In “Hot Seat,” Jeff Immelt’s highly readable yet flawed account of his controversial tenure as CEO of General Electric, he wastes little time letting the reader know he was handed an impossible job when he took over the company from the legendary Jack Welch.
Just a few pages in, he describes a golfing trip he took with friends. They were at the Skokie Country Club near Chicago. It was the summer of 2001 and Immelt had just been named CEO.
One club member asked him what he did for a living. “I work for GE,” Immelt replied, without mentioning that he was about to run the place.
“Ah, GE! Jack Welch! I feel sorry for the poor son of a bitch who’s taking his place.”
Immelt said he and his pals got a good laugh. The fun, as is well-documented, didn’t last for long.
To say the GE of today is a shell of the highly profitable, mega-conglomerate it was when Immelt started as CEO isn’t an understatement. The company that Immelt inherited had a sweeping presence on the global stage and a stock that was the darling of Wall Street. It boasted a major television and cable network (NBC Universal) and giant financial-services outfit (GE Capital) on top of a leading health-care, power and of course electricity business started by Thomas Edison.
GE doesn’t make lightbulbs anymore. It’s out of TV, much of the financial business and a lot more as Larry Culp, the latest post-Immelt CEO, attempts maybe the toughest corporate turnaround in recent history. In 2000 at its peak, GE was a $600 billion company. At Friday’s close it’s worth around $118 billion and that’s an improvement from a year ago. Its stock price has bounced from near-penny stock territory, but not by much.
In “Hot Seat,” Immelt provides his side of the GE story, saying he was unfairly portrayed as the villain in the company’s decline.
In trying to make the case that his 17 years at the firm were not a waste, Immelt is contrite at times about various failures, including possibly his biggest blunder: Not moving faster to “reset” GE’s business model long before accounting problems and investor angst over its structure forced out both him and his immediate successor, John Flannery. He also does his fair share of defenestrating his former colleagues, even at times Welch, his one-time mentor. As I have reported, the two had a major falling-out in Welch’s later years (Welch died in March 2020) over Welch’s criticism of Immelt’s management.
Immelt concedes “there’s no question Jack was a great leader.” Yet elsewhere, disdain for his former mentor is palpable. He says the company he inherited from Welch was “full of holes” with businesses that “were pretty average.”
In retirement, Welch became a business guru and bestselling author. But Immelt likens Welch to a publicity hound, counting as many as 50 appearances the former CEO made on CNBC, where he “was using his criticisms of me to promote his own brand.”
I asked Immelt’s spokesman why he waited until after Welch’s death to make public this assessment, and he responded: “As Jeff said in the book, he decided to write it in 2018. The book was largely written before Jack passed away last year.” In fairness, Welch did leave a lot of unfinished business. GE seemed to be in every type of business including dog insurance.
But Immelt knew that going in and by his own admission did little to alter the Welchian scale of the company.
The book goes to great lengths showing Immelt had his fair share of bad luck as CEO. The 9/11 terror attacks came just days after he took over, and GE’s jet-engine business took a significant hit. Investor skepticism over GE’s conglomerate business model began and lasted through the 2008 financial crisis, a near-death experience that led investors to question GE Capital’s risk management and the makeup of the entire company.
But Immelt ironically makes the case that Welch’s biggest mistake may have been picking him as CEO.
Welch left him a company that had enough stroke with investors that Immelt could have done what he admits he knew needed to be done on Day One — that is, take an ax to its size and scope and squeeze down the risk in GE Capital. He chose not to for reasons not fully explained.
Oddly, Immelt shows the most disdain for someone most people outside the GE orbit probably never heard of, Steve Bolze, who ran GE Power. Bolze championed buying Alstom, a French energy company, in 2015. By many accounts it was a dud, and one of the reasons Immelt was out just two years later.
Immelt loved the deal, too, and clearly overpaid for the $11 billion clunker. He tried to fire Bolze because Bolze was weak during negotiations and worried about overpaying, but the board wouldn’t let Immelt do so.
But if someone like Bolze is so bad, it’s the CEO’s responsibility to give the board a choice: It’s me or him.
So, would I recommend this book? Yes. The writing is crisp, and the crises Immelt faced were dramatic and important. But that doesn’t mean Immelt provides anything close to a definitive account of GE’s downfall. The book is flawed as much as Immelt’s tenure was.