GE – The Flannery Way – General Electric Company (NYSE:GE)

GE (NYSE:GE) has taken an incremental shot at righting the ship that has been listing in the eyes of many of its shareholders. The question that always comes to the fore in such instances is whether the change goes far enough.

In keeping with the sentiment in my most recent article, GE: Let It Be, I believe that a light touch is appropriate. Now, I urge all to follow the refrain from John Lennon’s masterpiece:

This morning GE announced the long expected retirement of CEO Immelt.

To no one’s great surprise, GE has finally made the decision that everyone has been expecting. Mr. Jeffrey Immelt, whose legion of non-fans love to taunt him with epithets such as Jeffy Boy, is retiring as CEO effective August 1, 2017.

The first SA article following the announcement was Alessandro Pasetti’s “General Electric: Nothing Changes“. The comments to this short article were relatively sanguine but there was a definite undercurrent of dissatisfaction with the selection of a long-time GE veteran.

On August 1, 2017, John Flannery, GE Healthcare’s CEO will take the hot seat, likely with a short to nonexistent honeymoon.

Many have been hoping for dramatic changes in the executive suite at GE. The following jstratt comment to the Pasetti article cited above makes the point with clarity:

John Flannery is a GE veteran with long tenure. In his own words at the recent Sanford Bernstein Strategic Decisions Conference he described GE Healthcare as:

This introduction most emphatically suggests that Mr. Flannery will serve as a polisher, not as a fixer. Now that disaffected shareholders have tasted the red meat of an announced Immelt retirement, which so many see as too long delayed, they are unlikely to be in a patient mood. Tension is clearly at hand.

CEO-to-be Flannery recently set out his approach to reform setting out a possible template for his new role.

At the Bernstein Conference, Flannery reported how he had been drafted to take over GE Healthcare at a time when it was successful but was facing arrested growth. His description of GE Healthcare at the time when he took it over could apply as well to GE as a whole at the current time.

Accordingly, I expect that he will work to apply the lessons he learned in upgrading GE Healthcare to the whole of GE. In this regard, the following description likely sets out his initial approach to his new larger mandate.

The Flannery way will focus on these three ingredients.

cultural focus on achieving better customer outcomes

His prescription for achieving these are in the classic polishing mold. He describes his approaches from careful product redesign to supply chain refinement to implementation of digital strategies in great detail.

GE has finally made a move. It should be a winner. Mr. Flannery has long experience in wrestling the devils at GE towards the end that it achieve its potential.

He is an executive who understands GE. He knows that performance counts but he also knows that significant improvements can be realized from incremental changes properly applied.

GE is about to chart a new chapter in its storied history. I am looking forward to better times a coming.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.