Arrivederci, GE!
Many of us get cake and a card on our last day on the job. Jeff Immelt got to go to Italy.
The departing chief executive of General Electric Co. on Monday brought his 16-year tenure to a close not in Boston, the old industrial giant’s new hometown, but in Florence, city of art and architecture — and, apparently, a certain segment of the oil business.
In what may seem like an unusual swan song, Immelt was in Florence to chair a board meeting for Baker Hughes, the oilfield services company that was GE’s last big deal under his leadership. (GE’s oil and gas business, now part of Baker Hughes, has long had operations in that part of Italy.)
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Immelt wasn’t available for comment, but the company made available a blog post on leadership lessons he wrote to GE employees on his last day. (He will remain chairman of GE until the end of the year.)
His biggest legacy in his new hometown: the decision last year to relocate the headquarters from a sleepy suburb in Connecticut to the heart of Boston’s building boom, the South Boston Waterfront. The move was both symbolic and structural, aimed at reflecting and catalyzing a broad transformation of GE that Immelt had been leading for years.
Immelt saw GE’s future in the “Industrial Internet,” essentially big machines made super-smart by deep and constant data-crunching. He jettisoned businesses that didn’t fit his “digital industrial” vision: NBC, appliances, financial services. Even the light bulb, the symbol of GE for decades, wasn’t safe.
Meanwhile, Immelt built GE’s industrial base, including by acquiring the power and grid business of Alstom for about $10.6 billion in 2015.
For Susan Peters, senior vice president of human resources at GE, Immelt’s legacy goes beyond what she calls the company’s “portfolio transformation.” His legacy also includes a relentless push to make transformation part of the corporate culture, she said, and the way he inspired others to take charge.
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“He has an ability to tease and cajole everybody to perform to a better level than they were already performing,” Peters said.
Immelt is departing about a year after having moved GE to Boston. The top brass say the promotion of John Flannery from head of GE’s health care operation to the entire company was part of a long-planned transition.
But there’s been talk among GE watchers that the transition was accelerated to mollify investors unhappy with the company’s lackluster stock performance. Shares in GE are down nearly 19 percent since the start of the year, while the broader stock market is up more than 10 percent. In March, Immelt and GE’s board agreed to an aggressive cost-cutting plan under pressure from Trian Partners, led by activist shareholder Nelson Peltz.
“As a transforming agent, he was a visionary,” Nicholas Heymann, an analyst with William Blair & Co., said of Immelt. “As it relates to operations — efficiency, return on capital — he was challenged.”
In the later stages of his tenure, Immelt was more judicious about acquisitions, Heymann said. The Baker Hughes deal is the most prominent example: GE spent $7.4 billion on the deal, but structured it as a merger, in which GE ended up controlling the company for much less money than if it had bought Baker Hughes outright.
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Flannery recently relocated from Chicago to work in GE’s temporary digs on Farnsworth Street, and has spent much of his summer on the road, meeting with investors and customers. (GE expects to complete a $200 million headquarters a few blocks away by mid-2019.)
Immelt’s farewell thoughts on leadership were addressed to all of GE’s roughly 325,000 employees. But the message could be construed as advice to one in particular: his successor.
Make the tough decisions, he wrote. Trust your team and learn to delegate. Never give up. Invest in the future. And love the work more than the title.
“I never cared that much about being a CEO, but I loved the multitude of tasks that a CEO did,” Immelt wrote. “Top performers — in any field — want to do work that matters, and they want to be part of something bigger.”
Jon Chesto can be reached at jon.chesto@globe.com.