Soon after that fateful conversation, Immelt set GE on a path to becoming a new kind of enterprise: a digital industrial company that could unlock productivity from connected machines.
The marriage of seeming opposites was a hallmark of Immelt’s 16-year tenure, which ended on July 31. He ran a 125-year-old industrial company like a startup that could pivot around a scientist’s insight about machine data. He made an iconic American organization a dominant force in global infrastructure, selling jet engines, medical scanners, turbines and other machines in 180 countries while simultaneously growing manufacturing at home. He transformed the company’s portfolio with $100 billion in deals, taking it back to its industrial roots, doubling profits from core industrial businesses and focusing on innovation as a growth strategy.
In a sense, Immelt reinvented a company made famous by invention.
“Tell The Truth All The Time”
Immelt took the reins of GE on Sept. 7, 2001, four days before the tragic attacks on the World Trade Center and Pentagon. In the immediate aftermath of the attacks, global markets shuddered and investors wiped $1 billion off GE’s market capitalization. Vice Chairman John Rice remembers Immelt’s resolve during the tumult, particularly toward industries that were being battered. “We invested a lot of capital in airlines,” Rice says. “They needed funds because they weren’t able to operate. Jeff made a tough set of calls about whether we will stick by our customers.”
It reflected a steadiness that Immelt had found early in his career at GE. Immelt, who studied mathematics and economics at Dartmouth College before attending Harvard Business School, joined the company in 1982. He was soon transferred to the company’s appliances division and given the unenviable task of fixing a quality problem with refrigerator compressors. Immelt went from managing a few hundred salespeople to getting 7,000 employees to fix 3 million compressors. Instead of glossing over the problems to then-CEO Jack Welch, Immelt was blunt about how much it would cost. He later told Fast Company, “I learned to tell the truth all the time.”
A Transformed Portfolio
The company Immelt is handing over to his successor, John Flannery, is greatly changed from the one he inherited. Immelt transformed the company by spinning off its real estate, financial services and media divisions, including its stake in NBCUniversal, for tens of billions of dollars. The moves stabilized GE after the 2008 financial crisis. Immelt then strengthened the core of GE by focusing on power infrastructure, buying the energy assets of the leading power company Alstom in 2015 and merging GE Oil & Gas with Baker Hughes in 2016 to create the world’s largest energy services business. “His enduring legacy is the portfolio transformation,” Rice says.
Under Immelt, GE also took stands on issues that were important to customers. The company’s Ecomagination initiative helped moved the environment to the top of the corporate agenda. Paired with the push into digital, GE created world-beating efficiency with its gas turbines and jet engines, developed some of the world’s largest wind turbines and invested in software that could connect the machines to the internet and optimize them.
GE’s 9HA gas turbines are now the world’s most efficient, according to “Guinness World Records,” and the company’s wind-turbine-manufacturing business is one of the biggest in the world. Predix, GE’s software platform for the Industrial Internet, is leading the digital-industrial transformation.
Financially, Immelt’s bet paid off as well. Since 2005, Ecomagination has generated $300 billion in revenue. The program also helped GE reduce its greenhouse gas emissions by 53 percent.
A Deal Maker
Flannery, who becomes chief executive on August 1 and chairman in January 2018, was an integral part of many of Immelt’s most important moves. As the head of business development for GE, the 55-year-old Flannery steered the $13.5 billion purchase of Alstom, the largest acquisition in GE’s history. Previously, he led operations in Latin America and Asia, doubling profits in Japan and spending three years in India. After he took the helm of GE’s $18 billion Healthcare business in 2014, he boosted sales by 5 percent.
A 1983 graduate of Fairfield University in Connecticut and later of the Wharton School at the University of Pennsylvania, Flannery is the father of three and a Boston Red Sox fan — he named his dog after right-fielder Mookie Betts. In 1987 he joined GE Capital, where he analyzed the risky loans that backed leveraged buyouts.
GE is now a “much simpler company” thanks to Immelt, Flannery said on a Facebook Live broadcast on June 12. Flannery’s top priority is to listen to investors and customers, focus on execution, and take a “fresh look around the company overall, and with a sense of urgency.”
“Persistence And Resilience”
For his part, Immelt says GE is now positioned for the future because of the employees who make the company work every day. But he knows the work of the 125-year-old company is far from done.
Speaking to the graduating class of the NYU Stern School of Business last year, Immelt said: “Early in my career, I worried way too much about what people thought. Over time I realized that progress counts for more than perfection and that anything worthwhile takes persistence and resilience.”