GEWATCHER

WHO AND WHAT IS JEFF IMMELT??

2011-03-25T15:32:00.000-07:00

I am amazed and very disturbed about the leadership of Jeff IMMELT.

When I wrote THE SECRET TO GE's SUCCESS...which was originally entitled BREAKING THE GE CODE..(the so called experts at Mc Graw Hill changed the title, since they already several SECRET BOOKS).. I thought that JEFF IMMELT was just a victim of POOR TIMING and having to succeed THE LEGEND OF ALL LEGENDS..JACK WELCH..

I was even given the previlege of LUNCHING WITH JEFF in the EXECUTIVE DINNING ROOM for over two hours...

BUT, now I am totally confused.

JEFF appears to be very gracious and understanding and even has some elements of TRADITIONAL GE leadership...

BUT AGAIN.. his RELATIONSHIPS with the biggest failure of AMERICAN PRESIDENTS and even WORSE a PRESIDENT THAT LACKS LEADERSHIP TO SUSTAIN THE COUNTRIES POWER and the BEST SOCIETY EVER.. IS BOTH DISTURBING AND EVEN MAKES ME WONDER WHAT JEFF IS DOING.. IT APPEARS THAT HE SUPPORTS THE SOCIALIZATION OF THE COUNTRY AND HE IS NOT HELPING THE COMPANY, AND KEY STAKEHOLDERS.

I was once proud of GE as an ALUMNUS..but now I challenge its entire VISION, STRATEGIES and LEADERSHIP...

JEFF DO YOU REALLY KNJAOW NOW NEGATIVE WHAT YOU ARE DOING IS HAVING ON ALL OF THE "GE LOVERS, ALUMNI and KEY STAKEHOLDERS?

JACK WELCH appears to have SELECTED THE WRONG LEADER...even with the so called CREATIVE SELECTION SYSTEM.

Bill ROTHSCHILD..author of THE SECRET TO GE SUCCESS. the only real STRATEGIC HISTROY OF GE PAST and PROJECTED FUTURE.

JACK WELCH RETURNS

2011-03-04T15:42:00.000-08:00

I am enjoying the return of JACK WELCH...the CEO who never gives up.

Recently Jack has challenged the IMMELT strategies of GOING GREEN and IMMAGINATION.

He challenges whether the GREENING strategy...namely WIND FARMS and SOLAR will ever turn to the GREEN Currency of the US (which as become MONOPOLY MONEY with different colors because of the ability to replicate the currency).

When I worked for Jack it was clear that he always wanted to see the PROFIT results for any ventures or acquisitions...I agreed with the concept but challenged his logic...

IMMELT is the HEDGE FUND MANAGER of all time...and it is not clear that his portfolio makes sense..he needs the challenge of a WELCH LIKE leader...which I have always played with my clients and even in GE...

IMMELT must return to Critical analysis and REAL STRATEGIC THINKING and avoid BEING ALL THINGS TO ALL PEOPLE AND IMMAGINATION...

I still own a large number of GE shares and am disturbed that the stock price is so vulnerable and not the consistent earner of the past...

JEFF LISTEN TO ALL OF THE STAKEHOLDERS and EVEN YOUR MENTOR JACK WELCH..who is aging but not senile.

Still A GE LOVER...BUT CONTINUE TO BE A CHALLENGER OF ILLOGIC, AND NON STRATEGIC THINKING

Bill Rothschild..GE CLASS OF 1984.. and a retiree and shareholder,

2010-10-16T14:18:00.000-07:00

RETURING TO GE HEADQUARTERS at FAIRFIELD AFTER 27 YEARS..my REFLECTIONS!

2010-10-07T15:26:00.000-07:00

July 2009 I returned to visit GE's headquarters in Fairfield Connecticut for the first time that I left in 1983. It was a strange visit since NOTHING changed since I left, except for a security guard at the gate, which didn't exist in 1983 when we were all safe.

Everyone was very pleasant and professional. The lobby had not changed and I was directed to the third floor, which was the home of Reg Jones and Jack Welch when I worked there. I was greeted by a women who said to me" do you remember me?" I hesitated and said I did, but was uncertain, but she told me who she was and I did remember. She then introduced me another women who had also worked at the headquarters when I was the Strategic planner and had worked for one of my associates.

I felt at HOME and that NOTHING had changed since I left more than twenty years ago.

I was directed to the massive reception room, and I was the only guest.

After a short time, Jeff Immelt came out to welcome me. This was the first time I met Jeff personally and he was a delightful host.

Jeff and I had a one half hour visit in his executive dining room and discussed many issues about the company and my experience. He was surprised that I was at CROTONVILLE, now the Jack Welch Learning Center and that I was responsible for introducing BUSINESS SIMULATIONS and leading all of the Strategic Planning programs that was vital to the introducing the company to this vital process.

I left the over one half meeting feeling good about Jeff and his ability to lead the company. I thought he recognized that he had made mistakes and would address them.

I still like Jeff and his values and abilities but have been disappointed that that he had changed and that the strategy is on the right track.

My next discussion will describe my visit to CROTONVILLE and how it has changes when it was the TEMPLE OF CHANGE.

Bill Rothschild...

If you want to learn the complete story of GE's CODE of Success, read my book THE SECRET TO GE's SUCCESS...(a title I protested but was over- ruled by the creative editors of McGraw Hill)..

Why the surprise about Nuclear?

2010-08-29T09:58:00.000-07:00

I continue to be amazed that GE seems to be continually surprised about its ability to be a major player in the Nuclear arena. The headline in the August 26, 2010 Wall Street Journal was "Laggard GE Makes Nuclear Push". The article said that GE was able to get only one order while Westinghouse Toshiba received 8 and others got seven others. It also said that GE was disappointed that Obama hasn't help GE get more orders and provide funding.

This surprises me since it was always clear that GE had backed the less popular BWR and the market preferred the PWR. This is what I wrote in my book: The Secret To GE's Success three years ago: " Recall that, in the heyday of nuclear power, GE elected to back the BWR and not the PWR reactors. Over 75% of the installed nuclear units are PWR, and in many emerging markets like China, PWR dominate.

In January, 2006, British Nuclear Fuels--the owner of what was left of Westinghouse, including nuclear assets--decided to put it up for sale. GE allied with Hitachi made a bid. The two other bidders were both Japanese companies: Mitsubishi Heavy Industries and Toshiba. Toshiba bid $ 5.4 billion and acquired Westinghouse. GE believed the bid was too high but by failing to match Toshiba's price, it missed the opportunity to get access to the PWR technology and a large installed base, as well as the possibly losing the Chinese market. However, it should be noted that they have a relationship with Hitachi, who has been a PWR supplier. This may be one of the reasons that GE decided not to increase its bid for Westinghouse and it plans to use the combination of their own BWR and Hitachi's PWR to capture a significant share of Chinese opportunity"

I guess I was wrong about the combination of BWR and PWR since the article pointed out the GE is still focused on "a new improved" BWR, which I still think is a losing strategy.

This situation illustrates that GE may still be doing too much "imagination planning and not the proven, critical strategic thinking and decision making that made the company strong.

Bill Rothschild...

WHAT DOES GENERAL ELECTRIC STAND FOR..IT IS VERY CONFUSING..

2010-08-12T16:25:00.000-07:00

The recent discussion of how IMMELT told the C staff to be KIND of OBAMA is a complete violation of every good principle of LEADERSHIP and especially GE LEADERSHIP. The result has not only hurt the value of NBC but the integrity of the entire management team.

A year ago, I was asked to comment, by CHEIF EXECUTIVE MAGAZINE, on whether IMMELT and his team should be fired. I asserted that it was not a good idea to replace Immelt, since IMMELT was the best GE had and t there was no one in the current GE team that could do the job. Since the GE TEAM was all hand picked by Jeff and would likely continue the same strategic plan.

I personally met with IMMELT in JULY 2009 and came away believing he was open and committed to doing what was needed for GE to be come the GREAT company was. For the first few months it appeared that he was doing what a good STRATEGIC leader, in the GE tradition.

IMMELT has done some of the SURGERY that is needed, but it is confuusing to understand why he supported an OBAMA administration which is clearly either doing what is wrong because it is confused or incompetent or is trying to do what will UNDERMINE what the country is built on and wants to REDISTRIBUTE wealth AND destroy the country.

If you read my book THE SECRET TO GE's SUCCESS, you will see that GE has been a political company and was once a SOCIALISTIC oriented company under SWOPE; to a highly conservative creator of RONALD REAGEN... but unlike the IMMELT situation was based on intensive evaluations of what the US needed and how GE could help and benefit. This is a contrast to the current situation where GE, under IMMELT, has backed an adminstration which is clearly FAILING to help the country and is not help GE succeed in using its talents and resources to help the country GROW STRATEGICALLY and create REAL financially strong jobs.

IMMELT has challenged the benefit of investing in CHINA and has added a few hundred jobs to the US, but it still APPEARS TO BE A STRONG PRO-AMERICAN COMPANY.

IMMELT must decide whether it is in favor of SAVING the country or supporting the forces what will undermine it.

LESS IMAGINATION AND MORE STRATEGIC THINKING

2010-07-18T16:19:00.000-07:00

During my 40 years of strategic leadership, leading my own successful consulting firm and dealing with companies of a wide variety of sizes, position on the life cycle, and industries, I learned that WINNERS are practical and realistic and limited IMAGINATION.
Unfortunately my Alma-mater, GE, appears to be so enamored with imaging that they may have lost sight of the reality that winners must DO WHAT THEY SAY AND NOT JUST DREAM ABOUT IT.

The current GE management team imagined that CHINA was winner and now find it is not as easy to deliver results and NEVER will be.
They thought that the OBAMA HOPE was consistent with their IMAGINATION and it is not.
They IMAGINED THAT THEY COULD GROW REVENUES at a consistent rate of 8% and have now realized it is not that easy.

IHOPE AS A STOCKHOLDER, ALUMNI and FAN OF GE's ability to succeed, THAT THEY FACE REALITY AND RETURN TO REAL STRATEGISTS and SUCCESSFUL LEADERS AND NOT JUST DREAMERS.

BILL ROTHSCHILD

RONALD REAGAN's CONVERSION

2010-03-28T14:17:00.000-07:00

It is interesting that GE is celebrating the 100th birthday of Ronald Reagan, since its current political policies are very different than those of the Cordiner/ Boulware era, in which Ronnie led GE theater. In addition, GE's ads assert that the company learned from Reagan's political and economic wisdom.

The reality is that it was GE that converted Reagan and not what is being promoted.

When Reagan joined the GE Theater he was a LIBERAL DEMOCRAT, similar to the current Obama administration's socialistic policies, in which Jeff Immelt plays a role in the economic policy.

In my book THE SECRET TO GE's SUCCESS, now a best seller in six countries, I quote Reagan's own words about is socio/ political/ economic conversion:
"I began to talk more and more of how government had expanded and was infringing on liberties and interfering with private enterprise..(can you imagine what Ronnie would say about today's complete take over of all our enterprises!!!)
"It finally grew to the point that one day I came home from a speaking tour and said to Nancy 'I got out there and make these speeches which I believe---they are my own speeches-- and then every four years I find myself campaigning for the people who are doing the things that I am speaking against.' And I said "I am on the wrong side".

GE has been on several sides of the socio/ political and economic side. Swope and Young were socialists and liberal Democrats and were architects of SOCIAL SECURITY and THE NATIONAL RECOVERY ACT. Under Cordiner, the company were highly conservative Republicans and were very involved in fighting BIG GOVERNMENT and BIG UNIONS.

It is very confusing what side the company is on today. Immelt says he is vowed Republican, but yet supports many of the socialistic and big government policies of the OBAMA administration and as we said is part of the OBAMA economic team.

Reagan would not agree and if GE really believes that he contributed to the company's policies it should demonstrate how and why.

Visit http://www.strategyleader.com/ and read THE SECRET TO GE's SUCCESS to learn more about GE unique history.

Bill Rothschild

AMAZING AND DISTURBING

2010-03-07T15:18:00.000-08:00

The GOOD NEWS is that Jeff Immelt was concerned about the stockholders and image of taking a bonus when GE was not during well and its stockholders had taken a hit on both stock value and the destruction of the dividends.
The BAD NEWS and VERY DISTURBING NEWS is that his MANAGEMENT TEAM including his CFO and Vice CHAIRMEN didn't have good sense to do the same. The CFO who is responsible for missing all the signs of collapse and bad management decisions received over $13 million and the other management team members received over $16 million each.
This is amazing to me for several reasons.
First of all how do the subordinates who were personally responsible for the POOR performance deserve and get a 30 to 60 percent bonus over the leader who admitted he made mistakes and didn't deserve his bonus.
Second, where is the BOARD OF DIRECTORS who authorize these unbelievable, unjustified salaries and bonuses.

GE IS OBVIOUSLY OUT OF SYNC WITH REALITY and they OWN THEIR OTHER STAKEHOLDERS A MAJOR APOLOGY and a REEXAMINATION POOR STRATEGIC LEADERSHIP.

Bill Rothschild, GE ALUMNUS, STOCKHOLDER AND SUPPORTER..AND AUTHOR of the ONLY COMPLETE AND OBJECTIVE ASSESSMENT OF GE SUCCESSES AND FAILURES..THE SECRET TO GE's SUCCESS..

PS This poor management practices are completely INCONSISTENT WITH THE REASONS THAT GE HAS BEEN SUCCESSFUL..and needs to be changed.

Immelt and Paulson

2010-02-12T06:14:00.000-08:00

Jeff Immelt decided to play a major role in helping the United States cope with its economic issues and problems. First he joined the New York Federal Reserve and now participates in the OBAMA economic counsel. He is a friend of Paulson and obviously had conversations with Paulson before the "economic crisis".

Unfortunately, when you play a role in public arenas you are subject to being criticized and even challenged. This is happening with Paulson's assertion that Immelt called him before the crisis and told him that GE was having trouble selling its commercial paper. Paulson asserts that this added to his panic since he believed that if GE was having problems others may also be having similar problems.

Immelt disclaims this conversation and said he didn't talk about commercial paper problems.

Immelt's participation is government affairs is consistent with GE's history. Gerard Swope the President from 1922-33 was very involved with both Hoover and Roosevelt and the architect of National Recovery Act and Social Security, his co-leader Owen Young headed up the plan to help Germany recover from its war debts and a candidate for the Democratic Presidential nomination.
Cordiner and his team were involved in fighting the increasing power of BIG GOVERNMENT and BIG LABOR. GE taught Ronald Reagan many of the principles of being a conservative, which he used in his presidential tenure.

These leaders also had to take the heat of the controversies they took part in. As Harry Truman said "if you can't stand the heat, get out of the kitchen" and "the buck stops here".

To learn more about GE's willingness to be "Politically Incorrect" read the entire strategic history in my book: THE SECRET TO GE's SUCCESS- available in paper back on Amazon and in six languages, as well as KINDLE and on audio.

CONGRATULATIONS JEFF IMMELT- CREATING REAL JOBS

2010-01-30T13:03:00.000-08:00

Jeff Immelt is one of the few, if only U.S. CEO, that is creating REAL, long term professional jobs. He has invested in two facilities in the Schenectady, NY, the original home and headquarters of GE, which has declined dramatically over the past three decades. Jeff recognizes that this area is a good place to live, has excellent Universities, (RPI, Union, SUNY to name a few) and that you can hire loyal quality professionals and workers at a reasonable, competitive salary.

Jeff recognizes that investing in the United States makes great business, economic and political sense.

THANKS JEFF!!!

Bill Rothschild, author of the only comprehensive, objective assessment of GE's 127 year history, THE SECRET TO GE's SUCCESS, now in seven countries and on KINDLE.

Creating and Meeting Expectations

2010-01-23T06:45:00.000-08:00

During my entire career I have stressed the need to create realistic expectations and then meet them consistently. In fact, I have counselled my clients to create "low expectations and exceed them, rather than high expectations and fail.
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.

Marty HOLLERAN..a remarkable story about a GE alumni

2010-01-22T17:06:00.000-08:00

Extraordinary Measures is inspired by the true story of John Crowley, a man who defied conventional wisdom and risked his family’s future to pursue a cure for his children’s life-threatening disease. Supported by his beautiful wife Aileen (Keri Russell) and their three children, John Crowley (Brendan Fraser) was on the fast track. But just as his career was taking off, Crowley walked away from it all when his two youngest children, Megan and Patrick, were diagnosed with a fatal disease. With Aileen by his side, harnessing all of his skill and determination, Crowley teamed up with a brilliant but unappreciated scientist, Dr. Robert Stonehill (Harrison Ford) to save the children.

The part of the story you might not know is that Aileen Crowley is the daughter of Martin Holleran, a former GE officer. Martin Holleran’s career began with General Electric in 1966, and led to numerous executive positions which culminated, in 1986, in his election to Vice President – Sales and Distribution for the GE/RCA Consumer Electronics Business which was ultimately sold to Thomson in 1988. Martin’s son, Marty J. Holleran III, was an Area Sales Manager for GE Appliances for two years, a GE Repairman for three years, and interned at GE for two years. He is currently President and CEO of GFR Consulting.

“We’re a second generation GE Family,” said Marty on the LinkedIn GE Alumni group, “and thought our Alumni friends would like to check out this powerful story!”

I remember Marty when he was part of the Corporate Consulting family. He is a graduate of University of Scranton, a Jesuit college.

Lessons for the past...we are a REPUBLIC and not a DEMOCRACY.

2010-01-22T16:19:00.000-08:00

Moving ahead...

Over the past few days we have witnessed a major, but quiet, revolution and a reaffirmation of the strong foundation of our US Republic. The Obama administration learned that the US was not a nation of "serfs" and peasants who would follow the whims of a pretend leader... it showed that would speak out against any attempts to move the country into a "redistribution of wealth"/ socialistic and communistic state.

