiding mistakes than driving innovation.
The cultural transformation extended to Crotonville, GE’s legendary management development center. Under Welch, Crotonville had been a boot camp for his management philosophy, producing generations of executives skilled in cost-cutting and operational efficiency. Immelt attempted to reshape it into an innovation hub, bringing in Silicon Valley entrepreneurs and design thinking experts. However, this created a disconnect: managers would learn about innovation and risk-taking at Crotonville, only to return to divisions still operating under Welch-era metrics and expectations.
With GE Capital’s gradual downsizing underway, Immelt needed to chart a new growth path for GE’s industrial core. He identified healthcare as a key strategic priority for several reasons: it was already a significant part of GE’s industrial portfolio through its medical imaging business, offered high margins, and most importantly, presented opportunities for technological innovation that could drive long-term growth. Healthcare also aligned with Immelt’s vision of transforming GE into a more technology-driven company, as the industry was rapidly evolving from traditional hardware to more sophisticated digital and biological solutions.
This strategic focus led to the 2003 acquisition of British medical diagnostics company Amersham for $9.5 billion — Immelt’s boldest move yet. Amersham wasn’t just another healthcare company; it was a pioneer in molecular diagnostics and personalized medicine. While GE Healthcare had traditionally focused on selling hardware like MRI and CT scanners — essentially big-ticket capital equipment with predictable replacement cycles — Amersham represented an entry into the cutting-edge world of biotechnology and precision medicine. Its products included diagnostic imaging agents that could track disease at the molecular level and technologies for developing targeted therapies — areas that promised explosive growth but required significant R&D investment and longer development cycles.
The integration of Amersham proved far more challenging than anticipated. The cultural clashes went beyond typical merger friction. GE’s managers, trained in Six Sigma efficiency and quarterly performance metrics, struggled to evaluate and manage Amersham’s research-driven projects. Scientists at Amersham, accustomed to long development timelines and the uncertainty of breakthrough research, chafed under GE’s detailed reporting requirements and constant pressure for short-term results. Even basic decisions became complicated: How should R&D projects be evaluated? How long was too long for a product development cycle? What metrics should be used to measure the success of research teams?
These tensions manifested in practical ways. Several key Amersham research projects faced delays as they were forced to adapt to GE’s more rigid project management systems. The exodus of top scientific talent began within months of the acquisition, as researchers bristled under GE’s more hierarchical management structure. Even customer relationships were affected — Amersham’s collaborative approach to working with pharmaceutical companies and research institutions didn’t fit neatly into GE’s more transactional sales model.
During this period, GE also made a prescient but ultimately troubled entry into renewable energy, another example of Immelt’s attempt to position GE for future growth markets. The 2002 acquisition of Enron Wind’s assets for $358 million came at a unique moment — Enron’s bankruptcy had created an opportunity to acquire significant wind power technology and expertise at a fraction of its true value. The assets included advanced wind turbine technology, a portfolio of patents, and operational wind farms across multiple countries. This move aligned with Immelt’s broader vision of transforming GE into a more sustainable and technology-focused company, while also leveraging GE’s existing strengths in power generation and engineering.
However, integrating these renewable energy assets proved far more challenging than anticipated. GE’s traditional energy business, built around selling and servicing gas turbines, operated on different rhythms and margins than the nascent wind power sector. Gas turbines represented large, one-time sales with predictable maintenance revenues, while wind power involved smaller units, more distributed installations, and complex dependency on government policies and subsidies. The wind business also required entirely different technical expertise — from aerodynamics to grid integration — that GE’s traditional energy teams didn’t possess.
The challenges extended to the business model itself. Wind power projects had longer development cycles, thinner margins, and more complex financing needs than traditional power generation. They were also heavily dependent on government renewable energy policies, which varied by country and could change with political winds. While GE’s engineers successfully improved the acquired wind turbine designs, the division struggled with project execution and cost management. The renewable energy division would require years of investment before achieving profitability, testing Wall Street’s patience with Immelt’s long-term vision and highlighting the difficulties of grafting new, emerging technologies onto GE’s traditional industrial core.
By 2004, cracks in GE’s vaunted executive development system became increasingly visible. Under Welch, the system had operated like a well-oiled machine: promising executives rotated through different divisions every few years, creating generalists skilled in applying GE’s management playbook across any business context. However, as industries became more specialized and technology-driven, this generalist approach began showing its limitations. Healthcare executives needed deep understanding of medical technology and regulations; renewable energy leaders needed expertise in power markets and grid infrastructure. The jack-of-all-trades GE manager was becoming less effective in an era of increasing specialization.
The breakdown of the executive talent pipeline was exacerbated by changing external conditions. During the Welch era, GE’s status as corporate America’s most admired company had made it a magnet for top talent. By 2004, with the stock price stagnating and the company’s direction uncertain, retention became a growing challenge. Several promising executives, groomed for senior leadership, departed for CEO positions at other companies, taking with them the institutional knowledge that had been key to GE’s success.
Perhaps most concerning was the emerging identity crisis within GE Capital. While Immelt had begun reducing its riskier activities, the division still generated too much of GE’s profit to be dismantled quickly. This created a strategic paradox: GE Capital’s earnings were needed to fund the industrial transformation Immelt envisioned, yet its continued prominence undermined the credibility of GE’s return to industrial roots. This tension would only grow more acute as the financial sector entered what would prove to be its final years of pre-crisis expansion.
By the end of 2004, Immelt’s early years had revealed both the necessity and the enormous difficulty of transforming GE. The company’s size and complexity, once seen as sources of strength, had become obstacles to change. The very attributes that had made GE exceptional under Welch — its financial engineering prowess, its standardized management system, its ability to generate reliable earnings — were proving less valuable in a business environment that increasingly rewarded technological innovation and specialized expertise. The question was no longer whether GE needed to change, but whether it could change fast enough to remain relevant in the 21st century.
The Pre-Crisis and Crisis Years (2005–2008)
By 2005, Jeffrey Immelt appeared to be finding his footing at GE’s helm. The company’s stock had stabilized around $35, and his push toward high-tech industrial businesses was showing early signs of success. Facing growing pressure from environmentalists and recognizing the business opportunities in sustainable technology, Immelt launched “Ecomagination” in May 2005. This initiative, backed by an ambitious $1.5 billion annual commitment to clean technology research, aimed to position GE at the forefront of environmental innovation. The program would focus on developing more efficient jet engines, advanced water treatment technologies, cleaner coal technologies, and next-generation wind turbines. It wasn’t merely environmental posturing — Immelt had recognized that climate concerns would fundamentally reshape industrial markets, from power generation to aviation, and potentially create billions in new revenue streams.
