“I always played for the long term. When you have to make tough decisions, you are going to get criticized.”
— Jeffrey Immelt, 2009
Taking over the mantle from the legendary Jack Welch was a formidable task. But Jeffrey Immelt, Chief Executive Officer of General Electric (GE) and onetime apprentice of Welch, has carved his own path. Now Welch, along with others, will no doubt weigh in on Immelt’s latest chess move- to provide GE with new direction by hiving off NBC Universal to Comcast.
Unlike his predecessor, Immelt has GE in his blood. Growing up in Cincinnati, he was the son of a lifetime GE employee, a father who hung his hat at GE’s aircraft-engines division for 38 years. The younger of two brothers, Immelt attended Dartmouth College, quickly sowing his leadership skills as president of his fraternity and a vocal leader on the school’s football team. Graduating with a degree in Applied Mathematics, the six-foot four Immelt left Hanover for Boston, to complete his MBA at Harvard University. He then joined GE’s ranks in 1982. Initially working as a district sales manager, Immelt became indoctrinated in GE’s corporate culture by serving in a leadership position in three divisions- Plastics, Appliances, and Medical Systems. In 2000, Immelt replaced Jack Welch to become GE’s president and chief executive officer.
Immelt brought to the table a team building attitude, bred in his earlier years. And when he met his first trial by fire as vice president of consumer services in Appliances, it was that spirited attitude that prevailed. With morale low in the wake of a recall of over one million refrigerators, Immelt ascended a forklift, much like a coach rallying his team, and delivered a stirring speech of encouragement to factory workers. Later sporting a workman’s uniform and working side by side with GE repairmen in the field, Immelt’s leadership style was cemented, earning him a reputation as leader who melded the style of a boss, a coach and a caring father all rolled into one.
But there were still red badges of courage to be earned for Immelt. Assuming the role as vice president and general manager of Plastics in 1992, he failed to meet his sales target by nearly $50 million, inviting strong words of chastisement from Welch. To his credit, Immelt used those words to fuel his motivation to succeed even more fervently.
And succeed he did. Becoming head of GE Medical Systems in 1997, Immelt spurred an acquisition spree, snapping up 60 companies that soon earned GE the reputation as one of the most innovative companies in medical imaging. With the first digital mammography technology and the fastest CT scanning machine on the market, GE’s operating profits doubled, market share increased from 25% to 34% and sales skyrocketed by 75% by the time Immelt departed the division.
With this, Immelt became a candidate for the CEO position in 2000. But once again, Immelt felt the heat of challenge. In his first week as the CEO, Immelt had to hold the ship steady in the wake of the September 11, 2001 attacks, which sent the economy into a freefall. Undaunted, Immelt’s vision for the company centered upon increasing the use of technology, emphasizing a connection with customers, diversifying the business mix and creating cultural diversity within the company. But the signpost of Immelt’s strategy was innovation, and GE’s new slogan “Imagination at Work” was christened.
With an eye on a long-term strategy, Immelt led the restructuring of GE’s portfolio to favor high-growth businesses.. Three times, Barron’s magazine named him one of the “World’s Best CEOs” and GE emerged as “America’s Most Admired Company” in a poll conducted by Fortune magazine. With two years as CEO under his belt, Immelt was named “Man of the Year” by the Financial Times for positioning GE “to face the 21st century’s challenges.”
Then the global financial crisis hit. The company’s share price plunged 85% from its high under Welch’s reign to below $6 earlier this year. With the company’s industrial arm floundering and GE Capital struggling with mounting loans, GE stock lost 56% of its market value in 2008 and earnings dropped 22%. He faced criticism from the financial community and he was confronted with shareholder disapproval for the decision to slash dividends by 68% earlier this year. In response to GE’s flagging performance, Immelt refused to accept his 2008 bonus and performance awards worth $12 million.
Now, in a significant move to resurrect GE’s profit-raking track, Immelt has sold a 51% stake in NBC Universal to Comcast, which has left the 53-year old CEO flush with $8 billion in net cash and an option to cash in the rest of the company’s 49% stake in NBC Universal over seven years. Immelt hopes this move will help him shift the focus to the firm’s main forward-thinking businesses, namely the divisions in power generation, aviation, electromotive (railroad) and medical-imaging equipment, plus the finance arm GE Capital.
Immelt has led the drive to revolutionize GE’s direction, from a company focused on the bottom line to an innovation powerhouse. He is setting his sights on new, cutting-edge R&D centers in Bangalore, India, Shanghai, China and Munich, Germany. And unlike in the past, he foresees 60% of GE’s growth in the future stemming from outside the U.S. “I assume we can be number one again,” says Immelt confidently. And with that winning attitude, Immelt hopes to bring team GE in for a score.
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© Thomas White International, Ltd. 2019