It’s time for GE to ditch GE
But it’s also the company that allowed its financial arm to become so opaque and unwieldy that backhand betting almost sank the industrial parent company during the financial crisis and, more recently, created a reserve deficit. $15 billion surprise linked to a long-term care insurance company. . Since the start of this century, GE has earned a reputation for making bad acquisitions – from the 2015 purchase of Alstom SA’s energy business, which led to a $22 billion write-down, to its foray into unfortunate in oil and gas and its costly bets on a failed digital reinvention – and for taking a loose approach to financial reporting. Former CEO Jack Welch once described GE as “the greatest people factory in the world”, but his management style and corporate culture are now being blamed for breaking the company, the ones its leaders have parachuted in to lead, like Boeing Co., and perhaps the American capitalist model as a whole.
While current CEO Larry Culp has made significant progress cleaning up GE’s law and streamlining its operations, the stock has floundered since November, when he announced plans to split the company into three. Many investors seem to prefer to wait for the opportunity to hold shares of the new companies rather than go through giant GE’s long and messy process of unraveling – especially amid worries about a recession. It is therefore surprising that, given the opportunity to present its businesses in a new and independent light, GE chooses instead to anchor them by name in the heritage of the parent company.
GE announced on Monday the branding of the three companies it plans to create. The healthcare division is expected to be spun off first, in early 2023, and will be called GE HealthCare. The merger of GE’s gas power, renewables and digital assets, which is expected to be completed in early 2024, will be called GE Vernova. The remaining aerospace operations will be called GE Aerospace. The latter company will retain the rights to the GE brand, which it will license on a long-term basis to the other companies. GE says its brand is valued at nearly $20 billion and provides a competitive advantage to customers. But it also comes with a lot of baggage, especially in the eyes of investors. If the lesson of GE’s past is that it was too bold when it should have been cautious, the lesson of its present may be that the company is too cautious to abandon its legacy when it should be bolder.
When Culp’s former company Danaher Corp. announced it was splitting in two in 2015, Steven Winoker — then an analyst at Sanford C. Bernstein & Co. but now head of investor relations at GE — had this to say, “Two Danahers? What’s not to like about that? It’s hard to imagine anyone saying the same thing about three versions of GE. It should also be noted that despite his solid reputation, Danaher did not pass on his name; the spin-off of its industrial business was called Fortive Corp.
The new GE names are boring, and that has its advantages. Keeping all three entities under the main GE brand will likely have relieved the company’s lawyers, who have been spared the delicate task of securing a trio of new global brands. Despite the company’s ups and downs, the GE monogram has been evolving gracefully since the 1890s and should not be discarded lightly, or without a better alternative.
The most imaginative of the new names is GE Vernova. The explanation of how the company created this branding suggests that it’s probably for the best that the creative impulses stopped there. “Ver” is derived from “verde” and “verdant”, to denote the greens and blues of the Earth, while “nova” comes from the Latin word “novus”, which means new. This aims to capture “a new and innovative era of low-carbon energy that GE Vernova will help deliver.” Sure.
There is a plausible path for this energy-focused company to eventually become known as Vernova. It would sound like how Baker Hughes Co. finally dropped the name Baker Hughes, a GE Co. — a mouthful of a moniker that was adopted when the two companies’ oil services businesses merged in 2017 and is become much less desirable the parent company GE ran into financial difficulties. GE still owns about 4% of Baker Hughes. It makes sense that Vernova’s energy business would have the most direct path to a non-GE future because it has the most checkered past and the toughest financial outlook. In contrast, it seems unlikely that GE HealthCare will ever be called simply “HealthCare”, while the aerospace business will be called “Aerospace”. This brand image leaves a limited margin for the resulting companies to forge their own identity.
Design-wise, GE’s spinoff follows in the footsteps of Facebook’s recent narrow rebranding as Meta Platforms Inc. — an attempt to reframe the company within the metaverse without causing undue controversy.
There’s also an echo of Volvo’s serious sensibility, as parodied in the 1990 film “Crazy People”: “Buy Volvos.” They are boxy but they are good. We know they’re not sexy. It’s not the right time to be sexy anyway, with so many new diseases. Be safe instead of sexy. Volvo. Boxy, but good.
If GE’s color choices are predictable — “compassionate purple” for GE HealthCare, “evergreen” for GE Vernova, and “atmosphere blue” for GE Aerospace — they at least have poetic pretensions. But the variety of sans serif typefaces is a bit more chaotic. GE HealthCare uses accessible curves and a nice rotation of its a and e; GE Vernova is in bland capitals, with a clunky tagline to explain the name; and GE Aerospace deploys an industrial, almost federal face that smacks more of the New Deal than the next century.
There’s nothing wrong with shouting with GE HealthCare and GE Aerospace as brand names. Despite all the negativity surrounding GE in financial circles, investors have a short memory. The business challenges are also quite complex, and there is a larger world beyond Wall Street in which the average person doesn’t spend much time dwelling on long-term care insurance mistakes and impairment of acquisitions. GE’s reputation has never been tarnished in the same way as, say, Monsanto Co., which is associated with the Agent Orange herbicide used in the Vietnam War and genetically modified crops. Bayer AG ditched the Monsanto name when it acquired the company in 2018. But there’s nothing particularly inspiring or exciting about the names GE HealthCare or GE Aerospace either, and typically companies embarking on a reinvention want to minus a bit of inspiration and excitement.
More writers at Bloomberg Opinion:
• GE’s Culp kills the beast Jack built: Brooke Sutherland
• Meta mediocrity turns out to be the message: Ben Schott
• Boeing faces a chorus of criticism in high places: Brooke Sutherland
• What banks and airlines can learn from funeral homes: Ben Schott
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Brooke Sutherland is a Bloomberg Opinion columnist covering transactions and industrial companies. A former M&A reporter for Bloomberg News, she writes the newsletter Industrial Strength.
Ben Schott is the advertising and brand columnist for Bloomberg Opinion.
More stories like this are available at bloomberg.com/opinion