Immelt, Jeffrey R. 1956–
Immelt, Jeffrey R. 1956–
Jeffrey R. Immelt
Chief executive officer, General Electric Company
Family: Son of Joseph Immelt (manager of General Electric Aircraft Engines Division) and Donna (schoolteacher; maiden name unknown); married Andrea Allen (General Electric customer-service representative), 1986; children: one.
Career: General Electric Company, 1982–1983, internal marketing consultant; 1983–1989, district sales manager in Plastics; 1989–1992, vice president of consumer services in Appliances; 1992–1997, vice president and general manager of Plastics; 1997–2000, CEO of Medical Systems; 2001–, CEO.
Awards: Man of the Year, Financial Times, 2003.
Address: General Electric Company, 3135 Easton Turnpike, Fairfield, Connecticut 06431; http://www.ge.com.
■ Jeffrey Immelt had big shoes to fill when he took over as chairman and CEO of General Electric Company (GE) in 2001. His predecessor, Jack Welch, had become a legend in American business. Under Welch's leadership GE's growth rate averaged 18.9 percent and over his entire career the company's stock rose more than 3,000 percent. Immelt quickly put his own stamp on the company, earning the respect of employees, customers, and investors alike. He emphasized a long-term approach to growth and sought to differentiate General Electric from its competitors by creating a customer-focused culture and making innovation a priority.
Immelt was born into a General Electric family. His father, Joseph, worked in the GE aircraft-engines division in Cincinnati for 38 years, retiring as a middle manager. Immelt exhibited leadership skills early; he was a good student who enjoyed
sports. As a high school basketball player he advised his coach to yell at the team less often. The coach at first reacted to Immelt as if he were no more than a cocky teen, but he later took his player's advice.
At Dartmouth College, Immelt majored in applied mathematics and served as president of his fraternity, Phi Delta Alpha. At six feet four inches tall he played offensive tackle on the Dartmouth football team. Students who knew Immelt in college recalled that he was a natural leader who could help his football teammates relax in huddles.
During summers Immelt worked at the Ford Motor assembly plant in Cincinnati, where, as he told the New York Times, he "learned a lot about how to communicate to people, what makes them respond" (December 1, 2000). After graduating from Dartmouth in 1978, Immelt worked briefly in the brandmanagement department at Procter & Gamble. He earned his MBA from Harvard University in 1982.
After graduating from Harvard, Immelt followed in his father's footsteps, taking a job at General Electric. He started in GE's corporate office in Fairfield, Connnecticut, where he worked as an internal marketing consultant. After a year he was transferred to Dallas, where he was a district sales manager for GE Plastics. Immelt met his wife, Andrea Allen, a GE customer-service representative, while working in Dallas. The couple were married in 1986 and their daughter, Sarah, was born a year later.
LED GE DIVISIONS
In 1989 Immelt was named vice president of GE Appliances. He arrived at the division just as it began a recall of millions of refrigerators due to failed compressors—one of the largest recalls in GE history. Immelt quickly earned the respect of workers for the manner in which he managed the replacement of the compressors. He delivered motivational speeches to workers on the factory floor in Louisville from atop a forklift and donned a uniform to accompany technicians on house calls. Immelt told Time magazine that during his tenure at GE Appliances he "went from being a boy to a man" (September 10, 2001).
Immelt left GE Appliances for GE Plastics in 1992. While he successfully persuaded carmakers to use more plastic parts, he also experienced several difficulties. In 1994 he missed the division's earnings goals by $50 million. Immelt explained to BusinessWeek Online that he had failed to move quickly enough to increase prices during a time of inflation. When he attended a management meeting that year, he avoided the CEO Jack Welch until Welch finally pulled him aside and told him, "Jeff, I want you to know you had one of the worst jobs in the company. I think you are great. I love you. You're going to get this right. If you don't, you're going to have to go" (September 6, 2001).
Many executives would have felt threatened by such a statement from the CEO, but Immelt viewed it as a positive experience. He told BusinessWeek Online, "I was a thousand times more valuable to the company, having gone through that. I had 10 times more self-confidence because I knew I could work through issues of my own creation. Besides, I already knew when he chewed my butt out that I was going to turn it around" (September 6, 2001).
Immelt continued to attract attention when he was named president and CEO of GE Medical Systems (GEM) in 1997. When he arrived at GEM, the division was in its third year of flat revenues. Immelt initiated a series of 60 acquisitions, and GE became the world's most successful medical-imaging company by producing innovative products like the first digital mammogram system and the LightSpeed CT, the world's fastest CAT-scan machine. Under Immelt, GEM operating profits doubled and market share went from 25 to 34 percent. By the time Immelt left the division in 2000, sales had increased 75 percent.
