University of Edinburgh Case Studies (UEBS): Characteristics of Jack Welch's tenure at GE Contrasted with Jeff Immelt's tenure

managers committed to ambitious targets, and were forced to meet them by forcing their subordinates to meet them

provide powerful incentives for achievement
"stretch" toward company goals (set lofty goals and achieve them in due course)
did away with bureaucracy
periodic declaration of strategic initiatives promulgated to all employees
"Work out" to incorporate ground-level ideas about process improvement (aspects of Lean)
From 1981-2001 GE grew from $30B to $126B
Jeff Immelt:

"Where Welch ruled through intimidation and thrived as something of a cult figure, Immelt opts for the friendlier, regular-guy approach. He prefers to tease where Welch would taunt. Immelt likes to cheer people on rather than chew them out. that style has given him a very different aura within GE.He may not be a demigod, but its his man-of the people nature that draws praise from the top ranks to the factory floor."
Different economic climate

"the exuberance of the late 1990s and the inevitable downturn have created difficult times. Entire industries have collapsed, poor business models have been exposed [ENRON], large companies have filed for bankruptcy and corporate credibility has been called into question."

Immelt sought to weather the challenging economic climate by diversifying the GE portfolio
"We all want the stock to go up. But to do that we have to manage the company. In fact, the only way you can run GE is to believe that performance will ultimately drive the stock"
"If the annual report has to be the size of the NY City phone-book, thats life."
Searching for new top line growth to improve the bottom line. Where could profitable growth be found in the post 9-11 2000's?
Identify key global trends for GE to seek opportunities. These were evolving themes and Immelt iterated

Demography- find where there are young (movies) and old (pacemakers)
Infrastructure- linked to the next item of emerging markets and government investment
Emerging Markets- China, India, Eastern Europe, Russia, Middle East, Africa, Latin America, SE Asia offered 3 X world average growth
Environment

Like his predecessor, J. Welch, Immelt set ambitious targets of 8% organic growth (excluding M&A growth)

exit slow growth businesses
"we don't acquire businesses because we can. We don't go for unrelated fields. We acquire companies that give us new growth platforms where GE capability can improve financial performance and build shareholder value."

$100M upgrade to GE corporate R&D center in Niskayuna, NY
New global research centres in Shanghai and Munich, Germany
By 2008, GE Global Research had over 2500 researchers working in NY, Bangalore, Shanghai and Munich.

Different from Welch, who focused on R&D for short term product development, Immelt focused on longer term development

Number of projects reduced from 1000 to 100.
For choice technology areas, the focus was not on short term projects, but on large research fields such as :

"We did a lot of heavy lifting in our portfolio because we didn't have enough juice. We saw where we needed to go and we found that we wouldn't get there with our existing businesses. So, we bought homeland security, biotech, water-businesses that would give us a stronger foundation for innovation." -Growth as a Process: An Interview with Jeff Immelt, Harvard Business Review, June, 2006.

University of Edinburgh Case Studies (UEBS)