The General Electric (GE) that Jeffrey Immelt inherited in 2001 was widely regarded as one of the world’s most successful companies of all time. It was the only company that has remained a member of the Dow Jones industrial index since the index was first created (Rowe & Guerro, 2010). It can be assess that throughout its history, it has been associated with near-continuous growth and above average profitability. GE was founded in 1892 from the merger of Thomas Edison’s Electric Light Company with the Thomas Houston Company.
Its business was based upon exploiting Edison’s patents relating to electricity generation and distribution, light bulbs, and electric motors. During the twentieth century it became not only the biggest and most diversified industrial corporation in America, but “a model of management and strong leadership. With two decades under Jack Welch’s leadership, the company had only enhanced GE’s reputation for effective management and leadership.
In 2001, Fortune magazine named GE as America’s “most admired company” for the fifth year in succession, and the Financial Times identified GE as the “world’s most respected company” for the fourth consecutive year. Further, when Jeff Immelt took over as Chairman and CEO of General Electric on September 1, 2001, he had no doubts that his predecessor, Jack Welch, a “living legend,” “best leader of the past half-century,” would be a tough act to follow (Rowe & Guerro, 2010).
Research shows that investors had little hope that Immelt could ever match the incredible 50-fold increase in GE’s market value that Welch had achieved; the management community was more concern with the changes to the corporate strategy, organization structure and leadership & management systems that Immelt would incorporate into the company. Welch had been a revolutionary and an innovator. In demonstrating profound leadership abilities, Welch, had swept away most of GE’s carefully constructed structure and its greatly admired corporate planning system.
He had relentlessly challenged GE managers for improved operational and financial performance; he had created a GE management style based upon his own personality, values, and beliefs. His management innovations at GE had exerted a huge impact upon management thinking and management practices throughout the whole corporate sector. Welch, demonstrated profound qualities utilizing the Path–goal theory which have special focus on assisting subordinates to get around, over, under, or through obstacles that are keeping them from achieving their tasks.
Obstacles may be responsible for subordinates having feelings of frustration, uncertainty, and being threatened. Path–goal theory implies that leaders should assist subordinates in getting around these obstacles or in removing the obstacles from the path to task completion (Northouse, 2010, p. 131). In analyzing this case in comparison of the two CEO’s , it can be stated best that this is a decision making directive case, In which Welch, the managers did not always agree on how Welch conducted business, but his directive leadership style emphasized giving direction to subordinates regarding their tasks.
These directions as demonstrated in the above analyses showed that results were expected, and generated how tasks will be accomplished, and the schedule for task completion. In addition, the leader clarifies performance expectations and explicitly outlines the required standard operating procedures, rules, and regulations. In similar terms, following Welch’s success, Immelt knew his number one priority was to restore the confidence of the investment community in GE and pay particular importance to the financial structure and financial reporting matters.
In looking further ahead, Immelt realized that his primary leadership direction challenge will be coming to terms with Welch’s legacy at GE. More importantly, both Jack Welch’s form of leadership and Jeffrey Immelt forms of leadership demonstrated excellent success in GE, with the company having abilities to grow from different forms of leadership across the board, from its history to the present. Corporate Strategy Planning “General Electric operates businesses in more than 20 primary areas from aircraft engines to vendor financial services” (Swink, Melnyk, Cooper, & Hartley, 2011, p. 27).
Corporate strategic planning addresses the portfolio of businesses owned by a firm. Of the three levels in strategic planning, corporate strategic planning is the broadest in scope. Decisions are made at these level limit choices that can be made at the lower levels. GE does this best overall by communicating the overall mission of the organization, and identifies the type of businesses that the firm wants to be in. for large multidivisional firms, key decisions in corporate strategy address what businesses to acquire and what to divest.
The strategy typically covers long time horizons, setting the overall value, direction and goals of the firm as a whole. It establishes how business performance will be measured and how risks will be managed as displayed by GE’s CEO Jeffrey Immelt producing innovation and sustainability (Swink et al, 2011). Supply Operations GE sets clear expectations for our suppliers, which are implemented through a very structured program with regular metrics. Every year, GE try’s to find ways to improve.
In 2011–12, the focus has been identifying the best way to work with our suppliers on resource efficiency and improving their overall execution capability (Immelt, Chief Executive, 2012). With GE’s assessment system, they led to improvements that enhanced the environment, health and safety (EHS) performance of GE’s supply chain. In 2011 alone, GE asked themselves if there were additional opportunities to work with suppliers to achieve sustainable, long-term improvements in resource efficiency.
The key recommendations of the benchmarking were to continue to expand their collaborative approach with their suppliers, focusing on a few specific opportunities identified through lifecycle analysis or supplier suggestions, and to ask their suppliers for data only if they had specific use for the information producing the supplier relation management techniques (Swink et al, 2011, p. 299). Earlier efforts had shown that GE should use a Pareto approach to focus on the best opportunities. The Ecomagination Advisory Board was strongly supportive of the approach and its focus on collaborative efforts.
