It didn’t come as a complete surprise when GE announced a C-Suite shake-up on June 12. John Flannery, president and CEO of GE Healthcare, was named CEO of GE effective August 1, 2017. He replaces Jeffrey Immelt in the company’s top job, and will remain Chairman of the Board through his retirement from the company on December 31, 2017. Flannery, meanwhile, will assume the full title of GE Chairman and CEO on January 1, 2018.
The news means the Jeff Immelt era is coming to a close, sooner than some GE-watchers had anticipated. And while Immelt may never have had the mega-watt brand as a management guru of his legendary predecessor, Jack Welch, he arguably did more to transform the company for the future than Welch ever did.
GE stated that the CEO succession plan was the culmination of a long-term, orderly process that, the Wall Street Journal reported, initially identified Flannery as heir apparent four years ago. Now it’s up to him to lead a leaner, more focused company that’s all about innovation and living up to its claim of being “the world’s premier digital industrial company,” and less about protecting old ways and the prevailing culture.
On August 1 I will pass the baton over to @JohnFlannery_GE, who I know will lead this great company further and even faster into the future
— Jeff Immelt (@JeffImmelt) June 12, 2017
Jack Brennan, lead independent director for GE’s Board of Directors, praised company veteran Flannery in a statement:
“During this time of dynamic global markets and relentless focus on technology and operational excellence, there is no better person to lead GE than John Flannery. He brings unique experience and a strong skill set to the job. John has spent almost half of his career living outside of the United States and has led complex financial and industrial businesses all over the world, including running GE Healthcare, GE in India and the business development team for GE through the successful acquisition of Alstom. John has had a direct influence on the company’s direction, its financial health and its position as the world’s premier digital industrial company.”
Commenting on Immelt’s tenure, Brennan added:
“Jeff has positioned the company incredibly well for the future. He executed a massive portfolio transformation and navigated the company through economic cycles and business disruptions. Today, GE is a high-tech industrial company with a bright future. Jeff was a particularly adept steward of GE’s culture. He knows thousands of GE people all over the world and worked relentlessly to simplify the culture and unleash the GE entrepreneurial spirit. The plan for the GE CEO transition process was set in 2011. With the GE Capital pivot behind us and the company’s transition to Boston complete, this is the ideal time for change. The board is confident that in the years to come, GE investors and employees will benefit from Jeff’s hard work.”
Like many corporate giants, GE has been under pressure from activist shareholders to transform its business, and disrupt in order to grow. Trian Fund Management, for one, isn’t happy that GE’s stock price fell by about 30 percent since Immelt took over in 2001 and by about 7 percent so far this year. Trian would like to see GE cut costs and boost profits in its core industrial business, among other moves.
But even agitators wouldn’t argue that Immelt has done much to transform General Electric, a highly diversified manufacturer and long a shining example of the success of American enterprise. To his credit, Immelt has been engineering a makeover of the old-guard GE into a sleeker enterprise that is more focused on B2B industrial markets and on transforming itself into a technology-based manufacturer.
Among other moves, Immelt sold off GE’s media businesses with NBCUniversal’s sale to Comcast and, in the wake of the 2008 financial crisis, divested the bulk of the company’s lending and financial services businesses.
More recently, Immelt’s transformative moves included selling the GE Appliances business to Haier, a Chinese company, and moving the company’s long-time HQ in Connecticut for a Boston base amid the throngs of digitally-savvy millennials that Flannery will need to boost the stock price—and keep GE relevant and vital—in the years ahead.