The top job at General Electric has long been one of the most pre-eminent positions in all of American business – whether it was held by statesmen-like figures for Corporate America, management icons or advisers to presidents.
The CEO who will replace 16-year veteran Jeff Immelt come Aug. 1 hasn't yet had that kind of star profile.
John Flannery, 55, who has been CEO and president of the company's health care unit, has spent 30 years at the company, a longtime insider in a company that has long promoted them. But he only recently has been included in media speculation about who might succeed Immelt as his tenure passed the 15-year mark and as GE's stock continued to underperform.
Yet Flannery has a broad and diverse background at GE that includes some two decades as part of the company's financial arm, corporate experience working on mergers and acquisitions, and a successful tenure running one of GE's operating units.
He will aim to use that as he tries to win the support of investors, revive the company's long flagging stock price, and decide how to lead one of the last major conglomerates, a simplified but still sprawling company that makes products as varied as light bulbs and jet engines.
“I have a long history of looking at things from an investor's perspective by training and background,” he said in a conference call with investors.
That could help counter concerns that some analysts say Wall Street had earlier in Immelt's tenure about overpaying for acquisitions or overexposing the company's bottom line to financial services leading up to the financial crisis.
Much of Immelt's tenure has been marked by a dramatic overhaul of the conglomerate's disparate businesses – divesting operations like GE Appliances or GE Plastics; largely exiting the company's finance arm; and making huge mergers or acquisitions in its industrial and oil and gas businesses. But following a top-to-bottom review of GE that Flannery has promised, there could be more to do.
“If there's a need for further portfolio optimization, (Flannery) has as good a handle as anyone on how to do this in GE's business,” said William Blair analyst Nicholas Heymann. He called Flannery a “pragmatic, well-respected guy,” noting his performance at GE Healthcare, where he jolted organic revenue growth from less than 1 percent, he said, up to 5 percent in shorter than two years.
That pragmatism was on display during an interview last week when Flannery said of GE's stock price, which has lagged competitors' stock and market indexes, that “it's fair to say none of us are happy with the price right now.” Asked about his plans to further reshape GE's business, he stuck to the basics.
“What investors want is growth, margin and cash,” he said. “That's what we're focused on with the company.”
Jack Brennan, GE's lead independent director, said in an interview that Flannery's combination of operating and investment skills – the “ability to think like an owner and operate like an industrialist” – were a big part of the choice the board made.
“John brings a set of financial skills and a mindset around returns and returns on investment that is very strong.”
At GE's corporate headquarters, Flannery led business development – its name for mergers and acquisitions – which included the acquisition of Alstom, the largest industrial acquisition in the company's history. While there, he also worked on shrinking GE Capital, divesting GE's appliances business, and spinning off its private label credit card business before turning around GE's health care business.
Though he has touched many parts of the company, Flannery said “in fairness, I really need to spend the next period here doing a comprehensive review,” noting that Immelt had “asked me to take a fresh look at the company from angles, and that's where I'm going to spend my time, doing a deep dive into all aspects of the company.”
What that will result in seems unclear, but Flannery said he planned to continue Immelt's strategy of adding digital capabilities to GE's industrial products while acknowledging that the company needs to change.
“There's many areas in which we've excelled,” he said in a call with investors, but “at the same time there's clearly areas we need to be better, and we need to address those areas with urgency and with purpose.”
In a panel discussion of executives held with GE employees and broadcast on Facebook Live, Flannery struck a lighthearted tone, answering questions in a lightning round about his favorite band (The Allman Brothers), the person he admires most (his dad) and what talent he'd most like to have (the ability to play blues guitar or dunk a basketball).
Brennan quipped in response: “I was hoping for 'be a great CEO of GE.' ”