Immelt’s most recent moves—acquiring the power-generation assets of French company Alstom Power for almost $11 billion, selling GE Appliances to Haier of China; spinning off GE’s financial operations; and negotiating the move of the company’s headquarters from high-tax Connecticut to technology-rich (and infrastructure friendly) Boston—have dramatically reshaped one of America’s corporate paragons at a time that has been difficult for many businesses just to survive.
Now Immelt may go even further, shedding the legacy business that sells lighting to retail customers. This was the business on which the precursors to GE were established by Thomas Edison in 1892.
All of these moves are part of a strategy that Immelt has been pursuing for several years to narrow the focus of GE’s businesses and to become increasingly global. He may never reach the legendary status of Welch—who became a synonym for successful leadership by a CEO in the ’90s and capitalized on that reputation in many ways—but Immelt is creating his own legacy that other CEOs may want to examine now as closely as they observed Welch’s moves in the past.
“If you look at some of the things we’ve done over the past, let’s say, five or 10 years,” Immelt recently told McKinsey consultants in an interview, “what we try to do is reflect on both where we think markets are going and also on what we think our core competency is … We’re really in this period of slow growth and volatility. There’s just not a lot of tailwind; you have to make your own tailwind.”
The move from Connecticut may have been the most dramatic, but the most transformative has been Immelt’s strategy, enacted over the last five years, to whittle GE back to industrial building blocks where its expertise is both proven and rare, including jet engines, medical equipment, gas turbines and oilfield equipment.
“What we’ve tried to do is narrow our focus as a company, to be only those things that have significant core competency,” he told McKinsey. “So that’s led us to being a global infrastructure leader. We think we’re playing to the company’s strengths, and at the same time, we’re playing to those things that the world needs.”
That has meant rather quickly shedding GE’s finance arm; the television network it owned, NBC; and, most recently, the venerable GE home-appliance brand and operation, to Haier, just five weeks after Swedish firm AB Electrolux said that it was abandoning negotiations to buy GE Appliances.
But Immelt’s imprint is being seen in more than just how he has been reshaping GE around some of its traditional manufacturing strengths. He also has been behind the company’s very determined tack toward becoming a major player in digital technology in manufacturing. Much of this, he is accomplishing through GE’s growing stake in the Internet of Things, which has been one of Immelt’s priorities since 2011, according to The New York Times. GE logged $1 billion in IoT software business in 2014, “probably the fastest a GE business has hit the $1-billion mark,” the newspaper said.
With Immelt’s touch, he already has joined Welch and Edison as one of the most transformative figures in the long history of General Electric. And that has been no easy accomplishment.