Rothschild Strategies Unlimited LLC/ Strategyleader®

The following is a summary of my “lessons learned from my book “The Secret to GE’s Success” and an evaluation of Jeff Immelt’s performance based on his HBR article entitled “How I Remade GE!”( September 2017)

FROM THE BOOK:

Lesson One: THE RIGHT LEADER FOR THE RIGHT TIME: NO COOKIE CUTTERS

One of the most important things to recognize is that the future is likely to be different from the past or present. GE installed a system that allowed the CEOs to select successors who were very different from them The company recognized that leaders had to fit the requirements of the changing markets, competition, technologies, and sociopolitical philosophies.

Some things to consider. Take a look at where your company is in its life cycle, and recognize that the right leader for the embryonic stage of the cycle is not likely to be successful when the company matures. Review the strategic changes that may be needed, and recognize that if a new strategy is required, it will necessitate different skills. For instance, a technology-driven strategy requires different skills than does a marketing-differentiated strategy. Global systems markets will re- quire leaders different from domestic, product-driven markets.”

FROM IMMELT's HBR ARTICLE

Embrace New Kinds of Talent -

"A company our age simply couldn’t do the things we’re trying to do with our core population. We needed a cadre of people who hadn’t grown up in the company. That required me to protect those people until they were truly integrated and to be open to building a new culture, new ways of doing things, and new thoughts.

If you look at GE today, there are more senior people from outside the company than at any time in our history. As noted, Bill Ruh, the leader of GE Digital, came from Cisco. Ganesh Bell, the chief digital officer of GE Power, worked at SAP. Both Jérôme Pécresse, who leads our renewable energy business, and Philippe Cochet, our chief productivity officer, joined GE through our acquisition of Alstom.

From 2009 to 2016, the number of people hired from outside GE each year (excluding acquisitions) increased by more than 60%. And the number of external hires added annually to our executive ranks more than doubled, to 160.”

DIFFERENCE FROM PAST SUCCESS FACTORS: GE grew its own management in the past Immelt dramatically changed this...however the did recognize the need to staff with the technical talent required for his TRANSFORMATION!!!

LESSON  #2. ADAPTABILITY -Nothing is sacred or indispensable.

FROM My Book: "GE's ability to challenge every business and police, even when they were working. This has enabled the company to make changes before it was too late. GE’s leaders have had a systematic way of evaluating its businesses. They have challenged all of the businesses, even those that were “making the numbers” and winning. During the Welch era, the company pruned, exited, sold off, and refocused its businesses; as a result, the company was very different from the one that he inherited from Jones. I call GE: The College of SURGEONS since they have had a number of “surgeon leaders”.

From IMMELT’s HBR article. “ We radically changed our portfolio by focusing on our core industrial businesses and divesting slower-growth, low-tech, and nonindustrial businesses".

IMMELT HAS BEEN CONSISTENT HIS ADAPTABILITY and BEING A SURGEON LEARDER....Issue is this positive or negative to GE's ability to manage revenues, earnings and cash flows. 
Immelt has been one of the biggest “surgeon leaders” in GE’s history. He divested both Plastics and Major Appliances where he once worked, as well as to practically liquidating GE Capital a major source of revenues and cash flow. This has made the company more focused but also more vulnerable to socio/ political/ market/ competitive changes than in the past and has negatively impacted its ability to manage its cash flows.

 

THESE ARE TWO NOTES IT POSTED ON GE SITE WHICH OBVIOUSLY DIDN'T MEET THE STORY THEY WANT TO TELL AND WERE REMOVED!

  • "Transformation is not always good. GE's current portfolio reflects this...the SECRET TO GE's SUCCESS was based on careful strategic thinking, planning and leadership. Unfortunately I don't see this reflected in the current poor state of the company."

 

  • "Unfortunately we have measures to determine a winner and a loser. In sports it is normally scoring more than the competition. In business it is RETURNS to investors and stockholders. If you examine all of the THE GE LEADERS they made their numbers. Employees were rewarded, retirees were given what they were promised, investors and stockholders got their returns. I predicted in my book that Immelt would not achieve what he promised and he not only didn't do this, but today the company is in disarray, the stockholders have less returns than they did when he took over, he discontinued the retirees health benefits...in short HE FAILED TO MAKE THE NUMBERS AND ALL STAKEHOLDERS, include himself since he invested in GE stock and it lower than when he invested...I am greatly disappointed in his TRANSFORMATION and hope that he selected a successor who can reverse all of these negative trends. I think Jeff is an honorable, nice man, but unfortunately we must admit he FAILED."
  • NOTE: Immelts HBR article asserts his transformation was a success and its results will come LATER!!
  • As a stockholder I hope he is right!

 

 

 

 

         

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