However, GE was simultaneously pursuing a contradictory strategy in fossil fuels. In 2004, the company began aggressively expanding its oil and gas division, starting with the acquisition of Edwards Systems Technology (a leader in fire safety and security systems for oil facilities) and InVision Technologies (which specialized in explosive detection systems) for $1.1 billion. The expansion accelerated with the 2006 acquisition of Vetco Gray for $1.9 billion, which brought crucial subsea and drilling technologies. By 2006, GE had invested nearly $4 billion in oil and gas acquisitions. The logic behind these moves seemed compelling at the time — oil prices were soaring above $60 per barrel, energy demand was growing globally, particularly in emerging markets, and the shale gas revolution was beginning to transform the energy landscape. However, this massive bet on fossil fuels would later create not just a strategic conflict with GE’s renewable energy ambitions but also expose the company to the boom-and-bust cycles of the energy sector.
GE Capital, meanwhile, remained the company’s most complex challenge. The division was reporting record profits, contributing nearly 40% of GE’s earnings by 2006. Its expansion into commercial real estate was particularly aggressive — between 2005 and 2007, GE Capital’s real estate assets grew from $47 billion to $79 billion. The division had also quietly increased its exposure to subprime mortgages, accumulating billions in what it termed “non-traditional” loans. When risk managers raised concerns about these exposures, they were dismissed with a familiar refrain: GE Capital’s superior risk management systems and AAA credit rating made it “different.”
The acquisition trail continued with increasing intensity across other sectors. In aviation, the 2007 purchase of Smiths Aerospace for $4.8 billion was particularly significant. Smiths brought crucial digital and electric power management systems for aircraft, positioning GE to benefit from the industry’s shift toward more electric aircraft architectures. The deal also strengthened GE’s position in the military aerospace market, where Smiths had strong relationships with defense contractors.
In healthcare, the $1.2 billion acquisition of IDX Systems represented a strategic push into healthcare information technology. IDX provided software for medical practice management, electronic health records, and medical imaging — critical capabilities as healthcare facilities worldwide were beginning to digitize their operations. This acquisition complemented GE’s existing healthcare hardware business and reflected Immelt’s belief that software and data analytics would become increasingly crucial in healthcare delivery.
Perhaps the most consequential decision of this period was GE’s massive investment in its power business. Betting on projected global demand for natural gas turbines, GE committed billions to expanding its power generation capacity. In 2005 alone, the company spent $3.2 billion on power generation assets, including the acquisition of Ionics Inc., a leader in water treatment and desalination technology. The strategy was based on energy demand forecasts that would prove catastrophically wrong as renewable energy costs began their unexpected decline. Each of these acquisitions reflected Immelt’s vision of building a more technology-focused industrial company.
Beneath the surface of these strategic moves, GE’s legendary operating system was showing signs of strain. The acquisitions also added layers of complexity to an already unwieldy conglomerate, stretching management attention and resources across an increasingly diverse portfolio of businesses with different technological needs, regulatory requirements, and market dynamics. The company’s practice of using GE Capital’s earnings to smooth out industrial volatility — a hallmark of the Welch era — was becoming increasingly difficult to maintain as financial markets grew more complex. By 2007, internal auditors were warning about the growing opacity of GE Capital’s operations, particularly its use of off-balance-sheet vehicles and complex derivatives to manage earnings.
The first tremors of what would become a financial earthquake hit GE in early 2008. As credit markets tightened, GE Capital’s business model revealed its fundamental weakness. The division had relied heavily on short-term commercial paper funding — essentially short-term IOUs — to finance long-term assets like real estate and equipment leases. This model worked brilliantly when credit markets were functioning normally, allowing GE to profit from the spread between short-term borrowing rates and long-term lending rates. However, when the March 2008 collapse of Bear Stearns sent shockwaves through the financial system, GE faced an unprecedented challenge: for the first time in its history, the company struggled to roll over its commercial paper. What had been as routine as breathing for the financial giant — raising billions in overnight funding — suddenly became a daily struggle for survival.
The oil and gas division’s vulnerabilities emerged simultaneously. While oil prices soared to a historic peak of $147 per barrel in July 2008, creating temporary euphoria, the subsequent crash exposed the cyclical nature of the energy business. GE had invested over $14 billion in oil and gas assets between 2004 and 2008, acquiring everything from subsea equipment manufacturers to pipeline technology providers. But as oil prices plummeted below $40 by year’s end, these investments began looking increasingly questionable. Service contracts were canceled, equipment orders dried up, and the division’s projected returns evaporated.
September 2008 brought the moment of truth with devastating clarity. The collapse of Lehman Brothers on September 15 triggered a global financial panic that pushed GE to the brink. The company’s stock, which had traded above $30 just weeks earlier, plunged below $10 — wiping out over $200 billion in market value. More critically, GE Capital’s access to funding markets virtually disappeared. Money market funds, traditionally reliable buyers of commercial paper, began refusing to lend even overnight. The market’s long-held faith in GE Capital’s AAA rating, which had allowed it to borrow cheaply for decades, evaporated almost overnight. The division’s $631 billion in assets, once a source of pride, now loomed as an existential threat, with each day bringing new concerns about potential write-downs and funding gaps.
Immelt was forced to take increasingly desperate measures. On September 25, 2008, GE announced a series of dramatic steps: suspending its $3.2 billion stock buyback program, freezing its dividend at 31 cents per share (before cutting it altogether in February 2009 — the first cut since the Great Depression), and halting all non-essential spending. The company then turned to Warren Buffett, securing a $3 billion investment from Berkshire Hathaway at punitive terms — a 10% dividend rate and warrants giving Berkshire the right to buy $3 billion of GE shares at $22.25, well below their recent trading prices. Perhaps most humbling was GE’s decision to participate in the FDIC’s Temporary Liquidity Guarantee Program, effectively putting its commercial paper under government guarantee — an unprecedented step for a company that had prided itself on its financial independence.
The power division’s crisis deepened the company’s troubles. Orders for gas turbines, which had been robust throughout the early 2000s, plummeted as the global economy contracted. Utilities canceled or delayed orders, and the division’s massive manufacturing capacity — expanded through billions in investments — suddenly became a liability. The timing couldn’t have been worse: just as the traditional power business was struggling, renewable energy began gaining serious momentum, with wind and solar costs falling faster than anyone had predicted. By late 2008, GE was forced to begin a painful restructuring of its power business, taking charges against earnings and laying off thousands of workers across its global operations.
The crisis exposed how GE’s various businesses, far from providing true diversification, had created hidden correlations that amplified risks throughout the company. These connections were both subtle and pervasive. GE Capital wasn’t just a separate financial arm — it was deeply intertwined with every major business unit’s operations, creating a complex web of dependencies that would prove devastating when the financial system seized up.