Scott Brown has become a celebrity because he said that "my constituents don't want SOCIALIZED medicine, because we already have a similiar system and I will fight to prevent it" This demonstrated that we are not a DEMOCRACY, but a REPUBLIC and each state has power.

The major impact was not stopping the SOCIALIST movement but just a reminder that it is not easy to REVOLUTIONIZE our country but it will take EVOLUTIONARY change.
Another major result is real, good and predictable jobs.

The U.S. MUST RECLAIM ITS MANUFACTURING leadership and provide manufacturing jobs.. I liked OBAMA idea he expressed in his campaign... TAX those who export jobs and give the FUNDS to those who create GOOD US JOBS.

I want to congratulate JEFF IMMELT for taking the leadership role in creating new manufacturing and R&D jobs in the United States...now we need to get the rest of the Fortune 500 to do the same. This combined with investing in new venture businesses will help restore the American Dream and provide the security we have enjoyed since WWII.

Keep tuned for new insights in strategic thinking that matters and restores management to THINKING IN THE BOX and NOT JUST DREAMING OUT OF THE BOX...

Bill Rothschild, author of THE SECRET TO GE's SUCCESS and RISKTAKER, CARETAKER, SURGEON AND UNDERTAKER..the four faces of Strategic Leadership.

The NBC/UNIVERSAL ZUCKER FIASCO...is beyond belief

2010-01-19T15:44:00.000-08:00

The NBC/UNIVERSAL--ZUCKER FIASCO...is beyond belief

I have spent my last forty years either as a GE Executive or as a proud GE investor and lover...but the current ZUCKER fiasco is well beyond my pride and love for GE...

GE prided itself as a PROFESSIONALLY LED company and was very clear that it expected its leaders to be WINNERS... Jeff Zucker has failed in everything he has done and is still in his job... he permitted the NBC network to become a poor #5, continued to invest in losers and now is a complete embarrassment with the LENO/ OBRIEN open war...

ONLY he and is leader, JEFF IMMELT can claim responsibility for this FAILURE.. in my book THE SECRET TO GE's SUCCESS..I identified that NBC/UNIVERSAL wa being HARVESTED and needed to be changed or exited.

The fiasco started before ZUCKER...BUT like OBAMA, he has only made things worse..
Jeff IMMELT...what are you doing?

Bill Rothschild.. author of the ONLY objective assessment of GE's successes and failures...now in SIX translations

2010-01-15T09:50:00.000-08:00

TWO NEW EDITIONS OF THE SECRET TO GE's SUCCESS. McGraw Hill USA will provide an ON-DEMAND, paperback copy of the book. It can be obtained on their site or AMAZON.
TATA- McGraw Hill is publishing an ENGLISH language version of the book for the INDIAN market.
In addition the book is now in SPANISH, JAPANESE, SIMPLIFIED CHINESE, KOREAN and INDONESIAN. A KINDLE edition is also available on the AMAZON site.

Overall, the book has been well received and has had many strong reviews. Bill intends to continually update the book by describing what Immelt and GE has done in the past nine years and how it relates to the company's past successes and failures.

This is the latest review by Robert Morris:
LATIN: The Critically Important Acronym,

No doubt for reasons of convenience, most (if not all) of the most important information about GE is summarized within a series of acronyms. For example, with regard to GE's "4 E's (+P) of Leadership," Jack Welch explained that the four Es represent positive Energy, the ability to Energize others, having an Edge (i.e. the courage to make tough yes-or-no decisions) and Execution (the ability to get the job done). What about P? "Passion!"

The subtitle to William E. Rothschild's brilliant book refers to another acronym, LATIN, that reveals "the secret to GE's success": Leadership as well as Adaptability, Talent, Influence, and Networks.

As Rothschild explains, his material covers GE's successes and failures since 1892 when it was established in New York, the result of a merger of of the Thomson-Houston Company and the Edison General Electric Company. Charles Coffin was GE's first president and Edison, who left the company two years later, initially served as a director. Rothschild describes the five success factors in each stage and provides "an objective assessment of what was done in each realm - both positive and negative."

The material is carefully organized within four sections, each of which covers a specific period throughout GE's history: Part I "Living Better Electrically": 1879-1939 (Chapters 1-4) Part II "Diversification and Decentralization": 1940-1970 (Chapters 5-9) Part III "Portfolio Leadership": 1971-2001 (Chapters 10-13) Part IV: "Back to the Future": 2001-Present (Chapters 14-16) When reading Rothschild's book, it soon becomes obvious that those who led GE determined its priorities and objectives in each of the stages of its development.

For example, Edison's focus was on identifying real problems, finding solutions and commercial applications for them, insisting that everything be patented and copyrighted;
Coffin and Edwin Rice (1892-1921) ensured the success of the merger with a commitment to participative and consultative leadership, and willingly shared authority with associates;
Gerard Swope and then Owen Young (1922-1939) took that commitment "to a higher level by creating ways for managers and employees to contribute to the company's strategies and policies;
Charles Wilson and Philip Reed (1940-1950) were transitional leaders and Wilson "understood the old GE perfectly" but lacked the experience and the temperament to lead "the significantly charged company" after World War Two and voluntarily stepped won;
Ralph Cordiner and Reed (1950-1963) spearheaded GE's decentralized growth with "a new and relatively unproven way," management by objectives (MBO); Fred Borch (1963-1972) continued decentralized management and, when realizing that he had attempted to do too much ("GE can do anything it wants to."), "instituted a radical change in GE, enabling it for the first time to exit or prune products or even entire businesses"; lacking a co-leader following the premature death of his mentor,
"Flip" Philippe, Reginald Jones(1972-1981) created a new "chairman's office," assumed the titles of chairman and CEO, and surrounded himself with those who had diverse personalities and leadership styles;
Jack Welch (1981-2001) accepted Jones's suggestion that he "blow up GE" (i.e. eliminate everyone and everything that did not add substantial value to the company) and did so - in Rothschild's words -- as a "contentious, demanding, celebrity CEO, a surgeon leader," [who was his]own intelligence network"; and finally,
Jeff Immelt (2001-Present) who is more diplomatic "but still tough" and considers people selection and their development especially high priorities as he leads GE through what continues to be a troubled global economy.

By the way, those who have a special interest in GE's current CEO are urged to check out David Magee's recently published book, Jeff Immelt the New GE Way.

Rothschild devotes equal attention to each of the other four success factors (i.e. Adaptability, Talent, Influence, and Networks) during each of the four eras. Readers will also appreciate his skillful use of various devices that cluster key points.

Briefly annotated checklists, for example, such as these: Common characteristics of all GE training programs (Pages 32 and 112), special benefits offered to electric utilities companies to ensure their growth and profitability (Page 92), GE's four-step process to recognize business opportunities (Pages 176-177), the steps Welch took to implement Six Sigma at GE (Page 214), how various CEOs successfully completed major change initiatives (Page 265), and finally, "some GE surprises and what the company did in response" (Pages 269-270).

Other reader-friendly devices include boxed "Exhibits" that also cluster key points such as those that summarize the five ingredients for success for each of the four eras: "Living Better Electrically" (Edison through Swope and Young), Diversification and Decentralization (Wilson...Borch), Portfolio Leadership (Borch...Welch), and "Back to the Future" Strategy (Immelt). Rothschild also provides a "Highlights" section to introduce each of the four Parts and a "Takeaways" section at the conclusion of most chapters.

When concluding his book, William Rothschild acknowledges, "The GE Way doesn't always work consistently at GE; it can't possibly work for any other co many that attempts to embrace it indiscriminately." Rather, he urges those in other companies to "adapt, rather than adopt, the GE approach" that he so brilliantly examines in this book.

SUCCEEDING A LEGEND-2000 GE prior to IMMELTS selection

2010-01-11T17:03:00.000-08:00

Succeeding a Legend

In 2001, Prior to the selection of Jeff Immelt as GE CEO I published this article in the Chief Executive Magazine. This article and the latest Chief Executive Magazine article ...which is also on this page, shows that it was clear that Immelt had to make changes and ADAPT, as all of the GE leaders have done. Take a look at both.

On April 2, 2001, the oldest company on the Dow Jones, General Electric, will elect a new CEO. This new CEO will have no small challenge: succeeding a business legend.

There are several candidates that we are all publicly aware of. I won't speculate on who will replace Welch, but rather focus on what the new CEO should do to become a legend in his own right. Jack himself has made it clear that the new CEo should have a minimum of 15 years in office, which in today's business world is an eternity and why Jack's replacement will need to establish his own mark as a legend.

To become a legend, the new CEO should ask the following questions:

How and why did Jack Welch become a legend?
Is the current GE business portfolio sufficient to replicate the Welch track record? What are my strategic alternatives to make me a long-term winner?

HOW AND WHY DID JACK WELCH BECOME A LEGEND?
There are four characteristics of Jack Welch that, I believe have contributed to his remarkable success. Jack is 1) a skillful, intuitive portfolio strategist; 2) willing to change the rules if required; 3) highly competitive; and 4) a great communicator and motivator.

1) The skillful intuitive portfolio strategist.
Jack knows what he likes and dislikes. With focus and careful analysis, he is willing to bet on his instincts. He has focused on what he believes were the winners and eliminated the pieces that didn't fit his strategy, but did so with an excellent sense of timing and the recognition that business and product lines that didn't fit GE were potential fits with other companies.
He has exhibited the same sense of value and timing in making acquisitions. In the past few years he has made strategic acquisitions in Japan and Europe at very attractive prices. Welch acquired RCA at a bargain price, merged its market leading consumer electronics business with a losing GE brand and then traded it to Thompson for Medical Systems properties and cash. He also spun off Utah International at a profit and sold the Aerospace and Defense businesses and has made money on the Martin Lockheed stock.

2) Willing to change the rules as needed.
Jack Welch's predecessors were unwilling to sell a business unit with the GE brand for fear that the brand would be negatively impacted. Jack changed this thinking, carefully selling the GE brand with both the small appliance and consumer electronics businesses. He took advantage of the huge profits made from the GE pension programs to supplement company earnings, as well as to use the know-how to manage other company pension programs.

3) Jack the competitor. As with his golf game, Jack in business sought to the leader in every market. His vision was simply: Be #1 or #2 or don't play. He emphasized the need to be "different" and create sustainable long-term competitive strengths.
He used GE's financial strengths and skills to gain a dominant position in many of its capital goods markets. GE has become the largest owner and leaser of aircraft, thereby pulling through aircraft engines and services. It did the same in locomotive, turbine and medical system businesses.
Welch increased GE's emphasis on selling of services and solutions, rather than just products. Services have become the major contributor to earnings and even permitted the company to sustain positions in stagnant markets, such as Nuclear and Steam generation.

4) A great communicator and motivator. An effective communications strategy has been critical to energizing the GE troops. Numerous books and articles have been written about Jack's management style, and frequent and recognized speaking engagements at MBA schools have spread his success to the academic community and to their students.

IS THE CURRENT GE BUSINESS PORTFOLIO SUFFICIENT TO REPLICATE THE WELCH TRACK RECORD?
The new CEO must accept that GE is a strategically led portfolio company with a mix of businesses in different phases of the life cycle. which enables GE to deliver consistent earnings. This is the current macro portfolio of the company.
____________________________________________________________
The 1998 GE business portfolio
Business -------------------------% Revenues--------------% Earnings
GECS-------------------------------- 49-----------------------------28
Industrial----------------------------10-----------------------------13
Aircraft Engine--------------------9-------------------------------13
Power Systems------------------8-------------------------------- 9
Plastics----------------------------6------------------------------- 11
Technical--------------------------5--------------------------------8
Major Appliances------------- -5-------------------------------- 5
Broadcasting---------------------4---------------------------------9
______________________________________________________________
Jack Welch has had several favorite businesses during his reign. The first is financial services, which he has used as both a means (to pull through other GE products and services) and an end (becoming a major owner and leaser of capital goods equipment). Aircraft Engine and Medical Systems (included in the Technical) have been other favorites and he has made a significant number of acquisitions to enhance the position of these lines. The other businesses have been able to create strong positions and contribute to the company's earnings and cash flow.

There are other issues to be addressed, such as, what are the impact of changes financial service regulations and the creation of enormous financial service companies going to have on GECS? What are the risks inherent in the "own/ lease provide equipment and services synergy? Can the mature businesses continue to be the earnings and cash generators or have they reached a point where new technological and innovative strategies will be required?

The portfolio has don a remarkable job, but it will require new ideas and innovations to remain strong. The following, among others, is the list of what GE owns and leases either by itself or with partners:

A fleet of 850 owned and managed aircraft
950,000 cars and trucks under lease and service management
Fleet of over 1,100,000 TEU
13 communications satellites
186,000 rail cars
Over 100 modular buildings and facilities

WHAT ARE MY STRATEGIC ALTERNATIVES TO MAKE ME A LONG-TERM WINNER?

Continue to do what Jack did...
This is going to prove difficult. It would require that he be the intuitive portfolio leader, flexible, highly competitive and a good motivator and communicator. Obviously, these are positive characteristics, but rarely has a successor been able to replicate the legend. Plus, the current GE portfolio is vulnerable and doesn't appear to have the ability to produce the same results for next decade and beyond.
Re-institute the TECHNOLOGICAL and MARKET INNOVATION OF GE'S past.
Welch did not become a legend because of any notable technological breakthroughs made my GE under his command. But there have been innovations in financing, services and applications, which stimulated growth.

The New CEO may wish to review the strategic history of GR and determine if past innovations could help. In 1963, GE was faced with the need to find new growth areas.

It commissioned the Growth Council and challenged it to find opportunities that were growing faster than the GNP and built on GE strengths. The council came up with 10 areas:
Products--------------------------------------Services
Aircraft Engines __________ Financial and Personal Services
Computers_________________Entertainment
Polymer Chemicals_______Community Development
Nuclear_____________________Education
Medical_Systems_____________________

Many of these recommendations were foundations for significant GE businesses. Financial Services, polymer chemicals, aircraft engines and medical systems were all great successes.

For GE other opportunities, such as computers, community development and education failed, but did prove to be major growth industries. One of the major problems GE had was that it tried all of them. It was not selective and it assumed that managers could manage anything.
The new CEO might wish to commission a similar council comprised of the best and brightest inside and outside the company. The council could identify areas that build on GE's significant financial, services and applications strengths and identify acquisitions and partnerships to enhance its technological and marketing skills.
The major issue is how much risk does the new CEO want to take? GE has not truly succeed in more than 60 percent of their new ventures, but their batting average is better than their competitors.

RECOGNIZE THAT GE MIGHT FARE BETTER AS MORE THAN ONE FIRM.
In the past decade many companies have decided to split themselves up. AT&T has done it twice: once to comply with the court ruling and once to create shareholder value and focus. ITT (one of the first conglomerates) split because its business portfolio was not strong enough.
Jack Welch has studied options and strongly rejects splitting GE up.When asked by Forbes what he thought if his successor split up GE, Jack was quoted as saying:" It meant I've picked the wrong guy--I haven't done my job well." The company position is that GE is now "boundary less" and that it gains from exchanging ideas across businesses.

This may all be true, but it's still an option the new CEO must consider. He should step back and be objective about what is best for the company in the next two decades and not what has worked in the past. The process should be evolutionary, not revolutionary. Jack Welch took three years before he started his evolutionary process. Making timely decisions is what makes the legend during the evolutionary process.

The first step in the evolution is to create at least three companies and establish tracking stocks:
1- TRADITIONAL GE. This would include the electrical, electro-mechanical and chemical based components of the company. Lighting, power systems, aircraft engine, and plastics would be part of this company. Its mission would be to continue to grow profitable sales and maintain strong positions, using the skills and resources of GE Capital as required. In essence, this is the continuation of the current strategies. There may be, however, some pruning required with Major Appliances as a disposition candidate.
2- GE FINANCIAL SERVICES. In essence, it is now a separate company and behaves like one. This company should aggressively but selectively continue to gain position and be the financial arm of the other components, which would enable GE to adapt to the dynamic changes in the industry. It may require the acquisition of or merger with a major financial services company.
3 GE TECHNOLOGY. This is the major change in the portfolio and Welch strategy. Jack elected not to be a major player in the information and communications, biotechnology and new IT-based markets. GE has made many acquisitions in the medical systems and communications area, but nothing real dramatic; most have been either line or market extensions. It has not really decided how to use NBC as a platform for the revolutions taking place in the information, communications and entertainment arenas. The new CEO must take decisive and major steps in these markets before it's too late. New ventures, creating new products and services and so on, all of which GE did before the Welch era.

By creating these three companies the new CEO would be able to focus each one and be positioned to participate in new markets. The tracking stocks are likely to increase overall stockholder value and reduce the need for debt. But most importantly, it would enable the company to clarify what it really is and develop the most appropriate management and teams to meet the unique needs of the three companies. Integration and communication need not suffer if they are managed
.
AS WELCH MIGHT SAY: SO WHAT?
The old adage, "If it ain' t broke, don' fix it," seems to be the major reason that the multi-GE approach is rejected. Jack Welch, however, didn't live by these rules. He was proactive in taking actions before they became problems. The new CEO must do the same. He must be creative and not just try to emulate Jack. He will need Welch's intuitively strategic, competitive communications and motivational skill, but he must use these skills to create a truly new GE.

Bill Rothschild, author of the THE SECRET TO GE's SUCCESS...NOW IN SIX LANGUAGE, KINDLE, AUDIO...

Why is the PRESS trying to DESTROY GE?

2009-04-03T15:50:00.000-07:00

Why is there a current desire to DESTROY GE?

Before the 'WALL STREET MELTDOWN and the uprising against those who required and begged for Federal Government bailouts and survival packages, General Electric was a global ICON...

GE's GREAT ICON image was a combination of a strong, well managed company with predicable earnings, the largest capitalization, the WELCH deification and a diversified portfolio. I described in one ONE WORD...LATIN.

