What Really Happened at GE?
The collapse of GE is one of the most spectacular business stories of our times. At the turn of the century, it was the most valuable company in the world, and its leader—Jack Welch—was dubbed “Manager of the Century” by Fortune. Today, the company is a shadow of that. And investors lost hundreds of billions of dollars on the ride down.
So why, if you served as CEO for 17 of those sad 21 years, would you write a book about it? That’s the question Ellen McGirt and I ask Jeff Immelt on this week’s episode of Leadership Next. I won’t give away his answer here, but it is worth listening to (on Apple or Spotify). And for that matter, the book is worth reading. Immelt has always been a good storyteller. And while most business memoirs tell the story of success, Immelt’s Hot Seat is the rare tale of what went wrong.
Immelt admits some mistakes. He believes, for instance, he should have moved more quickly to address the problems at GE Capital. He wishes he had restructured his company to be more nimble. “Instead of eight big P&Ls, I wish we had 100 small P&Ls.” He rejects some of the common criticisms—for instance, the notion he was unwilling to take bad news from his team. “For 15 years, I heard nothing but bad news.” He also pushes some of the blame back onto his predecessor, forward onto his successor, and aside on a few former colleagues along the way.
But the real lessons of the book are the downsides of complexity—GE was such a behemoth, that he never really got his arms around it—and the unpredictable role of luck. “I never viewed myself as a victim and I never wanted Hot Seat to be a victim story,” he told us. “But to do what we needed to get done, I couldn’t have the global financial crisis. It was a torpedo right in the middle of the boat…. GE is a fun company to run when you have tailwinds. It was a bitch to run” in a financial crisis.
Do you think CEOs ultimately bear responsibility for the fate of the companies they run? Let us know your thoughts.
Leadership branding | Career change | Board positioning
4 年So if you go back to when GE was at all-time high, the then CEO Jack Welch and board led by Ken Langone made the move to name Immelt as CEO. This move confirms both how important succession is and how much risk it can represent. A single decision can determine a lot of subsequent decisions and actions. In this case, Immelt went on to run GE into the ground, with help from the Great Recession, and the runner-up, Bob Nardelli, tried to run Home Depot into the ground, at least in reputation. Jim McNerney, the other original candidate to replace Welch, went onto great tenures at both 3M and Boeing, respectively. Although on the latter, his succession produced the CEO who had to face the biggest crises in company history. What does this all demonstrate? Luck is timing, and timing may be everything at the highest corporate levels. Careers can be literally made and broken at the drop of a hat. Thankfully that’s changed a lot in 20 years. Failure is not fatal, success is not final...
SHEQ Mgr. at Centurion Container | Doctoral Candidate | Vol. Firefighter | Consultant
4 年I'm curious about this book as I'm very familiar with GE. Stock from almost $60 to now $13.60. Is there any good leadership lessons from that? My personal opinion. Thanks.
Managing Partner @ Global Media Consult Your Compass in the Chaos of the TV Industry
4 年Great interview and certainly a book worth reading for anyone interested in management topics. I worked at GE myself in the '90s and early '00s at GE Health and then NBC; basically was 'socialized' in my management style there. In those years I was always going back and forth in cult-like admiration for Jack Welch and occasional disgust about the brutality of his approach. I hoped that Jeff Immelt would be able to uplift the company into a more modern, gentle management style. He was certainly the right guy for that. But the GE Capital part became such a strong player within the company that most of management forgot to look beyond the financials of any business decisions. The bottom-line fixation was dramatically felt at NBC; and it shows even nowadays in humor in "30 Rock".
Visionary Leader with Passion for People, Customer Centricity & Operational Excellence
4 年Responsibility and Accountability is the burden of Leadership. At times, Leaders are quick to own the success as a result of their strategy/execution but find it difficult to apply same logic for failures. It takes courage to own failures and humility to delegate success, no matter what.
Dubbed “executive team wingman,” Upcoming book “Master Your FutureVerse” 2021
4 年I’ve read a few interesting books about the demise of GE. Mr. Immelt deserves his explanation.