Sunday, May 09, 1999
Immelt may be GE's CEO in waiting
Ex-Tristater leads starring division
BY DEL JONES
USA Today
General Electric CEO Jack Welch retires Dec. 31, 2000. And as the race to replace him intensifies, 43-year-old GE executive Jeffrey Immelt has emerged as one of the top contenders, possibly the favorite.
The company says no final decision has been made on what will be one of the most closely watched executive successions of the decade.
But it's been no secret that Mr. Immelt, a former Cincinnatian and Finneytown High School grad, is among a half-dozen contenders for Mr. Welch's job.
With his medical-systems division thriving, some people who are familiar with GE's succession process say he has forged his way to the top of the list.
Asked whether Mr. Welch's successor has been quietly chosen, he said last week in New York: “I'm not the person to ask.”
The imposing 6-foot-4 Mr. Immelt, who has worked at GE since 1982 but never for a GE chief executive officer other than Mr. Welch, has become a front-runner for several reasons:
• He's CEO of the medical-systems division, which has prospered in an industry constantly challenged by cost-cutting hospitals.
• He's a disciple and expert of Six Sigma, the quality movement that has been made almost a religion at GE.
• He's an insider and young enough to lead GE for 20 years, two things Mr. Welch wants.
• He has a canny sense of timing that makes careers.
Last year, he completed three acquisitions for $1.3 billion, building GE medical into a $6 billion company the size of General Mills.
The division introduced a blockbuster ultrasound late last month that sells for $250,000. It's so precise that it lets patients see their blood pulsing over tiny particles of stroke-threatening plaque, like a stream over rocks.
Mr. Immelt said GE medical systems plans five or six more major product launches by year's end in what the division dubs “Breakthrough '99.”
GE is trying to keep its CEO succession plans secret. Because of the sensitive nature of the question, many GE watchers and insiders were reluctant to speak on the record.
When Mr. Welch's replacement becomes known, analysts and headhunters say, there will be a feeding frenzy on GE's top executives by other companies looking for CEOs.
Already, James McNerney, 49, CEO of GE's thriving aircraft engine division based in Evendale, is in the running for the top job at Compaq Computer, headhunters say, and he probably wants an answer about his future at GE.
“Welch hasn't totally played his hand” in picking a successor, said author-consultant Noel Tichy, a leading expert on GE who doesn't expect an announcement for about a year.
He added that board members know who the front-runner is, just in case Mr. Welch “gets hit by a beer truck.” But he and his board of directors are capable of changing their minds during the next year, according to Mr. Tichy.
Mr. Immelt would be very young to be running one of the five largest companies in the United States, one with a market capitalization of $346 billion. But if he takes over, he would be the age Mr. Welch was when he got the job.
Headhunters say that all but eliminates anyone in his or her 50s, which is why older executives such as Larry Bossidy, John Trani and Glen Hiner long ago left to run AlliedSignal, Owens Corning and Stanley Works, respectively.
It's also why top GE leaders such as Dennis Dammerman, Mr. Welch's second-in-command, and power systems CEO Robert Nardelli are likely to be passed over.
That leaves a short list of young contenders including lighting CEO David Calhoun, transportation systems CEO John Rice and information systems Chairman Gary Reiner.
Mr. Immelt's chances were helped last fall when his division introduced a fast CATscan machine that diagnoses critically injured patients in seconds instead of minutes. It had $60 million in orders by year's end. In his annual shareholders letter, Mr. Welch singled it out as the first major product designed for Six Sigma.
GE watchers know not to take the accolade lightly.
Six Sigma is a complex, highly statistical quality program that Mr. Welch wants as his legacy. Mr. Immelt, with a degree in applied mathematics and a Harvard MBA, represents a seamless transition that would enable Mr. Welch's legacy to endure.
“Jeff certainly has the background to understand what Six Sigma means,” said Laurie Snell, a retired math professor who taught Mr. Immelt statistics at Dartmouth. “It's a concept I would not expect the typical CEO to understand.”
Mr. Immelt, who declines to answer any personal questions, grew up in a middle-class neighborhood in the Cincinnati suburbs attending Crestview Presbyterian Church.
Acquaintances often find him intense and serious. Those closer to him say he is very funny and has the rare ability to lead while leaving the limelight to others.
He was a letterman in basketball, football and baseball at Finneytown High School. A rebounder on the high school basketball team, he characteristically left most of the scoring to others. Similarly, he played offensive tackle in football, blocking at Dartmouth for headline grabbers such as Nick Lowery, who went on to be among the NFL's most-accurate and highest-scoring kickers.
His father, Joseph, worked 38 years for GE, never aspiring to rise above middle management.
Jeffrey's competitiveness came from having a brother four years older, his mother, Donna, said. “Jeff wanted to do everything Steve did.”
Steve Elliott, a retired history teacher and basketball coach at Finneytown High School, said Mr. Immelt was a 17-year-old who was mature beyond his years. He had coached a very successful team in 1972 and was frustrated by the more fun-loving players who came up later with Mr. Immelt.
One day, Mr. Immelt pulled Mr. Elliott aside for a private conversation, suggesting that this team had a different, more playful personality and that perhaps it was the coach who needed an attitude change.
“We'll always play hard, but we're not the same,” Mr. Immelt told Mr. Elliott.
Mr. Elliott's first reaction was to dismiss Mr. Immelt as a kid. “But he was right,” he said, and he adjusted to the team dynamics. Finneytown won 18 of 20 games his senior year in 1974.
Mr. Immelt was president of Phi Delta Alpha fraternity at Dartmouth, where he fit into the university's “work hard, play hard, Animal House” atmosphere, Mr. Lowery said.
Dartmouth quarterback Buddy Teevens, now assistant football coach at the University of Florida, remembers him having the whole team laughing before an important snap by quoting lines from the then-popular TV show Mork and Mindy.
He was serious “with a twinkle in his eye,” said Mr. Teevens, who imagines Mr. Immelt looking stern at GE meetings before cracking “something out of left field.”
In Milwaukee, headquarters of GE's medical systems division, Mr. Immelt is never seen at the ribbon cuttings and political events often frequented by older CEOs, said Tim Sheehy, president of the Chamber of Commerce.
He plays golf occasionally but does not sail, despite living on an exclusive cul-de-sac a stone's throw from Pewaukee Lake, the largest among hundreds in the area with the exception of Lake Michigan. He spends his free time with his wife and daughter.
Mr. Immelt is the most dynamic executive that Mr. Sheehy has met, but “I would venture to guess that the other CEOs here don't know him.”
Joining GE 17 years ago, he spent a year in corporate marketing, then began a series of promotions, mostly in GE's plastics division.
Mr. Immelt's mother said the topic of her son becoming CEO has come up a time or two at the dinner table: “All Jeffrey says is, "I love what I'm doing right now.' ”
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