IN LATE MAY, it was Flannery’s turn to take the microphone at the Electric Product Group conference in Florida.
It had been a long year since Immelt delivered his less than stellar performance. All eyes were on the new CEO, with many of the same questions in mind: Was he going to deliver a new strategy? A major asset sale? A real solution to the GE Capital problem?
Flannery’s reputation was beginning to harden among those at the top of GE. It was sensed that he lacked composure, that he could get flustered in high-pressure situations. His critics thought he sometimes flew off the handle. This was a surprising change in his behavior for many who knew him as a calm and confident leader.
Like Immelt, Flannery was a strong speaker. After the annual management retreat in Boca Raton back in 2015, Flannery’s presentation had become part of GE lore. That annual three-day, invitation-only gathering in January was the ultimate networking event for GE leaders. Speakers sometimes included world leaders, and presenting to that group was a big deal. In Welch’s day, preparations would begin before Christmas, with chosen executives presenting privately to Welch for advice and approval.
But in 2015 Flannery had stunned the room by pulling off a feat that, to GE veterans, was akin to walking on water: he presented without using PowerPoint slides. He had simply communicated what he felt the Healthcare business needed, including what it was doing wrong. That singular triumphant moment helped build Flannery’s reputation for self-confidence and a willingness to break from the pack.
But now, three years later, it was clear that being CEO of GE wasn’t the same as presenting at Boca Raton, especially at a moment when everyone was looking to him to save the company. Flannery unfortunately was now building a new and different kind of reputation: for seeming to drop GE’s stock price anytime he opened his mouth.
His handlers feverishly prepared him for EPG so as to avoid another setback. They gave him a long sheet of possible questions with appropriate answers, did mock sessions, and asked him the same questions in a variety of different ways so that he could always know how to steer to the best answer.
But despite all the extensive prep work, Flannery still came before the annual gathering with a gloomy and, to him, unavoidable message: the Power business was facing years of pressure ahead, and major changes at the conglomerate would take some time to show results.
When pressed, he declined to commit to GE’s dividend for 2019 and answered questions about it as he typically did during his time at the top—as a finance expert. The dividend reflects the ability of the existing portfolio to pay it, he would say, so it might change with the portfolio. If a company sells half its businesses, he’d point out, it can’t pay the same dividend.
What investors heard in this response was: I may cut the dividend again.
Flannery didn’t follow the unwritten executive rule that you stand by your commitment—until you don’t. In some ways, he was being too transparent. He refused to paint himself into a corner by making a long-term promise in a fluid situation. He also defended his methodical approach to the strategic review.
“So being deliberate and then moving when things make sense—as opposed to moving just because somebody wants us to—is just my style,” he told the crowd. “So I get that people want faster. I’m managing in a broader sense.”
GE’s stock slid 7 percent that day on his comments. Again, the stock had dropped when Flannery spoke.
Even if the upbeat optimism of Immelt was now being seen as part of GE’s troubled past, the former CEO’s ability to communicate had at least often calmed a room. The company and its army of managers could do anything, he convinced his listeners. It spanned the globe, was admired by world leaders, and could ultimately work out any problem thrown at it.
Immelt often lamented the hand he was dealt, the external catastrophes he had to navigate, but there had been one solid truth in his repetitive invocation of the past—GE had weathered a lot of storms with a business model that many thought was obsolete. And even some of Jack Welch’s confidants had privately admitted that Welch couldn’t stand up to Immelt in giving a speech, working a room, and handling a crowd.
For John Flannery, Immelt was proving to be a hard act to follow.