GE and Alphabet: A Tale of Two Conglomerates
15 Pages Posted: 26 Apr 2019
Date Written: April 15, 2019
GE, an American icon, is a falling giant, and Alphabet, of Silicon Valley, is a rising one. In this paper, we review writings on the organizational structure of conglomerates and the facts in the two cases, analyze the fall of GE, and the rise of Alphabet. Though GE is a conglomerate, its executives did not recognize it as such and attempted for decades to “integrate” its unrelated businesses. Its strategy for Internet-of-things and digital transformation of GE faced many internal obstacles, ran in to execution problems, and was not a growth priority. Alphabet played according what theory would suggest: keep the conglomerate structure simple, allocate resources efficiently, and act transparently. In contrast to GE, Alphabet networked some of its businesses and benefited from the networking economies. Though solutions are rampant in the press and elsewhere, this paper looks at how to apply the theory on conglomerates to inform the options for GE. There is a lot GE and Larry Culp can take away from Alphabet and Larry Page.
Keywords: management, case, strategy
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