Former IBM Watson employees say it’s good to be nimble.
Image has been cropped and resized. Courtesy of GE Healthcare.Editor’s note: This is a column, not a hard news story.
Read the news coverage of General Electric’s decision to make its healthcare business a standalone company, and you’ll come across stories that describe an embattled titan of industry in the throes of a historic collapse. Headlines like “After Months of Selling Off Many of Its Businesses, What’s Left of General Electric?” and “General Electric’s Empire Has Officially Crumbled” pervade.
For the mainstream press, the tale of a once-mighty American conglomerate selling off assets on the day of its excommunication from the Dow Jones industrial average is irresistible. It’s also the story that newspapers and finance blogs should be covering. But for the health-tech crowd, there’s another story here, and it might take precedence over GE’s larger arc.
GE Healthcare—the new standalone company with the same name—could ultimately benefit from this move, in one huge way. And that is entirely because it is no longer part of the gigantic, flailing GE mothership. The new company could find that it loses some baggage.
First, let’s take a look at what GE Healthcare is. Its mission is to “drive more individualized, precise, and effective patient outcomes,” Kieran Murphy, president and CEO of the organization, said in a statement. GE Healthcare’s bread and butter is medical imaging, monitoring, biomanufacturing, cell therapy technologies, and the like. These products rely on technologies like artificial intelligence (AI), big data, and analytics.
If it weren’t for GE Healthcare’s international client base and $19 billion in revenues (with 5 percent growth) last year, those cutting-edge technologies would make the company look a lot like a health-tech start-up.
GE Healthcare is not, of course, a start-up in any way. But its separation from the main line makes it leaner, and that could be a good thing.
Now, let’s look at IBM Watson and some buzz that has cropped up about the AI endeavor in the wake of a pungent round of layoffs. After the bloodletting, several former engineers spoke with IEEE Spectrum’s Eliza Strickland, who wrote a fascinating piece on their observations and concerns. One takeaway was that IBM was too large, or too complex, or perhaps too mismanaged to capitalize on its AI.
(When reached by Strickland, an IBM spokesperson declined to comment the allegations, saying the layoffs affected a “small percentage” of Watson’s team and that the company continues to hire new engineers in “critical” areas. A Morgan Stanley analyst has also noted that the sort of restructuring that occurred at IBM is expected after acquisitions.)
But the sources who spoke for this story said their original employer, an AI start-up named Phytel, had more clients—and more promise—prior to being bought by IBM. “Smaller companies are eating us alive,” a source said of IBM. “They’re better, faster, cheaper. They’re winning our contracts, taking our customers, doing better at AI.”
Finally, let’s look at GE Healthcare in the context of these insights. It’s clear that, if you’re inclined to believe the former IBM engineers, being small is good for AI and similar tech companies. Perhaps the issue isn’t merely size but rather the concentration and distribution of knowledge. When the team consists of close-knit engineers and healthcare experts, and they are charged with charting the course, it’s possible that they will make better decisions than faraway high-level stakeholders. This is especially true in AI and healthcare, two fields that demand expertise but claim relatively few experts.
It’s widely known that IBM looks at Watson as a sort of high-tech savior, something that will transform the larger legacy company. When GE Healthcare is spun off in full, its technologies will no longer be responsible for transforming, or even buffering, the larger legacy GE. What’s more, GE Healthcare’s imaging agents and heavy-duty equipment may provide a healthy base for further innovation.
Despite all this, GE Healthcare still carries GE branding, a lucrative asset for its sales, marketing, and reputation.
The new organization’s CEO agrees with my take on this. (And being on the same page as a subject isn’t something a writer typically touts.) “As an independent global healthcare business, we will have greater flexibility to pursue future growth opportunities, react quickly to changes in the industry, and invest in innovation,” Murphy said. That is to say, for perhaps the first time, GE Healthcare’s decisions will solely belong to and chiefly benefit GE Healthcare.
Make no mistake: GE Healthcare is big in its own right. As of last year, the division had 54,000 employees. But that’s a portion of GE’s 310,000-plus employees and IBM’s 380,000 and change. And the relieved obligation to bolster GE might be even more important than size.
So, will GE Healthcare’s newfound independence help its innovators to develop better technologies and its business leaders to grow their footprint? We’ll see. But the company’s trajectory will be of its own making, and it will be crafted by people who work for a healthcare company, not a titan of industry.
Get the best insights in healthcare analytics directly to your inbox.