What Amazon, Google, Facebook can learn from GE's demise
Is bigger better when it comes to business? If you ask former General Electric (GE) Vice Chairman Beth Comstock, big technology and social media companies like Google, Amazon and Facebook have a lot to learn from the demise of the 125-year old conglomerate.
“I think we ought to be asking ourselves what is the price of scale?” Comstock told FOX Business’ Maria Bartiromo on Thursday. “I think I saw that through a GE lens. Certainly the generation of GE leaders that I was part of dealing with a lot of complexity that happens when you get to scale and are they going to be able to take the same risks? Are they able to do the things that got them there? I think we all ought to ask that about big companies.”
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The industrial giant itself has faced its fair share of struggles, especially over the past year, which included a 50 percent stock drop and a lost spot on the Dow Jones Industrial Average. Although Comstock worked at GE during the Jack Welch and Jeff Immelt eras, she isn’t pointing any fingers over its slow demise. She did, however, point out that even though they changed their culture, its business model no longer works.
“A lot of complexity and the runup to scale of GE,” she said. “You had GE Capital -- it was a conglomerate — conglomerates are no longer in favor.”
“You want a more focused company. The company was on a path to get there, but it takes hard work, complexity. The company needed to move fast. You've got to get the culture to move. All that takes time. I worry a little bit about our market system. I think you need the short-term predictability, but you also need to make room for the long term and that takes work.”
Earlier in her career, Comstock took a big interest in Silicon Valley. In order for these companies to continue to grow, she said, they need to look ahead and diversify their culture.
“What has happened to Silicon Valley is that they’ve become too insular,” she said. “They haven’t opened up enough to new ideas, to thinking ahead in some cases of where is the future going to go and I think we are seeing some of that play out.”