In the aviation sector, the impact was particularly severe. Airlines had long relied on GE Capital Aviation Services (GECAS) to finance their purchases of GE engines and aircraft. When this financing suddenly became unavailable, airlines were forced to cancel or postpone engine orders. This didn’t just affect immediate sales — it created a ripple effect through GE’s aviation business, reducing the future stream of high-margin maintenance and service contracts that had been a reliable source of profit for decades.
The healthcare division faced similar challenges. Hospitals and medical clinics had come to depend on GE Capital’s healthcare financial services to fund their purchases of expensive equipment like MRI machines and CT scanners. As credit markets froze, these healthcare providers began delaying both equipment upgrades and new purchases. The impact was immediate and severe, with order cancellations cascading through GE Healthcare’s sales pipeline.
The power generation business, which had been expanding aggressively, was equally vulnerable to these financial tremors. Utilities had traditionally used GE Capital to finance major infrastructure projects, including new power plants and grid upgrades. When this financing disappeared, utilities were forced to postpone or cancel orders for new turbines and equipment — a particularly painful blow given GE’s recent massive investments in manufacturing capacity.
The global recession amplified these interconnections in ways that exposed the fragility of GE’s business model. As oil prices collapsed, energy companies slashed their capital expenditures, leading to a wave of canceled orders for equipment and services in GE’s oil and gas division. This coincided with GE Capital’s liquidity crisis, creating a perfect storm that called into question the fundamental premise of the conglomerate model.
By the end of 2008, it was painfully clear that GE’s problems weren’t merely cyclical — they reflected deep structural flaws in the company’s evolution. The complexity that Jack Welch had celebrated as a source of earnings stability had become a source of systemic risk. Under his leadership, GE had used its AAA credit rating to build a massive financial services empire, creating dangerous levels of leverage throughout the company. The intricate connections between its financial and industrial operations, once seen as a competitive advantage, had become a vulnerability. Each business unit’s health was now dependent not just on its own market conditions, but on the stability of GE Capital and the broader financial system.
What made this particularly troubling was that even GE’s own leadership hadn’t fully grasped the extent of these interconnections until the crisis forced them into view. The company that had once prided itself on superior risk management had, in fact, been accumulating risks in ways that were neither fully understood nor properly managed. The stage was set for a painful period of restructuring that would fundamentally reshape one of America’s most iconic companies, marking the end of an era in American business history and raising profound questions about the viability of the conglomerate model in the modern economy.
Post-crisis restructuring (2009–2012)
The aftermath of the financial crisis forced GE into a dramatic period of restructuring, with 2009 opening to a company almost unrecognizable to its long-term investors. GE Capital, once the crown jewel of the conglomerate, was now its biggest liability. The unit’s $631 billion in assets included a toxic mix of subprime mortgages, troubled real estate investments, and consumer loans in struggling economies. More worryingly, GE Capital relied on $74 billion in commercial paper — short-term loans that had become increasingly difficult to roll over as market confidence evaporated.
The first quarter of 2009 brought a series of humbling blows. In March, Standard & Poor’s downgraded GE’s AAA credit rating, which the company had held since 1956. This wasn’t just a symbolic loss — it marked the end of GE’s ability to borrow at preferential rates, a cornerstone of GE Capital’s business model. The company’s stock, which had traded above $30 in early 2008, dipped below $6 in March 2009, destroying hundreds of billions in market value.
Immelt, who had spent years trying to gradually reshape GE, found himself forced into radical action. In February 2009, he announced a dramatic cut in GE’s quarterly dividend from 31 cents to 10 cents per share — only the second dividend cut in the company’s history. This move, while necessary to preserve $9 billion in annual cash flow, shattered GE’s image as the ultimate blue-chip stock and drove away long-term retail investors who had depended on GE’s reliable dividend payments.
The NBC Universal sale emerged as a crucial part of GE’s survival strategy, though its roots went back decades. GE’s entry into media had begun in 1986 with its $6.3 billion acquisition of RCA, which owned the NBC television network. The deal, orchestrated by Jack Welch, had been controversial at the time — many questioned why an industrial company needed to own a television network. However, under GE’s ownership, NBC had evolved from a traditional broadcast network into a media powerhouse. The addition of Universal Studios through a 2004 merger with Vivendi Universal Entertainment had created NBC Universal, a diversified media giant with assets spanning television, film, theme parks, and digital media.
By 2009, despite NBC Universal’s success in building a $30 billion media empire, GE faced a difficult decision. The entertainment division, while profitable, required constant investment in content and technology to compete with emerging streaming platforms. More importantly, GE desperately needed cash to shore up its industrial core and reduce debt. In December 2009, GE announced a complex deal to sell a 51% stake in NBC Universal to Comcast for $13.75 billion. The transaction structure reflected GE’s weakened position — rather than a clean sale, it created a joint venture that allowed GE to defer taxes and retain some upside potential through its 49% stake.
The deal’s complexity would later prove somewhat shortsighted. Comcast, with its deep understanding of the media industry and clear strategic vision, would go on to extract significant value from NBC Universal. By the time GE sold its remaining stake to Comcast in 2013 for $16.7 billion, the media landscape had transformed dramatically. Streaming services were revolutionizing content delivery, and NBC Universal’s assets — particularly its vast content library and Universal Studios’ intellectual property — would become increasingly valuable in the digital age. While GE had achieved its immediate goal of raising cash and simplifying its portfolio, the sale meant surrendering a business that might have provided valuable diversification and growth potential in the digital era.
This period also saw the beginning of what Immelt called “the New GE” — a strategic pivot that would fundamentally reshape the company. The plan involved shrinking GE Capital’s assets by more than $200 billion, focusing only on commercial lending directly tied to GE’s industrial businesses. The company began aggressively selling off consumer finance operations, real estate holdings, and insurance businesses. Each sale brought painful write-downs as assets were often sold at significant discounts to their book value, reflecting both market conditions and GE’s urgent need to reduce risk and raise cash.
The human cost of this restructuring was severe. By mid-2009, GE had eliminated over 28,000 jobs globally. Historic industrial sites that had been operating since the early 20th century saw massive layoffs. Even GE’s corporate headquarters in Fairfield, Connecticut, once a symbol of corporate prosperity, wasn’t spared — its workforce was reduced by 20%. The cuts went beyond just numbers; they represented a brain drain of experienced managers and engineers who had been key to GE’s operational excellence.
By 2010, with GE Capital’s immediate crisis contained, Immelt turned his attention to repositioning GE’s industrial core. The strategy centered on what he called “resource-rich regions” — markets with growing energy and infrastructure needs, particularly in emerging economies like China, Russia, and the Middle East. These regions were experiencing rapid industrialization and urbanization, creating massive demand for power generation, oil and gas equipment, and infrastructure development. Immelt believed GE’s industrial expertise could capture this growth while reducing the company’s dependence on mature Western markets.