LATIN summarized the reason that the company not only prospered, but excelled, while its other peer DOW JONES companies disappeared or suffered. LATIN stands for Leadership (no cookie cutters) Adaptability (nothing is sacred) Talent (grow your own) Influencing (Being politically unacceptable) and Networks (meeting realistic expectations).

However since the Wall Street meltdown...GE has been placed in the "Financial services... you can't believe them" category and its stock has dropped to all time lows...

BUT the good news is that the GE management has Adapted...(consistent with the GE tradition) and admitted it made mistakes and is moving in the right direction...

Jeff Immelt had vowed to reduce its dependence on GE Capital and return it to what is supposed to me...A means to grow the Industrial businesses and not be an END.
Recognition that GE is a US company with a global presence... he said in the most recent annual report to invest globally, but keep the US operations a center of the global growth.
A return to the disciplines of sound strategic thinking and decision making and include all of the input, both positive and negative and avoid being SURPRISED.

Jeff Immelt also made a personal commitment. He gave up over $12 million of personal wealth, because it was RIGHT and, even though his personal commitment deserved the incentives, the company stock did not...this is truly unique.

OVERALL.. I personally have a vested interest in GE, since I own GE stock and am a loyal GE alumnus...but I am and have been a strong opponent to the Immelt strategic vision of GO BIG and GO GLOBAL... My book: THE SECRET TO GE's SUCCESS and my continuing blog" GEWATCHER.. have continually challenged the IMMELT strategy and have described, in depth, GE's failures...

BUT.. GE is still the most successful US company and has demonstrated, over 127 years, that it is a winner and able to adapt and conquer change. One of the key elements is STRONG, DEDICATED, COMMITTED LEADERS...and based on what Jeff IMMELT has done and continues to do..I PERSONALLY am committed to continue my personal WEALTH to his leadership...however if I see evidence this is not correct, I will be the first to let you know.

Bill Rothschild, CEO Rothschild Strategies Unlimited LLC.. a personal, boutique that will let you know what is real and what you need to do to win...

GE wants "naysayers"!!!

2009-04-03T07:24:00.000-07:00

In his "letter to shareholders" in the 2008 Annual Report: Jeff Immelt states:

"For 2009, we have sharpened our strategic processes and scenario planning. We have increased the frequency and changed the agendas of our operating meetings. Each of our businesses has set up a process to identify the "naysayers" in each of our industries to make sure their voices are heard inside GE. From the top to the bottom and across GE, we must and will listen more critically and respectfully to each other".

I would not use the word "naysayer" to describe what it takes to be a strong, skilled strategy reviewer, but it is clear that GE now recognizes that it is impossible to develop sound, realistic strategies and expectations, without having many points of view.

This is not a new GE situation. In the mid 1970s, Fred Borch, GE's CEO, recognized that his ambitious "go big/ venture" program was failing to provide "profitable earnings" and so he instituted the disciplined strategic thinking and decision making process that helped turn the company around.

Borch conducted a study and found: "In many cases, the operating businesses didn’t do an adequate job of evaluating their markets, customers, and competitors, and they often failed to identify technological and sociopolitical trends and forces that could negatively impact their businesses. The result was that there were too many omissions, miscalculations, and surprises." (excerpt from my book:" The Secret to GE's Success")

GE Instituted Annual Review Systems that included multi-functional professionals, from inside GE, consulting firms and academics. The propose was to challenge the underpinning assumptions and be sure that the best insights and intelligence sources were used in constructing the strategic priorities and execution strategies.

There was a continuing review and monitoring of the key underpinning assumptions to assure that they were wrong, actions could be taken to minimize any negative impacts. The key was to avoid "surprising yourself" and minimize the impact of surprises, if and when they occurred.

Another key element of this system was Admitting Mistakes. "The overriding objective was to ensure that the business units had realistic expectations and weren’t kidding themselves or senior management. Management had been surprised by all of the ventures, in one way or another, and this had negatively impacted its credibility on Wall Street. The new process was designed to ensure that these surprises were minimized and that promises were met. Once this process was in place, the worst thing that business unit managers could do was surprise senior management. If they did, they were often demoted or even fired" (excerpt from my book: The Secret to GE's Success")

I was fortunate to head up this strategy review and integration process for several years and it is one of my consulting firms most successful services.

I am pleased that GE plans to reinstate this type of review process, so that it will not suffer the consequences of "surprising itself".

Bill Rothschild, CEO Rothschild Strategies Unlimited, LLC

Immelt asserts: "GE will always invest to win globally, but this should include a preeminent position in a STRONG U.S."

2009-04-03T06:42:00.000-07:00

Jeff Immelt made a strong statement in his 2009 "shareholder letter" which clearly demonstrates that he is in the GE leadership tradition. In my book: THE SECRET TO GE'S SUCCESS and my GEWATCHER blog, I have continually asserted that one of the key reasons that GE is still a strong and vibrant 127 year old company, is that its leaders were willing to admit mistakes and adapt. Jeff continues to adapt, admit mistakes and move on...he calls it "resetting". This is another example of adapting.

This is what Jeff wrote in his shareholder letter:

I have also learned something about my country. I run a global company, but I am a citizen of the U.S. I believe that a popular, thirty-year notion that the U.S. can evolve from being a technology and manufacturing leader to a service leader is just wrong. In the end, this philosophy transformed the financial services industry from one that supported commerce to a complex trading market that operated outside the economy. Real engineering was traded for financial engineering. In the end, our businesses, our government, and many local leaders lost sight of what makes a nation great: a passion for innovation.

To this end, we need an educational system that inspires hard work, discipline, and creative thinking. The ability to innovate must be valued again. We must discover new technologies and develop a productive manufacturing base. Our trade deficit is a sign of real weakness and we must reduce our debt to the world. GE will always invest to win globally, but this should include a preeminent position in a strong U.S.

There is no question that some of most talented smartest people became enamored with the "get rich/quickly" opportunities in financial services and haven't used their talents to create new products and services. Hopefully the "Wall Street meltdown" will change this and more students will go to engineering and scientific universities and not business schools. I agree with Jeff that we need to reward real innovation and creativity and not just "creative book keeping".

Bill Rothschild, author of THE SECRET TO GE's SUCCESS and other global best selling books and articles..visit http://www.strategyleader.com/ to learn more.

WINNERS...Set Realistic (even low) Expectations and EXCEED THEM

2009-03-22T17:52:00.000-07:00

GE has the ability to do what I tell my clients "create realistic/ even lower" expectations and exceed them.

For the past few years, I believe that GE has created unusually high expectations and has not achieved them. This has contributed to the stock decline and loss of credibility. Now, the company can do the opposite. The "street" doesn't believe that GE can achieve the earnings it promises, but GE asserts it can,

SO...GE can do what it promised and be a perceived as an OVERACHIEVER...if it does, I believe the stock will surge and the GE management will regain the confidence it learns... and the investors will be happy.

A WIN/ WIN/ WIN opportunity...so I hope that Immelt and his team will use this unusual opportunity and be heroes.

Bill Rothschild, author of the only comprehensive, objective and insightful assessment of GE's successes and failures from Edison to Immelt... THE SECRET TO GE's SUCCESS and GE Watcher blog...

Economist's Magazines GE assessment is fair and balanced..but their conclusion is wrong!

2009-03-21T07:25:00.000-07:00

My favorite magazine is the ECONOMIST, which calls itself a newspaper. It is my favorite because, unlike other magazines who think that brevity is the key to success, the Economist provides in-depth, comprehensive and in most cases, fair and balanced news, columns and special reports. Its GE analysis in March 21, 2009 edition, entitled: Losing its magic touch demonstrates what I am asserting. The Economist, unlike other publications, gave a good analysis of GE and its problems. Lets review some of the key points the article made about GE:

"How did GE get itself into a mess that has seen $269 billion wiped off its stock market value since the beginning of 2008? The main reason is that the strategy which helped GE gain its reputation for consistently producing bumper profits, year in and year out, has backfired. At its core was GE Capital. Founded in 1932 as General Electric Contracts Corporation to provide financing that supported the group’s industrial businesses, the operation gradually expanded into other areas of lending unrelated to GE. Under Jack Welch, GE’s chief executive from 1981 to 2001, GE Capital grew rapidly." This is true GE Capital was established as GE Credit Corporation during the great depression to finance dealers inventories and consumer purchases (note this is different than the Economist "facts", but mine are correct).
"If GE Capital were a bank, it would rank as one of the biggest in America (see chart 1). Its growth has made the division more and more important to its parent’s overall revenues and performance (see chart 2). In 2007 GE Capital’s profit made up 55% of the company’s total. "This is true and even though Jeff Immelt promised to reduce the dependence on GE Capital it didn't happen and the company became addicted to the ability to use GECC earnings to fill the gap and make the numbers.
"Given the unit’s difficulties, it would be understandable if Mr Immelt wanted to jettison GE Capital as soon as it has been nursed back to health—which may take a while. But he insists he is committed to the business, which he says has strong franchises in areas such as aviation and energy finance, thanks to its close association with GE’s industrial activities." This is also insightful GE's success in aircraft engines was partially a result of GE's financing of the engines and providing operating leases to airlines. This was a successful strategy and should continue, but it doesn't require all of the consumer and commodity type of financing GECC does. These could be separated out and spun off. Possibly using a " tracking stock approach".
"Mr Immelt, recognising that the world has changed, has placed more emphasis on organic growth since taking office. He has built up the company’s marketing expertise, whereas in Mr Welch’s GE engineers and spreadsheet jockeys were the masters. And he has focused on innovation. Since 2001 GE has invested $330m to expand its research facilities around the world. It spent $4.3 billion on R&D in 2008, up from $2.3 billion in 2002." This is a significant point. Welch focused on short term and not the long term and the company's ability to innovate declined during his tenure. Immelt needed to change the strategy and focus on innovation. In my book: The Secret to GE's SUCCESS" In my book, I entitled this "back to the future" since Immelt has tried to restore what GE once was, namely: innovative. However Jeff combined it with GO BIG (also discussed in the book") and this has become a major problem.
"So does this mean that GE should be broken up? Assuming the company can revive GE Capital, there might be a case for hanging on to that business even if its margins are squeezed. By refocusing on its original mission, a stripped-down finance unit could help drive sales at GE’s industrial operations by providing finance for large infrastructure projects and other activities." This is key to GE's future success, namely to become more focused, more selective, use the financial arm as a MEANS to grow the other businesses and not an END in itself.
"Some critics claim that GE’s boss has dented his credibility by making several optimistic predictions that have been quickly proved wrong. For instance, barely a couple of weeks before the company revealed that it had missed its earnings in the first quarter of 2008, Mr Immelt declared that he expected GE to hit its target. In September he denied that the company needed a fresh capital injection. But soon afterwards it announced that it had raised $15 billion from Mr Buffett and others." I totally agree that GE has created unrealistic expectations and has not been able to meet them. In my book, I challenged the company's assertion that it could grow at a 8% organic compounded growth rate, especially if the assumption that it could also grow earnings at the same rate, which had been the case under Welch.
"Nevertheless the suspicion lingers that GE’s boss has a habit of promising too much. The best way for him to rebuild confidence in his leadership will be to demonstrate that GE can bounce back quickly from its woes. It will require a prodigious feat of managerial wizardry to pull that off." I agree that there has been a tendency to over promise and not deliver...however, it Immelt follows his predecessors he will lead through adversity, admit mistakes and adapt thus making the company even stronger. A review of GE's past (in my book) shows that GE leaders, of which there have only been 10) all faced adversities.
-Edison picked the wrong technologies but adapted.
-Swope and Young saw GE revenues drop 75% during the Great Depression,
-Borch got the company growing again after the Great Electrical Conspiracy
-Jones managed to overcome hyper inflation and
-Immelt grew the company successfully and profitably after 9/11.

GE's success has been because of its LEADERSHIP, ADAPTABILITY, TALENT, INFLUENCING PUBLIC ISSUES and CREATING STRONG MANAGEMENT SYSTEMS and NETWORKS...I call this LATIN in my book.

In closing, I believe that the ECONOMIST has done a great job in summarizing what GE is and the key challenges it faces, however I DON'T THINK IT WILL REQUIRE A WIZARD, BUT A RETURN TO SOUND STRATEGIC THINKING AND DECISION MAKING that made the company stronger even in adversity.

Bill Rothschild, author of THE SECRET TO GE's SUCCESS and GE WATCH blog (www.strategyleader.com)

Shareholder versus Stakeholder Value

2009-03-15T16:39:00.000-07:00

In a recent FINANCIAL TIMES front page article the issue was raised about who created the Shareholder value concept and its negative impact on US businesses. The author asserted that the concept can be traced to Jack Welch's speech in 1981. Welch asserts that maximizing SHORT TERM profits to enhance Shareholder value, which really means increasing the share price is not a strategy and is not a good thing to do.
I totally agree with JACK that maximizing short term profits to increase the STOCK price is poor management. But in fact, this is what he did and it enhanced the share price.
But this concept of CREATING and MEETING Wall STREET EXPECTATIONS didn't start with JACK, it really started with Fred Borch and enhanced by Reg Jones... Jack two previous predecessors.
It started when GE was involved in PRICE FIXING. Borch took over because GE stock had stopped and Fred recognized it need a jump start. He and Reg, his CFO, decided to create and meet realistic expectations on Wall Street and it was GE that established the now accepted approach of guiding the Street.
GE under Jones mastered this approach and GE stock started to move upward, however Jones also recognized the need to balance all STAKEHOLDER (investors, stockholders, governments, employees, management, unions, communities and others) results, but clearly recognized that it was impossible to satisfy all stakeholders.
Welch elected to focus on shareholders, employees and management and he was successful..but times have changed and these stakeholders are under attack.
The issue facing Immelt and other current CEO's is how to balance the conflicting needs and expectations of all stakeholders and determine which is the right mix and emphasis.

Bill Rothschild, author to the most comprehensive, objective and insightful evaluation of GE's 127 years of successes and failures...THE SECRET TO GE's SUCCESS..

GE should show the world its total portfolio...to regain confidence!

2009-03-07T07:24:00.000-08:00

My son, Steve, and I were chatting about the GE situation yesterday and he made a great recommendation. Steve, who is a marketing expert and CEO of a new healthcare information venture, said that people really doesn't know what GE really is and the company needs to have extensive marketing and public relations campaign to explain what the company is and what it's opportunities are.

I believe that Steve is right. GE has become so complex and global that it is unclear what it is. In simple terms, GE is a strategic portfolio led company, with strong positions, globally in energy, health care and many other infrastructure markets that are very likely to benefit from the massive stimulus plans in the United States and China. It has had a strong leadership team and it is not just another financial services company.

In my book, THE SECRET TO GE's SUCCESS, I use the word LATIN to summarize GE's successes. It stands for Leadership, Adaptability, Talent, Influencing and Networks. These five characteristics explain why GE has been able to be successful for over 127 years, and overcome failures and adversity. I believe that GE still has strengths in each of these areas, but the company must be more aggressive in communicating what it is, why it is positioned to be successful for another 100 years.

In short, GE needs to give the world the BIG PICTURE and explain why they should have renewed confidence that the company will be able to overcome its current adversities and be successful for another 127 years.

Bill Rothschild, Rothschild Strategies Unlimited, LLC

Admitting Mistakes is a key to GE's Past success!

2009-03-03T07:34:00.000-08:00

Jeff Immelt is truly in the GE Leadership tradition. He has been willing to adapt to reality, rethink his game plan and most of all today...admitted he was responsible for the company's tarnished image. This is in the GE tradition.

In my book, THE SECRET TO GE's SUCCESS, I enumerate a number of situations where the GE leaders were wrong, recognized their mistake and moved on. In fact, the first GE CEO to do this was Edison, who picked the wrong technology, but was willing to admit it and move the company into the winning technology.

I still believe that one of the reasons that GE is in the current situation is that it's GO BIG/ GO GLOBAL strategies were wrong. I strongly believe that GE's strengths have been and will be being selective and focused on markets that they can lead. Unfortunately, this is not possible when you just want to get bigger.

However, the good news is that this may change and the company will again target and win.

I admire Immelt's leadership, dedication and even willingness to invest his own money in GE stock, when others are not and giving up his incentive bonuses ($12 million) when others have not been willing to do so. He is clearly dedicated to GE and hopefully the current crisis will be a positive and not a negative. He believes that the crisis provides opportunities and I agree, but it will require both taking risks and doing the required surgery.

I believe that the GE stock has been unfairly hammered because the company has been equated with many mismanaged banks and financial services company. GE is well managed and still has over 55% of its revenues and even more of its profits in businesses that will benefit from the current "stimulus plans" and the desire to invest in infrastructure, electrical generation, healthcare and many other key industries.

Investors and analysts should look at the total picture and give GE its just stock value. It should be trading at 15 times earnings and not 5. It credit rating should be retained since it is still profitable and doing what is necessary to assure it is liquid. Overall, GE should be viewed objectively and not emotionally.

Bill Rothschild, author of five strategic leadership books, many articles and blogs...visit http://www.strategyleader.com/

IT AMAZES ME...that current LEADERS don't meet promised EXPECTATIONS...

2009-02-27T15:42:00.002-08:00

In my entire career as a senior executive at GE and my 25 years plus years as strategic consultant, I always told my clients that it is critical to NEVER PROMISE what you can't deliver.
Unfortunately, this message has been lost on the current generation of "leader?", in business, in the government and in even in religion.
Surely, the BUSH administration didn't do what they promised and it helped create the MESS we are now in.
But my most disappointing, even amazed, situation is in General Electric. A review of GE's past showed that the company failed to meet the PROMISED EXPECTATION, but learned from its mistakes and since the latter years of BORCH, and the JONES and WELCH eras... GE could be counted on to do "what it said".
IMMELT has now violated this THREE TIMES in the past year.
Last January... he asserted, without hestitation... that GE would make its promised numbers.. but a month later GE failed to meet the promises.
Just a few months ago IMMELT promised that GE would continue to provide the dividends for 2009 and that it would maintain its AAA rating.
Today.. it reduced its dividend 68%... and it is clear that its AAA rating will be reduced.

