Three decades at General Electric Co. (GE - Get Report) helped John Flannery identify the elements crucial to winning, no matter which of the conglomerate's businesses he was running or in what corner of the world it was located.
"I have a relentless focus," Flannery wrote to employees on Tuesday, Aug. 1, his first day as CEO, on "customers, team and execution/accountability. When we bring those three things together, we will create 'our GE.'"
The 55-year-old succeeds Jeffrey Immelt at a turning point for the company founded by Thomas Edison in the late 1800s. His predecessor, whose tenure included challenges from the 9/11 attacks to the 2008 financial crisis, streamlined GE to focus on digital manufacturing but struggled to drive up the stock price and, recently, to deliver the earnings investors wanted.
While GE is the world's 14th-largest company, according to Forbes magazine, its shares have dropped 18% over the past 12 months to $25.52 as oil-equipment sales were curbed by lower crude prices and a government debate over possible cuts to Obamacare slowed purchases of health-care equipment.
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"I feel today a bit like I felt" after starting work at GE in 1987, Flannery wrote: "a mix of curiosity, anticipation, and optimism about the future -- but pragmatic optimism grounded in a full understanding of where the company is today."
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In the month since Flannery's promotion was announced, the new CEO has already met with 100 investors who outlined their expectations of better cash usage, higher margins and cost reduction, he wrote.
"They understand the importance of GE in the world, but they think we are underperforming," Flannery said.
Indeed, Immelt was already grappling before he announced his retirement with pressure from activist investor Trian Partners to boost earnings to as much as $2.33 a share in 2018.
That was an even more ambitious target than the company's earlier $2 goal, which Immelt had warned might be tough to reach.
GE reported profit of $1.49 a share last year from industrial businesses and lending operations that it plans to keep, and is working to deliver as much as $1.70 this year.
Investors grasp "how massive the portfolio transformation has been since 2001" -- including exiting broadcast television, appliances and most of lending -- but want an intense focus on running the company well and more accountability, Flannery wrote. "I heard them loud and clear."
Addressing their concerns, he said, will require exemplary teamwork throughout the company's workforce of about 300,000 employees.
"Healthy teams are willing to debate issues and tell each other, especially their leader, when they disagree," Flannery wrote. "When we know our problems and challenges, we solve them. When we don't discuss the real issues, we are an accident waiting to happen."
Building strong relationships internally will help GE further hone its strategy and broaden its competitive advantage with clients, he added.
"Customers are the 'North star' of our organization," Flannery said, referring to the luminary used by sailors relying on the night sky to steer ships. "If we truly listen to our customers, understand their needs and challenges, are committed to their success -- we will always be doing the right thing. We will develop the right products and solutions, we will be easy to do business with, and we will be a trusted partner they come back to again and again."
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Editors' pick: Originally published August 1.