This strategic shift led to a series of acquisitions that would significantly expand GE’s presence in the energy sector. The $3 billion purchase of Dresser Inc. in October 2010 was particularly significant. Dresser, a Texas-based company with a 100-year history in energy infrastructure, brought crucial technologies that GE had long coveted. Its portfolio included sophisticated gas engines used in oil and gas production, advanced control valves essential for pipeline operations, and precise measurement systems for monitoring oil and gas flows. The acquisition also gave GE a stronger presence in fast-growing markets like Brazil and India, where Dresser had established strong customer relationships.
The momentum continued with the $2.8 billion acquisition of Wood Group’s well-support division in 2011. This business specialized in electric submersible pumps, surface wellhead systems, and other critical technologies for oil and gas extraction. The acquisition was strategic not just for its technology but for its service capabilities — Wood Group had a strong reputation for maintaining and optimizing oil field equipment, providing GE with recurring revenue streams from service contracts. Together, these acquisitions transformed GE from a peripheral player in oil and gas into a major competitor to established industry leaders like Schlumberger and Halliburton.
However, these moves created an increasingly complex strategic tension. On one hand, GE was investing heavily in fossil fuel infrastructure through its oil and gas division. On the other, the company was positioning itself as a clean energy leader through its Ecomagination initiative, which had grown to $85 billion in revenue by 2011. The renewable energy division, particularly wind power, was showing promise but required substantial ongoing investment at a time when capital was scarce.
Throughout 2011–2012, GE Capital continued its dramatic downsizing. The unit sold off $78 billion worth of assets, including its Mexican mortgage business, Asian consumer lending operations, and large portions of its real estate portfolio. Each sale brought write-downs and restructuring charges, but gradually reduced GE’s exposure to financial services. By the end of 2012, GE Capital’s assets had shrunk to $419 billion, down from a peak of $631 billion in 2008.
The corporate culture underwent a profound transformation during this period. The confidence bordering on arrogance that had characterized GE during the Welch era was replaced by a more subdued, risk-aware approach. Crotonville’s curriculum was overhauled to emphasize risk management and crisis leadership. The famous Session C talent reviews, once focused primarily on identifying high-potential leaders, now included detailed discussions of succession planning and risk oversight.
Perhaps most significantly, GE began dismantling parts of its vaunted management system. The rigid performance metrics and forced rankings that had defined the Welch era were gradually replaced with more flexible evaluation systems. This shift acknowledged that the old approach, while effective in driving short-term results, had contributed to a culture that sometimes prioritized meeting quarterly numbers over long-term value creation.
By the end of 2012, GE had emerged from its crisis period as a different company — smaller, more focused on industrial operations, but still grappling with fundamental questions about its identity and future direction. The stage was set for even more dramatic changes in the years to come, including the transformative but ultimately troubled Alstom acquisition.
Digital transformation and Alstom acquisition (2013–2015)
By 2013, with GE Capital’s downsizing progressing and the NBC chapter closed, Immelt launched his most ambitious bid yet to remake GE into an industrial powerhouse. The company unveiled what it called the “Industrial Internet” initiative — a $1 billion investment in software and analytics capabilities aimed at making GE’s industrial equipment smarter and more connected. This wasn’t just another corporate buzzword; Immelt believed that the fusion of industrial hardware with digital technology would create a competitive advantage that pure software companies couldn’t match.
The strategy crystallized in 2014 with the creation of GE Digital, a new unit headquartered in San Ramon, California. The symbolism was clear — by placing this division in Silicon Valley rather than Fairfield, Connecticut, GE was signaling its intention to compete with tech giants. The company began hiring software developers at an unprecedented rate, aiming to build a workforce of 20,000 software professionals. The centerpiece was Predix, GE’s industrial Internet platform, which promised to help customers optimize everything from jet engines to power plants through data analytics.
However, the most consequential decision of this period came in June 2014, when GE announced its largest-ever industrial acquisition: the $13.5 billion purchase of Alstom’s power and grid business. The deal’s size and timing were stunning — GE was still working to digest previous acquisitions, and the global power generation market was showing signs of overcapacity. Yet Immelt saw it as transformative, arguing that the combination would create unmatched scale in power generation equipment and services.
The Alstom acquisition process proved to be a diplomatic and regulatory marathon. The French government, concerned about losing a national industrial champion, initially opposed the deal. GE spent months negotiating with French officials, eventually agreeing to create joint ventures in renewable energy and grid technology, while promising to create jobs in France. The final deal structure was complex — GE would pay $13.5 billion, but through a series of joint ventures and complex arrangements that would later prove problematic.
Meanwhile, activist investor Nelson Peltz’s Trian Fund Management took a $2.5 billion stake in GE in October 2015. Peltz’s arrival marked a new phase of pressure on GE’s management. While initially supportive of Immelt’s industrial strategy, Trian pushed for more aggressive cost-cutting and questioned the wisdom of maintaining any significant presence in financial services. This external pressure would ultimately accelerate GE’s most dramatic transformation yet.
The period culminated in April 2015 with GE’s announcement that it would sell most of GE Capital’s assets, retaining only those operations directly supporting its industrial businesses. This wasn’t just another portfolio adjustment — it was a fundamental reshaping of GE’s business model. The company would exit $200 billion worth of financial assets, marking the effective end of GE’s fifty-year experiment as a hybrid industrial-financial conglomerate.
The latter half of 2015 marked a critical turning point for GE as the full implications of its strategic decisions began to surface. The Alstom acquisition, finally completed in November 2015 after 17 months of regulatory negotiations, immediately presented integration challenges that exceeded expectations. The complex joint venture structures required by French regulators created governance complications. More worryingly, GE discovered that Alstom’s power business was more deeply affected by the global slowdown in power generation orders than initial due diligence had suggested.
The financial transformation was equally challenging. The plan to divest most of GE Capital’s assets, dubbed “Project Hubble” internally, moved faster than expected. By the end of 2015, GE had signed agreements to sell $157 billion in assets. While this rapid execution impressed Wall Street, it also created new problems. The quick sales often came at prices below book value, leading to significant write-downs. Moreover, the speed of the exit meant that GE was selling into a buyer’s market, particularly in real estate and specialty finance.
GE Digital’s expansion revealed its own set of challenges. The unit’s headquarters in San Ramon quickly grew to house over 1,400 employees, but cultural tensions emerged between the traditional GE management style and the more entrepreneurial approach of Silicon Valley. The Predix platform, while technologically ambitious, struggled to gain market traction. Customers were hesitant to commit to GE’s proprietary platform, preferring more open solutions from established software vendors.
The company’s renewable energy business faced similar complexity. While wind turbine orders were growing, driven by improving technology and government incentives, the division’s profitability remained challenged. The joint venture structure with Alstom in renewable energy added another layer of complexity to decision-making, just as the market required quick adaptation to falling solar and wind costs.
