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Whether Lawrence Jr. can revive the century old store after taking office only 14 months ago, Flannery was replaced and became the CEO with the shortest term in GE's 126 year history. As the first foreign CEO of Ge, Kapp was selected because he had successfully led Danaher company to transform from an industrial manufacturing company to a technology company. However, compared with Ge, Danaher is not an order of magnitude in terms of influence, scale and business complexity. Kapp faces much greater challenges

Han Shulin | wenmark |

on October 1, Eastern time, the board of directors of General Electric (GE) dismissed John Flannery, the CEO who has been in office for only 14 months

on the same day, the board of directors of GE announced the appointment of h.lawrence cup, Jr. to replace Flannery as CEO and chairman of the company. Kapp was elected in a secret ballot of the board of directors of Ge, which took effect immediately. In addition, Thomas w.horton was appointed as the leaddirector by the board of directors

for this 126 year old American industrial giant, this appointment is very sudden and breaks many traditions of Ge selecting the top leaders. Flannery unfortunately became the CEO with the shortest term in GE's history. At the same time, Kapp became the first top leader who parachuted from the outside in GE's history

for more than half a century, every new helmsman of GE has been selected from a set of internal selection processes that have lasted for several years and have strict procedures. This set of CEO heritage is also regarded as one of the successful experiences of GE's long-lasting foundation. But in the current era of drastic changes, Ge in crisis broke this tradition

on the day of the announcement of the appointment, GE's share price rose by 7%, temporarily stopping the continuous decline. Since Flannery took office on August 1, 2017, GE's share price has fallen all the way from $24.52/share. China has continued to innovate in the field of advanced extrusion technology to $11.29/share, with a 54% decline during his tenure

but when Flannery succeeded Jeff Immelt on June 13, 2017, GE's share price also rose 4% that day. Perhaps for GE, although it is still unknown whether the new CEO can lead Ge out of trouble, the replacement itself is good news for investors

while announcing the appointment of the new CEO, Ge also announced that due to the drag of the power generation business, it was expected that it would not be able to achieve the previously set free cash flow and earnings per share targets in 2018, but Ge did not announce the new targets. In addition, Ge is expected to make a full impairment treatment on the goodwill balance of about US $23billion in the power generation business. The specific plan is still being evaluated, and more information will be disclosed in the third quarterly report

ge was in danger in the late period of Immelt's term of office. It is difficult to blame anyone, but the inevitable dilemma of the star of the second industrial revolution in the face of the fourth industrial revolution. Whether Ge can get out of the dilemma and become a real basic evergreen company spanning three eras has attracted the attention of the global business community

GE's shortest lived CEO

Flannery was elected CEO from the succession plan that began in 2011. He took over from Immelt as the 11th CEO of Ge on August 1, 2017

before his election, Flannery was in charge of Ge medical business. Previously, Flannery was also responsible for the acquisition of Alstom, the reduction of Ge financial business, the split of consumer finance synchrony and the sale of Ge home appliance business. These are some important asset splits and mergers in GE's transformation in the Immelt Era. During his 16 year tenure, Immelt's biggest change to GE was the gradual withdrawal and divestiture of GE's financial business after the financial crisis, the return to industry itself, and the start of digital transformation, which defined the company as a digital industrial company

however, in the second half of Immelt's term of office, the company's revenue and profit growth almost stagnated, and its prospects were no longer optimistic by investors, and its share price fell all the way after 2015. The digital group that Immelt has bet on is still in the stage of continuous investment and has failed to make a profit. Finally, in June 2017, Immelt announced that he would retire in two months earlier than expected

after Flannery took office, he launched a series of measures to try to save costs and recover the decline. In November 2017, GE announced that it would reduce its quarterly dividend by half to $0.12 per share, which was the third time in GE's history. In addition, there are a series of asset sales and Restructuring: in September 2017, Ge sold its industrial systems business to abb for $2.6 billion; In May, 2018, Ge merged its transportation business with Wabtec, with a transaction value of $11.1 billion; In June, the industrial gas turbine business was sold to Anhong capital for us $3.25 billion

a bigger move was announced on June 26 this year. GE announced that it would divest three business segments: medical treatment, oil and gas, and transportation, and focus on aviation, power generation, and new energy in the future. Among the three separated sectors, the medical business will be listed independently, the shares of the oil and gas business will be sold within two to three years, and the transportation business will be merged with Westinghouse brake. Among ge2017's total revenue of $122.1 billion, the revenue of the three divested businesses was $40.5 billion, accounting for about one third

the three remaining businesses include aviation, power generation and new energy. Among them, aviation business includes aero engine, service business and military industry business, which is currently the best revenue and profit segment in Ge business segment; The power generation business includes large gas turbines, power generation services, electricity, steam turbines and other businesses, and its profits have decreased significantly since 2016. Among them, the setback in the development of large gas turbine business is an important reason for dragging down GE's performance; Renewable energy business has been dominated by wind power, including a small amount of hydropower business