I am not sure what the CURRENT GENERATION of SO CALLED LEADERS... didn't learn that it vital to DO WHAT YOU SAY and ALWAYS MEET THE EXPECTATIONS THEY CREATED.

WHY HAS THIS HAPPENED?

I am disappointed and amazed and hope that at some point in time that the CURRENT LEADERS??? will recognize that REAL LEADERS CREATE AND MEET REALISTIC EXPECTATIONS...

Bill Rothschild, author of the only comprehensive, objective review of GE's 127 years and the author GEWatcher and StrategyReview blogs...both on www.strategyleader.com

IT AMAZES ME...

2009-02-27T15:42:00.001-08:00

In the GE SUCCESS TRADITION...

2009-02-21T16:03:00.000-08:00

I was privilege to attend a meeting at which GE's CEO, JEFF IMMELT talked about the challenges facing the world and GE today and I was impressed by his insights and sense of reality. Jeff described the challenges we all know about the economy and added a few personal insights, as well as the issues he has had to deal with.

I listened to his insights and decisions and came a way with a strong feeling that Jeff is a TRUE LEADER in the GE TRADITION and is trying to ADAPT to the dynamics and complexity facing us all, but most of a $ 187 Billion, global conglomerate.

As a GE investor, though I am shocked and discouraged with the low GE price and EPS, I am willing to accept that Jeff and his team are in control, know what is happening and convinced that the company is 'SECURE", a word he used several times.

I still have concerns about many of the elements of Jeff's strategies and vision, but not about his dedication, abilities and willingness to face reality and make the best decisions possible. I wish I could say the same about those making decisions in Washington about spending the biggest "money throwing" event in the history of the world.

If I made investment decisions, I would bet on the IMMELT team to keep the ship on course and viable...

Bill Rothschild..author of the best case history on what makes a company successful, THE SECRET TO GE's SUCCESS.... now in six languages and on Kindle...

ADAPTING AND REINVENTING GE- A Secret to GE's Success.

2009-02-15T06:42:00.000-08:00

In a recent speech Jeff Immelt, current GE CEO, explained that the key to surviving and even prospering in a Crisis situation is ADAPTING.. This is consistent with GE's remarkable ability to reinvent itself over its 127 years.

Each of the GE's leaders was challenged in different ways, but learned from their challenges and moved the company in a new and exciting direction.

In my latest book “The Secret of GE’s Success” I describe how GE has resisted what I call: cookie cutter succession planning.

GE has had only ten CEOs in its 126 years, with a range of six to twenty year reigns. Remarkably each have been different and have leaders who were very different and were able and willing to ADAPT to change.

Charles Coffin succeeded Thomas Edison when Edison GE merged with Thomson Houston. Coffin was a very gentlemanly executive who was able to integrate these two different companies and their cultures, while developing highly positive relations with customers. He was faced with leading the company out of the Panic of 1893, a major depression. He negotiated with JP Morgan to take over the company’s equity position in the emerging electric utilities and installed the GE conservative financial systems.

Swope and Young had to lead the company both during the highly prosperous periods of the roaring twenties and the great depression. These unique individuals also played a major role in influencing social and economic policies and encouraging the unionization of the company at a period of major labor unrest and violence. Further they instituted a consultative management approach to the company that was highly unique at the time.

Cordiner institutionalized management and took strong stands against Big Government and Big Labor, as well as contributing to political conversion of Ronald Reagan. Unfortunately his achievements were darkened by the great electrical conspiracy and his inability to select his personal choice as successor.

Borch was faced with the challenge of moving the company ahead after the price fixing scandal and instituted one of the most risky and challenging new venture program ever. He moved the company in services, including financial services as well as several high tech ventures. To his credit, Borch recognized he had miscalculated the ability of the company to undertake and lead all of these ventures simultaneously and instituted the portfolio leadership systems that have enabled the company to continue deal with diversity and change.

Jones was a financial leader that used the portfolio management approaches to grow both revenues and earnings in a predictable way that calmed the concerns of Wall Street and positioned the company to move its stock upward.

Welch was a completely different type of leader than Jones. For over twenty years he was able to grow the company, prune its portfolio and make it a financial services giant, while continuing to grow some of the traditional businesses. He became a celebrity CEO and GE and Welch were viewed as one and the same.

Again when Welch left he selected an individual with different styles and visions. Jeff Immelt was faced with the challenges of succeeding a legend, keeping the company’s stock high, maintaining the triple A rating and initiating changes in a maturing portfolio of businesses. Further he was faced, four days into his tenure, with the aftermath of September 11, and the fact that the company not only lost employees in the World Trade buildings, but one of its leased aircraft and a stock that feel rapidly and has not regained the levels it had prior to 9/11.

In short, GE has had the unique ability to select CEOs who could lead for long periods, were not inhibited by the past and could adapt to change. I am pleased that Immelt is following his predecessors and wish him success in doing as well as they did.

Bill Rothschild, author of four vital Strategic leadership books.

Strategy is for the HEALTHY...not the sick or dying.

2009-02-14T06:46:00.001-08:00

During my career, both as GE's Corporate Strategist and in my more than 26 years as a consultant, I have emphasized the need to do strategic thinking and decision making, when the organization is healthy and has options, and not when it is very sick, in the intensive care ward or dying.

The recent, shocking collapse of the automobile and financial services industries, prove that it is impossible to develop viable options when the patients are in emergency surgery. It amazes me that the so called "leaders" of giant, prestigious companies, like GM, Ford, Citicorp, Merrill...could have been so surprised by the decline and fall of their markets. They fell into the GO BIG/ GO GLOBAL trap and tried to be all things to all people and do "creative packaging and book keeping" to grow market share. Unfortunately this has proven to be a global phenomena and not just an American problem.

I became involved in learning and practicing the art of strategic thinking in the early 1970s when GE's CEO Fred Borch recognized, that he had tried to do too much too soon and it negatively impacted GE's profitability and threatened its future.

Mr. Borch admitted he made a mistake and became the advocate of the principles of strategic portfolio leadership and management. GE was willing to challenge everything and everyone and focus on areas where GE could win.This enabled the company to prosper. Unfortunately, even GE, has become a victim of the GO BIG and GO GLOBAL mystique...but at least the company still has a strong portfolio and has options. It still makes money and hasn't lost billions and forced to ask for government handouts.

Hopefully it will turnaround its stock and credibility decline, learn from the past and re institute the sound strategic thinking and decision making skills that it had in the past.In summary, I hope that we all learn from this current malaise and re institute the disciplines of sound strategic thinking and decision making.

If you want to learn more read Putting It All Together- a guide to strategic thinking decision making..available on http://www.strategyleader.com/.Bill Rothschild, Rothschild Strategies Unlimited LLC

CONVERSION OF RONALD REAGAN...THE GE INFLUENC

2009-02-13T16:40:00.000-08:00

Only one company can make the claim that one of their employees became president of the United States, and even more assert that they changed this individual political philosophy. The company is General Electric

In my latest book: The Secret to GE’s Success, I describe how and why Ronald Reagan converted from being a liberal, union loving Democrat to a highly conservative Republican.

Ronald Reagan was hired by GE to host the very popular GE Theater, as well as to become the company spokesman. Reagan toured all of the GE plants and addressed GE employees at all levels. He worked for Lemuel Boulware, who was the architect of an anti-big government / anti- big labor strategy and policy that became known as Boulwarism.

The underpinning of this employee and community relations philosophy and strategy was that Big Government and Big Labor, independently and in an alliance, were dedicated to take away management’s rights and make the company a socialist state. Even though GE had been pro-labor and pro-government in the pre-war years, under Gerard Swope and Owen Young, the GE leadership, under Wilson and then Cordiner took the opposite view.

Under Boulwarism, GE management studied the needs of the employees and communities and balanced them with needs of the company to be competitive and profitable and decided on “fair but balanced” offer prior to the union negotiations. They presented the offer before the union talks and were willing to take a strike, rather than do was not right for all of the major stakeholders. Further they told the communities that if they could not operate effectively and profitably in the current locations they were ready and willing to move their production to more company, non union, locations. Obviously, these practices were not popular with the unions, the government and the traditional GE communities, but GE did what it said and divided and conquered the unions.

Reagan, though he wrote his own speeches, became a missionary for Boulwarism and he ultimately concluded that the message was right and so he changed his own socio/political philosophies. This conversion led to his running and winning the office of Governor of California and then the US Presidency.

Bill Rothschild...author of "the Strategic LEADERSHIP Library"

SHARING THE DEPRESSION BURDEN---GE STYLE

2009-02-11T06:18:00.000-08:00

One of the reasons that GE was so successful was the LEADERSHIP of Gerard Swope and Owen Young during the depression... this is an excerpt from my latest book: THE SECRET TO GE's SUCCESS...
"In 1929, the stock market collapsed and the world suffered the greatest economic depression in modern times. As noted, GE's revenues dropped more than 75% during the period. In comparison to many of its peers, who instituted sweeping layoffs---and in many cases put skilled and loyal employees out on the street--Swope and Yound were both more compassionate and more pragmatic. They recognized that if they wanted to keep talented people, they would have to take steps to minimize the Depression's impact on them.
Three programs were introduced:

Unemployment benefits. GE provided loans and relief to those workers the company could not continue to employ.

Guaranteed work program. GE's electric lamp business allowed workers to share the pain. Instead of just laying off 20% of the workforce, it instituted a program to allow employees to reduce their work hours from five to four days. Because each worker took a 20% reduction in pay, the program permitted GE to keep everyone employed.

Profit sharing in the 1930's. Another important innovation of the Swope/Young era was the introduction, in 1930, of a profit-sharing plan. This was unique in several ways. First it was offered at a time when many companies were having trouble simply surviving. Second, it was offered to all employees, regardless of their position in the company. Again, this plan was consistent with the socialistic philosophies held by Swope and supported by Young."

Read the entire story of the genius of Swope and Young---models of REAL LEADERS from which today's CEOs could learn...especially GE management..

Bill Rothschild, author of COMPLETE STRATEGIC LEADERSHIP LIBRARY...

ADMITTING TO MISTAKES AND MOVE ON...

2009-02-09T08:18:00.000-08:00

One of the continuing fatal flaws of many executives in the business, public and religious sectors is that they appear to be incapable of admitting they made a mistake. In fact, many of them make matters worse, sometimes fatal, by trying to cover up the mistakes or looking for scapegoats.

My latest book “ The Secret to GE’s Success” demonstrates how GE leaders from the inception of the company in most cases, have avoided this problem by admitting that they made a mistake, taking responsibility and moving on, hopefully trying to avoid repeating the mistake in the future.

Edison made the first, almost deadly mistake, of selecting the wrong way of generating and distributing electricity. He selected the direct current approach (DC) while his adversary and the rest of the industry selected alternating current (AC). Recognizing his error, he at first tried to discredit the competitive approach, but when it was clear he was wrong, he moved aside and allowed others to merge his company with Thomson Houston, which held second place in the alternating current market. The new company became even stronger and was gifted with innovative and strong management. If Edison didn’t admit he was wrong, GE would never have been able to survive.

But GE management was not always willing to admit its mistakes and resulted in a major set back. GE unfortunately was not as forthcoming in the late1950’s when it was accused of price fixing and instead of admitting the mistake it adopted its own version of “Watergate” which forced the company to abort its planned succession plan, slowed its growth and negated its historically strong relationships with the electric utility executives.

For three years GE’s revenues leveled at $5 billion and it forced the new CEO, Fred Borch to pursue nine major new ventures simultaneously, covering a wide spectrum of product and services growth opportunities. Because of a series of miscalculations and wishful thinking five of the nine ventures failed and even the four successful ventures took longer to yield positive results than anticipated.

To Borch’s credit, he recognized his mistakes and took corrective actions, which led to the installation of a very successful strategic portfolio leadership system and philosophy. The failed ventures were aborted and the limited financial and manpower resources focused on the winners. This lead to a very thorough and continuing assessment of all the key businesses and the ability to anticipate the need to change before it was necessary.

The Welch era continued to practice this “nothing is sacred” leadership style and to take calculated risks, but also willing and able to admit mistakes and move on.

However, the current GE leader and his team appear to be reluctant to admit that their GO BIG/ GO GLOBAL strategy needs to be challenged and adapted to meet the changing world. Immelt is vowed and determined to continue to invest globally and is highly dependent on government business to be successful. This is okay, but it is a challenge to develop and sustain strong relationships with governments, many of who are in a crisis mode.

Bill Rothschild, author of the ONLY comprehensive, objective and insightful assessment of GE's successes and failures, THE SECRET TO GE's SUCCESS.

AN IMMELT OPTION- SPIN OFF GE CAPITAL and ADAPT TO REALITY!

2009-02-05T15:53:00.000-08:00

Every day, as a stockholder who has a significant amount of my personal wealth in GE and also a loyal GE alumni, I watch the GE stock decline, that appears to be both a victim of POOR MANAGEMENT and the overall depression of the DOW.

Since I have written my book THE SECRET OF GE's SUCCESS, that provided an objective and insightful view of GE from its beginning to 2007, I am amazed at the decline and fall of the GE stock, the threat of losing its AAA rating (one of the prides of the company) and even the possibility of the decline or loss of the 100 year plus dividend.

I could take pride in "I told you so"..which I did in my book, but I am deeply concerned about the real GE stakeholders, the investors, employees and retirees, who have continued to believe the ability of GE management to their job, first of which to protect these valuable stakeholders., but this is not my message.

GE leadership starting with JEFF and his dream team, must be willing to do what his predecessor did and recognize mistakes and accept reality. This means that they must STOP GOING BIG..and start the necessary SURGERY.

(Note.. I call Immelt's team the dream team because in my book that GE replaced sound strategic thinking education with "dream sessions" which in my day was called creative thinking and later christened "out of the box thinking". Unfortunately I believe that MOST of our problems today is that too many people GOT OUT OF THE BOX and were not objective and face reality"

The first surgery must be done on GETTING RID OF GE CAPITAL... this should be separated from the company and made a separate BANK HOLDING COMPANY. This will allow the investment community to separate GE from the BIG BANK LOSERS.

Next, the company should do a complete and comprehensive STRATEGIC PORTFOLIO evaluation, which was the heart and soul of the REG JONES strategic thinking and decision process... it short, it must do what REG JONES and JACK WELCH did, perform skillful and profitable surgery...but it should establish a time line to assure that GE sells everything at the PEAK of its value, like WELCH did, and not make it a fire sale.

Finally, Immelt must re-establish the critical thinking and evaluations of the FINANCIAL and STRATEGIC AUDIT people.. is short reward and not kill the "messengers with the bad news".

I have many other recommendations to the IMMELT team and the GE board...but this is enough for now... in short, GE must return to the policies and practices that allowed it to, not only survive, but prosper during its 127 years and not be like their competitors (Westinghouse, RCA and so on, who are now only footnotes in business history...

LEARN FROM THE PAST SUCCESSES AND FAILURES..is the message of my book and my recommendation to the IMMELT team

Bill Rothschild, author of the only comprehensive and objective assessment of GE's successes and failure, now in six language and a world best seller...THE SECRET TO GE's SUCCESS..or as I wanted to call it BREAKING THE GE CODE..

Firing IMMELT is not the answer.

2009-01-22T15:34:00.000-08:00

No one, even me, would have anticipated, that GE stock would be below 15 and even worse at 11.50. Many are panicking and are calls for the remove of JEFF IMMELT. I don't think this is the answer... it is like believing that OBAMA can do a better job than Bush.

There is no question that IMMELT and HIS DREAM TEAM.. probably selected the WRONG GO BIG/ GO GLOBAL strategy and continued to rely on GE Capital to MAKE THE NUMBERS. But I strongly believe that IMMELT had to change the Welch HARVEST/ GE CAPITAL strategy and try an regain some of the past GE INNOVATION successes.

In my book, I concluded that the IMMELT GO BIG strategy was vulnerable to two major issues.

First was the fact that he had created UNREALISTIC EXPECTATIONS and had to DELIVER WHAT HE PROMISED EVERY TIME and in January 2008 he didn't and his CREDIBILITY COLLAPSED...then was the FINANCIAL and ECONOMIC meltdown which negatively impacted the WELCH dependence on GE CAPITAL to meet the numbers.
Second, was the fact that "everything takes longer than expected". Immelt has bet on MAJOR, LONG CYCLE opportunities globally and even if he is right, which I think he is, electric power systems, health care, ecological products, will take time to develop.

If IMMELT and his DREAM TEAM returns to SOUND STRATEGIC THINKING AND DECISION MAKING and MEET THE EXPECTATIONS HE HAS CREATED...the company will move ahead and gradually become a WINNER FOR ALL KEY STAKEHOLDERS...I AM BETTING HE WILL!!

But if he doesn't adapt...admit mistakes... it not clear who will take over and do even as good a job...Bring in an OUTSIDER will make things even worse...

SO LET US ALL HOPE AND PRAY THAT JEFF AND HIS TEAM WILL DO THE JOB..

Bill Rothschild, author of the only objective and comprehensive assessment of GE successes and failures, the MC GRAW-HILL BOOK THE SECRET TO GE SUCCESS.

GO BIG, ONE STOP SHOPPING NEVER WORK..LEARN FROM HISTORY..

2009-01-19T12:48:00.000-08:00

It is interesting that many of the BIG companies never learn from history. Over the past six months many of the GO BIG companies who thought that if they had ONE STOP SHOPPING and would satisfy ALL NEEDS have either gone bankrupt or been taken over by others. For instance the Sandy WEIL dream of one stop shopping and being global has failed. This was similar to the fate of Merrill another GO BIG player who is now part of another company BANK OF AMERICA who has merged the COUNTRYWIDE and MERRILL to do the same thing that caused Citi to fail..namely trying to be all things to all people.

