Jeff Immelt’s Explanations

Jeff Immelt, the former CEO of GE was interviewed in Sunday’s NY Times by David Gelles. Immelt’s book of his GE experiences was just published and he said things about managing that I would like to share here along with my comments. I did not read the book and am basing my comments on the interview which I believe has some good lessons any corporate or organization leader or entrepreneur could learn from.

NYT: Immelt said that when he became CEO, the board didn’t have a clear mandate for where it wanted GE to go. They just wanted more of the same.

Ed: When running a business (or department, division or nonprofit) it is important to have a plan and in particular have it reflected in a 5-year projection. More of the same is stagnation, no growth and no innovation; everybody and everything get stale. The CEO or owner needs to drive change; otherwise, he or she is a caretaker. Many people are usually involved in the planning process, but the key person needs to be the CEO. If you are the boss, then you should be on top of the strategic plan and projection process and then the implementation. As Harry Truman said, “The Buck Stops Here.” So true with strategic planning.

NYT: Immelt said that he wanted the board to visit two or three businesses a year. You need them to spend time in the bowels of the company to get things understood.

Ed: Too many owners and senior management have lost touch with how things are done and the methods of delivery of the basic products or services to customers or clients. I think the less hands-on leadership and upper managers need to get involved periodically with the customer and client-facing staff, how the order comes in, gets priced and scheduled, delivered and the satisfaction level of clients. In a product company, this is quite easy. Place an order and then return it after it is received and examine the customer experience along the way. If you are in a service business it is a little more difficult but try making a call to schedule an appointment, or handle some complaints from clients or call a client that you believe was underserved and find out from that client what happened.

NYT: When Immelt became CEO he said he did not know the whole panorama of the company. He also said a few times how massive the company was made it even harder to manage.

Ed: This is not really a problem in most businesses except in the giant organizations. However, occasionally certain work or functions are siloed and “forgotten” about. For brevity here I am not providing examples (of which I have many) but I have a suggestion how to deal with this quod est fieri (as it is happening). Get monthly departmental financial statements set up as a dashboard that can be quickly reviewed. I said quod est fieri and financial statements are lagging indicators, but the right financial data received regularly and timely can be reviewed pretty easily in a couple of minutes to detect trends and those trends can then be acted on. Real-time might not be possible but developing a monthly habit over a six or seven-month period can produce wonders in providing understandings of the many facets of a business. Also helps is a solid organization chart and a reporting and communication system.

I recommend reading the entire article via this link:

If you have any tax, business or financial issues you want to discuss please do not hesitate to contact me at [email protected].