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Alternative Consulting

Assignment Consulting Leadership Analysis of General Electric

Wyatt A. Chartrand and Kai Martin SUNY Binghamton University Leadership Skills and Development (LEAD 351-02)

Chartrand and Martin 1

Background and History:

General Electric’s leadership has spanned three centuries from 1892 to the present. Their

leadership styles in that time have dramatically transformed in keeping with the demands of the

marketplace and the public. As depicted in the two graphical representations below, General

Electric’s leadership development has roughly paralleled and reflected the development of

leadership thought itself, proving out General Electric’s ability to remain timelessly

transformative in regards to its leadership styles. Nevertheless, there is room for General

Electric’s leadership to improve and transform even further with respect to the current demands

of the market. This leadership analysis will attempt to ascertain General Electric’s state in

regards to its current leadership and posit some alternatives and recommendations for

improvement, for the leadership itself as well as the organization and its performance in its

industry.

General Electric’s leaders from inception to the present


The Leadership Continuum as reflected by General Electric’s leadership

Leadership Analysis:

As one of the oldest and largest U.S. corporations, General Electric continues to show

resolve by consistently performing strongly, even through events like 9/11 and the 2008

recession. Net earnings in 2014 were over $15.2 million and they were ranked on Forbes’ 2000

Most Valuable brands at #9. General Electric has been on a growth track under their current

CEO, Jeffrey Immelt, arguably in large part due to his leadership abilities. Under his tenure,

General Electric has become a premier corporation for technological innovation.

General Electric’s current leader, Jeffery Immelt, graduated from Harvard with an MBA

and began working at General Electric in 1982. He worked his way up, held many positions, and

replaced retiring CEO Jack Welch in 2001. He motivates people through encouragement and

relating to them on the regular level. He gets along with people well. He likes the idea of

--Great Man Leadership (Control and Centralization)

--Trait Theory

--Group Approach

--Shared Goals and Effectiveness

--Behavioral and Organizational Leadership

--Transformational Leadership

--Empowerment


organic growth from within GE and uses some untraditional methods to achieve that. He’s

known to have dreaming sessions with clients and has formed imagination breakthrough teams

and projects. He’s a self-proclaimed optimist who likes to learn from his mistakes and keep

moving forward.

Immelt is generally thought of as possessing many leadership strengths, bothing unique

and traditional. Immelt became CEO four days before 9/11/01. He managed to effectively

navigate the subsequent chaos that followed for the company. That event changed the

underlying business landscape at the time. Stocks fell for the next few years, however, Immelt

implemented a refocused corporate strategy centered on growth. He also began to merge and

acquire other companies, but on a small, controlled scale. Furthermore, he has ensured that they

all related to General Electric’s core competencies. He has proven to know how to navigate the

external and internal forces that businesses face. This is often more challenging than effectively

managing internal forces because of the sheer uncertainty. Internally, he stands as a strong leader

who wants himself, his employees, and the company to improve. He takes a “nice-guy”

approach and motivates his employees through empowerment and focus.

There have been criticisms and perceived non-strengths regarding Immelt’s leadership,

however. Under Immelt, stocks have not reached the level they did under Welch. This has been

a cause of concern over the last several years, though Immelt has managed to keep the focus on

his improvements to General Electric. Dividends have also seen a decline, and there has been

controversy over General Electric’s taxes and tax-related regulations since he has stepped into

his current position as CEO. In 2012, there were accusations that GE held millions in offshore

accounts to avoid taxation. From the perspective of a stakeholder and not a shareholder,

however, there are different forms of room for improvement on Immelt’s part and on the part of


General Electric’s overall leadership and C-suite. General Electric and Immelt’s primary

concern is twofold: that of strategy and that of legacy. In terms of strategic leadership, Immelt

has shown a weakness in his leadership in not putting the company first ahead of very aggressive

initiatives, such as green energy, causing a lack of profitability. Secondly, it is arguable that Jack

Welch is still running the company, as Immelt has in part been unable to carve out a fully

separate legacy for himself and move out from under Welch’s shadow, despite the differences in

leadership. Below, on the next page, Immelt’s leadership profile and corresponding leadership

matrix are presented (in addition to Welch’s), in line with our analysis.


Leadership Matrix Model


The leadership matrix maps out the positions of former CEO Jack Welch, represented by

the red circle, and current CEO, Jeffery Immelt, represented by the gold star. Compared to his

predecessor, Immelt has a more hands-on approach that depends on more teamwork. Some

doubted Immelt’s abilities when he replaced Welch, fearing his style was not a right fit for the

position of CEO. Immelt is strongly identifiable with a transformational leader: low

neuroticism, extraverted, very open, likeable and agreeable, and conscientious. He likes to be at

the helm of change and improvement, believing these are future business and industry drivers.

There are aspects of authentic leadership, with his normal guy approach and personal interest,

and leading with creativity and innovation as well, evidenced by his imagination breakthrough

teams. He also exhibits strong adaptive leadership in his first year on the job as CEO virtually

restructuring GE. His mix of leadership styles has proven to be effective in running GE.

