GE Watcher (2) Making GE even more complex.

In my most recent book: The Secret to GE's Success" and my article comparing Buffet and Immelt in Chief Executive magazine, I emphasized that one of GE's major strategic challenges was dealing with complexity. I truly believe that one of the reasons that GE's stock has not done well in the past seven years is that the investors don't understand GE because of this complexity and would prefer to place their bets in areas which are more understandable. My recommendation is to simplify the company, like Buffet has done.

However, it appears that the GE leaders have decided to make it even more complex. They recently announced that the GE Money's Consumer business will move its headquarters from Stamford, Connecticut USA to London. The GE Healthcare business is already located outside of London as a result of an acquisition and the promise to a senior officer that the headquarters would be in the UK.

This move adds to the complexity of managing the business, retaining key people, dealing with different government regulations, tax laws and cultures, making decisions and security problems. GE has already made its research and development complicated by having R&D facilities in China, India, Europe and the United States, which have enormous communications, cultural and SECURITY issues.

It is clear that my perceptions and those of the Immelt team are far apart and that GE has decided to become a WORLD, not a US company.... I believe this is a mistake for the long term.

Your comments and insights are welcome...

Bill Rothschild, author of "The Secret to GE's Success", which describes GE's successes and failures.. and why it has been able to prosper for 126 years.