“I was chairman for two days, and jets with my engines hit a building I insured, which was covered by a network I owned,” he says.
To top it off, Immelt had just inherited the reins of what is, by market capitalization, the world’s largest company—and from one of the most venerated of industry captains no less: corporate management guru Jack Welch.
Almost four years later, having carried the company through a weak economy battered by corporate scandals and a lack of consumer confidence, Immelt has survived, albeit sustaining a sharp plunge in G.E.’s market value since 2001.
“We’ve been through tough times before. Lots of them,” he told shareholders in April 2002. “And when we’ve hit those rough patches, one thing always happens: we always come out a stronger and better company. This time will be no different.”
AT THE HELM
By the time Immelt took over from Welch in 2001, he had shadowed the legendary CEO for nine months and beaten two other people to the top job.
Benson P. Shapiro, McNair professor of marketing, emeritus, at the Harvard Business School (HBS), explains the contrast between Immelt and his predecessor Welch.
“Welch was a very good operator... he emphasized execution and implementation. I think Jeff is trying to add innovation to that mix.”
Since being elected as CEO of G.E., Immelt, who is the ninth chairman of the $400 billion company, has especially emphasized innovation. His main strategy has been to introduce a company-wide strategy called “Imaginative Breakthroughs,” which financially encourages research into new projects and products. Five billion dollars, to be spent over the next four years, will go toward such projects as fuel-efficient locomotives and portable ultrasounds.
Immelt’s 2002 decision to treat employee stock options as an expenditure drew industry-wide accolades, as colleagues praised his commitment to fiscal responsibility.
And, by the numbers, Immelt’s changes seem to be paying off. G.E. recently achieved record first-quarter earnings of $4 billion, up from the $3.2 billion during the same period in 2004. The company not only weathered the post-Sept. 11 economy, but actually gained $381 million during this time.
CLIMBING THE LADDER
Immelt’s rise to the top of G.E. started in 1982, when the company hired him fresh out of HBS.
He began in corporate marketing and moved among the plastics, medical systems, and appliances divisions. Twenty- six years later, he became the president and CEO of the medical systems department, which is today a $12-billion leader in the health-care industry.
Despite Immelt’s winning streak, he encountered setbacks.