GEWatcher 7- A Two Sided Sword- Taking Public Stands

Throughout GE's history its CEO's have been willing to take public stands on major issues and influence public policy. Gerard Swope, the GE CEO from 1923 to 1939, was a major advisor to the Roosevelt administration and was the architect of the National Recovery Act and Social Security. Ralph Cordiner was a strong proponent of legislation that was viewed as anti- Big Government and anti- Big Labor. Cordiner hired Ronald Reagan to espouse these views.

Jeff Immelt in 2004 conceived the idea of building on the need to "green" the world and at the same time sell GE products. He called this "ecomagination" and has created specific measures on helping the company improve its own energy savings, but also to demonstrate how it is has impacted the company revenue and earnings growth.

All of the GE's CEO have tried to blend their efforts to INFLUENCE public policy and support the company's ability to compete and be profitable. Swope's NRA program would have created cartels and permitted leading company's in each industry sector to increase their leadership position. The NRA only lasted three years and was declared unconstitutional. Cordiner recognized that if BIG government and BIG labor controlled the economy GE would not be able to compete. Immelt recognizes that GE will significantly benefit by helping the country and the world become more ecologically friendly.

Unfortunately, when a major company and its CEO takes a stand there will always be advocates of the opposite point of view that will challenge you, especially if you represent a major company.
Jeff Immelt experienced this reality at the Eco:nomics conference at which he was invited to speak. He said: " I came because I was invited"..and "I don't need to be lectured by anyone in this room on how to compete". "Immelt's outburst came toward the end of a Q &A session that saw him repeatedly assailed by ideological conservatives angry over his involvement in the US Climate Action Partnership, a coalition of large businesses lobbying for a carbon cap and trade system, and his leadership role in pushing the business world to embrace clean energy and sustainability."

Immelt obviously was angry and it is apparent that he didn't expect to be criticized. Unfortunately, he must recognize that he must always be ready to defend his position both from a external, value to the world and customers, and internally, making money. Jeff seems to been unprepared for being criticized and reacted.

Jeff made another good point in his talk: " There is no completely free markets. The government has its hand in every industry: housing has mortgage tax credits' GE got into commercial aviation because of DOD helped fund it; etc.... " It is true that GE entered and has been supported by government money. It developed the jet engine during WWII because the US needed a jet engine... its nuclear technology was a by-product of the US nuclear program... and many other businesses were supported by the US government. This is only fair since all of its foreign competitors have been financed and supported by their governments. Nothing is pure...

Overall, I applaud Immelt's focus on helping solve the environmental and pollution problems since it has the abilities to do so...but it must always be remembered that his primary mission it to enhance the wealth and well being of his key stakeholders...employees, investors etc. He must never be SURPRISED or upset when others challenge his strategies and mission. This is just part of the game!

Bill Rothschild...author of "The Secret to GE's Success" the only book that explains the company's successes and failures and the lessons we can all learn from this remarkable company.