Two decades ago, SEARS was the leading retailer in the world...but it decided to become a ONE STOP financial services company, integrating insurance (ALL STATE which it owned) with a real estate and mortgage company AND it not only lost its retail leadership but was forced to sell off the financial service assets.

The story is not just reserved to financial services. General Motors is another failed example of being "all things to all people" and we can find examples in all industries.

So why do companies not learn...why can't they learn that it is STRATEGIC SELECTIVITY AND FOCUS that makes winners and the GO BIG is never the answer.

Bill Rothschild, author of five best selling strategic leadership books..including the most recent THE SECRET TO GE's SUCCESS, which enable leaders to be focused and selective.

CRISIS LEADERSHIP...what the UNITED STATES NEEDS TODAY..and isn't getting it.

2009-01-17T11:35:00.000-08:00

Crisis Leadership
Whether we like it or not, the United States in a crisis… and it is just not a financial crisis.
This is good and bad news.
Obviously, the bad news is obvious… the financial markets are in turmoil. Companies and individuals are overly leveraged, companies can’t get credit, individuals are max-ed out on their credit cards and many are losing their homes.
But there is good news….the United States is a CRISIS society and only takes constructive, difficult actions when it is in crisis.
Let me explain
1. Why the crisis is more than what is happening on Wall Street and in housing.
2. How we have responded constructively to past crises and hopeful can respond to this one.
3. What type of strategic leaders we need and some of the actions required.
More than Wall Street and Housing
With the advent of television and cable there have been more coverage of the financial market and so the rise or fall of stock prices has been be the surrogate for the US economy. When the markets are going up, as they have been over the past five years, everyone thinks the economy is good and you should continue to spend. When markets decline, as they have been in the past few months, the "gloom and doomers" appear and everyone begins to worry.
But in recent months, the housing bubble has deflated, sub-prime mortgages have caused most the key financial firms to write off billions, take enormous losses, get funded by “foreign governments, billionaires”merge, change their legal status and even go out of business. Commercial and private foreclosures and deflates have increased and people are often walking away and are unable to pay.

So now there is panic and all of the politicians want to save us by “quick fixes”.
But it is just not these problems that are putting us in a crisis situation.
Our infrastructure has been “harvested” or milked and are not able to sustain their simple needs of people to commute to work, fly and even heat and light their homes. There is grid lock in major cities on its highways, airports are reporting more “near misses”, when it rains the electricity goes out, the railroads are almost non-existent and not a major factor in providing transportation or shipping. We could enumerate more problems in health care, education, water and flood control. In short, we have a “third world infrastructure”.

But it is worse, we have become a debtor nation. Our balance of trade, weak dollar has enabled China, Dubai, Saudi Arabia to make major acquisitions of United States company and technologies. We have exported our manufacturing jobs and have become a service economy. Individuals are max-ed out their credit and can hardly afford to live. We have also decreased our security and ability to respond if attacked.

Students are graduating from our colleges heavily in debt and unable to find jobs that can allow them to pay their loans. The quality and rigidity of the educational system has declined. Some students can’t write, others have no idea of what is happening in the world. Colleges often have no classes on Friday and the students take a minimum work load.

More examples could be furnished but it is fair to say that there is a crisis is all phases of the United States economy and it is not just one problem, but the combination of these problems that put us in crisis.
TOO MANY RISKTAKER/CARETAKES AND NOT ENOUGH SURGEONS.
Risktaking and Caretaking Presidents
Since the end of the Second World War, the United States presidents have been either risk taker or caretakers… none, have been surgeons, and though the country has been harvested and there have not been any undertakers…yet.
Let’s take a look at the situations that each of these president’s faced and their style of leadership.
· Roosevelt--- inherited a country in crisis… the depression required taking major risks to jump start the economy. His first act was to close all of the banks… move the country to a more socialistic than capitalistic situation. He took enormous risks in helping England survive and some even believe the was willing to let the Japanese bomb Pearl Harbor to get the country into the war.
· Truman… the risk taker of all time…he bet on dropping the bomb…even though he had very little insight in how it would work out…
· Eisenhower was the caretaker of all time… he just let the world happen… no waves..
· Kennedy… not in time long enough to really classify… he was a risk taker when he tried to invade Cuba, but lacked the courage to see if it would work… he took a major risk with Russia and they backed down…so he was more of a risk taker than a caretaker.
· Nixon…was a risk taker, but his personality negated what he was able to do.
· Carter…was a true caretaker and a micro manager…
· Reagan was a risk taker.. and was able to create an economic evolution and the creation of a CULT.
· Father George BUSH was a caretaker… really doesn’t do much. His invasion and quick retreat of Iraq demonstrated this.
· Clinton the typical caretaker… was willing to change to fit the popular reaction.
· Bush W.. was a risk taker…but didn’t really understand the risk he was taking and surrounded himself with individuals that supported a “hawkish, foreign policy.
Crisis Leaders… but the United States has had other major crises in the past and has had a few leaders able to rise to the occasion. Let’s review a few.
· Civil War was our greatest crisis. When Lincoln took office, South Carolina split from the union and the Confederacy was formed. The bloodiest, “brother against brother”, family against family war ensued and Lincoln had to take actions that didn’t even have the support of those in the Union. His great talent was to be able to work with both friends and advocates and keep the country afloat.. a remarkable accomplishment, which should be imitated by leaders today.
· Great Depression… In the 1920’s the United States experienced many of the same blessings as it has in the 1980- 1990 period. There was affluence. People lived well and most of them lived over their heads and were speculators. Towards the end of the period there were signs that the “the good life” was in jeopardy…but the “if it isn’t broke…don’t fix it” mentality ruled and even though Hoover proposed programs they were rejected. It took the collapse of Wall Street to force changes and it was very painful. Roosevelt seized control and the government took over. NRA, WPA and other alphabet programs were introduced and people just tried to survive.
· World War II--- again prior to the “bombing of Pearl Harbor” the UNITED STATES wanted to pretend that the aggression of Hitler and Japan were not their problem, but the bombing again changed everything and the country again gave away its individual rights for the national interest. There was rationing, blackouts and a draft…
· Sputnik was another major event that changed the United States. The ability of the Russians to put a man in space and our inability to do so, enabled Kennedy to get people to honor his famous words: ‘ask not what the country can do for you, but what you can do for the country”… the space program has significantly contributed to our stand of living and given us many of the products that we now enjoy, like cellular, micro-electronics, new materials etc.
· The September 11th attack is another example…but this one is still unfolding so it is too early to see if has really changed us.
The message is that when the United States has been forced to make major changes and to focus on what is good for the nation and not their own selfish interests. The country has been ready, able and willing to make these changes and we have had the resources and leadership to pull it off.
But in each and every case, the country has refused to accept the reality of change before it happened and then has been forced to move rapidly.
Fortunately it has worked.
EVERYONE WANTS CHANGE.
We are now in a prolonged primary period in which we have had to listen to hopeful “presidents” tell us that we need to change. Some say “Washington is broken”, others say that we need to Spend MORE…others say we need to spend less…but none of the messages are really significantly different than we have been.
We have now have a “house of lords” called the Senate, consisting of long tenure, complacent individuals, many of whom have been in office for over 20 years. These individuals are more interested giving “pork” to their constituents, so that they can stay in office, than really making major changes and they have no term limits.

The House of Representatives are continually running for office and they appear more interested in “getting their unfair” piece of the government funds to keep their constituents happy and willing to provide them with the funds to get re-elected.
The nation is totally divided. There are racial, ethnic, economic, social advocacy groups that all want their way and the lobbyists, populated by ex-government officials and former elected officials to get represent vested interests.
In short, we have constructed a government that is only viable if the country is infinitely wealthy and has not really deficiencies. It is like the government of the Roman, Greek and other empires that all declined and fell because they lived in a “glass palace”.
SO WHAT?
These are the two words have applied in all of my professional career. Is there a solution?
I think there is a solution but it will be painful and must be executed now.
The first solution is to change the type of leaders we have now. I think that we have a government of too many “caretakers”, who are more concerned with the status quo and their own personal needs and wants. Note: the word…too many… I am not saying that we don’t have some of the right type of leaders, but if we do they are a small minority and not the majority.
Right Leaders for the Right TIME and SITUATION.
In my 1993 book Risktaker. Caretaker, Surgeon, Undertaker- the four faces of strategic leadership, I classify leaders into four types and describe their characteristics. This is a summary of each of the leadership characteristics and its relationship to the life cycle of the organization.

· Risk takers are most appropriate for start up situations. These individuals are missionaries, intuitive, dynamic and excellent communicators. They have a mission and are willing to bet their lives on making them happen. They are revolutionary.
· Caretakers are more cautious, managerial and tied to evolutionary rather than revolutionary changes.
· Surgeons are required when an organization is in trouble and needs restructuring. These leaders are willing to challenge the statusquo and folklore and hold NOTHING SACRED…everything and everyone is challenged and subject to being divested or liquidated.
· Undertakers are those able to take an organization and either wind it down or divest or merge it with another more viable organization.
The names are not critical, but what is critical is that there are NO LEADERS FOR ALL TIMES and that if you put the wrong leader in the wrong situation they will fail.
WANTED—Surgeon Leaders.
The United States now need leaders in the Executive and Legislative branches that are willing to take actions that will set priorities and allocate the resources consistent with the priorities, they are SELECTIVE and not “all things to all people”.
This means that they are willing TO CUT programs, Be POLITICALLY INCORRECT and recognize that they will antagonize some of the their constituents and even other nations.
· “NOTHING and NO ONE is SACRED”- The country leaders, including the President, his administration and Congress must be will to step back and evaluate all of the country needs and requirements and not make anything or anyone sacred.
· Set Priorities and Allocate Resources- Using a clear set of viable criteria the leaders must do an OBJECTIVE evaluation and set priorities and then be willing to communicate what needs to be done and what can’t be done… this means being POLITICALLY INCORRECT is needed.
· DO what they SAY…this is the essence of strategic leadership. Strategy is what you do and not what you say. Unfortunately, this will take a major change in the “political mindset”..where it is common to say one thing and do something else.
· LINE ITEM VETO- The president must be able to cut out the pork and not permit the valuable and needed programs to be surrounded by politically motivated, non-productive waste full pork.
· BALANCED BUDGET. Willingness to live in our means and not just continue to add to the debt… this means that there must be a CONSTITUTIONAL BALANCED BUDGET and no exceptions. If programs are increased in one area, others must be decreased or more revenues must be generated.
· TERM LIMITS FOR EVERYONE- Time limits on all members of government. Roosevelt made it clear that there must be time limits on the Presidency and so we have a two term president. But the Senate have become the House of Lords and a long tenure group of “too comfortable” and too Powerful individuals. If it make sense for two terms for the PRESIDENT, why doesn’t make sense for the Senate. The House members terms should be extended to four years and they two must only be able to serve for two terms.
· STOP FINANCING OUR ENEMIES. Stop all FOREIGN aid and examine where it should go. Don’t give money to our enemies or to those who are wealthier than we are. We can’t buy friendship and these funds should be used to solve real problems and be time limited. No annuities that go on and on and are actually used to undermine their purpose.
· NO MORE POLICEMAN AND MISSIONARY- Moving from the policeman and “democratic” missionaries to willing to allow other countries to manage their own countries and select the best form of government for them and not what may work of us. This also means a reality test on whether democracy is really working here. It is only partially working.
IMPOSSIBLE DREAM??
Reading this list of requirements may make you think that I am totally Nave and it is impossible to get these type of changes. After all, the current systems and policies protect the incumbents in government and allow them to get enough “pork” to keep them in office. There are too many and strong lobbyists who have created one of the only growth industries in the United States. There is a great fear of not giving away money to all nations even to our enemy since the country is already unpopular.
So, on the surface it is impossible and the current policies and practices will continue UNTIL THERE IS A REAL CRISIS. The crisis is likely to take the form of major recession, combined with massive unemployment and even some form of the “bread lines of the Great Depression”.
In conclusion… the United States must recognize its world role is changing and it must focus on being a little more self centered and not try to be the policeman and democracy missionary of the world. If it doesn’t it will just become another “historical” empire who self destructed because it lived in a “fairyland” and not in a real, changing and highly competitive world.

Bill Rothschild, author of THE SECRET TO GE’s SUCCESS and RISKTAKER, CARETAKER, SURGEON, UNDERTAKER- the four faces of strategic leadership.

Everyone must admit that BERNIE MADOFF should receive an award for being the MARKETING GENIUS of the past twenty years.

2009-01-05T15:58:00.000-08:00

Everyone must admit that BERNIE MADOFF should receive an award for being the MARKETING GENIUS of the past twenty years.

Of course, we all admit he may have been the biggest crook in all of history...but I would like to discuss what Bernie did that could be put to POSITIVE practices.

First Bernie understood segmentation. He targeted primarily the Jewish wealthy and charities. Based on what is published these were his chosen people. I am a strong believe in targeting and focusing on a specific segment. This might be based on gender, affluence or wealth...Bernie targeted both affluence and religion.

Second, he created a "myth" of exclusivity. He didn't accept anyone and even rejected some of his applicants...this made his myth even strong... it was the "exclusive country club" mentality.

Third, he didn't hire a large sales force, but permitted his sales force to belong and then use their Missionary zeal to convert others. Many of his missionaries lost all they had, but believed in Bernie.

Fourth, the created HIGH EXPECTATIONS and MET THEM. His returns were high and consistent.

Overall BERNIE MADOFF was the living image of the RELATIONSHIP, ENTREPRENEURIAL salesman.

He did a great job... but unfortunately it was ALL A LIE.If we ignore Madoff's dishonesty... he exhibited the essence of a RELATIONSHIP Salesman...

Bill Rothschild... author of THE SECRET TO GE's SUCCESS... a company who was never led by the MADOFF types and has delivered what it promised...for over 127 years (and hopefully will continue to do so for the next 100 years)

General Electric's 50year + plus Gas Turbine Commitment to Excellence

2008-12-24T12:32:00.000-08:00

The General Electric Energy site reported the following on December 16, 2008

"Government of Iraq Signs Power Generation Agreement with GE Energy Valued at Approximately $3 Billion Iraq Power Initiative Nearly Doubles Electricity Generation Capacity (Baghdad, Iraq - December 16, 2008)

The Iraqi Ministry of Electricity and GE Energy announced today at a ceremony in Baghdad that they have signed an agreement for power generation equipment and services valued at nearly $3 billion to provide much-needed electricity to support Iraq's future economic development. The announcement is a significant milestone as the country seeks to rapidly develop its energy infrastructure and increase its electricity production.

Under the agreement, GE Energy is providing heavy-duty frame 9E multi-fuel gas turbines capable of supplying 7,000 megawatts (MW) of electricity. The Government of Iraq plans to install the units at key sites around the country to provide needed support for the electricity grid. GE's 9E gas turbine technology has proven reliability and performance in more than 400 applications worldwide."
This order demonstrates GE's long term commitment to its core, innovative products and services.
The Gas Turbine business had its roots in the Second World War and made a major venture under the leadership of Ralph Cordiner in the late 1950's. This technologywas used in electrical generation, locomotive and ship propulsion systems. In addition the technology was developed in Evendale's Jet Engine business. Both the Schenectady and Evendale competed aggressively to gain market share in some cases competed against themselves. In my book: The Secret To GE's Success (page 96) I used this internal competition to describe why decentralization had some limitations. "One of the major limitations of decentralization was that in some situations the departments competed against each other. For instance, the jet engine and gas turbine department developed two different versions of the gas turbine and found themselves competing against each other in some markets. This wasn't resolved until much later during the Borch era; meanwhile, the result was customer confusion and the loss of business to competition".
General Electric has long history of product innovation and a willingness to take a long term view, even experiment with organizational systems that provided both external and internal competition. This is a unique characteristic of GE and has contributed to its continuing growth and vitality.
Bill Rothschild, author of the only comprehensive, objective and insightful evaluation of GE's 127 years of successes and failures, THE SECRET TO GE's SUCCESS, now in six languages and a global best seller.

GE the POSITIVES...

2008-12-20T16:23:00.000-08:00

Since the economic and credit crisis...GE has suffered...and for many reasons it should...but it is important to step back and look at the entire company and its positives and negatives.
Since the press and so called "investment analysts" have decided to focus on the negatives lets look at the positives of this REMARKABLE company.

First of all it is diversified... which every one asserts is important.

Second it is focused on major growth areas.

ELECTRICITY... which needs a major overall and upgrade. It provides NUCLEAR, LARGE STEAM TURBINES AND TRANSMISSION SYSTEMS
GREENING products and services.. which covers the gambit of wind, solar..et
HEALTH CARE... ranging from diagnostic to information systems and software.
INFRASTRUCTURE.. which includes a first class locomotive product line.
LIGHTING which is still a major consumer of electricity and a major opportunity for innovative systems
INNOVATIVE appliances which can help contribute to the "home of future...which is efficient and energy saving
Financing...which has been grown too BIG and if restructured and refocued can be a major element to enabling consumers and businesses to afford to innovate and refocus

Third.. it is still solvent and makes money.. unfortunately because of the current fiasco in financial systems and demise of the US "big three" automobile... it is being compared with losing companies unfairly.
Fourth.. a leadership team and deep bench... unlike the rest of the world GE has skilled people at all levels and even though I may disagree with their strategies and actions...they are still among the best, (but the rest are just terrible.

In short, GE still is a vibrant company and should not be included with the LOSERS.. however, it is still important that the GE management and leadership learn from its past successes and failures, which includes adapting, admitting mistakes and being realistic...

Bill Rothschild,author of the only objective, comprehensive and insightful analysis of GE's successes and failures and what we can learn from them: THE SECRET TO GE's SUCCESS.. available in all major bookstores and in SIX languages.