Implementation of GE’s new approach is underway with “resource efficiency” being now a part of GE’s supplier expectations, which are incorporated by reference in GE’s purchasing contracts. GE’s measures of resource efficiency are core components in a new tool we are base-lining in 2012 with suppliers that are covered by the Supplier Responsibility Guidelines (Immelt, Chief Executive, 2012). The new assessment tool includes a tiered scoring system for evaluating a supplier’s management system and includes energy efficiency, greenhouse gas emissions and water usage.
The scoring tiers and elements required to reach each tier provide a pathway to future improvement. The new tool should encourage suppliers to achieve measurable improvements in resource efficiency, in a way that adds business value for both GE and its suppliers, avoids additional costs, and, where possible, addresses related critical compliance requirements. To encourage the sourcing teams to help suppliers with their resource efficiency, they added sourcing to their internal awards program. The sourcing team has previously found great success using an internal award program designed to accelerate the use of diverse suppliers.
GE believes similar programs will allow them to further unlock the creativity of their sourcing teams to achieve increases in resource efficiency. By highlighting the efforts of forward-thinking employees and business partners, GE aims to accelerate the diffusion of collaborative projects that deliver real environmental and economic benefits to GE and our supplier’s altogether. GE’s above approach will enable them to identify projects that are consistent with the philosophy underlying ecomagination, which will deliver both operational and environmental benefits without increasing our cost of supply (a key management expectation).
Furthermore, because many of GE’s products are highly engineered, safety-critical and have long development cycles, any resource-efficiency ideas that could involve modifying GE’s products or their components must be linked to their design and technology processes (Swink et al, 2011). GE already identified opportunities in logistics management, metals recycling and packaging. For example, GE energy experienced massive growth in their wind businesses and an in the global shipment of parts and components needed for final assemblies in Florida and South Carolina.
During the same period, GE was piloting the use of lifecycle management tools to quantify their baseline transportation environmental footprint across their businesses. The team began by analyzing the weight of shipments, modes of transportation and distances, greenhouse gas (GHG) emissions associated with each mode and the total number of shipments. With calculations in hand, they worked with external consultants at the Massachusetts Institute of Technology (MIT) to verify measurements and validate our assumptions regarding the potential for reducing their footprints (Immelt, Chief Executive, 2012).
The insights gained through their supply analyses and the increase in demand for transportation within the wind business focused their attention on addressing the most energy-intensive transportation phases, including trucking critical components received at the Port of Long Beach to assembly facilities in the Southeast. Given that the emissions associated with shipping by truck are seven times greater than those emissions associated with shipping by ocean freighter for a given weight and distance, GE identified alternative routes to increase the distance traveled by water and minimize the distance traveled over land.
Since taking action in 2009, GE Energy has achieved reductions in GHG emissions equivalent to taking more than 200 cars off the road and cost savings totaling nearly $9 million. Even during the economic collapse, GE made good decisions during the crisis that are benefiting major investors. GE invested in capital to weather the crisis and retain a strong business model. This required tough calls to be made, such as with raising equity in 2008 and cutting the GE dividend in 2009.
Today, they have a competitively advantaged financial services business that is rewarding investors with strong earnings and growth (Immelt, Chief Executive, 2012). GE invested more in R&D each year, despite the tough economy. Their R&D spending has grown 54% from 2008 to 2011. GE invested for the long term, while cutting cost in less-essential areas. They manage to face the future with a stronger product pipeline than at any time in their previous history. GE sold their security business, completed the joint venture of NBCU with Comcast and sold some non-core assets in GE Capital.
Those moves generated substantial cash for GE. They give significant financial flexibility in the global economic recovery. Because of these actions, GE is positioned for success and profitability. In the 21st century companies must serve two roles. They must deliver positive returns for investors, and they must be a positive force for change. GE does both. GE’s value is more than the sum of its parts. GE is an innovative, advanced technology infrastructure and financial services company with the scale, resources and expertise to solve tough global problems for customers and society.
References Jeff Immelt Bio | GE CEO | General Electric Chief Executive. (2012). In Jeff Immelt, CEO. Retrieved October 7, 2012, from http://www. ge. com/company/leadership/ceo Northouse, P. G. (2010) Leadership: Theory and practice, (5th ed) Thousand Oak, CA: Sage. Rowe, W. G. , & Guerro, L. (2010). Cases in Leadership (2nd ed. , p. 211, 221). Thousand Oaks, CA: Sage. Swink, M. , Melnyk, S. A. , Cooper, M. B. , and Hartley, J. L. (2011). Managing Operations across the supply chain. New York, NY: McGraw-Hill/Irwin