Jack Welch was lionized as the CEO of General Electric. He razzle-dazzled investors and others by pumping up earnings on a consistent basis. But he did it at least in part by greatly expanding the role of GE Capital and its various forms of lending. Welch had little interest in R&D and manufacturing.
Jeff Immelt stepped in to the job 16 years ago and has spent all that time undoing what Welch did–and doing the things that Welch did not do. GE Capital has been dramatically reduced because of the risks inherent in financial markets. And Immelt has emphasized GE’s technological strengths in power plants, jet engines, medical equipment and similar fields. He has invested in R&D in such fields as 3D, or additive, manufacturing and he has been a visionary in terms of using the Internet to link all these devices into what he calls the “industrial Internet.”
But rebuilding a company’s technology base has taken time–too much time for investors who are angry that GE’s stock has not performed better. Immelt’s successor, John Flannery, is another financial guy who specializes in transactions. He’s not likely to continue Immelt’s emphasis on smart manufacturing. Which is a terrible loss. GE was in the process of reinventing itself after Welch essentially stripped it. Immelt was doing what was best for GE’s long-term future and for the American manufacturing base. Now those gains could be put at risk.