This document analyzes the leadership of General Electric from 1892 to the present. It provides background on GE's leadership development and styles over time. The analysis then focuses on the leadership of current CEO Jeffrey Immelt since 2001. It describes his strengths, including navigating challenges and focusing on innovation. Some criticisms of Immelt are also outlined, such as stock performance not reaching levels under former CEO Jack Welch. The document concludes with recommendations for Immelt to adopt a "fusion" leadership style combining transformational and autocratic leadership, with a renewed focus on ethics and operational excellence.
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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
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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
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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
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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.
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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.
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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.
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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.
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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.
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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
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