Fortune's unnamed judgment of Jeff Immelt
I am writing this to push back on an unfair article. So I want to state my bias up front: I believe strongly in GE and GE people, both in the past and in the future. That includes Jeff Immelt.
This week Fortune published an under-reported and unbalanced article on “what happened” at GE in Immelt’s 16-year tenure as CEO.
The piece is filled with finger-pointing from people not confident nor courageous enough to have their names associated with their claims. Ten people are quoted negatively about Immelt and GE. Only two are named (Wall Street analysts); seven are unnamed former GE executives and one is an unnamed GE vendor.
This near-total reliance on unnamed sources prevents Fortune’s readers from understanding the relationships of these sources with Immelt. For example, were any of the unnamed executives dismissed from GE by Immelt? Did they work for GE recently or years ago? Plus, if they were members of Immelt’s senior leadership team, aren’t they, in effect, criticizing themselves?
Before the article was published, I questioned the fairness of using anonymous sources to disparage someone. More specifically, I asked Fortune why these sources needed the protection of anonymity. After all, Immelt no longer has any influence over them. The author of the piece, Geoff Colvin, responded that the quoted nameless sources corroborated things he heard from other nameless sources.
Fortune also mentions unnamed former GE directors in a list of sources it spoke with. By contrast, a recently retired GE director provided Fortune with an on-the-record statement, but Fortune did not use it. Marijn Dekkers, chairman of Novalis LifeSciences and former CEO of Bayer and Thermo Fisher Scientific, wrote:
"For the past six years as a GE director, I was impressed by Jeff Immelt's ability to pick the right strategies for a company in transition -- globalizing, exiting finance, leading the industrial world into the digital age, and more focused initiatives such as expanding into life sciences. GE must improve its performance in its biggest business, Power, but no one can doubt its leadership in essential industries with strong market share, advanced technology, and excellent customer relationships. This is the result of a long-term growth strategy that has placed GE ahead of its competitors and positioned it well for the future."
In addition to veiled sourcing, Fortune does not quote any current GE executives (other than past public statements from CEO John Flannery), nor examine any issues that impacted GE during one of the most volatile economic periods in recent history. This includes the role of activist investors, two recessions, and the revaluing of financial businesses after the global financial crisis.
Most remarkably, Fortune lays the enduring problems caused by GE Capital solely at Immelt’s feet. In doing so, it points to the growing percentage of GE profits from financial businesses (vs. industrial) in his first six years as CEO (peaking, by the way, in 2007 when GE was Fortune’s Most Admired Company). This simplistic argument fails to account for the strong industrial economy of the 1990s and the worldwide industrial slowdown that erupted early in Immelt’s time as CEO.
Also, Fortune fails to note that none of the GE Capital insurance and reinsurance acquisitions that continue to plague GE today were made during Immelt’s tenure. In fact, Immelt’s sale of Genworth early in his tenure likely saved the company during the global financial crisis.
Fortune ignored many other facts (see below) provided to it in three areas where it claims “things went wrong:” capital allocation, culture, and execution. Two examples:
- Fortune rips Immelt’s acquisition record but does not mention his best deals that built GE’s Healthcare and Aviation businesses into undisputed market leaders.
- Fortune says GE’s leadership culture “deteriorated.” It fails to note that Immelt rebuilt and modernize GE’s famous “Crotonville” leadership development capabilities, that involuntary turnover during his tenure was less than five percent and that GE has been consistently named as a best place for leaders.
Colvin is a respected journalist. He was well-known to GE in the 1990s, but he has not met with Immelt in more than a decade. In that time, GE was transformed from an amorphous financial-industrial conglomerate into a focused industrial-digital leader. It became a global enterprise, building record market share in Power, Aviation, Healthcare, Oil and Gas, Renewables, and Transportation. It became the leader in the internet of things and additive manufacturing and continues to be recognized as one of the best companies for leaders and one of the world’s most ethical companies.
GE has problems, no doubt, but Fortune has not done a fair assessment of the company today nor how it got here.
Gary Sheffer is a communications consultant and the former head of communications at GE. He is a spokesman for Jeff Immelt.
GE Aerospace Sales Director (Retired)
6 年It should be pretty obvious why current GE Execs might be unwilling to be outspoken relative to their opinions on “what went wrong” and be identified. Obviously, there are huge challenges ahead that we all recognize and I suspect these are regarded as a great opportunity to reconfigure this company and return value to its shareholders by many of those same Execs. Hopefully, the “new culture”will encourage the type of meticulously researched, well timed risk taking that may be required, as opposed to Immelt’s apparent “shoot from the hip” (ready, fire, aim) behaviors. I think the company as a whole should strive to emulate the success that the world class Aviation Business has had since the mid-1980s where educated risk taking has certainly paid off. The Aviation Business flourished because we collectively felt challenged to become the leading aircraft engine supplier in the world, passing Pratt & Whitney. Employees were excited to go to work every day and contribute to this cause. There was a genuine feeling of teamwork where everyone was pulling on the same side of the rope. Hopefully that mentality can return to the GE Corporation as a whole.
Independent Advisor for Career Development
6 年Just feel so good to see your insight again!, go BLUE!
Strategic Analytical Consultant
6 年Immelt was dealt a tough deck no doubt but I have to agree with Fortune, he did not make the most of what he had...the bad decisions made don't require anonymous sources to evaluate...
Professor at Fordham University, Director Consortium for Trustworthy Organizations
6 年Gary, thanks for pointing out this article, I had not seen it. A few thoughts. Understanding what happened at GE is an important topic and I hope things are turned around. Despite the unnamed sources, many facts and named sources are used to support the authors points. My problem with the article is that the story does not answer the question in the headline: what happened at GE? The author’s answer is that Immelt was a bad leader who was incompetent in capital allocation. This lacks depth. The answer requires understanding the various factors that caused change. Leadership is only one of these factors. I suspect the seeds of the problem were sowed under Welch and I think you are right that is both unfair and inaccurate to lay all the blame with Immelt. If anyone ever gets to the bottom of the root cause I would not be surprised if a lack of candor and fear were partly to blame but this is mere speculation from someone who studies organizations. Having said that, I am glad Fortune wrote the piece and hope others weigh in to answer the question. GE and companies like IBM, Caterpillar, GM helped build our country and they are not aging well.
Global Advisor to Private equity and Industrial companies on Mergers and Acquisitions. Investor and NED services
6 年I think we also live in a world where analysts have never lived on a shop floor and where there is no respect from any quarter for people that employ thousands They are easy pickings as they can’t be as nimble as companies formed to live and die by short term trends and who employ zip and have zero profits They are prey to theorists who have no clue to the consequences of destroying the 401k of thousands on the whim of a theoretical and quite often wrong prediction Regardless of Sênior Leadership and GE had its share of poor ones we ought to embrace and be proud of the technology created and the mouths fed This also applies to Honeywell UTC Rockwell etc It’s easy to slam the other way because as investors we never have to live up to consequences One bit of advice I have to very GE employee Spend 500 dollars on your own stock and then ignore the doomsayers pretending to be analysts and you will profit over time and a great company will emerge again