By late 2015, cracks in GE’s transformation story began to show. The power division, now GE’s largest industrial unit following the Alstom acquisition, started seeing order cancellations and pricing pressure. The global shift toward renewable energy was happening faster than GE had anticipated, leading to overcapacity in gas turbine manufacturing. This was particularly problematic given that GE had just doubled down on traditional power generation through the Alstom purchase.
The pressure from Trian Fund Management intensified. While Nelson Peltz publicly supported Immelt’s industrial strategy, his firm pushed for more aggressive cost reduction targets and questioned GE’s conglomerate structure. The activist investor’s presence led to increased scrutiny of GE’s accounting practices.
As 2015 drew to a close, GE’s stock traded well below the levels needed to deliver on Immelt’s promise of significant shareholder returns. The company had essentially bet its future on three major transformations simultaneously: the exit from financial services, the digital industrial revolution, and the power business expansion through Alstom. Each of these bets would soon be tested in ways that would ultimately lead to the most dramatic period in GE’s recent history.
Accelerating decline (2016–2017)
By 2016, the cracks in GE’s transformation strategy had widened into visible fissures. The power division, newly enlarged by the Alstom acquisition, began showing troubling signs that went beyond normal cyclical downturns. Orders for new gas turbines, the division’s profit center, fell by more than 50% from their peak. It wasn’t just a temporary market slowdown, but a fundamental shift in the global power industry toward renewable energy.
The Alstom integration proved far more problematic than anticipated. GE discovered that many of Alstom’s projects were running over budget and behind schedule. More worryingly, the French company’s internal controls and project management systems were weaker than GE had assumed during due diligence. By mid-2016, GE was forced to inject additional capital into several Alstom projects, particularly in the Middle East and Africa, where cost overruns had become severe.
GE Digital, despite billions in investment, was struggling to gain traction. The Predix platform, intended to be the operating system for the industrial internet, faced technical challenges and customer resistance. While GE had hired thousands of software developers and invested heavily in marketing its digital transformation, revenue from digital services remained disappointingly small relative to the investment. By late 2016, internal debates intensified about whether GE should have tried to build its own digital platform rather than partnering with established tech companies.
The pressure from activist investor Trian Partners intensified throughout 2016. Nelson Peltz’s firm published a detailed white paper calling for $2 billion in additional cost cuts by 2018. More significantly, Trian began questioning GE’s long-standing practice of using long-term service agreements to book future revenue, suggesting that this accounting practice might be masking underlying performance issues.
In response to mounting pressures, Immelt announced another round of cost-cutting initiatives in December 2016. The company pledged to reduce annual costs by $1 billion in its industrial operations through a combination of job cuts, facility consolidations, and digital efficiency improvements. However, these moves seemed increasingly reactive rather than strategic, and raised questions about whether GE’s fundamental business model was sustainable.
The company’s biggest headache was its oil and gas division. After investing over $14 billion in acquisitions between 2007 and 2014 — including Dresser, Wood Group’s well-support division, and other energy assets — GE had transformed itself into a major player in the oil and gas equipment sector. But the timing proved disastrous. Just as GE completed its expansion, global oil prices collapsed from over $100 per barrel in mid-2014 to below $30 by early 2016. This price crash devastated the energy services industry, leading to widespread project cancellations and massive cost cutting by oil producers. GE’s oil and gas division, which had been expected to become a major growth engine, instead became a source of mounting losses.
Faced with this crisis, Immelt pursued a bold but risky solution. In October 2016, GE announced plans to combine its struggling oil and gas business with Baker Hughes, one of the industry’s most respected names. The merger would create a new publicly traded company in which GE would hold a majority stake. While presented as a strategic move to create an energy services powerhouse, the transaction’s complex structure — including various put and call options — suggested GE was actually trying to find a graceful way to reduce its exposure to the volatile energy sector while maintaining operational control.
The Baker Hughes deal, completed in July 2017, created a new entity called “Baker Hughes, a GE Company” (BHGE) in a complex transaction valued at $32 billion. The structure was unprecedented: GE would own 62.5% of the combined company, with Baker Hughes shareholders receiving a special dividend of $17.50 per share and retaining 37.5% of the merged entity. The deal was supposed to create an energy powerhouse that could compete with industry leader Schlumberger, combining GE’s manufacturing and technology expertise with Baker Hughes’ services and international presence.
However, the Baker Hughes merger immediately faced challenges. The timing proved unfortunate — oil prices remained stubbornly low, and the energy services sector was in the midst of a prolonged downturn. The integration was complicated by the need to maintain Baker Hughes’ status as a public company while operating within GE’s corporate structure. Cultural clashes emerged between Baker Hughes’ Houston-based oil services veterans and GE’s corporate managers, who brought different approaches to everything from project management to customer relationships.
By spring 2017, pressure on Immelt reached a breaking point. The company’s cash flow was deteriorating faster than expected, particularly in the power division. A series of embarrassing revelations emerged, including the practice of flying a backup corporate jet behind Immelt’s primary aircraft — a practice that cost millions and seemed wildly out of touch in a company aggressively cutting costs at lower levels. This revelation devastated employee morale and became a symbol of leadership’s disconnection from operational reality. On June 12, 2017, GE announced that Immelt would step down as CEO, to be replaced by John Flannery, a long-time GE executive who had most recently led GE Healthcare.
Flannery’s initial review of the business revealed deeper problems than publicly acknowledged. The power division’s issues went beyond market cyclicality — GE had been aggressively booking revenue from long-term service agreements while underlying cash flow was weakening. The Alstom acquisition, rather than providing synergies, had added complexity and risk just as the market was turning.
The Baker Hughes situation became even more complicated under Flannery. While the merger was barely six months old, questions arose about GE’s long-term commitment to the energy sector. Internal debates intensified about whether GE should accelerate its exit from oil and gas, potentially by selling its stake in BHGE sooner than the originally planned lockup period.
By year-end 2017, Flannery announced a major restructuring, including plans to exit several businesses and cut 12,000 jobs in the power division alone. The company would also dissolve GE Digital as a standalone unit, significantly scaling back its digital ambitions. The Baker Hughes investment was placed under review, with GE indicating it would explore options to “exit our ownership” over several years, a remarkable shift in strategy for a deal that was less than a year old.
Culp era and turnaround attempts (2018–2019)
The dawn of 2018 brought GE’s darkest hour yet. In January, the company shocked investors by announcing a $6.2 billion charge related to insurance operations it thought it had left behind years ago — North American Life & Health, a remnant of GE Capital that had written long-term care insurance policies decades earlier. More troubling than the size of the charge was its implication: GE would need to set aside $15 billion in additional reserves over seven years. This revelation raised serious questions about what other hidden liabilities might lurk within GE’s complex structure.
