This has been proven with the GE results and the market response. Immelt and his team was able to "beat expectations" and GE stock did much better than the market.
In my book THE SECRET TO GE's SUCCESS, I expressed concern about what Immelt was promising, namely to grow 8% per year organically. I said it was not likely to happen.
This is what I wrote:
" Creating and Meeting High Expectations!
Welch created very high levels of expectations and Immelt, as we just said, has achieved excellent results. The issue is whether Immelt has created such high expectations and many don’t believe they are realistic and can be achieved.
Of course, I’d like to be able to stop here, and predict that Immelt will reign successfully for another 15 years, and that when he retires, he will be lauded to the same degree as his predecessor.
But my professional training and experience inclines me to try and sniff out the kinds of potential problems that might get in the way of that kind of success. What follows, therefore, are some of my four major long-term strategic concerns.
Ability to “Go BIG”
It is clear that Immelt continues to assert that GE can grow at an 8% compounded organic growth. He has even created a new process that he believes will enable the company to achieve these unprecedented results.
In the Harvard Business Review interview Immelt says that he recognizes the challenge and points out that the company achieved this growth in 2005 and will do so again in 2006.
He is clearly convinced and has the missionary zeal to make it happen. However, based on my experience and study, I am not convinced that he can do it and am concerned that he has created an unrealistic expectation.
What happens if he doesn’t make it, even for one year, will this have a negative impact on the stock price and put his reputation in jeopardy?
I think it will! "
Bill Rothschild, author of RISKTAKER, CARETAKER, SURGEON, UNDERTAKER- the four faces of strategic leadership.
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