SUCCESSOR TO JACK WELCH
In 1994 Immelt's performance earned him a spot on a list of some 24 candidates to replace the CEO Jack Welch upon his retirement. Welch had served as the CEO and chairman of GE since 1981 and was one of the world's most admired executives. During his 20 years at the helm GE's structure dramatically changed. He sold off businesses in fields that GE could not dominate, laid off workers, and acquired an average of one hundred businesses every year. He emphasized the service end of the trade—especially financial services. During Welch's tenure GE's growth rate averaged 18.9 percent and its stock rose 3,098 percent. The company's sales increased from $27 billion to $130 billion a year. GE consistently topped lists of American's most admired companies.
The list of candidates to fill the position of CEO was whittled to eight by 1997 and to three by June 2000. At 45 years of age Immelt was the youngest of the three candidates by 10 years; many analysts believed his youth was one reason for his ultimate selection to be Welch's successor. GE traditionally kept CEOs for long periods of time, and at his age Immelt could remain in the position for some 20 years. The announcement of Immelt's selection came on November 27, 2000.
Welch had planned on retiring soon after his successor was chosen, but during 2000 and 2001 GE attempted to purchase Honeywell International. Welch decided to remain in the CEO position during the transition, giving Immelt a nine-month apprenticeship in which he served side by side with his predecessor. The pair was disappointed when the $45 billion Honeywell takeover was nixed by the European Commission during the summer of 2001. Welch retired and Immelt took over in September 2001.
When Immelt took over the company, GE produced appliances, plastic car parts, medical-imaging systems, aircraft engines, light bulbs, and television shows and also offered financial services. The corporate trend in 2001 was to concentrate on core businesses, so many people thought GE needed to divest itself of its older, less profitable divisions, such as appliances and lighting. But Immelt felt about GE's units as a mother does about her children: he loved them all. He supported the older units, saying that they were a good venue through which to generate some cash, train employees, and build the company's brand. He believed that managers could learn a lot running the older businesses, especially during recessions.
Immelt hated to hear General Electric labeled as a conglomerate. Rather, he viewed GE as a collection of small companies that all had room to grow. He described the corporation as a whole in BusinessWeek : "We run a multibusiness company with common cultures, with common management where the whole is always greater than the sum of its parts. Culture counts. The strength of GE is its diversity" (January 28, 2002).
BUSINESS STRATEGY EMERGES
Immelt described the talent he believed he brought to the position of CEO in an interview appearing on BusinessWeek Online : "I'm decisive, I'm accountable. I have good discipline. I believe in people; I know the difference between a good one and a bad one. A big job is how you pick people. I love change. I love trying new things. I really bring to the job a complete growth headset. I've had great experiences in technology and globalization, running sales forces and doing acquisitions, and I bring all those things to the job" (September 6, 2001).
Immelt's management style was inevitably compared to Jack Welch's. Both men were considered to be competitive and intense, but Immelt was more low-key. Time magazine described the differences between the two executives: Welch was like a general deploying his troops; Immelt was more like a coach cheering on the home team. Welch was revered; Immelt was adored. Immelt was described as self-effacing and considerate—a nice guy. Peter Foss, a colleague, said, "If you say, missed your numbers, you wouldn't leave a meeting with him feeling beat up but more like you let your dad down" (September 10, 2001).
Being compared to Jack Welch was the least of Immelt's concerns during his first year as CEO, as he was challenged in ways he could not have anticipated. During his first week on the job the September 11, 2001, terrorist attacks shocked the world and sent the economy reeling. As the first year wore on, financial-reporting scandals made headlines, casting doubts on big businesses throughout the country. GE was criticized for Welch's generous retirement perks. The company failed to increase earnings by at least 10 percent for the first time in 10 years; the stock price fell. But Immelt had a plan. He established four goals for the company: to better use technology; to get closer to customers; to diversify the business mix; and to increase diversity among top management.
During that first year Immelt initiated $9 billion in acquisitions. He diversified the company by adding segments involved in wind power, security, cable-television channels (including a Spanish-language network and the Bravo channel), commercial and consumer finance, water filtration, and oil and gas services. The new companies failed to immediately add to the bottom line, but Immelt's strategy was more long-term. He planned to truly expand the company through innovation, not acquisition. Immelt said in Fortune, "We have to make our own growth" (April 5, 2004).
To motivate such innovation, Immelt changed the way GE appointed managers. Instead of rotating managers through several divisions, he kept them in place longer, such that they could become specialists in their fields. By staying in their respective divisions, managers experienced the full consequences of any mistakes; additionally they were able to see the results of long-term innovations.
Immelt also focused on innovation in technology. He breathed new life into GE's once-famous Schenectady, New York, research lab, where scientists had been given free rein to pursue scientific interests, resulting in products like the X-ray tube and tungsten light. The lab languished, however, until Immelt once more made it a priority. The lab was renamed the Global Research Center, and scientists there experimented with projects involving nanotechnology, photovoltaics, hydrogen power, advanced propulsion, and other innovations. Some of these long-term projects were not expected to produce results for up to 15 years—an unusually long period of time in the American corporate environment of the early 2000s—but they were part of Immelt's strategy to concentrate on high impact projects. GE built affiliate research labs in China, India, and Germany.
