General Electric Co. has named a new chief executive following the news that 16-year Chairman and CEO Jeff Immelt will step down in August, but the industrial giant's focus on transforming itself from an manufacturing powerhouse into a digital technology provider is unlikely to change, experts say.
Boston-based GE announced Monday that Immelt, 61, would step down as CEO Aug. 1 and retire from the company on Jan. 1, 2018. Immelt will be replaced by John Flannery, currently president and CEO of GE Healthcare and a 30-year veteran of the company.
Despite the change in leadership, GE's "framework" will remain unchanged, as the company continues to follow Immelt's strategy of transforming the enormous company from its roots as a manufacturer of home appliances, electric components, and railway locomotives into a simpler, digital industrial firm with a focus on the markets of power, aviation, transportation, healthcare, and oil and gas, GE said in a statement.
The company did not respond to a request for comment about Flannery's prospective strategies.
During Immelt's term as leader, 125-year-old GE sold off its appliances and plastics divisions while building large stakes in the "industrial internet" and additive manufacturing (also known as 3-D printing) fields, the company said.
Those moves have positioned GE to claim a growing role as a provider of various supply chain technologies, such as a pilot program launched in May with the Port of Los Angeles to digitize maritime data and make it accessible to beneficial cargo owners (BCOs) and container line companies. Also in 2017, GE landed a five-year contract to run the digital management systems for 250 Deutsche Bahn locomotives operating across Europe, using an Internet of Things (IoT) approach to create self-aware trains and digitize the rail supply chain.
GE made additional investments in supply chain technology during 2016, including a collaboration with SAP SE to build IoT services; the acquisition of the cloud-based, rail shipment-reporting company ShipXpress Inc.; and the $599-million purchase of German 3-D printing company Concept Laser GmbH.
Flannery, 55, gave a nod to Immelt's efforts to incorporate digital technology into GE's traditional industrial operations and become an information-management company. "[Immelt] has transformed the GE portfolio, globalized the company, and created a vision for the GE of the future by positioning the company to lead in digital and additive manufacturing. In the next few months, my focus will be on listening to investors, customers, and employees to determine the next steps for GE," Flannery said in a statement.
Flannery began his career with the company when he joined GE Capital in 1987. He has since spent almost half of his time living outside of the U.S., leading financial and industrial businesses, including running GE Healthcare, GE in India, and the business development team that oversaw GE's acquisition of Alstom, the French power generation and electricity transmission business now called GE Power.
While industry watchers had not predicted Flannery as Immelt's successor, his long tenure and broad experience at the company are seen as signs that GE is not planning any sudden changes.
"I don't think this change will have a drastic impact on the digital transition strategy that has been ongoing at GE," said John Santagate, research manager for supply chain execution at IDC Manufacturing Insights, an analyst group based in Framingham, Mass. "GE has recognized that the industrial manufacturing industry is changing, and rather than be disrupted, has opted to lead the charge."
Still, Flannery faces pressure from shareholders to improve GE's stock market performance. That means he will probably take a hard look at the base of businesses in which GE competes—including supply chain and logistics—and apply his corporate experience in financial risk, acquisitions, and divestitures, Santagate said. For any company implementing a change in leadership, that process can always trigger changes in strategy, he said.
Gartner, Inc.
