The Great Unbundling

General Electric’s announcement last week that it is splitting into three parts not only marks the final stage in the unbundling of the world’s most successful conglomerate but underscores a theme we’ve been sounding at ITL for years now: that the future belongs to ecosystems.

The GE announcement — and one by Johnson & Johnson, also last week, that it is splitting into two pieces — largely relates to stock market issues. GE felt that investors weren’t fully understanding a three-headed business — which manufactures equipment for healthcare, power generation and aviation — and thought the aggregate valuation of the businesses would fare better if each had its own, clean story to tell. J&J made a similar calculation when it decided to split its volatile prescription drug business from the steady-as-she-goes consumer business that sells Band-Aids and Tylenol.

But the splits also reflect that the need for specialized expertise in a business, whether that’s jet engines or over-the-counter medicines, increasingly overwhelms whatever benefits come from combining a variety of businesses in a single corporate structure — and that digital connections make it ever-easier to gain any benefits via collaboration without being under the same corporate roof.

When I was a young pup of a reporter at the Wall Street Journal, an old hand told me, “If you have a good story, you should write it every once in a while.” In that spirit, I’d like to resurface some of the many articles we’ve published on how the unbundling of businesses and capabilities can play out in insurance, benefiting businesses and customers alike.

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