BACK TO REALITY--Creating realistic expectations

2008-12-17T06:35:00.000-08:00

In my book, THE SECRET TO GE's SUCCESS, I challenged Immelt's assertion that he could grow GE at an 8% compounded growth rate, which translated into added $14 billion plus revenues per year. This challenge was based on my extensive experience, study and evaluations of major companies and especially GE.

This is what I wrote (page 250) : " He (Immelt) 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. It is possible that in the long term he will have doubled the revenues every nine years, but it is really impossible to add $14 billion plus revenues year after year?

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!"

Unfortunately, I was right... it is impossible for any organization to growth continually. There are always down cycles and the strong organizations are willing to adapt to these changes, set more realistic expectations and move ahead. I hope that Immelt and his team are re instituting the "strategic thinking and decision making disciplines that enabled Borch and Jones to admit their mistakes and refocus the company's portfolio.

Recent actions and words appear to indicate that this type of strategic thinking and decision making is being used, but only time will tell.

If you want to learn why GE was successful in the past and should be in the future, please read my book THE SECRET TO GE's SUCCESS . It provides an objective, comprehensive and insightful view of the companies successes and failures..and what you can " take away " from this remarkable company. If you have an interest in learning more about strategic thinking and decision making, read Putting It All Together- a guide to Strategic Thinking and decision making...There is a revised and updated edition available on my site: http://www.strategyleader.com/. This book and its companion software StrategyLeader is used in many business and executive programs.

Bill Rothschild, CEO Rothschild Strategies Unlimited, LLC.. that provides personalized consulting and workshops on the art and science of strategic thinking and decision making.

Immelt...globalization affirmation

2008-12-16T16:11:00.000-08:00

In the Economist's THE WORLD in 2009 edition, Jeff Immelt asserts that globalization is vital and must be RE-EMBRACED. These are some of this key points:

"A strong international trade system is fundamental"

" Continued economic liberalization enhances growth"

"Protectionism must be resisted"

"Global trade must be fair"

I challenged this entire theme. If the world was fair and all countries permitted goods and services to flow in an out of them based on real economic and marketing principles then Immelt is right...but the reality is that this has NEVER happened and NEVER WILL HAPPEN.

The first responsibility of ALL governments is to support and enhance their own countries and provide REAL jobs and positive balance of trade. They must PROTECT their own patents and copyrights and skills... The United States lives in a DREAM WORLD... the country had given away its COMPETITIVE ADVANTAGES and KNOW HOW for short term, greed and profitability and has exported GOOD JOBS to countries that are not willing to honor the intellectual properties.

The United States is now in crisis BECAUSE it can't provide high paying jobs to its citizens. All of the major companies, including GE, has given away jobs, opened laboratories in countries that have a reputation of not honoring patents, copyrights and intellectual proprietaries, all in the name of SHAREHOLDER value, but not STAKEHOLDER VALUE..but unfortunately even the shareholders have been devastated.

The United States companies and government must learn to focus on THE UNITED STATES citizens first and then if it can afford it go GLOBAL

LEARN HOW TO THINK STRATEGICALLY...www.strategyleader.com

Bill Rothschild, author of the only comprehensive, objective and insightful analysis of GE's past successes and failures...THE SECRET TO GE's SUCCESS.

THE GREAT AMERICAN AUTOMOBILE HARVEST

2008-12-05T08:17:00.000-08:00

It is amazing to watch the three automobile CEO's sit before Congress and ask for the Federal Government to save them. The American Automobile companies are a classic case of a HARVEST strategy, which in simple terms they have sold off market share over several decades, reaped handsome profits and then collapsed.

Each of these three companies were once led by visionaries and strong leaders.

Alfred Sloane was the leader in market segmentation and providing unique brands and autos for each segment. He led the idea of market migration...the first buyers purchased a Chevy, then migrated upward to the ultimate a CADDY.
Henry Ford was the low cost, manufacturing genius, introducing the assembly line and offering one color BLACK.

Chrysler focused on product innovation and differentiation and introduced many new ideas and concepts.

Each of the companies prospered until the early 1960s, when they all assumed that there would be FEW automobile companies and they could compete against themselves and ignore the new comers, Japanese automakers. In fact they allowed the Japanese to take control of the small, economy car segment because its margins were lower than the big, gas guzzler segments.They all moved to a manufacturing strategy and ignored the markets and the trends. They sacrificed quality and innovation for lower costs and then gave away the shop to the UNION, providing unreasonable benefits and increasing salaries. They sold the same cars under different brands and downgraded the quality of the high end, prestige brands, like Cadillac, Lincoln and Chrysler.

All of these companies instituted "cookie cutter" manpower and educational systems, so that all of the candidates looked alike and were "automobile" men.

Further all of them divested their non automobile subsidiaries to focus on just automobiles. For instance, General Motors sold its Frigidaire appliance business, its ALLISON division, its locomotive business and so on. All of which were market leaders, but didn't fit the automobile mentality

The reason that it has taken decades to put these companies on the edge of collapse is that they had very large share and were so big. It takes time to harvest giants, but ultimately they meet the same fate of smaller companies, they go out of business. This is the point they are today.

I have mixed emotions about whether to save them or not, but I do think that all of the current leaders, the company's Board of Directors SHOULD RESIGN now... but the problem is that because of their COOKIE CUTTER development systems, it is unlikely they have replacements that can do the surgery and competitive/ market based strategic thinking and development requried and unfortunately it has been demonstrated that bring in outsiders doesn't work either.
Further it is difficult to do creative strategic thinking when you are in the EMERGENCY room and just trying to stay alive. Strategy MUST Be DONE when you are healthy and have options and not when you are trying to survive.Sloane, Ford and Chrysler must be turning over in their graves.

Bill Rothschild, author of the book that shows why GE is different and hopefully will avoid the same mistakes as the Automobile companies...THE SECRET TO GE's SUCCESS and PUTTING IT ALL TOGETHER - a guide to strategic thinking and decision making.

Realistic EXPECTATIONS...

2008-12-03T15:33:00.000-08:00

I have advocated realism and establishing REALISTIC, not DREAMING expectations. In my book THE SECRET TO GE's SUCCESS, I described how historically, GE, was able to set realistic expectations and then MEET them.

Unfortunately, the current GE leadership decided to establish... "DREAMING SESSIONS and OUT OF THE BOX" expectations and they failed.

But now reality has forced all, not just GE, to stop dreaming and focus on the current and potential reality and not over promise... the result is clear. Yesterday... Immelt and his dream team, told the world things were BAD...but they had the resources to continue the traditional GE dividends... and even though the results were not desirable ...the GE stock rose 14%...too bad they didn't do this in March and GE would be the safe haven and its stock would be double its current value.

Bill Rothschild, author of the only book that explains the past successes and failures of GE and why General Electric (GE) needs to get back to LATIN...read: THE SECRET TO GE's SUCCESS...

GE explains why they are CONFIDENT and believe that their strategy is still right!

2008-11-26T11:26:00.000-08:00

Confidence... is vital in a crisis situation and it continues to be apparent the Immelt and his team are very confident that they have the right strategy and it will yield positive results for all of the stakeholders.

This is summary of what they have communicated on the GE website (http://www.ge.com/) , about the critical issues and how they are addressing them. I would like discuss these points briefly:

GE is a strong and solvent company-- and adapting to change..
My opinion: I am happy that Immelt and his team have recognized that being adaptable is key to the success of the company. This is one of the key points I made in my book.
The Company is safe
• "We have taken actions to keep the Company safe and to maintain a strong balance sheet. These include reducing leverage and long-term debt needs to solidify our Triple-A credit rating and raising an additional $15 billion of cash through an equity offering. This is money in the bank that gives us additional protection and flexibility."
My opinion... unfortunately the actions taken to keep the Triple A rating caused the stock to dive to as low as $12 a share... this was a surprise and it is critical that future surprises be avoided.
Aggressive cost management
My Opinion...GE has always been focused on cost reductions. However, it is very difficult to rely on the Business Units to do this without top down prodding and enforcement. The combination of top down and bottom up cost reduction has worked the best. The key is assure that the most vital businesses don't sacrifice the future to make the short term numbers...
No “bailout” money
My Opinion-- unfortunately "perception is often reality" and the company's moves to get Buffet and Government money made it appear that it was required and not just desired... it is vital that the company review the words and timing of its actions so that it is not just related to sick companies.
Diversified business model
My Opinion... most of the most recent news stories about GE appear to confirm that energy and infrastructure are doing well. It is vital that this continues and if there are changes that the company inform investors early and tell the entire truth... NO SURPRISES...
Global growth
• "More than half of our projected ~$187 billion in revenues will come from outside the U.S. this year. While other economies are experiencing challenges, some areas are growing and our broad diversification will serve us well."
My Opinion: I am still concerned about having Research and Development Labs in China and India, since it puts GE innovative and technological assets and skills in countries where it is not uncommon to have them pirated. China still has a poor track record on patent and copyright protection.

• "Providing service to our customers is a key piece of our business. It is even more important in challenging times as customers want to insure that their equipment is running efficiently and effectively. Services are high margin; they will contribute about $35 billion in revenue in 2008 and make up a significant portion of our backlog. GE Capital is profitable and manages risk prudently"
My Opinion... Services have a been a key to GE's success since the Jones era...however, the best services are based on strong technological based products and systems.
• "GE Capital is expected to make about $9 billion in 2008, more than almost any other financial services company in the world"
My Opinion is that GE Capital plays a vital part of the overall GE strategy, since it enables the company to finance high tech systems and projects...but it has been allowed to take on a life of its own and became all things to all people and highly leveraged and opportunistic... Immelt has promised to reduce the dependence on GECC now he must do it.

"We are a profitable, well run business with a portfolio of high quality assets and hold the highest long and short-term credit ratings from S&P and Moody’s. Notwithstanding this, we continue to diversify our funding sources (including growing deposits), reduce our reliance on commercial paper and strengthen liquidity and capital adequacy to improve our access to funding."
Stock price
My Opinion: GE's stock has been impacted by the financial crisis, but if the company had not missed its first quarter and surprised everyone, including themselves, it would still be in the high 20's or low 30's. It was SURPRISE that caused half the problem.

Overall, I am still a GE fan and investor... I still think the company needs to be more selective and focused and not be focused on GOING BIG and GOING GLOBAL..further they need to slow down, focus on doing what they say and avoiding further surprises... if they do and follow the key factors of past success, which I call LATIN...Leadership, adaptability, talent, influencing and networks, all of the stakeholders will prosper.

Bill Rothschild, author of the only objective, comprehensive and insightful analysis of GE's 127 years of successes and failures and the lessons we can learn from both...THE SECRET TO GE's SUCCESS.

GE's actions and contracts increase confidence!!!

2008-11-26T07:51:00.000-08:00

It is both reassuring and confusing that GE is continuing to invest in new projects as though nothing is happening in the world. The latest $850 million investment in a wind farm, in British Columbia is just one in a series of new investments that the company has made. This is confusing since the company just accepted Federal Government money to assure preserved its AAA credit rating.

Hopefully, these actions and the continuing number of large energy and infrastructure contracts worldwide will reassure the investment community that GE is not only going to survive but will do what it did in the past prosper because of its ability to adapt and provide the leadership required to do the job.

Bill Rothschild, author of the only objective, comprehensive and insightful analysis of GE's 127 years of success and admitting and responding to its failures, THE SECRET TO GE's SUCCESS...now in six languages including Chinese, Indonesian, Japanese, Spanish and Korean.
Available on www.Amazon.com .

The GE Capital Story

2008-11-20T15:46:00.000-08:00

In 1932, General Electric recognized the need to help its dealers survive the Great Depression and have cash to finance their floor planning and consumer credit, so they created the General Electric Credit Corporation. GECC continued in this role until the 1960's, when Fred Borch created his "growth council" to identify new ways for the company to diversify and get off the $5 billion revenue plateau, that resulted from the Great Electrical Conspiracy...the price fixing scandal.
One of the recommendations of the Growth Council was to focus on FINANCIAL SERVICES, which included moving into other financial sectors. The head of this task force was Ticker Klock, a GE financial executive. Borch selected Klock to expand the scope of GE Credit and he moved the company into other financial services, including commercial financing and "private label" credit cards.
During the Jones era, GE recognized that financial large commercial projects was both a MEANS to enhancing revenues and an END to make more money. For instance, GE was able to sell more jet engines if it financed the the aircraft and then provided operating leases to airlines. The same was true of locomotives and so GE Credit became a key element in GE's marketing strategies.
When Jack Welch became CEO he selected two of his key staff from GECC. One was Dennis Dannerman who became CFO and other Larry Bossidy as his Vice Chairman. Dennis and Larry convinced Jack to increase the size, importance and scope of GE Credit and make it GE Capital. Welch appointed Gary Wendt to head of this organization and gave him a license to grow. Under Wendt, GE Capital increased in size and importance to GE and served as a means of managing earnings. GE Capital had a competitive advantage because it could borrow under its parent's AAA credit rating and have a strong competitive advantage.
This combination of a Financial Services subsidiary and a strong manufacturing portfolio, enabled GE to provide predictable and positive earnings growth.
Unfortunately, nothing lasts forever. Today GE Capital has become a liability and not an asset and so GE has witnessed a loss in confidence and a rapidly declining stock price. Immelt has vowed to reduce the size and importance of GE Capital. He announced he was restructuring the organization and it would become a smaller contributor to GE's bottom line. However, he also announced he would use the same successful JET Enging financing strategy to enable GE to grow its solar and wind generation businesses.
I have always believed that GE Capital should be a "means" to help the manufacturing businesses to grow and not a END of its own, in shore, I think it is appropriate to move back to what its role was in the past and not be a financial services company.

Bill Rothschild, author of the ONLY objective, comprehensive and insightful assessment of GE's 127 years and even predicted the current problem....THE SECRET TO GE's SUCCESS and GE Watcher blog (www.strategyleader.com)

Standing and Fighting- the difference between General Motors and General Electric Labor Relations

2008-11-14T08:10:00.000-08:00

Standing and Fighting - one of GE's success policies!!

Many leaders have taken the easy way out. Rather than taking strong stand against adversaries they have been willing to give in to unreasonable and uneconomical demands rather than standing a fighting.

This is painfully obvious today when we witness the problems in the automobile and its supplier industries. General Motors and Ford are almost in bankruptcy and asking the Federal Government to save them and are not able to compete against its non-union foreign competitors. Not only are their wages high, but they are forced to pay for workers who don’t work, fund pensions, and contribute to ever increasing health benefits. In addition, these companies are forced to operate in old, non-competitive factories in locations that have high taxes and worker protection laws.

All of these problems were not caused by the current management but by those who preceded them, especially the leaders in the 1950’s and 1960s. Following World War II, the United States experienced its most prosperous times. There was enormous demand for consumer and industrial products. During the war, the entire US manufacturing effort was focused on winning the war and not on providing consumer and industrial products. Further the US companies stood alone in the ability to provide these products worldwide, since the European and Far East producers had been devastated during the war.

Unlike other major companies in autos, steel, aluminum and transportation, GE was unwilling to “pay off” the unions with overly generous, non-economic wages and benefits. Instead, GE leaders took a strong stand in the mid-1950s against the then strong labor unions dominance and uneconomic demand.

Led by Lemuel Boulware, GE’s refused to participate in industry bargaining and negotiated with the unions on a company basis. They carefully thought though what was in the balanced interest of employees, investors, stockholders and made a “fair offer” prior to the negotiations. Though they were willing to make some concessions, they were firm and were willing to take a strike rather than give away the shop. They christened this approach “Doing Right Voluntarily” and used these policies and practices to assure that the company didn’t mortgage its financial future. In addition, GE made it clear that it was ready willing and able to move its established plants to friendlier, non-union locations, rather than be blackmailed.

This practice became known as “Boulwarism” and though it received a great deal of negative press, it worked for a number of reasons:

First, GE had a long positive track record from the company’s inception of caring about its employees and their welfare. They instituted a suggestion system in 1906, a pension program in 1912 and insurance in 1920.

Second, the major GE union, the United Electrical Workers (UE) was a communist led union that appeared to be more concerned with having a people’s revolution than about the conditions faced by the GE workers themselves. This union was highlighted in the McCarthy hearings and was ultimately ejected from the CIO.

Third, the CIO created a competing non-communist controlled union, under Jim Carey, who aggressively sought to convert the UE members to the IUE. Further other powerful unions were part of the GE bargaining units, including the Teamsters and the IBEW. So Boulware divided and conquered the unions and didn’t have to face one dominate union, as there were in the auto, coal and steel industries.

Fourth, as we said GE did its homework and was willing to give the workers, both union and non-union, attractive and even innovative benefits before they were required. In most cases, the workers recognized that the benefits and wage increases were fair and balanced and were will to accept them without a strike. This neutralized the unions bargaining power.

Fifth GE hired the “Great Communicator” and the popular host of GE Theater, Ronald Reagan to tour all of the GE plants and spread the message of evils of Big Unions and Big Government. Reagan claimed to have visited 135 GE research and manufacturing facilities and met with some 250,000 individuals. It ultimately led to his own conversion and gave him the underpinning of his successful election to President of United States.

Sixth and probably most important, GE was willing to close plants in unattractive union locations and move them to non-union cities. This was very powerful, since it gave the company power that the auto, steel and coal companies didn’t have. GE was an early proponent of moving to the southern US and overseas.

Overall the GE Boulwarism approach enabled the company to maintain control over its own destiny and not allow Big Unions and Big Government to dictate to them. GE was unwilling to mortgage the future for short term gain and was willing to take a strike if it was needed. This was sharp contrast to the other industry leaders who accept peace at any price and didn’t appear to care about the long term implications of giving away the shop.