By June 2018, GE faced another historic humiliation: after more than a century as a member of the Dow Jones Industrial Average — the last original member of the index — GE was removed, replaced by Walgreens Boots Alliance. This symbolic defeat represented more than just a stock market technicality; it marked the end of GE’s status as the quintessential American industrial company.
Under mounting pressure to raise cash and simplify the conglomerate’s structure, Flannery made the dramatic decision to spin off GE Healthcare. The division, which generated $19 billion in revenue and $3.4 billion in profit in 2017, had been one of GE’s most reliable performers. It held strong positions in medical imaging, life sciences, and healthcare software, with a global installed base of over 4 million machines. Just a year earlier, spinning off healthcare would have been unthinkable — it was considered a crown jewel that provided stable cash flow to fund GE’s transformation.
However, GE’s deteriorating financial position forced Flannery’s hand. The company needed to raise cash to address its ballooning debt, which stood at over $77 billion. Additionally, activist investors, led by Trian Partners, had been pushing for radical simplification of GE’s structure. The healthcare spinoff would allow GE to monetize a valuable asset while potentially unlocking value — healthcare companies typically traded at higher multiples than industrial conglomerates.
The summer restructuring announcement outlined plans to make GE Healthcare a standalone company, with GE initially retaining a 20% stake to help fund its pension obligations and debt reduction. The company would also sell its stake in Baker Hughes over two to three years. What remained would be a dramatically simplified GE focused on power, renewable energy, and aviation — a far cry from the diverse conglomerate that had once dominated American industry.
However, Flannery’s three-year timeline for implementing these changes struck many investors as too cautious. With GE burning through cash and facing mounting debt payments, the market was looking for more urgent action. The gradual approach to such major strategic moves seemed out of touch with the company’s increasingly precarious position.
September 2018 brought yet another crisis when GE’s power division disclosed problems with its newest gas turbine model. Oxidation issues were discovered in turbine blades at several customer sites, requiring expensive repairs and halting shipments of new units. This technical failure couldn’t have come at a worse time, damaging GE’s reputation for engineering excellence just as it was trying to stabilize its power business.
On October 1, 2018, GE’s board made a dramatic move that shocked the corporate world: John Flannery was ousted after just 14 months as CEO, replaced by H. Lawrence Culp Jr., the former CEO of Danaher and the first outsider to lead GE in its 126-year history. The catalyst was another massive write-down in the power division — $23 billion, effectively acknowledging that GE had destroyed nearly all the value from its $13.5 billion Alstom acquisition. The stock, which had already fallen below $12, plunged further on the news.
Culp’s appointment marked a radical departure for GE. Unlike his predecessors, he had no emotional attachment to GE’s traditional businesses or management practices. He brought with him the “Danaher Business System,” a lean management philosophy that had transformed Danaher from a small toolmaker into a highly successful conglomerate. His immediate focus was brutally clear: stop the bleeding and generate cash.
The Baker Hughes situation saw rapid movement under Culp. In November 2018, GE announced plans to accelerate its exit, reducing its stake from 62.5% to just over 50% through a series of secondary offerings. This generated needed cash but at a significant discount to the value GE had attributed to the stake just a year earlier. The company also announced it would reorganize its Baker Hughes board seats and modify various commercial agreements, effectively beginning the unwinding of the complex merger structure.
Culp’s approach to the power business was equally decisive. Rather than trying to preserve the division’s scale, he broke it into two units: Gas Power, focusing on gas turbines and services, and Power Portfolio, containing the grid solutions, nuclear, and other power businesses. This split allowed for more focused management and clearer accountability. He also launched a comprehensive review of the division’s project execution and risk management practices, uncovering numerous instances where GE had underbid projects or underestimated costs.
By early 2019, Culp unveiled his strategy for what he called “New GE”: a smaller, simpler company focused on its core industrial businesses. The plan included selling GE’s biopharmaceutical business to Danaher (Culp’s former company) for $21.4 billion, using the proceeds to pay down debt. The healthcare spin-off was put on hold, with GE instead choosing to sell a portion of its stake in the unit while retaining control.
The most significant aspect of Culp’s approach was his brutal honesty about GE’s problems. Unlike his predecessors, who had often tried to maintain optimism about quick turnarounds, Culp warned that the fix would take years. He described 2019 as a “reset year” and provided transparent metrics for measuring progress, particularly around free cash flow — a measure that had become increasingly important to investors skeptical of GE’s accounting.
Under Culp’s leadership, GE began its most fundamental transformation since Edison’s era. His approach was methodical, focusing first on the company’s operations at their most granular level. In what became known internally as “daily management walks,” Culp would spend hours on factory floors and in field offices, asking detailed questions about processes, examining data boards, and pushing managers to identify specific operational improvements. This hands-on approach marked a stark contrast to the more top-down management style that had characterized GE for decades.
The implementation of the “lean management” system, adapted from Culp’s Danaher days, brought dramatic changes to GE’s corporate culture. Gone were the elaborate PowerPoint presentations and complex financial metrics that had dominated management meetings. Instead, Culp instituted simple visual management tools — whiteboards tracking key performance indicators, daily huddles focused on immediate operational issues, and “gemba walks” where managers were required to regularly observe actual work processes. This approach was particularly revolutionary in GE’s power division, where complex project management had often obscured underlying performance issues.
Baker Hughes continued its complex separation from GE throughout 2019. Culp orchestrated a series of secondary share offerings that reduced GE’s stake to just over 36.8% by year-end, generating approximately $9.1 billion in proceeds. The unwinding of various commercial agreements and technology-sharing arrangements proved particularly delicate, requiring careful negotiation to preserve value for both companies while enabling Baker Hughes to operate independently.
The financial services cleanup accelerated under Culp. GE Capital’s assets were further reduced from $136 billion to under $110 billion. More significantly, Culp addressed one of GE’s most persistent problems: its underfunded pension obligations. Through a combination of pre-funding and freezing benefits, GE began to tackle its $27 billion pension deficit, though this required difficult conversations with labor unions and retirees.
Perhaps most importantly, Culp began rebuilding GE’s credibility with investors through radical transparency. Quarterly earnings presentations were revamped to focus on free cash flow and operational metrics rather than adjusted earnings figures. The company provided detailed breakdowns of project costs and margins in the power division, including frank acknowledgments of past bidding mistakes and execution problems. This transparency, while painful in the short term, helped restore trust in GE’s financial reporting.
By late 2019, the first signs of improvement began to show. Aviation continued to perform strongly, and even the troubled power division showed signs of stabilization. Free cash flow, while still negative, was improving faster than expected. The stock price, which had fallen below $7 in December 2018, recovered to around $11 by year-end 2019. However, Culp consistently emphasized that the turnaround was still in its early stages, warning that sustainable improvement would require years of continued operational focus.
