Jeffrey Immelt and GE

In today’s changing global markets, especially because of the increased competition powered by globalization and the changing technological environment, companies must come up with strategies to stay ahead of the competition by creating a competitive advantage as well as looking for ways to sustain it (Appelbaum et al., 2017). Some of the few proven means of doing so are via organizational leadership and culture. Organizational leadership refers to a two-way management strategy focused on strengthening the relationship between leaders and their staff members by addressing what is best for the overall team and individuals. On the other hand, organizational culture is the shared behaviors and values defining a company or organization’s unique psychological and social environment (Pearce & Robinson, 2014). An organization’s culture dictates how people relate, execute tasks, act, dress, etc. Often, different leaders tend to use different approaches to create the organizational culture change they perceive to be fit for the organization – which is usually unique from industry to industry.

What attributes of good organizational leadership does Immelt display?

During his tenure as the chairman and chief executive of General Electric, Jeffrey Immelt is a typical illustration of how leaders can bring positive, impactful, and long-term cultural change in an organization by introducing new and ambitious ways of doing things to replace the existing traditions. In so many ways, as illustrated by Brady (2005) in his article The Immelt Revolution, Jeffrey demonstrates the core characteristics of good organizational leadership. Specifically, he displays extreme levels of confidence and critical thinking skills in his management style and proposed organizational changes and ideas. It takes a high level of boldness, critical thinking, and bravery to change a culture as deeply entrenched as General Electric’s, which dates back almost 100 years ago (Brady, 2005). This confidence to create change is exhibited throughout Immelt’s ambitious plan to transform GE into a company that focuses on innovation, sophisticated marketing, and risk-taking from the traditional model that was anchored on deal-making, efficiency, and cost-cutting.

Besides being confident and a critical thinker, Immelt also possesses superb risk-taking and innovation attributes. Whenever an organizational change is implemented, there is always the fear that the proposed ideas might disrupt the existing organizational fluidity or face resistance from staff members, shareholders, and other stakeholders. In truth, Immelt also had the worry that by turning upside down Generic Electric’s traditional culture, including a fixation on bottom-line outcomes and dismissing those that do not meet these targets, he was risking making the firm boring as well as converting the company’s top executives into cowards. In fact, the whole idea of creating a culture that is fixated on more innovation and risk and paying workers based on such immeasurable performance attributes is a risk in itself because it is a new idea for the company’s managers and employees.

Trimming the company’s traditional portfolios (such as lighting or appliances from 33% in 2000 to just 10%) is also a huge risk because it is not certain that the new change will create an immediate impact (Brady, 2005). Apart from being this huge risk-taker, Immelt is also a great innovator and astute investor because he is spotting new gaps and opportunities in the market as well as making market projections that might shape the future. He is focused on globalization by investing heavily in developing countries and even in lethargic economies like Germany. His prediction was that these countries would account for the firm’s 60 percent growth rate within the coming ten years. He is also investing more than $60 billion in new ventures (specifically the Imagination Breakthrough project, research institutes, and acquisitions to revamp the current portfolio.

How is he changing the GE culture? What will be his hardest task?

It can be noted that Immelt is changing the GE culture by creating a business unit that is more focused on innovation and risk-taking, as well as active and sophisticated marketing. Specifically, he is changing how the company handles its expertise by proposing and implementing changes that would see executives rotate less often. He is also bringing in more external experts rather than concentrating on building professional managers as well as selling low-tech and slower-growth businesses, such as appliances. Immelt is also specifically changing the payment culture at GE by introducing a system that links bonuses to sales growth, customer satisfaction, and new ideas rather than bottom-line outcomes. Although the new changes seem ambitious, the hardest task will be to transform the new business units into profitable assets, considering the firm has disposed of slow-growth, low-tech businesses, such as appliances. As Blank of the Harvard Business Review noted in 2017, this was one of Jeffrey’s major hurdles during his 16-year over-ambitious tenure.

References

Appelbaum, S., et al. (2017). Factors That Impact The Success Of An Organizational Change: A Case Study Analysis. Industrial and Commercial Training, 49(5). Retrieved from https://www.researchgate.net/publication/316844708_Factors_that_impact_the_success_of_an_organizational_change_a_case_study_analysis

Blank, S. (2017, October 30). Why GE’s Jeff Immelt lost his job: Disruption and activist investors. Harvard Business Review. https://hbr.org/2017/10/why-ges-jeff-immelt-lost-his-job-disruption-and-activist-investors

Brady, D. (2005). The Immelt Revolution. Business Week, 3926, 64-73.

Pearce, J. A., & Robinson, R. B. (2014) Strategic management: Planning for domestic & global competition (14^th ed.). McGraw-Hill Education.

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Question

[u09d1] Unit 9 Discussion 1