This is just one of the elements that has enable GE to prosper and grow over its 127 years of existence, while other United States giant companies have gone out of business or are one the verge of bankruptcy. The complete story can be found in my latest book “The Secret to GE’s Success”, published by McGraw-Hill and a global best seller...now in six languages, including Simplified Chinese, Japanese, Korean, Indonesian and Spanish, as well as being digital. It is being used in many MBA and Executive programs worldwide. Other strategic leadership books are available on www.strategyleader.com

India's Financial Express highlights and learns from THE SECRET TO GE's SUCCESS !!!

2008-11-10T07:06:00.001-08:00

India's Financial Express highlights and learns from THE SECRET TO GE's SUCCESS !!!
7:02 AM PST, November 10, 2008
India's Financial Express Newspapers highlighted a section of my book THE SECRET TO GE's SUCCESS... The Indian press have shown a significant interest in learning what they can from GE's remarkable history, since GE has made India one of its three key growth areas...I thought you would be interested in what they have focused on.
Bill Rothschild, CEO of Rothschild Strategies Unlimited LLC

GE's success secret decoded
Borch's Growth Opportunity Ventures taught GE many lessons, which GE later incorporated into its strategic thinking and management systems and into the GE Code as well. Let's review some of the reasons that only a few of the ventures survived and succeeded.
Leadership
Unrealistic view of how long ventures take to succeed: Most of the ideas that the growth council proposed have become real and profitable businesses. But it has taken decades for them to materialize, and it has required a sustained, long-term commitment and the investment of leadership, people, and money. This is evident with the ultimate success of jet engines and financial services, and—I would argue— the likely resurgence of nuclear power.
* Recommendation: Realistically assess the time it will take for your new ventures to grow and become profitable. Make sure that you err on the side of being conservative—and don't overpromise.
Too many ventures at one time: GE's biggest error was to believe that it could pursue all of these ventures at the same time and that it had the financial and human resources to make them all successful. Each of the opportunities required more cash and capital than anticipated, and the total requirements were enormous—beyond any one company's ability to fund them. In fact, it is amazing that the company didn't go broke during this period.
Without doubt, Borch grew the company: Revenues increased more than $3 billion in three years. But it was a profitless growth, which dearly demonstrated that the company needed a new way of planning and setting priorities.
* Recommendation: Be selective. Don't bite off more than you can chew. Focus on the most attractive opportunities where you can most easily succeed and be sure that you have a clear understanding of what it will take to win before you embark.
Adaptability
Didn't understand the businesses: Though the council identified growth opportunities, it did a poor job of figuring out what it would take to sell the products or services. It lacked an appreciation of the competitive environment and the response of the incumbents, and—most important—it didn't take into consideration the power and influence of governments and labor unions.
* Recommendation: If you are planning to move into a new market, either by internal ventures or acquisitions, be sure you really understand what is critical to being successful.
Talent
Believed they could do anything: GE leaders believed that they could do anything and that the company's managers had been equipped to manage any business regardless of size, technologies, markets, and so on. Clearly, the outcomes of the ventures demonstrated that this conviction, which dates back to Cordiner and Smiddy, was simply wrong.
* Recommendation: Never assume that just because you have been successful in your current businesses that you have the skills and abilities to succeed in others. Recognise that all businesses have some distinct aspects that will separate the winners from the losers.
Networks
Made staff earn a living: Although Borch's assumption that he could reduce staff by requiring them to earn their keep turned out to be dead wrong, the idea of having a discretionary, fee-based staff is worth considering.
This approach has several advantages. First, it is Darwinian: Only the fit will survive. Second, it forces the staff to make a contribution to keep clients, and therefore it forces them to keep current. The major dangers are that some will survive just because they have friends inside the company and that the staff may become too myopic.
* Recommendation: Separate your staff organisation into two groups: essential and discretionary. Determine if you need your own discretionary resource, or if you should outsource it. If you think there is an advantage to having your own staff, then make them earn their keep.
Admitted mistakes and changed: To Borch's credit, he too recognised these errors, and in the second half of his tenure, he changed the company's management system to ensure that these types of mistakes would not be repeated. The ability to admit mistakes and make major changes is clearly one of the major contributions that Borch made to the GE heritage.
* Recommendation: Everyone makes mistakes. Sometimes the mistakes are large, and sometimes they are small, but they are all a part of leading and taking risks. The key is to follow Borch's example and be willing to admit your mistakes, take corrective actions, and try not to hide or make excuses.

If you wish to read the entire book...it is available on AMAZON.

The Training Ground...

2008-11-09T09:29:00.000-08:00

The following is an excerpt of THE SECRET TO GE's SUCCESS, which appeared Express Computer , in India's leading IT weekly business

Manage-Wise
The training ground
Many electric utility executives, engineers, and professionals were graduates of GE’s test and management programs. Since GE kept only a percentage of the trainees, the company encouraged those who didn’t make the GE team to work for the electric utilities. This cultivated strong bonds between “GE alumni” and the company.
These mutually beneficial relationships between manufacturers and their customers were very common and were practiced in all major industries. It was the personality and skills of Coffin and his team, however, that made GE even more successful.
Coffin recognized the need to hire the best people and keep them loyal. He instituted several major training programs that still exist today, and he hired qualified people regardless of their race, religion, or politics.
Building a bench
From its inception to the present, GE has had a strong farm system organization. The company has always believed in the concept of recruiting young, retaining the best, and building from within.
Coffin and his management team recognized early that it was very important to recruit talented individuals early in their careers and then provide the training and work assignments to enhance their skills and company loyalty.
In 1901, GE established apprentice programs in Schenectady, Lynn, Bridgeport, and Fort Wayne, which were the major manufacturing locations. A combination of work assignments and evening classes were developed in four areas: machinist, draftsman, blacksmith, and moulder. Upon completion of a course, the graduates were awarded a “Certificate of apprenticeship.” This program was one of the key programs in the company until the 1950s. There were ties to local universities so that the apprentices also could work on getting engineering and technical degrees.
Coffin knew that the company needed competent, GE-trained and GE-loyal engineering staff, so he created the Engineering Test Program. This program was an entry-level program for all engineering recruits. The trainees were assigned to specific “testing” operations in the product departments, as well as the General Engineering Laboratory. Some were sent to the Corporate Research and Development Center.
Coffin also recognized the need to hire talented nontechnical college graduates, so he established the Business Training Course (BTC). The college recruits were given a variety of financial assignments, and they were required to take very intensive accounting and financial courses two nights a week. The trainees had to take weekend exams, and they were given grades as though they were in college.
Grades and work appraisals were used to determine who would be promoted. The best graduates were assigned to the Auditing Staff, enabling them to learn about the various company operations and enhance their ability to lead in these businesses. Graduates of the Auditing Staff became the financial linchpins, and often the general managers, of the company’s business units.
A personal recount
This is the program that I joined in 1955. I was a Fordham University Russian Language and area studies major, and I had never had an accounting course in my life. I soon found that I was not alone. More than half the BTC enrollees were liberal arts majors. GE believed it was the trainee’s ability, rather than his or her undergraduate major, that mattered.
All of the GE training programs had six common characteristics:
The programs recruited from the best technical high school, colleges, and universities. The apprentices were recruited from the best high schools; the engineering and BTC program candidates came from the best colleges and universities. The recruiters’ focus was on the candidates’ ability to learn, not just on their experience. This candidates’ selection process resulted in programs being filled with excellent and committed students. It also resulted in strong relationships between GE and the best high schools, colleges, and universities.
The GE training focused on the GE Way of doing things. Even if you were a skilled engineer or accountant, you often had to forget what you had learned in school and relearn the GE Way. Some of the trainees found this difficult, so it was often easier for GE to hire those with less education in an area and train them than it was for GE to convert those who already believed they knew how to do it. (My lack of previous accounting knowledge made it easier for me to learn the GE Way, in contrast to those participants who already had accounting degrees and had to “unlearn” what they already knew and then relearn the GE Way.)
The program trainers assigned challenging work. All of the programs used work assignments that were designed to help the participants practice what they were taught. GE was able to develop such challenging teaching materials because the program administrators assigned a “mentor” and “counselor” to each student to help him or her learn and adapt.
The programs included tests and work appraisals. The BTC, for instance, had Saturday morning examinations at the end of each course, and these three to four hour exams were as rigorous as any college or university exam. Numeric grades were given and posted for all to see, just as they would have been in college. (I was amazed at having to take exams and get grades. I was equally amazed at how competitive the program was.)
Breeding the best
Up or out. Throughout its history one of GE’s strengths has been its willingness to focus on the best and “prune” those not making the grade. So too did the company let go of those students in its training programs who couldn’t get the grades GE was looking for. The company used a combination of exams and work assignment appraisals to determine whether a trainee would (a) continue in the program, (b) be asked to leave the program but be allowed to stay with the company, or (c) be asked to leave the company outright.
GE gave certificates, not advanced degrees. Though the GE training programs were intensive and demanding, the graduates received only a GE certificate and not an advanced degree. This was done to ensure that the graduates stayed with GE and were less marketable on the open market.

Excerpt from 'The Secret to GE’s Success' by William E Rothschild. Reproduced with permission © 2008, Tata McGraw-Hill Publishing Company Limited. Price: Rs 595. Vishwanath_Ghanekar@mcgraw-hill.com
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Destroying STAKEHOLDER value and confidence!

2008-11-02T13:19:00.000-08:00

During the past six months we have witnessed many companies destroy their stakeholders' personal wealth and confidence. Note I use the word "stakeholders" and not shareholders. Stakeholders include employees, communities, governments, investors, stockholders and any one who has a vested interest or "stake" in an organizations.

There are FOUR factors that have contributed to this destruction:

Unrealistic expectations. Most of the LOSERS have promised results that were unrealistic, poorly conceived and missed them dramatically. It is truly amazing how much money major organizations have lost and missed their promised results.

Surprised Themselves. To make matters worse, the management of these organizations have not only surprised their stakeholders, but themselves. This is the worse SIN anyone can commit. It means that the organizations lack internal assessments and believe their press releases and not the reality of their situation. It appears that they have had staff organizations who were "yes people" and not willing or able to point out that the "emperor has no clothes".

Arrogance and unwilling to admit mistakes and take responsibility. Not only have these "so called leaders" fooled themselves, but have been so arrogant that they refuse to admit they made mistakes and were at fault. They use the "blame game" to say that everyone else was at fault and not themselves.

Rewarding themselves for failure. Finally they destroy organizations, put them in bankruptcy, do harm to their investors, employees, communities, but have the nerve to take HUGE compensation packages. They reward themselves tens of millions of dollars and benefits for FAILURE.

It is amazing that these four characteristics can be attributed to major organizations. Some are still viable, but many have been destroyed forever and everyone has lost.

The real issues are: WHY DID IT HAPPEN AND WHAT CAN BE DONE TO PREVENT THIS IN THE FUTURE. I hope that the major MBA programs are studying this situation and will determine if they were also responsible for the problem and how they can prevent it in the future.

Bill Rothschild, author of the only comprehensive, objective and insightful assessment of GE's 127 years... THE SECRET TO GE's SUCCESS and Risktaker, Caretaker, Surgeon, Undertaker- the four faces of strategic leadership.

Damm the torpedos....

2008-10-28T16:00:00.000-07:00

"Damm the torpedoes...full speed ahead" is an old adage from the Second World War... it shows courage and convection that the game plan was right and even if things are on going to plan, we will win.

This is what Jeff Immelt is asserting. He is a TRUE believer that his GO BIG, GO GLOBAL, PORTFOLIO GAME PLAN is right and will succeed.

Based on my 40 plus years, as a strategist, successful consultant and ardent student of strategies and GE, I have great concerns about this "macho" style. It is true that GE has a very diverse and in many cases strong portfolio and competitive position. But I still believe that the company is too complex and subject to too many unique and possibly unattractive situations.

I still recommend that the company stop its growth for growth sake approach and refocus, get smaller, less complex and invest in winners....this is the essence of the strategic leadership that has made the company successful in the past... it still gets down to LATIN...right LEADERSHIP, willingness to ADAPT... having a strong, deep TALENT pool, INFLUENCING the key stakeholders, by meeting expectations and having realistic and viable NETWORKS and programs.

Bill Rothschild, author of THE SECRET TO GE's SUCCESS, the only comprehensive, objective and insightful assessment of GE's successes and failures and what we can learn from them.

Paranoia...poor choice of words.

2008-10-19T16:19:00.000-07:00

Immelt is in INDIA and said he was PARANOID about the current World Economy... Since he graduated from Dartmouth and HARVARD... I am confused about his choice of worlds... I think the word PHORIA would be find for any rational individual to describe today's world, but Paranoid had other meanings... this is what I found on the Internet...

Paranoia is a disturbed thought process characterized by excessive anxiety or fear, often to the point of irrationality and delusion. Paranoid thinking typically includes persecutory beliefs concerning a perceived threat towards yourself. In the original Greek, παράνοια (paranoia) simply means madness (para = outside; nous = mind). Historically, this characterization was used to describe any delusional state.
Sometimes in common usage, the term paranoia is misused to describe a phobia. For example, a person may not want to fly out of fear the plane may crash. This does not in itself indicate paranoia, but rather a phobia. The lack of blame in this case usually points to the latter. An example of paranoia, however, would be fear that the pilot is an alcoholic with no evidence to suggest such, and would crash the plane as a result of this.

Please Jeff... select the right word to describe your feelings and perceptions, since every word you say and everything you do has a major impact of ALL YOUR STAKEHOLDERS.

Bill Rothschild, author of the ONLY objective and insightful assessment of what make GE able to prosper and grow over 127 years...THE SECRET TO GE's SUCCESS and continuing assessment of the IMMELT ERA..(GE Watcher..on http://www.strategyleader.com/

The "GO BIG" Failures

2008-10-17T08:16:00.000-07:00

The 1950's there were the GO BIG Conglomerate Era, when Harold Geneen's ITT, Litton Industries ruled and became so big that they failed.
In the 1960's it was other giant GO BIG companies, like GM, Ford and major steel and chemical companies went BIG and ultimately became so big that they allowed the smaller, more focused Japanese companies to gain beachheads in the US market and gradually eroded their share and profitability. Today they are contracting and beginning forced to merge to just survive.
In the 1990's it was the DOT COM Wonder kids, who WENT BIG and forgot that they had to make money on the way up the growth curve. Most have died or been combined with other companies.
The major Business Schools, academics, consultants and management publications and books taught management to THINK OUT OF THE BOX.. be imaginative, destroy the bureacrats, forget about the inhibitors of doing it right, be creative with the accounting and financial systems, USE OTHER PEOPLE's MONEY and not have large reserves.
In short, the " experts" promoted the GO BIG proponents and eliminate those in their organizations who challenged and required the organization to consider the positives and negatives of growth.
In the past year, THE "GO BIG insurance company", AIG, "THE GO BIG mortgage" company, Countrywide, "GO BIG Energy company", ENRON all went into bankruptcy and have had to be rescued.
The MESSAGE is loud and clear...BIGGEST for its own sake, is not a viable long term goal and all companies must reinstate the solid, objective and "tough minded" strategic thinking and decision making that made the strong in the first place.
They must remember that:

ALL THINGS TO ALL PEOPLE strategies never work and

SELECTIVITY,

CHALLENGING everything and being willing to prune the portfolio and focus on those segments that are attractive and where they are strong.

In short this means relearning and applying the disciplines of sound strategic thinking, execution and being prepared for change. I have spent my entire career teaching and helping my clients do this type of thinking and decision making and it has worked. I continue to provide these services.

Bill Rothschild, author of the PUTTING IT ALL TOGETHER- a guide to strategic thinking and decision making. The first guide to strategic thinking and its updated edition and STRATEGYLEADER (R) strategy software and tutor. BOTH are available on http://www.strategyleader.com/, take a look.

WHAT A DISAPPOINTMENT...WHY?

2008-10-13T16:41:00.000-07:00

Today the Dow average went to the fifth highest levels...YET...GE Declined...

Immelt and his DREAM team need to explain what is happening...

There may be a logical reason...but it is not OBVIOUS.

Bill Rothschild, author of THE SECRET TO GE's SUCCESS... the only book that gives a comprehensive, historical and OBJECTIVE view of the GE SUCCESSES and FAILURES, BUT GE management have done whatever they could to negate its success in the United States,

"Never Over promise and Minimize (if not avoid) Surprises!!"

2008-10-11T10:09:00.000-07:00

"Never Over promise and Minimize (if not avoid) Surprises"

This was the essence of the Ralph Cordiner and Reg Jones eras in Strategic GE's history.

These are some quotes from my book" The Secret to GE's Success" which focus on creating and meeting investor expectations:

" In the 1950's, Cordiner initiated Investor Relations as one of the new corporate functional services. The organization's job was to help create realistic expectations among the investment analysts and then communicate expectations internally so that the operating and executive officers understood the right level of profitability to achieve.

"Jones was one of the most skilled executives in this regard. He established a team consisting of staff members from investor relations, finance, and strategic planning (my job at the time) as well as his own vice chairmen to determine the expectations that could be achieved consistently"

"If there was a gap between what business units promised and "Wall Street expectations" Jones recognized that if he compelled all of the businesses to increase their profit levels, he might negatively impact the ability of at some divisions to execute their approved strategies.. a special evaluation was created to assure that the increased profit levels didn't negatively impact the "growth businesses" (again one of my jobs).

I had the good fortune of being part of the Jones process and helping the company meet Wall Street Expectations while implementing the approved strategies. It was challenging but fun.

Bill Rothschild, author of THE SECRET TO GE's SUCCESS the most comprehensive, objective assessment of GE's 127 years of progress, now in six languages.

Challenging the FOLKLORE...Team Competence versus Loyalty

2008-10-03T06:12:00.000-07:00

One of the obvious failings of the Bush administration has been Bush's emphasis on loyalty rather than competence. There is no question that President Bush has had several unqualified members of his team and they have held their jobs because they have been "team players".
This has practice is also very prevalent and obvious in many large corporations and it has negatively impacted all of the key stakeholders.

