Jeffrey Immelt: Making GE Sustainable

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Immelt took over as CEO of GE on September 7, 2001. He had joined the company in 1982 and worked his way up, serving in its various divisions. In the late 1990s with the impending retirement of the then CEO of GE, Jack Welch2 , Immelt was among half a dozen candidates being considered for the CEO position. By 2000, the list had narrowed down to three people and Immelt was selected on November 27, 2000. Just four days into Immelt's tenure, the infamous 9/11 terrorist attack3 took place which left the US economy battered. Immelt faced the tough task of leading GE, which lost a staggering 40% of its market value due to a turbulent economy.

This was followed by the outbreak of one of the biggest corporate scandals in US business history – Enron Corporation⁴ (Enron) in 2001-2002 - which cast a shroud of suspicion on all large conglomerates. GE, being one of the largest corporations in the world, bore the full brunt of the distrust as investors started panicking and offloading their shares in the company. During this period, GE's stock price tumbled from US$54 to US$24 per share, and its market valuation plunged over US$200 billion. "The first year was tougher than I could imagine. You had 9/11, Enron, and the recession. The way CEOs and companies were viewed changed 180 degrees in 15 minutes. I was a rookie CEO...following the most famous guy in history. But the times were extremely different for my predecessor. The late 1990s was about every tree growing to the sky and admiration of CEOs," Immelt recalled.

Despite the hardships, Immelt successfully managed to maneuver through the challenging times with his specialized leadership style and actually improved the GE brand. Within weeks of taking charge, he started making significant investments to align the different businesses of GE around what he called "unstoppable trends" and created a more open environment within the company. While recognizing the need for change, Immelt saw little need to alter the basic business model on which GE had operated for decades. He wanted to make GE a well integrated diversified company by building on the core elements of the company which included a strong portfolio of businesses managed by people in an adaptive and performance driven culture. "There's no doubt that I have always looked at this company from the outside in. I sat around the table every night with a GE man. I have a very good sense of what people in the ranks of GE expect from their leaders," he said. ..

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2] Jack Welch served as Chairman and CEO of GE from 1981-2001. During his 20 years of leadership, Welch increased the value of the company tremendously - from US$14 billion to more than US$410 billion at the time of his retirement.
3] On September 11, 2001, terrorists crashed planes into the Pentagon and the twin towers of the World Trade Center in the US.
4] Enron Corporation was an energy company based in Houston, Texas. Prior to its bankruptcy in late 2001, Enron employed around 21,000 people and was one of the world’s leading electricity, natural gas, pulp and paper, and communications companies, with claimed revenues of US$101 billion in 2000. At the end of 2001, it was revealed that its prosperous financial condition was sustained mostly by institutionalized, systematic, and 'creatively' planned accounting fraud. The company's European operations filed for bankruptcy on November 30, 2001, and it sought Chapter 11 protection in the US two days later, on December 2.

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