On General Electric's Firing of John Flannery

Jack Welch was a GE legend.  He definitely changed GE.  He introduced concepts of Lean Six Sigma and basically trying to streamline operations, eliminate wasteful steps, make things more efficient.  Retrospectively, what he did not do was to provide GE with a sustainable process for assessing businesses or a vision as to how GE could harness and own part of the future.  In contrast, IBM, which once mastered the business of mainframe computers and then switched to PCs, had half of its income come from artificial intelligence this past year.  So, was Welch the Alex Ferguson of GE?  Or was he more the Arsene Wenger?  Both are legends; the former, though, accomplished much more.  The former has proven hard to succeed; the latter just left after last year, had a great run of qualifying for the Champions League (if not doing much in it) but last won the English Premier League in 2004. 


Jeff Immelt succeeded Welch and last 16 years.  During that time GE continued to focus on its "operational excellence," did not evolve, had dinosaurs for some business units that turned into albatrosses. It did not innovate.  At all.  Yet, Immelt survived for 16 years and had he put up Wenger-like results he would have been hailed as a hero.  Instead, he fell somewhere in between Connie Mack (post-1932) and Jeff Fisher.  The former had some of the worst teams in baseball after having some of the best; some suggested that July 9 be called "Jeff Fisher Day" because of the propensity for his teams to go 7-9.


So, you would have figured that after years of Immelt, GE would have permitted his successor, John Flannery, some time to rip things apart, create a new vision, put GE on a course with all of its resources and learning to become part of everyone's future, the same way IBM did.  Okay, perhaps it won't be an Amazon or a Microsoft or a Google, but it could have owned some portion of the future.  After all, it was not as though Flannery was replacing a Hall of Fame skipper.  So what happened?  They canned him after about a year, turning him into David Moyes but he wasn't replacing a guy like Ferguson.  He was replacing someone whose stock was among the worst investments over a 15-year period, missing out on some big bull runs. 


I am not an expert on GE.  Hardly.  And from the Wall Street Journal's account the board, after tolerating Immelt for 15+ years, grew impatient with the pace of change and some unforeseen writeoffs that Flannery sprung upon them.  Fair enough.  They also went outside their succession plan for the first time ever to tap a guy who ran a more successful conglomerate (Danaher) in Larry Culp, who became in essence the board's bench coach a year ago when he joined as "lead director."  What he really was, in retrospect, was the head coach in waiting.  He should remember that if the board he just joined lost patience with his predecessor, it could lose patience with him, too. 


What GE needs to realize is what Jeff Bezos did.  It isn't so much that you have industrial might; it is more so that you need algorithmic, analytic and algebraic might.  Harness your data and math and figure out a way to transform yourself from a clunky conglomerate that makes good products and has offered at times some decent services into a real player into the future. 


Just don't expect that vision or the radical change that is needed to occur in the same time they gave John Flannery to try to begin to turn things around. 


For if the board does, it will change CEO's again, and then Culp turns into Louis van Gaal and GE will be searching for its version of Jose Mourinho.  And last time I looked, the Hall of Fame skipper was having a rough time of it at the bellwether franchise. 


Messes take a while to clean up.  What is needed is not a passion about leaning things out and fixing things, but plotting a course for the future.  IBM did it. 


Can GE?