Book Review: Jeff Immelt and the New GE Way, by David Magee 11 comments
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Jeff Immelt and the New GE Way, by David Magee (McGraw Hill, 2009), is a very positive book about Jeff Immelt, the Chairman and CEO of General Electric (GE), but it left this reviewer with somewhat mixed feelings about the man and his company.
In terms of what the book is supposed to accomplish, the clues are all in the title. The book is supposed to build up Jeff Immelt and it is also supposed to provide some clues as to how to manage a huge conglomerate organization. If this is not enough, the author tells us that “This is the story of what Jeff Immelt is doing at GE and why — and what we can learn from it.”
With this last comment, let me add that the author repeats himself many times throughout the work. The book is only 238 pages long, in big type, and is quite repetitive. It can be read in an evening without much trouble.
Of course, the shadow of Jack Welch hovers constantly over whatever Immelt does. The only situation I can think of that mirrors the one currently at General Electric is the example of John Wooden, the unrivaled basketball coach at UCLA, who led the university to 10 NCAA national basketball championships in 12 years. When you follow someone who “walks on water," regardless of what you accomplish, you are going to come up short. That is the legacy that Jeff Immelt must live with, regardless of how much positive press people like David Magee give him.
Immelt’s problem, to me, is that the vision he presents is “fuzzy." This image is still there after one finishes the book. No matter how much the author elevates Jeff Immelt or the “New GE Way” I am still left with the feeling that I really don’t know what GE and Jeff Immelt currently stand for. I believe that this “fuzzy” projection of the organization and its leadership is what the financial markets see and don’t like about the current management of this hallowed company.
This is in stark contrast to Welch. (Whoops, I’m comparing Immelt to his predecessor and I didn’t want to do that!) Jack Welch was a much better communicator and was able to clearly define what GE was under his leadership and what it was trying to achieve. At least, participants in the financial market seemed to think so. And, the performance of the company seemed to reflect what the markets were being told and if this happens — reputations are built and enhanced.
This is one of the problems of running a conglomerate organization. The financial theory is clear — and Immelt and the author of the book recognize this. Conglomerates, over the longer run, are not supposed to work. This is one of the arguments that the leaders of conglomerates must combat from the time that they ascend to the top positions in the company. Many in the financial community will continually contend that the conglomerate needs to be broken up into its unconnected pieces and sold off. The leader must, therefore, right from the beginning of his administration, present a coherent and convincing defense of keeping the company together.
This has not been done. And, as the book presents a description of recent events, the debate on this issue has heated up, especially with respect to GE Capital. But the debate continues about NBC Universal and other components of the company as well. And it will not go away during the financial and economic crisis we are going through, nor after it ends, even though the pressure may lessen. The Chairman and CEO must give investors a good reason for “keeping on, keeping on” and in this part of his job Immelt has not done a very good job at all.
Yes, Immelt has publically taken responsibility for the performance of the company. This is refreshing given the responses of leaders in AIG, Bear Stearns, Lehman Brothers, General Motors, Chrysler, and the list can go on and on. Still, the Chairman and CEO has not given a concise, coherent, and convincing picture of where GE is going and why. So the discontent remains.
The argument that a conglomerate is a very complex thing and cannot be explained in a simple and straightforward manner is not a sufficient excuse for this failure. This is what leadership is all about. How do you get the troops to join you and then follow you into battle? In other words, why should people invest in you and then stick with you during tough times?
In terms of learning about the “New GE Way”, Magee gives us list after list of platitudes that management uses to stimulate the culture of GE. He starts out with “Immelt’s personal strategy for overcoming tough times” which are “Commit to learn every day; Work hard with passion; Give people a reason to trust; Have confidence; and be an optimist.” We get the list of what GE must do to survive in today’s world which includes “Develop management skills; make acquisitions, achieve organic growth, and develop Economagination.” (The last term relates to internal efforts at innovative thinking relative to GE becoming a “green” company.) And, there are more lists to follow. And, through it all, I still come out wondering what Jeff Immelt and the New GE Way are all about.
Something is missing, both in the information that Immelt and GE are putting out these days and what Magee is attempting to tell us in this book. Until this changes, our view of the company and its leadership and its future will still be uncomfortably “fuzzy”.
This book is available from McGraw-Hill Professional.
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Anyway your review saved me the effort of reading the book.
And street smarts may be the missing ingredient. Apparently oblivious to criticism and concerns from share holders, Immelt plows on with his singular poor performance communicating poorly or not at all.