CUSTOMER SERVICE A PRIORITY
During his nine-month apprenticeship with Welch, Immelt traveled around the world meeting GE clients. He believed that GE could differentiate itself from its competitors by being more customer-focused. As reported in BusinessWeek, the Delta chairman Leo F. Mullin was impressed when during labor problems Immelt called "just to say he thought I was doing well. That meant a lot to me" (September 17, 2001). But Immelt's customer-focus strategy went beyond shaking hands and making phone calls. He initiated a culture in which GE shared information and practices with customers in order to add to the company's value and make it indispensible. The program was called "At the Customer, For the Customer."
GE shared productivity-boosting tips, global expertise, and data from GE units, including market information and basic research; the company also gave lessons in its much-admired management concepts. These initiatives went beyond the expectations of customers. When Southwest Airlines had problems with a component made by a GE competitor, GE helped solve the problem and also introduced efficiency-increasing Six Sigma business concepts to the airline. After the project proved successful, GE helped Southwest with others, improving financial analyses and invoice flows. Employees' track records in increasing customer productivity became components of GE performance evaluations.
GE Medical (GEM) went out of its way to offer assistance to its longtime customer University Community Health System in Tampa. When the health system built a state-of-the-art heart hospital and research center, GE created a system using proven equipment and services as well as experimental technology that was not on the market yet. It also gave advice on leadership development and workplace design. GEM coordinated with other GE units to help build the medical facility and supplied all the hospitals' clinical information technology and more than 80 percent of its diagnostic and imaging equipment. GE's good service earned it a seven-year contract with the facility, instead of a more common one- to five-year contract.
During his first years as CEO Immelt also made progress with respect to his goal of using technology better. In January 2002, 40 percent of the company consisted of administration, finance, and backroom functions. Immelt promised to shrink that figure by 75 percent over the following three years.
Immelt also pledged to promote diversity among top management. He claimed that he was "haunted" by a newspaper article that had run pictures of GE's senior management: 30 of the 31 executives pictured were white men. Immelt believed that GE needed to be able to relate to customers in order to serve them better. As GE was expanding globally, Immelt wanted to add Asians and Indians as well as women and African Americans to the company's ranks of executives and sales-people. Immelt increased diversity in GE Medical Systems when he ran the division and as CEO was committed to doing the same with the rest of the company.
After Immelt spent two years as GE's CEO, London's Financial Times named him the Man of the Year. The publication praised him for remaking General Electric "to face the 21st century's challenges: the rise of China and India, low growth and inflation, and geopolitical volatility" (December 27, 2003). The Financial Times explained that in remaking GE, Immelt was leading change in both American companies and their business leaders: "His careful remodeling of his own company is leading a wider reassertion of the primacy of shareholders and customers" (December 27, 2003).
Financial World noted that in his first two years Immelt made significant changes in corporate governance. He appointed a lead director to balance his role as chairman. Rather than stock options, he received performance share units that were tied to the company's results. Financial World also pointed out that Immelt wanted GE to rely less on financial services—something Welch had acquired—and more on high-growth industries and fast-growing economies such as China's. Immelt was a cheerleader for globalization, and GE invested heavily in China, where the company was building the country's energy grid.
Immelt frequently made headlines with his surprising changes at GE. In January 2004 he reorganized GE's 11 businesses into four slow-growth "cash generators" that fed seven "growth businesses." The new plan was expected to increase earnings. Dramatic changes like that one helped Immelt meet his goals for the company while establishing a management style distinct from that of his renowned predecessor.
See also entry on General Electric Company in International Directory of Company Histories.
sources for further information
Brady, Diane, "His Own Man: Is There Room for Improvement at General Electric after Welch? Jeff Immelt Thinks So," BusinessWeek, September 17, 2001, pp. 78–80.
——, "Will Jeff Immelt's New Push Pay Off for GE?" BusinessWeek, October 13, 2003, pp. 94–98.
Deutsch, Claudia H., "GE's New Corporate Face: Jeffrey Immelt Rides a Can-Do Confidence to the Top," New York Times, December 1, 2000.
Eisenberg, Daniel, "Jack Who?" Time, September 10, 2001, pp. 42–53.
Gapper, John, and Dan Roberts, "The Friendly Face of American Capitalism in a Cynical and Dangerous Era: Man of the Year Jeffrey Immelt," Financial Times (London), December 27, 2003, p. 11.
"The Man Who Would Be Welch," BusinessWeek, December 11, 2000, pp. 94–97.
Shepard, Stephen B., "A Talk with Jeff Immelt," BusinessWeek, January 28, 2002, pp. 102–104.
Unseem, Jerry, "Another Boss, Another Revolution," Fortune, April 5, 2004, pp. 112–124.