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

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?

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..

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

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

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

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

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

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

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

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.

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

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

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

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
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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...