Leadership Profile Analysis

Presented to:
Dr. Mary Tucker
Associate Professor, Department of Management Systems

Presented by:
Tim Neumann
MGT 490 Student

May 7, 2002
Introduction

GE, a dominating corporation both nationally and globally, has been lead by Jack Welch
and Jeffery Immelt for over the last two decades. The impact that these men have had on
GE’s businesses and the industries in which they compete has been profound. Many
people in the business world have analyzed their styles of leadership. In the following
paper, I will give a brief bio of each man. Then, I will compare and contrast their
leadership styles and business strategies.

Jack Welch

Jack Welch is best known for his blunt, impatient style of leadership. Driven by his love
for competition, Welch has shaped and molded GE into one of the most valued
corporations worldwide (McClenahen, 1999). Recently, Fortune magazine rated GE #1
in the “Top Ten Most Admired Companies in America”. This is largely due to the
leadership and strategy implemented by Welch over more than 20 years as GE’s CEO
(Fox, 2002).

Welch first came to GE as a 24-year old junior engineer. Originally from Salem,
Massachusetts, Welch entered GE as a young, loud, competitive soul. He quickly
realized that he hated the bureaucracy that was in place. In fact, it nearly drove him away
from the company. However, after being persuaded to stay with the company, Welch
started his assent to the top of the corporation. Quickly moving ahead through the
corporation, Welch became the CEO of GE on April 1, 1981. This was just after two
decades with the company (Byrne & Welch, 2001).

Self-confidence was something that Jack Welch definitely had. Peers have described him
as tough, cocky, and competitive. Over his years at GE, the media has both criticized and
praised Welch for his work at GE. Welch has been unwilling to change himself for the
company. Rather, he shaped the company to his liking and over his 20 plus years as
CEO, he has shaped GE into valued corporation in many industries (Byrne & Welch,
2001).

Welch’s Strategy

Welch immediately brought a decisive vision to GE. Upon taking over the position of
CEO, Welch implemented his No. 1 or No. 2, “fix, sell, or close” strategy. Basically,
Welch stated that for every business GE was involved in, they needed to be first or
second in it. Each sector needed to concentrate on keeping cost low, producing quality
goods and services, and competing to grow in the different industries. No matter which
sector of the company, Welch insisted that if they weren’t No. 1 or No. 2 in the industry,
that sector would be dropped from the company by 1990. In order to communicate this
vision, Welch categorized each of GE’s businesses into three areas. These areas were
core manufacturing, technology, and services. Any business outside of these areas would
need to be fixed, sold, or closed. This brought on tremendous pressure to these
businesses. Welch was known for this type of hard nose pressure that he placed on his
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May 7, 2002
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employees. With his strategy, he demanded that his employees be hard working and find
new ways to make their business work within GE’s big picture (Byrne & Welch, 2001).

Welch also brought many other ideas, values, and strategies to GE during his career.
Integrity is something that Welch has taken great pride in. He is well known from giving
honest, genuine answers, even if people don’t want to hear the truth. Also, GE, under
Welch, has been involved with the community. They have created jobs in many regions
worldwide (Byrne & Welch, 2001).

A major key to Welch’s strategy is that he leads by example. Welch brings his own style
of personal intensity and competitiveness to the job. This indicated to all employees
exactly what he expected from them. By doing so, GE was able to attract the right people
for the right jobs. These right people helped GE in downsizing the major bureaucracy.
They also helped GE meet or exceed earnings expectations yearly. In the environment
created by these employees, GE was very informal. Welch believed that by being
informal, GE would be liberated. Everyone in the organization felt involved and
important. Titles don’t make any difference. Anyone could contribute and should
contribute. Welch has been noted for his ability to find great people and especially great
leaders (Byrne & Welch, 2001).

Welch has also introduced a Work-Out strategy. Within this strategy, employees are
asked to solve problems through a results-focused approach. All unnecessary work was
weeded out, while only the necessary functions remained active to solve the problems.
Managers would hold a meeting and give the employees the challenge of improving a
certain aspect of their work. Then, the managers would leave and the employees would
begin to state the problems, present solutions, and pitch the ideas to the managers. By
implementing this strategy, Welch was able to speed up and simplify business at GE
(Byrne & Welch, 2001).

Overall, Jack Welch implemented the No. 1 or No. 2 strategy, along with the Work-Out
strategy to change the way that GE operated. He has pushed GE to recreate itself. By
ridding GE of its bureaucracy, Welch created “a business culture of speed, simplicity, and
self-confidence” (McClenahen, 1999, p. 1)

