Business Week reports that John Rice, who will head General Electric Co.'s (NYSE: GE) new Technology Infrastructure unit and is a corporate Vice Chairman, is sounding very CEO-like in his description of GE's recent reorganization -- which I discussed here.
Rice offered a more cogent explanation of the reorganization than what I have read so far. The key points:
Transparency - BusinessWeek quotes Rice as saying, "It's an easier way for investors to view us and understand what we do." I don't agree with him because it will make it more difficult for investors to compare current performance with previous years' results for at least a year. That's because it will be difficult to compare four units to the previous six.
Common sales force - Rice also suggested that the reorganization will streamline the sales of some products. For example, the new GE Energy Infrastructure, which includes energy, oil and gas, makes products that are frequently sold together. This makes sense to me -- as long as GE trains and motivates its sales force to sell them together.
- Cost reductions - In April, CEO Jeff Immelt said that GE would achieve a cost reduction target of $3 billion rather than the previously announced $2 billion goal. Rice suggested that the reorganization would enable GE to achieve this higher target. In the absence of further details, I remain curious and skeptical.
With GE stock down 30% from where it was when Immelt took over, Rice's statement got me thinking that he was well-positioned to become GE's next CEO. He is running one of GE's most successful businesses and his vice chairman title suggests that the board knows him.
For the sake of GE shareholders, let's admit that -- unlike Jack Welch -- Immelt has not earned a 20-year run as CEO. I think it's fair to give someone else a chance. And Rice looks like a strong candidate.