- General Electric CEO Jeff Immelt will step down on Aug. 1 after 16 years as head of the company, GE announced Monday, The Wall Street Journal and CNBC report. Immelt will also retire from his role as chairman of the board on Dec. 31.
- The current president and CEO of GE Healthcare, John Flannery, is set to replace Immelt as CEO and take over his role as chairman next year. Flannery has been at GE for 30 years, starting his career at GE Capital in 1987.
- Immelt's departure comes at a time when GE is under pressure from activist investor Trian Fund Management to increase its profit and boost costs for its industrial business, the Journal reports. GE, however, said the leadership change has been underway for quite some time. The board determined the timing of the transition in 2013 and voted Flannery as the incoming CEO on Friday.
Immelt was key in reinventing GE, divesting its media and lending business following the financial crisis. The 125-year-old company could not remain dominant as an industry giant without going through changes to its business model.
Though GE is not a traditional tech firm, the company has worked in recent years to transform itself as a digital giant. Immelt had long stated that one of his goals was to make GE a leading software company by 2020. To do that, GE had to recognize that transformation was not simply a task, but an "all encompassing change."
For some companies, that's a pipe dream. But Immelt helped drive the heavy investment and the hiring spree of more than 28,000 employees in GE's standalone software unit, which was established in 2015. And those employees are heavily compensated, on par with market rates. For example, a senior software engineer at GE Digital earns about $138,000 per year.
As GE CIO Jim Fowler recently noted, Immelt was key to driving digital initiatives, inside the company and commercially through its products. Now, the question is whether incoming CEO Flannery will show the same investment in going digital, especially if there is pressure to cut costs.
What is clear, is that without board and executive level investment in going digital, transformation efforts can shrivel. The good news is Gartner reports one-third of CEOs have IT as a priority, intent on building up internal resources and capabilities in order to compete.