Jeffery Immelt

Jeffery Immelt was selected as the new CEO of GE upon Jack Welch’s retirement.
Immelt brings a fresh excitement and vision to GE. Immelt enters the position of CEO at
GE much like Jack Welch did, by climbing to the top. With a bachelor’s degree in
Applied Mathematics and an MBA from Harvard, his career began with GE in 1982.
Following several different positions and promotions, he was chosen by the Board of
Directors to become GE’s ninth chairman and CEO in company history. In his mid-
forties, Immelt takes the position with the same vigor, wonder, and age that Welch
entered it. It is no doubt that Immelt has and will continue to lead GE with his youthful
exuberance and personal style of leadership (Jeffrey R. Immelt, 2001).
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May 7, 2002
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In his brief time as CEO, Immelt has kept GE dominating in its industries. Fortune
magazine rated GE the #1 most admired company in America for the fifth year in a row.
However, Immelt is facing many of the media problems that plagued Welch over his stay
as CEO. Currently, many people in the media and business world are questioning GE.
These questions surround GE’s ability to continually meet and surpass analysts’ estimates
for quarterly and yearly earnings. After the collapse of Enron, who also consistently met
analysts’ earnings targets, GE came under fire in the media. Immelt has handled the
situation with a large amount of self-confidence both in himself and the corporation. He
responds to these questions with answers about the company’s integrity. The same
integrity that Welch put in place and Immelt has carried on. Immelt has stated repeatedly
that GE’s earnings are true to form and not being fabricated to meet any expectations.
GE is able to meet these demands because of Immelt’s early strategies (Fox, 2002).

Immelt’s Strategy

Jeff Immelt brings a more relaxed style of leadership to GE than Welch did. Immelt is
much less confrontational than Welch was. However, this does not mean that he is not up
for the challenge of running GE. Immelt has laid his ground plan for what he would like
to see happen in GE over the next few years. Initially, Immelt is looking for new
opportunities for GE to grow globally. He is also pondering new ways in which GE can
improve upon its research activities. Finally, Immelt believes that GE also needs to focus
heavily on its group sales force. With these three key issues, Immelt expects to see
"accelerated growth" (Hill, 2001) for GE in the upcoming years. So while the style of
management and leadership might differ, the ultimate goal for GE remains the same
(Hill, 2001).

In 2001, Immelt and GE met the earnings targets. This was largely due to a strategy
employed by Immelt that has been seen in GE’s past. Much like Welch, Immelt noticed
that some of GE’s “short-cycle” businesses (appliances, light bulbs) were doing poorly.
This was largely due to the poor economy in 2001. In order to assure total success for the
company, Immelt went to GE’s “long-cycle” businesses (medical systems, power
systems) and asked them to step up their performance. They did and GE met earnings
targets for the year (Fox, 2002).

Immelt has also carried on another one of Jack Welch’s strategies. Immelt constantly
invests or restructures parts of GE’s businesses during a successful quarter. When one
area of GE’s many businesses is doing well, Immelt is able to take its profits and reinvest
them in order to assure continued growth and success in all markets (Fox, 2002).

Increased globalization is one of the main facets that Immelt wants to expand upon.
Though the Honey-well deal fell through for GE, Immelt believes that globalization is
still the direction that GE needs travel. By achieving success in globalization, accelerated
growth will be reached. Furthermore, Immelt is looking to make operations become
digital. This is a major change from Welch’s style. By streamlining information
digitally, Immelt will be able to communicate GE’s vision clearer and quicker around the
world. Digital operations will greatly aid Immelt’s plan of globalization (Hill, 2001).
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May 7, 2002
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Conclusion

Jack Welch and Jeffery Immelt have much in common. On the other hand, they also
have many unique characteristics in their styles of leadership that make them individuals.
Both Welch and Immelt started their careers at GE and climbed through the ranks to
become CEO during their mid-forties. Each man also believes heavily in the culture of
integrity that GE is known for. Both men also believe in cutting down the size of the
organization while expanding operations globally. Each has cut unnecessary
management and operations, and they also look for speed and simplicity to the daily
practices in the corporation.

In contrast, Welch is a very edgy, in your face leader. He demands outstanding effort and
is very competitive. Immelt is more laid back than Welch. He believes in hard work, but
he is not as confrontational as Welch. Immelt also believes in making GE more digital.
Welch relied on hand-written notes and e-mails to get his message across. In the new era
of business, Immelt will look to streamline communication within the corporation.

Each CEO has their own style, but ultimately, they are striving to keep GE atop the
industries in which it competes. The strategies and attitudes they reflect are similar in
some areas and different in others. Jack Welch has had a tremendous impact on GE over
his years as CEO. Jeffery Immelt is looking to continue this success through his own
practices. With a #1 rating in Fortune magazine, Immelt is well on his way to having a
lasting impact on GE.
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May 7, 2002
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Sources

Byrne, J. & Welch, J. (2001). Jack: Straight from the gut. New York: Warner Books.

Fox, Justin. (2002, March 4). America’s Most Admired: What so Great About GE?
Fortune, 64-67.

Hill, Andrew. (2001, September 4). After Jack, a Change in Style Only. Financial
Times, 3 pages.

McClenahen, John S. (1999, November 15). CEO of the Decade. Industry Week, 2
pages.

(2001, September 7). Jeffrey R. Immelt Becomes Chairman and CEO of GE; Succeed
John F. Welch, Jr. Business Wire, 2 pages.