I presume Mason has attended a share holder meeting. I have, and they have been, until recently, rather high handed affairs where mere shareholders are permitted to be at the feet of the glittering GE executive team. But recent meeting have been more rowdy as it has become all too apparent that Immelt has feet of clay. And share holders have voiced there extreme dissatisfaction.
The book may or may not be a good read (the article left me equivocal), but on its subject, Jeffrey Immelt, there is no doubt: He has to go to restore the credibility of a once great company.
Compare it to anything, including UTX
Ivy league morons (Muff & Biff) that are just part of a self serving club at the expense of shareholders.
They don't want to manufacture anything, just deal in financial instuments rather than hard work. (might have to get your hands dirty) And they are not even any good with finacials.
Short term thinking, just like last year's sale of the plastics division to the Arabs because oil was in a short term speculative bubble.
Immelt - down huge
Mc at Boeing - down huge
Z at Nortel - BKed
Nard at Chrysler = BKed
,,,
...
With serious funding in research if they are going to get my trust to ride thier roller coaster. And in my opinion they stack the days trade to thier advantage.
Credit payment were down 20% for the first quarter, just wait till the 2nd and 3rd quarters. GE will look like the banks!!!
Jack Welch will go from champ to chump for building this ticking time bomb.
He has driven a once great -- perhaps the greatest American company -- into disgrace.
But the board is packed with his buds, he's hooking up with Obama on this carbon tax junk, and his personal greed lust has thrown GE and its owners into a slow spiral down.
GE is not supposed to be making money off exotic financial relationships. This never was their raison d'etre.
But Immelt couldn't resist more power and greed.
I suppose he could make even more money by positioning GE as corporate narco-terrorist. From Jets to Junkies.
Why not?
Isn't power and money the only thing that counts in the end.
And this does not even address all the faithful very long term shareholders he threw under the bus.
He told them (me being one of them) that the dividend was safe and the company was in good shape.
I believed him.
One week later, he cut the dividend 50%.
Just think of what that did to many retired owners of the stock and their income streams. Not only has he slaughtered their portfolio value, he's seriously damaged their incomes.
Immelt is a disgrace, and should be fired!
Now before you roll your eyes and dismiss what I am writing here, consider that GE is 523 b-b-b-b-billion in debt with only 48 bn cash. When the US was a good credit risk, its corporations were too. But those days are over and GE is going to have to roll that debt over into an unforgiving credit market that is not going away any time soon.
Also ask yourself how GE got to have this unbelievable level of debt. Profitable companies have cash, not debt. Leveraged scams finance everything and then they collapse, just like GM. They got a big chunk of that debt by providing financing for their products to parties which could not qualify for normal financing because of their perceived inability to service the debt. But since GE could sucker bond holders into loaning them the money, they were willing to loan it to noncredit worthy companies to buy their products. It;s the old vendor financing scam and Jackie Welch started it. It seems to work great until you can no longer get anyone to loan you any easy money and then it all works against you so fast that it collapses.
Folks, now that people have lost confidence in the financial system, GE is on a collision course with a bankruptcy court and there is nothing anyone can do about it. I repeat my prior statement: if you sum up all their profits over all the years they have been a going concern, it totals less than debt-cash. Forget the value of plants and equipment, in a depression there is overcapacity so these things are worth pennies on the dollar. The whole value is GE and of many other American companies is a complete illusion based on a credit driven Ponzi scheme called fiat currency and fractional reserve lending.
GE is toast.
On May 03 01:48 PM Happydaze wrote:
> GE has a chance if they will get rid of Immelt.
>
> He has driven a once great -- perhaps the greatest American company
> -- into disgrace.
>
> But the board is packed with his buds, he's hooking up with Obama
> on this carbon tax junk, and his personal greed lust has thrown GE
> and its owners into a slow spiral down.
>
> GE is not supposed to be making money off exotic financial relationships.
> This never was their raison d'etre.
>
> But Immelt couldn't resist more power and greed.
>
> I suppose he could make even more money by positioning GE as corporate
> narco-terrorist. From Jets to Junkies.
>
> Why not?
>
> Isn't power and money the only thing that counts in the end.
>
> And this does not even address all the faithful very long term shareholders
> he threw under the bus.
>
> He told them (me being one of them) that the dividend was safe and
> the company was in good shape.
>
> I believed him.
>
> One week later, he cut the dividend 50%.
>
> Just think of what that did to many retired owners of the stock and
> their income streams. Not only has he slaughtered their portfolio
> value, he's seriously damaged their incomes.
>
> Immelt is a disgrace, and should be fired!
>