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Immelt believes that "services are still in their infancy" at many of the company's other divisions. Rather than just sell aircraft engines, for instance, GE can help airlines maintain them, even remotely monitoring performance from the ground while the jets are in the air. Power systems, currently enjoying a $40 billion order backlog, can work with utilities to maximize efficiency and eventually offer forecasting technology to better predict electricity demand. Medical, which Immelt transformed from a $4 billion imaging-equipment vendor into a $7 billion, full-fledged systems provider, not only sells MRI machines to hospitals but also monitors...
...GE has been the exception to the rule that conglomerates are clumsy beasts doomed to underperformance. In the two decades since he took the helm from Reginald Jones, another legend, the wiry, intense Welch, son of a train conductor from Salem, Mass., has turned a sprawling $27 billion-a-year industrial conglomerate into a $130 billion-a-year diversified dynamo that sells everything from aircraft engines, power turbines and CT scanners to life insurance, sitcoms, light bulbs and dishwashers. He exited businesses that GE couldn't dominate, from semiconductors to toasters, and earned the nickname "Neutron Jack" for his massive...
Welch wasn't perfect--retailer Montgomery Ward and brokerage Kidder Peabody were businesses that blew up on his watch--but GE stock has risen close to 4,000% and the company has consistently delivered 10% to 20% in annual earnings growth. Even during the current downturn, GE posted a healthy 15% rise in second-quarter earnings, though its stock has fallen 33% since its most recent high of $60 last August. No wonder, then, that as Immelt put it at the company's annual managers' meeting in Boca Raton, Fla., in January, "everybody at GE thinks they work for Jack...
Immelt jumped a big hurdle in getting the job. Succession is practically papal at GE--Immelt is only the ninth chairman in the company's 123-year history--and a close three-way race emerged among Immelt and two other senior executives, Robert Nardelli, 52, and W. James McNerney Jr., 51. Immelt was the youngest of the three, and the fact that he could serve as CEO for two decades may have nudged him ahead. As for the losers, within weeks they were running FORTUNE 500 companies. Nardelli took over retailer Home Depot, and McNerney now heads 3M, a tech...
...primary strategic mission for Immelt is to hasten GE's transformation from a low-margin manufacturer to a more lucrative services company that sells solutions as much as stuff. In GE's world there are fewer but bigger customers, so there's a vital need to maximize the relationship--to milk them for all they're worth. GE now gets 70% of revenues from services, compared with about 15% when Welch took over. The bulk of it, however, comes from its giant GE Capital subsidiary, with $370 billion in assets...