Hot Seat | Jeff Immelt

Summary of: Hot Seat: What I Learned Leading a Great American Company
By: Jeff Immelt

Introduction

Step into the challenging world of leadership as ‘Hot Seat: What I Learned Leading a Great American Company’ takes you through the riveting roller-coaster ride of Jeff Immelt’s 16-year tenure as the CEO of General Electric (GE). As the successor to the legendary Jack Welch, immerse yourself in Immelt’s journey as he attempts to maintain the company’s momentum amid the Great Recession and the demands of imprudent investors. Discover the stark contrast between Welch’s leadership style and Immelt’s empathetic ethos, and how Immelt’s decision-making was strengthened from formative life lessons and tough assignments.

Immelt takes responsibility for GE’s downfall

In this candid postmortem, Jeff Immelt admits to his failure to maintain GE’s momentum through the Great Recession and satisfy investors during his 16-year tenure as CEO. Despite following in the footsteps of legendary Jack Welch, Immelt takes full responsibility for the conglomerate’s downturn, pointing a finger at impatient investors and the need to prioritize short-term gains over long-term growth. Immelt’s brutal honesty and refusal to sugar-coat his mistakes make for a captivating read.

Jack Welch’s Legacy

The former CEO of GE, Jack Welch, was highly regarded by investors and credited for making GE a popular investment in the stock market. However, his successor’s tenure was deemed controversial despite GE’s success in the marketplace. Welch’s leadership style resulted in GE being valued as a technology company instead of a diverse conglomerate that produced jet engines, insured pets, and TV shows. During his time, GE shares soared 4,000% with a price-to-earnings ratio of 50 which reflected an image that outpaced reality.

Immelt’s Lesson Learned

Immelt’s father teaches him a life lesson during a baseball game that shapes Immelt’s career at GE. Despite being a good athlete, Immelt’s successes came from hard work. He chose a lower-paying job at GE instead of more lucrative offers from a consulting firm and a Wall Street bank, taking his father’s ethos to heart. Immelt played football and studied math at Dartmouth before getting his MBA at Harvard Business School.

Immelt’s Undying Loyalty

After fixing 3.3 million refrigerators at GE, Jeff Immelt’s division, GE Plastics, missed its earnings target by $50 million due to the rise in oil prices in 1994. During a company retreat, Immelt was publicly berated by Welch for the earnings miss, but as a sign of loyalty, Immelt got a tattoo of the GE logo on his hip.

The Price of Winning

Immelt’s challenging negotiation with GM and the consequences of winning the CEO race.

Jack Welch, CEO of GE, put Jeffrey Immelt up against two top GE insiders to audition as his heir before leaving the company. Immelt won but not without sacrificing teamwork among the potential heirs. To secure his position, Immelt negotiated tough with General Motors to secure a price hike on plastic pellets used to make bumpers and dashboards. Despite the deal, the GM vice president greeted Immelt with curses. The consequence of Immelt’s victory was Bob Nardelli’s retaliation as CEO of Home Depot, ending the company’s relationship with GE as a supplier of lighting and credit cards.

Immelt’s Resilience

After the 9/11 attacks and the 2008 market crash, GE CEO Jeff Immelt faced significant challenges. With crisis management at the forefront, Immelt sold NBC and refused his bonus to mitigate GE’s losses. He encouraged his team to approach uncertainty with resolve and optimism, reinforcing the importance of a steady hand in troubled times.

GE Capital’s Rise and Fall

GE Capital’s ascent from contributing 20% to 40% of parent company GE’s earnings by the 2000s was impressive. However, the company’s reliance on its high leveraged insurance business drew skepticism from Moody’s and PIMCO’s Bill Gross, leading to its eventual downfall. Despite issuing credit cards for Walmart, backing loans for commercial real estate, and leasing jets, trucks, railcars, and satellites, GE Capital’s profits could not save it from financial ruin.

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