Could Large System Intervention be a Savior?

In the article titled" What the Hell Happened at GE?", Geoff Colvin beautifully dissected the series of mistakes that GE or more precisely, Jeff Immelt (CEO for 16 years) committed which eventually led to the faltering situation of GE in current market.

In the article he discussed about Immelt's biggest acquisition which also looked his worst i.e the  2015 acquisition of Alstom, a big French competitor of GE’s largest business, GE Power, which makes and services the huge turbines that utilities use to generate electricity. 

At a price of $10.6 billion, this was GE’s most expensive industrial acquisition ever.Deal was reviewed eight times and finally approved.

The red flags?

• At the time of acquisition, Alstom’s profit margins were low, but GE figured it could raise them. 
• GE’s strategy relied heavily on selling services, but regulators made the company divest Alstom’s service business. 
• The acquisition added more than 30,000 high-cost employees, many in Europe, but GE figured they’d more than pay for themselves.
• Adding to the woes, the deal was mis-timed. GE doubled down on fossil-fuel-fired turbines just as renewable were becoming cost competitive. 

Which led to what?

• Global demand for GE Power’s products collapsed, while GE had bet heavily the other way.
• GE Power’s profit plunged 45%.

But these are all external factors which made the deal a failed one.

What about the internal reality of the system and did that give much to this debacle?

Alstom Power, in all its glory, was a french company with deep-rooted European values. The work pace, value for employee and  commitment to work-life balance were few of the perks of working in the company.Employees who joined in their twenties would continue working with Alstom till their retirement period and that speaks a lot about the organization culture of Alstom.

But all was not rosy. The organization was hierarchy heavy, employees falling in the middle of 9 box model had grown complacent, even the poor performing employees were not let go easily, the organization had turned into a mammoth that doesn't want to be moved or poked.

The Culture of GE is well-known for new initiatives, taking risks and constantly innovating.

The clash of these elements seem inevitable and that's exactly what happened. 

But I would like you all to see this from a macro perspective because that will show that this was not just about the clash of company culture but the clash of culture b/w two countries.

The french are too french and US is too much of US.

French believe in employee value, work life balance, US believes in performance and follows  hire & fire strategy.Its like trying to mix oil and water. But we wonder if they had a strategy to mix oil and water?

The entire acquisition took two years to complete on paper. Meanwhile, no initiative was in place to start culture integration. 

The moment official name change happened from Alstom to GE, rumor mills started running. The leadership team got replaced in a blink of time, contract workers started getting invites for review, unwanted job movements were happening rapidly and a lot of poor performers were let go in batches. A lot of processes were changed and employees were expected to take the learning initiative. 

And while all this was happening, no one from the leadership bothered to discuss with the employees. The situation was chaotic, people were forced to change their way of working and there was no comforting hand around.*

The question arises, Could a large Systems intervention save the day?

In the article"Large System Interventions - my first understandings" published in "The intervention Insights," it is well explained what Large systems Intervention means.

Large - The term here refers to groups or units that are beyond the scope of an individual's understanding. When we say Large it means that it is not the capability of one person to work on the unit/entity because one person cannot grasps its magnitude,


System - The term here means that large units or entities interact with their environments and also interact internally with their parts.

1) The interaction and balance with the external environment
2) the fit of all its internal parts

A large system intervention aims to take up two key aspects,the organisation environment relationship and the interaction of its internal components.

Interventions - Intervention means to find the pain points that the entity is facing and looking at how to help overcome that pain point. What we should remember though about interventions though is that they need to help the organisations learn. As an interventionist our aim is to equip organisations to learn thereby helping them become their own change agents .

By going through this explanation, we can safely assume that a Large system Intervention would have been an effective tool to discuss the issues of this Acquisition.

The organization did not go for any such intervention but here, we are looking at possibility of  a better future if it chooses to go for it.

In my next article, I will be taking this discussion forward.

Feel free to add to the discussion thread.

*The data points are taken from the India Business Unit