at the same time, Ge also announced that it would streamline its headquarters and save at least $500million by the end of 2020. It is worth mentioning that on the day when GE announced its new corporate strategy, GE was excluded from the Dow Jones industrial average for the first time since 1907

for the digital business promoted by his predecessor Immelt, he also significantly reduced the pace of expansion during Flannery's tenure. In the Immelt era, Ge launched predix, an industrial interconnection platform, and established Ge digital in 2015. Ge hopes to attract third-party developers to develop application software for industrial fields on the predix platform, so as to collect data, improve equipment operation efficiency, carry out predictive maintenance and other services. Undoubtedly, the bold and radical digital transformation initiated by GE itself has set a benchmark for the global industry to accept this concept

however, the exploration of the pioneers was not very smooth. The digitalization of industry could not quickly replicate experience with the help of platforms and investments like consumer interconnection, but was inseparable from the vertical experience of each complex industry. For GE, its predix has been in the investment stage and has not yet been profitable. On July 30 this year, the wall street once reported that GE was considering selling the business of digital group, and the assets to be sold were not clear. Ge as a benchmark pioneer of industrial interconnection, this news has aroused widespread concern around the world

Flannery had to respond in the form of a public blog, emphasizing GE's long-term commitment to the digital business, and did not name the sale rumors as "there may be all kinds of noise in the change". However, he also stressed in his public blog and later investor meetings that the business of Ge digital group will first focus on the core business of Ge. Information from the market also shows that GE's predix platform has significantly reduced its marketing efforts to third-party customers. Ge did not even participate in the Hannover industrial exhibition in April this year. Compared with his predecessor, Flannery's confidence in digital business remains unchanged, but his strategy is much more pragmatic

however, the stock price, which can meet the needs of specific products, fell endlessly, and the business objectives were less than expected, so that the board of directors finally made the decision to change the leadership in advance. Despite Flannery's frequent actions, the board still believes that the pace of change is not fast enough. In the end, Flannery's CEO tenure lasted only 14 months and ended abruptly, becoming the shortest lived CEO in ge126 years of history. Reginaldjones, the CEO of Ge with the shortest term of office, was in office. Welch's term of office was as long as 20 years, and Immelt, who replaced Welch, was in office for 16 years. It was once regarded as an excellent tradition of Ge to carefully select CEOs in the long selection process and make them serve for a long time. Today, whether this tradition is still excellent is also a question mark

the last straw to crush Flannery

the weakness of the power generation business and the risk of goodwill impairment may be the direct reason for the early replacement of the board of directors

in early September this year, the latest ha gas turbine produced by GE was found to have oxidation problems in metal alloys, which may lead to blade damage. Exelon power, which uses the gas turbine, had to temporarily shut down two power stations in Texas for GE to repair

the news was disclosed on September 20, and GE's share price fell all the way. On September 28, the last working day of Flannery's CEO, he also emphasized in a video to employees that the problem was under control, and encouraged employees to "fight for the company", believing that the application of new technologies would take some time to fully work, and the criticism of power generation business was exaggerated

obviously, a technical problem is not enough to defeat Flannery, but it is no different from adding insult to injury to the struggling GE power generation business

ge's power generation business includes large gas turbines, power generation services, electricity, steam turbines and other businesses. In the first half of 2018, the revenue of GE power generation business was $7.58 billion, down 19% year-on-year; The profit was US $421million, down 58% year-on-year; Orders fell 26% year-on-year, of which equipment orders fell 29% and service orders fell 22%. Among all the existing businesses of Ge, the power generation business is the least optimistic. At the end of 2017, 12000 jobs were cut in GE power generation business

an important reason for the weakness of power generation business is the large gas turbine business. At the investor meeting after the second quarter report, Jamie Miller, GE's chief financial officer, introduced that 7 gas turbines were shipped in the first half of the year, compared with 21 in the same period of the previous year; In addition, orders for gas-fired power generation systems decreased by 78%

the decline of gas turbine business is related to changes in the global market environment. Not only Ge, but its competitor Siemens' gas turbine based power generation business is also the most difficult business in all its businesses. Siemens has planned to lay off staff. With the development of renewable energy and the saturation of the European and American markets for traditional wear-resistant parts, the market for large gas turbines used for natural gas power generation has shrunk rapidly in the past two years

in November 2015, Ge completed the acquisition of Alstom's power and electricity business with us $10.6 billion, which is the largest acquisition in the industrial field in GE's history. The change of market environment makes this transaction seem to be revalued

after the acquisition, GE's gas turbine products can form complementary advantages with Alstom's boilers, steam turbines with stable and reliable steam performance and steam turbine products in many power generation projects that GE was bidding for at that time. Ge completed the acquisition of Alstom after defeating Siemens and other competitors, and its business is mainly included in the power generation group

however, the shrinking of the overall gas turbine market means that these complementary effects are useless. The assets acquired from a large number of mergers and acquisitions cannot generate business and cash flow. The final result is that when GE announced the replacement of CEO, it also announced that it would fully devalue the goodwill of the power generation group of $23billion, which is closely related to the acquisition of Alstom

Wall Street quoted an anonymous source as saying that the board of directors

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