Nevertheless, his higher dependence on others (teams) and less high-handed approach to

leadership have caused him to be perceived as less strong as Welch and less able to get a handle

on things operationally tightly enough to succeed purely from a profit-driven standpoint in the

same way that Welch did. Additionally, his activeness in contrast to Welch’s could be perceived

as overaggressive and not reserved enough (when needed), pushing the company into risky or

non-profitable territory (or both). Below, on the next page, is a corporate leadership SWOT of

the leadership outcomes under Immelt.


Corporate Leadership SWOT/Leadership Outcomes

Strengths:

General Electric has held a widely diversified portfolio for some time. From applied

sciences to financial services, General Electric has become a household name. Jeffery Immelt

took control of General Electric and refocused their strategies to sustain growth, sophisticating

their R&D division. They stress leadership and have a leadership program for future leaders.


Weaknesses:

General Electric experienced what many now view as a “Golden Age” under Jack Welch.

By taking over for Welch in 2001 and dealing with 9/11 and the impending financial meltdown,

Immelt’s tenure has seen a less profitable company. Revenue growth is slower these days and

stock prices are steady. As an U.S. corporation, the firm’s performance is strongest at home and

weaker in foreign markets.

Opportunities:

The organic growth model sustained by General Electric under Immelt opens the door to

major opportunities for future development. By organizing the corporation around independent

growth, General Electric is less dependent on intermediaries and more flexible with projects.

Consumers like to see large corporations adhere to some form corporate social responsibility,

and as a traditional U.S. powerhouse, General Electric would be an exemplary figurehead. Their

foreign markets show room for growth, so investments in those areas could be an option for

business growth.

Threats:

Technology and Financial servicse companies have some of the strongest competitors in

today’s markets. Not only does General Electric have to be concerned with tech giants like

Google, Microsoft, and LG, but also financial giants like Wells Fargo, JPMorgan Chase, and

Citigroup. These markets are also very sensitive to government regulations, and any shift in

these would require swift action on general Electric’s part. Macroeconomic factors also put

external pressure on General Electric through business business cycles.


Alternatives:

Recommendations:

Of the two likely alternatives we have identified, we believe that, based on the current

business environment, Immelt should gradually but measurably adopt a “fusion” style of

leadership—a mix of transformational leadership and autocratic leadership. Immelt currently

lacks much of the autocratic leadership style that Welch exhibited, but is strong in his

extroverted, empowering style of transformational and servant leadership. Because cash flow is

Continue Current

Leadership Style

• Aggressive (possibly excessively), perhaps too depednent on others and not controlled enough to effect profitability.

• No true legacy separate from Welch's shadow.

Begin a "Fusion" Style of

Leadership

• Sustain and increase transformativeness, with a renewed focus on ethical leadership.

• Adopt a balanced measure of greater control and authority, with greater reservation as needed--a "fusion" of transformational and autocratic leadership.


still the lifeblood of any for-profit organization, Immelt would do well to tight his style and

implement policy that would allow for greater operational excellence in terms of both execution

and profit, something Welch demonstrated to a logical extreme. What Welch did not do very

well, however, was both treat people well (his implementation of “stack rankings” and the

Hobbesian workplace practices he engendered are not remembered fondly by most people) and

utilize transformationalism and empowerment, something that Immelt does do very well. In

addition to leading innovation, Immelt needs a renewed focus on leading operationally. This, in

addition to a material, substantial focus on ethicality and corporate social responsibility (such as

through the hiring of a Chief Ethics Officer), will ensure General Electric’s place as a top leader

in its industry for both the immediate future and for the long term.

To Sum


Works Cited

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Electronic Journal SSRN Journal (n.d.): n. pag. Australian National University, July

2009. Web. 1 Dec. 2015.

Byrne, John A. "The Fast Company Interview: Jeff Immelt." Fast Company. N.p., 01 July 2005.

Web. 01 Dec. 2015. <http://www.fastcompany.com/53574/fastcompany-interview-

jeff-immelt>.

Chandler, Michele. "GE's Jeff Immelt: Driving Change Can Be Unpopular." Stanford

Graduate School of Business. Stanford University, 1 May 2010. Web. 01 Dec.

2015.

Denning, Steve. "Don't Blame Green For GE's Problems." Forbes. Forbes, Inc., 1 Mar. 2011.

Web. 3 Dec. 2015. <http://www.forbes.com/sites/stevedenning/2011/03/01/dont-blame-

green-for-ges-problems/>.

"GE History - Past Leaders." General Electric. General Electric, n.d. Web. 2 Dec. 2015.

<http://www.ge.com/about-us/leadership/past-leaders>.

Northouse, Peter G. Leadership: The Theory and the Practice. 7th ed. Thousand Oaks: Sage

Publications Ltd., 2015. 1-17. Print.

"The World's Most Valuable Brands." Forbes. Forbes Magazine, n.d. Web. 01 Dec. 2015.

<http://www.forbes.com/companies/general-electric/>.

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