The groundwork was being laid for what would eventually become GE’s most dramatic move yet — the decision to split into three separate companies. Though this announcement was still in the future, the operational improvements and structural changes implemented under Culp’s early tenure were creating the conditions that would make such a split possible.
Pandemic impact and separation planning (2020-early 2021)
As 2020 began, GE’s gradual recovery under Culp’s leadership collided with an unprecedented global crisis. The COVID-19 pandemic hit GE’s aviation division particularly hard — arguably the worst blow since the unit’s founding in 1917. With global air travel grinding to a near halt, airlines began canceling or deferring orders for new engines. More critically, the lucrative maintenance and service revenues, which typically provided stable cash flow even during downturns, plummeted as aircraft worldwide remained grounded.
The pandemic’s impact forced Culp to take dramatic action in aviation. In March 2020, GE announced plans to cut 10% of its aviation workforce — about 2,600 jobs. By May, this number had grown to 25% of global aviation employees, or approximately 13,000 positions. These cuts were particularly painful as they hit GE’s most profitable division, which had been the company’s reliable cash generator during the power division’s troubles.
The timing couldn’t have been worse for GE’s ongoing transformation. The company had just begun showing signs of stabilization in its power business and was making progress in reducing its debt load. Now, with aviation in crisis, GE faced a new cash flow challenge. The company’s stock, which had recovered to around $13 in early 2020, plunged below $6 in May, erasing much of the gains made under Culp’s leadership.
However, the crisis also accelerated certain aspects of GE’s transformation. The healthcare division, which had been considered for spinoff, proved crucial during the pandemic. The unit ramped up production of ventilators and other critical medical equipment, demonstrating its strategic value. GE Healthcare’s imaging technology also played a vital role in COVID-19 diagnosis and treatment, leading to increased orders for CT scanners and X-ray machines.
Culp’s focus on operational efficiency and cash preservation proved valuable during this period. The lean management practices implemented before the pandemic helped GE respond quickly to the crisis. The company reduced costs by $2 billion and took steps to preserve $3 billion in cash during 2020, demonstrating an agility that would have been unthinkable in the old GE.
The Baker Hughes stake continued to be monetized, though at lower valuations due to the energy market downturn. By mid-2020, GE had reduced its ownership to about 32%, generating additional cash but at the cost of significant mark-to-market losses. The timing of these sales, while necessary for GE’s liquidity, highlighted the challenges of unwinding complex corporate relationships during a crisis.
By late 2020, GE began to see the contours of a post-pandemic future more clearly. The aviation division, while still severely impacted, showed signs of stabilization, particularly in the military engines segment which remained steady throughout the crisis. However, the commercial aviation recovery proved uneven — domestic flights began resuming while international travel remained depressed, creating a complex planning environment for engine production and maintenance schedules.
Culp’s approach to the crisis reinforced his reputation for transparent communication. Rather than making optimistic predictions about a quick recovery, he provided detailed metrics about airline utilization rates, maintenance schedules, and order backlogs. This granular approach to communication helped restore investor confidence — GE’s stock gradually recovered to pre-pandemic levels by early 2021.
The power division, surprisingly, showed resilience during this period. The reorganization into Gas Power and Power Portfolio began bearing fruit, with improved project execution and cost control. The renewable energy division also gained momentum, particularly in offshore wind, where GE’s Haliade-X turbine — the world’s most powerful offshore wind turbine — began securing major orders. This success in renewables provided a glimpse of how GE might transition away from its traditional power business.
Healthcare continued its strong performance, though in a shifting landscape. While demand for COVID-related equipment began normalizing, the division saw increased interest in its digital and AI capabilities, particularly in remote patient monitoring and diagnostic tools. This digital transformation accelerated under the pandemic, with GE Healthcare introducing new AI-powered imaging systems and workflow solutions.
A crucial development came in March 2021 when GE announced a significant deal with AerCap to combine its aircraft leasing business (GECAS) with the Irish company. The $30 billion transaction marked GE’s effective exit from financial services, a business that had once generated nearly half its profits. The deal would give GE a 46% stake in the combined company and generate approximately $24 billion in cash to help reduce debt.
This period also saw significant progress in GE’s cultural transformation. The lean management system, initially viewed with skepticism by many long-time GE managers, began showing tangible results. Daily management practices, visual controls, and kaizen events became standard operating procedures across the company. More importantly, these practices helped break down the hierarchical decision-making structure that had long characterized GE’s management style.
By late 2021, GE had reached a pivotal moment in its transformation. The operational improvements under Culp’s leadership, combined with the lessons learned during the pandemic, had created both the capability and the rationale for the most dramatic move in the company’s 129-year history. On November 9, 2021, GE announced plans to split into three separate public companies focused on aviation, healthcare, and energy.
The decision, while shocking to many outside observers, was the culmination of years of restructuring and strategic repositioning. The plan called for GE Healthcare to be spun off in early 2023, combining its medical technology business with its digital solutions segment. The energy businesses — including power, renewable energy, and digital — would be combined and spun off in early 2024. The remaining GE would focus on aviation, leveraging its strong position in both commercial and military aircraft engines.
The complexity of this undertaking was staggering. Each new company would need its own management team, board of directors, and corporate infrastructure. The separation would involve dividing approximately $110 billion in assets, untangling complex supplier relationships, and allocating GE’s substantial debt load among the three entities. Perhaps most challengingly, the company would need to separate shared technologies and intellectual property that had been developed across multiple divisions over decades.
The healthcare spin-off preparations revealed the intricate web of connections that had been built within GE. The division had leveraged GE’s digital capabilities, used shared research facilities, and relied on the parent company’s global supply chain networks. Creating a standalone healthcare company meant not just separating these functions but also building new capabilities where needed. Under the leadership of Peter Arduini, who would become CEO of the independent GE Healthcare, the division began developing its own corporate functions while maintaining its operational momentum.
The energy businesses faced an even more complex separation. The plan to combine power and renewable energy into a single company, to be called GE Vernova, reflected both the challenges and opportunities in the energy transition. This new entity would need to manage the declining gas turbine business while scaling up its renewable energy operations, particularly in wind power where GE had become a leading player with its Haliade-X offshore turbines.
Throughout this period, Culp maintained his focus on operational excellence. The lean management system became even more critical as teams worked to document and separate processes that had been integrated for decades. Daily management walks now included discussions about separation planning, with managers using visual boards to track the thousands of decisions and actions needed to create three independent companies.
The market’s reaction to the split announcement was cautiously positive, with GE’s stock rising on the news. Many analysts saw the move as a logical conclusion to Culp’s transformation efforts — creating focused companies that could better serve their markets and attract appropriate investors. However, the sheer complexity of the separation, combined with the ongoing challenges in aviation and energy markets, meant that significant risks remained.
