Jeff Immelt and the New GE Way: Innovation, Transformation and Winning in the 21st Century Reviews

Jones and Welch were then, Immelt is now., April 8, 2009

By 

Robert Morris (Dallas, Texas) –

  

  

  

At General Electric, the chairman and CEO selects his successor, subject to confirmation by the board of directors. Almost 30 years ago, Reginald Jones selected Jack Welch and urged him to “blow up GE.” Both he and Welch realized that the “Welch way” had to replace the “Jones way.” During the next 12-18 months, Welch became known as “Neutron Jack” as he made numerous and significant changes throughout GE, systematically and summarily eliminating both unprofitable businesses and underproductive people.

What we have in David Magee’s book is, to the best of my knowledge, the first comprehensive examination of Jeff Immelt’s leadership as GE’s current chairman and CEO. Prior to being selected by Welch and then confirmed by GE’s board of directors as the company’s chairman and CEO in 2001, he held a succession of increasingly more important executive positions in various GE divisions (e.g. Plastics, Appliances, Plastics Americas, and Medical Systems) after earning an M.B.A. degree from Harvard University’s Graduate School of Business in 1982. He soon caught Welch’s eye and was generally viewed as a fast tracker among the company’s younger executives. He was promoted to be vice president and general manager of GE Plastics, overseeing 5,000 employees and $3 billion in business. But after a promising first year, Immelt was slow to inflationary forces in the global plastics market. His division took a heavy toll in both sales and profits. Immelt was required to attend the annual meeting of GE’s top executives in 1995 and successfully avoided Welch and his wrath for three days. Finally, Welch caught up to him. “Jeff, I’m your biggest fan, but you just had the worst year in the company. Just the worst year. I love you, and I know you can do better. But I’m going to take you out if you can’t get it fixed.” Everyone knew that Immelt was in an especially difficult situation. However, Immelt accepted the harsh criticism (“I took a couple pf real ass chewings from Jack”) and, under severe pressure, showed exceptional toughness and problem-solving abilities as well as composure and self-confidence. He and the division emerged from this “trial by fire.”

Although Magee includes a great deal of information about GE, most of it has already been discussed in dozens of other books, notably those written by Welch himself as well as by Stephen Baum and Dave Conti, Jeffrey Krames, Bill Lane, William Rothschild, Robert Slater, Noel Tichy, and Dave Ulrich. The focus of this book is not on GE, however, but on Immelt. Here are some of Magee’s observations and insights that caught my eye:

“Age might have been a tilting factor in Immelt’s favor as well [as being `comfortable in his own skin]. Seven years younger than [one contender, Jim] McNerney and eight years younger than [another, Bob] Nardelli, Immelt could make a 20-year run as GE’s leader just as Welch did while McNerney and Nardelli reasonably could not have lasted more than a decade and a half.” (Page 33)

“After Welch retired, Immelt continued the legacy of leadership training at Crotonville. By his seventh year on the job, he was pouring more than $1billion into corporate training and professional development, a figure believed unequaled by any corporation in the world. Think about it. Most CEOs would love to have a billion bucks to spend after expenses, but GE puts that amount as an expense into employee training education.” (Pages 77 & 78)

The reason organic light emitting diodes “cost too much for the average consumer and the reason none of the other companies investing in OLEDs has raced into the marketplace has been manufacturing difficulty. The lighting technology existed, but the ability to make large quantities of its outside of a laboratory did not. That’s where Immelt investment and commitment to the cross-fertilization benefits of the GE Global Research Center paid big dividends for the company in 2008.” (Pages 124 & 125)

“When discussing GE’s growth process, Immelt typically starts with innovation, even though the diagram runs in a circle and all aspects work together… `I knew if I could design a process and set the right metrics, this company could go 100 miles an hour in the right direction. It took time, though, to understand growth as a process.'” (Page 166)

“Whether it’s in emerging markets or the developed world, there will be about $5 trillion invested in the next six or seven or eight years in infrastructure,” said Immelt. “And one of the things I learned in business school is that if you want to grow, hang around people that are spending money. It’s one of those things that always works, and so we hang around people that are spending money, and right now they’re investing in infrastructure.” (Page 194)

“Transformation almost always comes at a price in business, no matter how necessary it may be for the good of a company. That’s why some leaders…

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