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Open Letter to GE CEO Lawrence Culp



Dear Lawrence,

Since Jack Welch left, GE has gone through 2 CEOs. Jeff Immelt who was supposed to transform GE and John Flannery who seemed to be a caretaker CEO. After John Flannery, you were supposed to lead the company back to greatness.

Over the past 18 years almost half a trillion dollars has evaporated from GE's market value. That's roughly the size of Facebook. The stock is now $7.06 and was as low as $6.66. Today Uber has a bigger market cap than GE. So much for leadership.

Today GE announced that it was spinning out its Industrial IoT business and selling most of its stake in ServiceMax, the company it bought in 2016 for $915 million.

With all the Six Sigma black belts roaming the leafy campuses and halls of GE, you have fallen into the trap laid out by the dumb consultants you keep hiring. Spin-off and sell other businesses to reduce burn and bring in cash to pay GE’s crazy debt of $115B (as of Q3 2018). It does not seem you can borrow with preferential rates anymore since GE has been downgraded again by Fitch and Moody’s. So, what do you do? Sell the "IoT digital unit"and the recently purchased ServiceMax.


Here’s free consulting for GE since you’re on a selling spree. Get rid of the businesses that don’t have any future growth potential or are in the areas that you cannot possibly compete. Keep the business units where GE has a competitive advantage and shines.


GE Appliances for Business

The Koreans, Chinese and Mexicans own this business. GE cannot possibly compete with Samsung, LG, Haier, Grupo Mabe. It is a business that has moved away will never come back. Take the good consulting talent you have and put them in a new unit called GE Consulting. The rest of the unit’s assets and personnel should be sold.


GE Transportation

Sell it to Southern Pacific, DHL, Amazon, FedEx or UPS… anyone. Take the groups that make train engines and sell it to the French, Canadians or Japanese. The future is about high speed, low energy consuming locomotive engines and the Japanese, French, and Canadians beat GE hands down. Most of what you do is fuel-inefficient freight trains and maintenance contracts. If there is good consulting talent, move them to GE Consulting.


GE Oil and Gas

Get rid of it. Halliburton, Bechtel or Schlumberger will probably pay a premium for it. It’s not a growth industry. After two more years of the current political climate, the demise of fossil fuels is inevitable. The world is innovating and building better energy sources. If you think GE wants to be holding the last bag in the oil and gas business, then keep it. Otherwise, sell it off. The consultants who are left, move them to GE Consulting.


GE Lighting for Business

Sell, sell, sell. OK, you have consultants who can help design LEED and lighting efficient businesses, but after the initial installs, you’re done. The consultants turn out to be the Maytag men. The lights of the future are all LED-based which can last 20 years or so. The Chinese own this business, and they are good at it. The mercury-laden fluorescent and high-intensity lights are the relics of the toxic past. This business sucks the wind out of GE. If you have consultants that are smart, move them to GE Consulting.


GE Power, Power Conversion, Energy, Energy Consulting, Energy Connections

Consolidate them into one single operating unit and get rid of it. Face the music, GE is not good at this business. Anything that has the words POWER and ENERGY in it, consolidate it and get rid of it. It is built on a house of cards. Anyone who follows GE knows it. GE Power is powered by financial magicians rather than real profit and growth. As the Wall Street Journal says, “GE had been sending money out the door to repurchase its stock and pay dividends but wasn’t bringing in enough from its regular operations to cover them. It wasn’t sustainable.” GE Power is the proverbial drain on the books.


GE Aviation

You make the best jet engines on the planet, and you only have a few competitors. Keep this business.


GE Healthcare

Keep this too. GE has the best in this business. Don’t rest on your laurels as the Germans and Japanese will keep GE on its toes. The Chinese make their equipment, and you’ll never crack that market. However, owning the US market for CAT Scan and MRI machines is not so bad.


GE Consulting (a consolidated new group)

Now that you consolidated all you consultants, keep a few and build a world-class capability in Artificial Intelligence. There is a period wherein Human Intelligence will still play an outsized role is needed to build out AI capabilities. Sell the rest of the consultants to Accenture, Cognizant or HP Enterprise. HPE and Cognizant likes IT-based maintenance contracts. Organize it, so it’s easy to divest.


GE Mining

Get rid of it or sell it to BHP Billiton. It’s a nasty business in the worst places in the world.


GE Digital

Keep it, grow it and transform it. Your digital capabilities are horrendously outdated. It’s all about software. No one cares about the little IoT beacon hardware because the Chinese already own IoT hardware market. IoT hardware is already on the commoditization fast train. Software, however, is still nascent and few are good at this. Equipment is useless without software. GE has the advantage of an installed base. Sell great software to them. If you want to know what IoT and digital means, please visit an Amazon Go store close to you. Look at your Apple Watch and that darn Amazon Echo.


In short, stick to where you are VERY GOOD at – jet engines and high-end medical equipment. Pay down that horrible debt burden. Finally, pay great attention to 5G and Artificial Intelligence. Also, quit hiring the high-paid management consultants. They will tell you what you already know or what I just outlined with fancier charts.


In the meanwhile, GE puts anyone?


Yobie Benjamin

Former GE Shareholder

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