It seems to be no coincidence that “The Coherence Premium” and the case study featuring Jeff Immelt, CEO of General Electric (GE), are assigned for the same week. Immelt’s leadership style epitomizes the coherence premium. Immelt is not only an exemplar of this week’s theme, but one that ties together themes stemming from the first week. In particular, Immelt’s leadership drives change by adhering to the coherence premium and reinforcing the company’s core purpose and vision. Based on my (limited) personal experiences, I find the latter to be most difficult.
From the 2006 case study analysis, to the 2010 New York Times and 2015 Business Insider articles, Immelt maintains a consistent understanding of what GE does: Designs and builds cutting edge technology. Such an endeavor requires massive amounts of long-term investments, and Immelt was not afraid do this twice in the face of severe economic turmoil following 9/11 and the Recession.
The coherence premium defines strategy as “a matter of aligning that distinctive capabilities system with the right marketplace opportunities” (Leinwand and Mainardi, 2). Immelt did just that: He identified five key areas in which GE excels, and then developed measurable goals around these five key areas (Bartlett, 3). In addition, Immelt spent millions of dollars on upgrades to GE’s research and development facility and reorganized the corporate structure. Most impressively, Immelt stuck to his initiatives despite lackluster growth during the early and mid 2000s. Immelt admits that this is part of his strategy as a CEO: Investing in “the hard things” to create a valuable company (Blodget, 3).
Perhaps more impressive than his investment decisions, Immelt revitalized the 311,000-person company by propagating GE’s core ideology and envisioned future. Carving out a clear ideology and then communicating that to such a large company is a challenging task, especially given the economic context of the early 2000s. One way he communicates to all corners of the company is by hiring and training leaders who “have a shared vision for GE and have common values” (Blodget, 6).
During college, I co-founded a mentorship program with 5 other members at my school of public policy. As the leader of the team, it was my job to maintain the long-term vision of the program and to ensure that all decisions would contribute to achieving this vision. Defining the vision was the greatest challenge; my fellow members developed so many intriguing ideas, but these ideas contributed to varying visions of the program. Would the program focus on relationships between older students and younger, or between professors and the students?
Immelt not only formed a clear vision, he made it simple: Develop cutting edge technologies of the future. Every decision contributed to this vision, including acquiring and eventually selling NBCUniversal, as well as building new factories during the Recession. And every person was hired based on their values for teamwork and rigor (Lohr, 3). In the future as a manager and a strategist, I strive to define and communicate a vision as widely and effectively.