General Electric has been a company in search of a gain for almost two decades now, ever since Jack Welch stepped down as CEO. There are a number of explanations regarding why the company is still facing such dire straits even after years of searching for a winning strategy. One has to do with the selection of the CEO who would succeed Welch. I remember sitting at breakfast in Washington, DC, while on a business trip, hearing that Immelt was to be the CEO who replaced Welch – not the best of news, even though Welch endorsed Immelt.
And, Immelt’s initial remarks and, certainly, his early actions were important “tells” regarding his tenure as CEO. Immelt was a product of the traditional GE system whereby CEOs were (until recently) always hired from those who had risen through the company hierarchy – a sure way to have more of the same and not nearly as good, in certain instances. All companies that follow this succession practice, eventually learn that true talent tends to run out if the same pool is used over and over, and that talent for real upper-level endeavor and real change management is leached from the pool. Thus, the GE board has determined, “No more” and has hired an outsider, Larry Culp, as CEO. Between 2000 and 2014 (about the amount of time that it took Immelt to dismantle GE’s successes) Culp presided over a quintupling of revenue and market share at Danaher Corp. Culp faces the same challenges that recently-deposed CEO Flannery did. Let’s face it, the company was left in an absolute mess – one of Immelt’s last missteps was to purchase France’s turbine business, Alstom. That, alone, might have been bad enough, but when turbine sales began to falter, GE was slow to notice and to react. Culp clearly has good management change abilities, so it’s possible that he will better-identify the needed talent pool for getting the job done, that he will better-motivate that group to take the appropriate corrective actions, and that he will endorse faster reactions. Here’s to better ways of doing things at GE.