By year-end 2021, GE had begun the detailed work of separation planning, while continuing to manage its ongoing businesses in a still-uncertain global environment. The company that had once epitomized the power of the industrial conglomerate was now leading the way in its own dismantling, marking the end of an era in American business history.
Final split preparation (2022-early 2023)
The year 2022 marked the beginning of GE’s most complex corporate restructuring. The company faced the monumental task of separating into three distinct entities while maintaining operational performance during a period of global economic uncertainty. The first major milestone was preparing GE Healthcare for its independence, a process that revealed the intricate web of relationships built over decades.
The healthcare separation proved more challenging than initially anticipated. Beyond the obvious tasks of establishing independent financial and IT systems, the team discovered countless subtle connections between healthcare and other GE operations. Everything from pension obligations to research partnerships needed to be carefully unwound. The division had shared patents with aviation, used GE’s digital platforms for equipment monitoring, and relied on the parent company’s global compliance systems.
Meanwhile, GE Aerospace (the future standalone aviation company) began positioning itself for independence. Under Culp’s continued leadership, this division would retain the GE name and heritage, reflecting its position as the crown jewel of the old GE. The division showed strong recovery signs as commercial air travel rebounded, with engine orders increasing and maintenance revenues beginning to normalize. The LEAP engine program, in particular, demonstrated robust growth, with a backlog exceeding $18 billion.
GE Vernova, the planned energy company combining power and renewable businesses, faced its own set of challenges. While the renewable energy segment showed promise, particularly in offshore wind, it continued to face margin pressures and execution challenges. The traditional power business, though stabilized, still grappled with a declining market for gas turbines.
By mid-2022, another layer of complexity emerged: the need to allocate GE’s substantial debt load among the three companies. This process required careful consideration of each entity’s cash flow potential and growth prospects. GE Healthcare would take on approximately $15 billion in debt, while GE Vernova and GE Aerospace would split the remaining obligations. This allocation needed to ensure each company would launch with sustainable capital structures.
The cultural implications of the split became increasingly apparent. Each soon-to-be independent company needed to establish its own identity while retaining the beneficial aspects of GE’s culture. Healthcare embraced a more innovative, technology-focused culture under Peter Arduini’s leadership. Vernova began developing a culture that balanced the reliability demands of power generation with the entrepreneurial spirit needed in renewable energy. Aerospace worked to maintain GE’s engineering excellence while becoming more agile.
The cultural transformation accelerated through late 2022 as each entity prepared for independence. GE Healthcare’s separation proceeded on schedule, with the company completing its roadshow to investors in December 2022. The spin-off was successfully executed on January 4, 2023, when GE Healthcare (GEHC) began trading as an independent company on the Nasdaq. The market responded positively, with the stock rising 8% on its first trading day, valuing the company at approximately $46 billion.
As 2023 unfolded, GE’s final transformation entered its most critical phase. Following the successful spin-off of GE Healthcare in January, which had validated the separation strategy with its strong market debut, attention turned to the more complex task of preparing GE Vernova for independence.
A key challenge emerged in the technology transfer process. Decades of integrated research and development had created unexpected dependencies between divisions. Engineers discovered that some of GE Vernova’s renewable energy technologies relied on materials science breakthroughs originally developed for jet engines, while power generation software incorporated algorithms from healthcare imaging. Resolving these technical interconnections required developing new proprietary solutions specific to each company’s needs.
The transition also revealed surprising strengths in unexpected areas. GE Vernova’s grid modernization technology, initially considered a secondary business, attracted significant attention from utilities facing the challenge of integrating renewable energy sources. This led to a strategic refocus, with additional resources allocated to developing smart grid solutions that could help manage the intermittency of wind and solar power.
The offshore wind segment offered more promise, with GE’s Haliade-X turbine securing several major orders. The 14MW version of the turbine began commercial operation in late 2022, maintaining its position as the world’s most powerful offshore wind turbine. This success in offshore wind highlighted GE Vernova’s potential role in the energy transition, even as it managed the declining gas turbine business.
By early 2023, the final stages of separation planning were underway. The allocation of GE’s intellectual property proved particularly challenging. Decades of shared research and development had created a complex web of patents and technologies used across multiple divisions. Teams of lawyers and engineers worked to map these dependencies and create appropriate licensing agreements that would allow each company to operate independently while protecting valuable intellectual property.
The debt allocation strategy was refined based on each entity’s projected cash flows and growth prospects. GE Healthcare’s successful spin-off with $15 billion in debt provided a template, but GE Vernova’s split would be more complex given its mix of mature and growing businesses. The goal was to ensure each company would launch with an appropriate capital structure while maintaining investment-grade credit ratings.
Larry Culp’s leadership during this period was marked by continued operational focus even as separation planning accelerated. The lean management system, now deeply embedded in GE’s operations, proved valuable in managing the complexity of the split while maintaining business performance. Daily management walks expanded to include separation readiness metrics, with visual management boards tracking thousands of separation-related tasks.
The company’s historic research facilities, including the Global Research Center in Niskayuna, New York, required particular attention. This facility had long served as GE’s central innovation hub, developing technologies used across all divisions. The solution involved creating a network of shared technology agreements while allowing each company to develop its own research capabilities aligned with its specific markets.
As early 2023 progressed, the outlines of three distinct companies emerged more clearly. GE Healthcare was already demonstrating success as an independent entity, focusing on precision health technology and digital solutions. GE Aerospace was positioning itself as a pure-play aviation company with strong positions in both commercial and military markets. GE Vernova was evolving into an energy technology company focused on both supporting the existing power infrastructure and driving the energy transition through renewable technologies.
The transformation of GE from a single industrial conglomerate into three focused companies marked more than just a corporate restructuring — it represented the end of an era in American business history. The conglomerate model that GE had pioneered and perfected under leaders like Jack Welch had given way to a new reality where focus and agility mattered more than scale and diversity.
The lessons learned during this transformation would likely influence corporate strategy for years to come. The challenges of unwinding complex business relationships, the importance of clear focus and accountability, and the value of operational excellence in driving change had been demonstrated on an unprecedented scale. As GE prepared for its final separation in early 2024, it was clear that while the GE name would continue through GE Aerospace, the era of the great American conglomerate had come to an end.
The company that Thomas Edison had founded in 1892, which had survived multiple economic cycles, two world wars, and countless technological disruptions, was completing its most dramatic transformation yet. However, unlike previous changes that had expanded GE’s reach, this final transformation recognized that in the modern economy, focused excellence would triumph over diversified scale. The three companies emerging from GE’s split would each face their own challenges and opportunities, but they would do so with the clarity of purpose that comes from focusing on a single mission rather than trying to be everything to everyone.