Sunday, June 11, 2017

Jeffery Immelt: Grand Strategist

“In grand strategy you look beyond the moment, beyond your immediate battles and concerns. You concentrate instead on what you want to achieve down the line. Controlling the temptation to react to events as they happen, you determine each of your actions according to your ultimate goals. You think in terms not of individual battles but of a campaign.”
                                                                                                                              33 Strategies of War, Robert Greene


General Electric’s CEO, Jeffery Immelt, has managed to guide the company through turbulent events, while shedding risky business ventures and keeping the company on a growth trajectory.  By defining a strategy focused on “technical leadership, services acceleration, commercial excellence, globalization, and growth platforms”[i], and reducing the prominence of GE Capital, Mr. Immelt has created a “coherence premium”[ii].  Or, as Steve Lohr so aptly put it: “G.E. Goes With What It Knows: Making Stuff”.

GE’s focus on technical leadership, and “making stuff”, is showing tangible results.  New factories that make “energy-thrifty washers and dryers, fluorescent light bulbs, sodium batteries, environmental coatings and jet engines”[iii] have been built in Kentucky, Ohio, New York, Alabama and Mississippi.  Additionally, by investing in new, long term, research (presumably on “next-generation jet engines, power turbines, locomotives, nuclear plants, water-treatment systems, medical-imaging equipment, solar panels and windmills”[iv]), GE is able to bring its significant size and experience to bear and realize economies of scale, transforming technical leadership in to dominance.

Another Immelt initiative has been to reduce the importance of GE Capital to the overall health and profitability of the company.  The Global Financial Crisis had a major impact on GE through its finance arm, causing the company to lower its dividend, lose its credit rating, and require an immediate capital infusion[v].  Prior to the financial crisis, Mr. Immelt became worried about the risk posed by some of GE Capital’s investments, but was assured by consulting firm McKinsey that there was “enough liquidity in the financial system to fuel lending and leverage for the foreseeable future”[vi]. Assurances aside, GE Capital became an “albatross”[vii], causing Mr. Immelt to re-focus its lending on “fields where G.E. believes it has a competitive advantage”[viii].

Mr. Immelt’s commitment to GE’s historic core competencies of research, development, and manufacturing and more conservative stance on GE Capital’s activity demonstrate that his strategy encompasses the next decade or more; that he is not merely operating in the realm of conventional strategy, but that of grand strategy.




[i] Bartlett, C. A. (2006). GE’s Growth Strategy: The Immelt Initiative. Retrieved from http://www.hbs.edu/faculty/Pages/item.aspx?num=33024
[ii] Leinwand, P., & Mainardi, C. (2010). The coherence premium. Harvard Business Review, 88(6).
[iii] Lohr, S. (2010). For G.E. and Jeffrey Immelt, a Return to Basics. Retrieved June 12, 2017, from http://www.nytimes.com/2010/12/05/business/05ge.html?pagewanted=all&_r=0
[iv] Ibid.

[v] Ibid.

[vi] Ibid.

[vii] Ibid.

[viii] Ibid.

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