According to Doris Goodwin's " Team of Rivals", Lincoln selected his cabinet members because they were competent and provided another perspective, even if they have adversarial views. His cabinet included people who ran against him and in some cases even criticized him in public. One of his team was running against him even while a member of the cabinet. But Lincoln used the talents of these adversaries to lead in probably the biggest CRISIS that the country had to face.

In my book: Risktaker, Caretaker, Surgeon, Undertaker- a four faces of strategic leadership I emphasize that there are no one leader for all times and that the team must fit the leadership type and the situation. If an organization is in crisis, the leader and the team must be willing to challenge everything, hold nothing sacred and seek all views.

In my latest book: THE SECRET TO GE's SUCCESS.. I emphasize that GE has avoided the "cookie cutter" approach and selected leaders and team players that were different and fit the unique situation.

When I was GE's Corporate Strategist, I always looked for and selected people who provided different insights, even if I didn't agree with them. When I led the Management Development Program and Strategic Planning Workshops and Seminars, I included professors and outsiders who challenged the GE Folklore and didn't just recite the party line.
I am not sure what is happening in GE today, but it is vital that all companies and organizations seek out people who are competent and not just "back slapping/ yes" people. Unfortunately it appears that most of the failing companies today have not sought "teams of rivals" but "teams of friends, neighbors and those who refuse to challenge the folklore".

Bill Rothschild, CEO of Rothschild Strategies Unlimited, LLC

Warren Buffet to the rescue and GE's Secret to Past Success!

2008-10-01T15:19:00.000-07:00

The last time that GE had to have a "white knight" come to their financial rescue was in 1897, when Edison GE and Thomson Houston had to merge and JP Morgan put in capital to save the company.

On October 1, 2008, it happened again... this time it was Warren Buffet, bought $3 billion of Preferred Stock... to help save the GE TRIPLE A rating.

Since I wrote my book, THE SECRET OF GE's SUCCESS, I have challenged IMMELT and team...GO BIG strategy. It was clear to me that promising to grow the company 8% organically seemed to be improbable, if not impossible. Unfortunately, I have been right and a change in strategy is required.

GE introduced strategic thinking, decision making and planning in the 1970's because Fred Borch had embarked on nine new, organically grown, ventures. Five of ventures failed, but Fred recognized and admitted his mistakes and focused on being selective and not growing for the sake of growth. This action enabled the company to focus on winners and contributed to the Welch's remarkable earnings and stock value growth. There are lessons to be learned from this period in GE's 126 year history.

I still have faith that GE leadership will rise to the occasion and replicate the company's past success and ability to adapt to change. However, it will require all five key success factors: Leadership, Adaptability, Talent, Influencing and Networks (LATIN).

If you wish to learn the reasons for GE's past success, take a look at my book: The Secret to GE's Success, now available on Amazon's Kindle and in six languages.

Bill Rothschild, author of Global best seller: The Secret to GE's Success, Risktaker, Caretaker, Surgeon, Undertaker- the four faces of strategic leadership, GEWatcher blog on Rothschild Strategies Unlimited LLC website: http://www.strategyleader.com/

Adaptability, Realistic Expectations- key to GE success.

2008-09-25T08:28:00.000-07:00

Two of the reasons that GE has had a successful 126 years is because the leaders were adaptable, set and met realistic expectations. It is highly promising to see the Immelt team continue this successful leadership approach.

It is clear that the company must reduce its dependence on Financial services and its complexity. GO BIG has not worked and focus and selectivity must become the new theme.

Bill Rothschild, author of the insightful,comprehensive, objective 126 year history of GE, THE SECRET TO GE's SUCCESS...a global bestseller.

Selling Your Name for a short term gain???

2008-09-23T15:53:00.000-07:00

Unlike his predecessors, Jack Welch was willing to sell GE' pride position, its name, lovingly called the MONOGRAM. The reason that Jack's predecessors were unwilling to sell the Monogram when they sold a business was that they believed that if the acquiring company didn't provide quality products and services it would reflect on the entire company. This was one of the reasons that Reg Jones was not able to sell the maturing housewares businesses (toaster, coffee makers etc) and the very unprofitable Television business.

Welch was willing to take the chance and so he sold the Monogram, for a five year period to get rid of Housewares and for an unlimited period to divest television.

Today it appears that Immelt and his team are willing to actively market the brand name. They have created a new joint venture with a Taiwan company to sell GE BRANDED High Definition/ Interactive Televisions, for a forty nine stake in the new company.

Other companies have done the same, but I am still a firm believer that when a company invests over 100 years in building a strong brand, it should not be used for a "quick/ opportunistic" deal.

Bill Rothschild, author of the most comprehensive, objective history of a truly remarkable company, designed to help the reader learn from both the company's successes and failures...THE SECRET TO GE's SUCCESS, now in six languages and a global best seller.

GE's historical strengths....

2008-09-18T15:13:00.000-07:00

Over the past few months I have highlighted many of the reasons that GE is having problems and why its stock is moving in the wrong direction.

But I totally agree with Jeff Immelt that GE is a strong, well managed, strategic company and should be more highly respected and valued.

GE has faced major problems before and has been able to adapt and even make the company stronger.

It started with GE's ability to survive the GREAT DEPRESSION. The Swope/ Young team was able to survive during the Great Depression, even though the company revenues dropped 75%. One of the human resource innovations was the LAMP business allowed workers to volunteer to work four days a week, with four days of pay to prevent 25% of the workers from losing their jobs.

In the 1950's, the GREAT ELECTRICAL CONSPIRACY, which was a major price fixing scandal, shocked the company to its core and even changed its succession plan, but it was able to move beyond and the company became stronger.

In the 1960's Borch embarked on a number of misguided ventures, most of which failed and caused the decline of its stock, but Borch took action and installed the strategic management system which saved the company.

One of the criticism, I have received about my book THE SECRET TO GE's SUCCESS, has been that I am too supportive of GE.

It is true I strongly believe that GE's leadership has been able to ADAPT to change and, though I have challenged the Immelt GO BIG/ GO GLOBAL strategies, I am still a GE fan, I believe that Immelt and his team will do the same and succeed.

(However, this will be even more difficult since the company is now so big and complex, but if Jeff and his team, learn from the past and uses GE's enormous, deep leadership, technological, innovative and marketing skills, GE will win and the GE investors, as well as all stakeholders will reap the rewards).

Bill Rothschild, author of the most objective, comprehensive view of GE's successes and failures and the lessons we can learn from them, THE SECRET TO GE's SUCCESS...now a global best seller in six languages, including Simplified Chinese.

GE's Second Home Country...CHINA

2008-09-16T06:14:00.000-07:00

I recently wrote an article in the June 2008 edition of Chief Executive Magazine, entitled: "Whose going the wrong way!" in which I compared the Chinese strategies of Korean, Japanese and Taiwanese companies and US companies. The former are dis investing in China, while US companies, especially GE, are making it their prime target and investing heavily.

The article demonstrates that focusing to heavily on China may be unattractive.

I am glad that I am not in GE management today, since it appears that GE plans to do exactly what I think is not the right strategy. When I was GE Corporate Strategist in 1981, I was a strong proponent of GE's investing in China, but my opinion has changed. Unfortunately, GE waited too long and now in trying to make up for lost time.

This article shows how committed GE is. I have major concerns about this focus. Take a look at what GE is doing:

GE to launch 5 regional headquarters in China
http://www.chinaview.cn/index.htm 2008-09-15 20:51:35

Print
SHANGHAI, Sept. 15 (Xinhua) -- General Electric Co. will soon set up five new regional headquarters in China to further tap a huge market that boasts huge business potential.
The U.S. giant now operates two regional headquarters in Shanghai and Beijing. The new locations will be in Shenyang, Wuhan, Chengdu, Xi'an and Guangzhou -- provincial capitals in the country's northeast, central, southwest, northwest and south, according to Chen Xiangli, president of China Technology Center under GE.
The move is in line with its new strategy of making China the multinationals second home country, Chen told a GE-sponsored technology conference in Shanghai.
"China is not only a market, but also a significant research and development base and a fundamental foothold for GE's future development," he said, stressing the company would rely on its business growth in the country in future.
"GE has been following the American and European markets over the past century, but China will turn into a priority in future," said Wang Xiaozhong, the center's public relations chief inspector.
The new headquarters would help existing functional departments in different regions to further explore the market and develop more China-oriented products, Wang added.
Since last year, GE has invested 55 million U.S. dollars to the center on the research and development of new products for China, with a focus on clean energy, water treatment and new materials, among others.
The center now boasts more than 60 advanced labs and employs some 1,400 people.
GE's China sales volume accounted for about 2.54 percent of its global turnover of 173 billion U.S. dollars last year.
Chen believed the company had great growth potential in China and the country would no longer remain at the end of the international sales chain dominated by the European and U.S. markets.

Bill Rothschild, author of the most comprehensive, objective GE strategic history "THE SECRET TO GE's SUCCESS"... now in Chinese and five other languages.

What happened to GE's accounting and financial management strengths?

2008-09-08T16:02:00.001-07:00

THE SECRET TO GE's SUCCESS

I joined GE as a member of the Business Training Course (now called Financial Management Program) and learned to admire the talent of the financial organization. It was clear that when GE reported its earnings there was 99% confidence level.

During the Welch era, there was concerted effort to reduce the power of the financial organization, because it was felt that it inhibited creativity and entrepreneurial flexibility.

It is clear that over the last thirty years that GE's accounting and financial auditors have not be able to assure investors and government officials that GE's financial statements and practices meet the historical standards of the past.

There are several very disturbing situations that illustrate this reality.

First was the surprise of GE's missing its expected results in the first quarter of 2008. It was clear that everyone, even the CEO, was surprised that about the miss. This caused GE stock to fall from 42 to 25 and it still hasn't recovered. The investment analysts and companies have moved the company into a hold mode.

Second, the company has had to restate its annual statements several times over the past few years and lower its reported earnings.

Third the SEC announced it was issuing a Wells Notice and taking civil actions and there are several stockholder suits.

current financial leaders

THE SECRET TO GE's SUCCESS (now in six languages) and GEWatcher blog found on (

http://www.strategyleader.com/

)

So what is happening STRATEGICALLY at GE!!!

2008-09-06T15:45:00.001-07:00

It is clear that the vision of GO BIG, GO GLOBAL and MAKE DEALS, continues at GE.

Since the Olympics, GE has not done much, but this is probably because everyone is on vacation and unwinding from the CHINESE show. GE selected Shanghai as its headquarters and a major Chinese technical center.

Immelt has become a Dartmouth trustee, which is one of his loves. He had hosted the visit of John McCain in Erie, which was one of the locations that Ronald Reagan used to display his loyalty to innovation and American industry.

However, there are several Governmental actions that are disturbing. The most recent was the SEC's concern about GE's book keeping and a CIVIL suit.

Overall, it is clear that the GE/ Immelt team are convinced they are on the right track and will continue the same philosophy and strategy...but the stock market has not bought in and the stock is doing nothing.

As we promised we will continue to be the Strategic GEWatcher and objectively and strategically assess their moves.

Bill Rothschild, author of the SECRET TO GE's SUCCESS (The only book that provides the historical strategic insights to understand the company and the probability of its strategic success. Now in SIX languages.)
Learn more by visiting http://www.strategyleader.com/

Standing and Fighting- a key success.

2008-08-28T06:39:00.000-07:00

Many leaders have taken the easy way out. Rather than taking strong stand against adversaries they have been willing to give in to unreasonable and uneconomical demands rather than standing a fighting.

This is painfully obvious today when we witness the problems in the automobile and its supplier industries. General Motors and Ford have bleeding heavily and are not able to compete against its non-union foreign competitors. Not only are their wages high, but they are forced to pay for workers who don’t work, fund pensions, and contribute to ever increasing health benefits. In addition, these companies are forced to operate in old, non-competitive factories in locations that have high taxes and worker protection laws.

All of these problems were not caused by the current management but by those who preceded them, especially the leaders in the 1950’s and 1960s. Following World War II, the United States experienced its most prosperous times. There was enormous demand for consumer and industrial products. During the war, the entire US manufacturing effort was focused on winning the war and not on providing consumer and industrial products. Further the US companies stood alone in the ability to provide these products worldwide, since the European and Far East producers had been devastated during the war.

Unlike other major companies in autos, steel, aluminum and transportation, GE was unwilling to “pay off” the unions with overly generous, non-economic wages and benefits. Instead, GE leaders took a strong stand in the mid-1950s against the then strong labor unions dominance and uneconomic demand.

This practice became known as “Boulwarism” and though it received a great deal of negative press, it worked for a number of reasons:

First, GE had a long positive track record from the company’s inception of caring about its employees and their well fare. They instituted a suggestion system in 1906, a pension program in 1912 and insurance in 1920.

Second, the major GE union, the United Electrical Workers (UE) was a communist led union that appeared to be more concerned with having a people’s revolution than about the conditions faced by the GE workers themselves. This union was highlighted in the McCarthy hearings and was ultimately ejected from the CIO.

Third, the CIO created a competing non-communist controlled union, under Jim Carey, who aggressively sought to convert the UE members to the IUE. Further other powerful unions were part of the GE bargaining units, including the Teamsters and the IBEW. So Boulware divided and conquered the unions and didn’t have to face one dominate union, as there were in the auto, coal and steel industries.

Fourth, as we said GE did its homework and was willing to give the workers, both union and non-union, attractive and even innovative benefits before they were required. In most cases, the workers recognized that the benefits and wage increases were fair and balanced and were will to accept them without a strike. This neutralized the unions bargaining power.

Fifth GE hired the “Great Communicator” and the popular host of GE Theater, Ronald Reagan to tour all of the GE plants and spread the message of evils of Big Unions and Big Government. Reagan claimed to have visited 135 GE research and manufacturing facilities and met with some 250,000 individuals. It ultimately led to his own conversion and gave him the underpinning of his successful election to President of United States.
Sixth and probably most important, GE was willing to close plants in unattractive union locations and move them to non-union cities. This was very powerful, since it gave the company power that the auto, steel and coal companies didn’t have. GE was an early proponent of moving to the southern US and overseas.

This is just one of the elements that has enable GE to prosper and grow over its 126 years of existence, while other United States giant companies have gone out of business or are one the verge of bankruptcy.

The complete story can be found in Bill Rothschild’s latest book “The Secret to GE’s Success”, published by McGraw Hill and is now available Simplified Chinese, Korean, Indonesian, Spanish, Japanese and CD.

Immelt is a RISKTAKER/ SURGEON...a unique combination!

2008-08-25T06:59:00.001-07:00

Risktaker/ Surgeon... a unique leadership style!
Since the early 1990's I have enabled my clients to integrate strategies with leadership and human resources.

In 1993, I wrote "Risktaker,Caretaker,Surgeon, Undertaker- the four faces of strategic leadership." The basic premise of my consulting practice and the book was that there was "no one type of leader for all times" or to challenge the premise of St. Thomas More's biographers, there is no one leader for all seasons.I used the simple life cycle to describe my theory. There are four stages of the life cycle:
Embryonic stage, birth and childhood, and this requires "risk taking, missionary leaders".
Teenage and early adulthood/ growth stage, that needs Caretakers..who will care for and grow the organization systematically;
Then there is middle age and maturity and this requires the surgeon, a leader that will focus on the best and growth and prune the declining or dying.
Finally there is the decline, fall and death stage and this requires an Undertaker.

Like all categorizations, they are simple but don't cover all situations. But this simple relationship to the right type of leader and the stage of a business enables organizations to spot the mismatches.

It is clear that you don't want a risk taker when the company needs major surgery or when it is time to divest or liquidate the assets.In a company like GE... which has businesses in all stages, the message is that the company needs a portfolio of leaders and the willingness to place the right type for the right situation. Historically, GE has had a "portfolio of leaders" and was able to match the type with the strategies. This was part of the strategic system when I was Corporate Planner in the early 1980's.

However, in my book and subsequent articles I concluded that GE's CEO's since the mid 1970's have been skilled surgeons. Borch started the pruning, Jones did some more and Welch was a great deal maker. I wrote an article several years ago called the "College of Surgeons" and described how most GE alumni were surgeon leaders when they left GE.

Now we have the Immelt era. Jeff started as a traditional surgeon and pruned many businesses, but as his years progressed he has become a very unique leader, which I have concluded is a RISK TAKER/SURGEON.

Risk taking Ventures...Immelt and his team have worked hard to focus on moving GE back to its traditional innovation, systems, solution role, which Welch had de-emphasized and even negated.This was achieved primarily by acquisitions and some internal innovations, but he has further increased the complexity and risks by making these global and increasingly moving into unstable, but potentially long term profitable areas like China, Middle East etc. He has bet billions on these ventures and even was willing to open research labs in countries that are not secure. In short, he has the missionary zeal and attributes of a "risk taker" leader.

Surgeon...but Immelt and his team have also continued the pruning. In fact, it has been greater and more pervasive than any of his predecessors. The latest surgery is demonstrated by his willingness to prune the "traditional GE" businesses, like appliances, lighting, motors etc. He clearly willing to to get out of businesses which he believes are not fast growing and global.Complexity, confusion and unpredictability are the results. Since most leaders fit one of the four categories, they are easier to understand and predict. The stakeholders, investors and the media understand what a risk taker or surgeon is and so they begin to feel comfortable with them, even if they don't agree.

However, when you have a compound/ split leadership personality it gets very complicated and difficult for the key stakeholders to understand and support. This is even worse when the leader says one thing one day and then does something different the next. This was the problem Immelt demonstrated when he promised a 13% growth and only delivered 5% in the first quarter of 2008.I am not sure the combination of "risk taker" and "surgeon" really works and can be successful in the long run.

Bill Rothschild...author of The Secret to GE's Success and Risktaker, Caretaker, Surgeon, Undertaker- the four faces of strategic leadership.