Model Management: The success and succession of GE's Jack Welch

Has Jack Welch, CEO of GE and Fortune magazine's 'Manager of the Century', pulled it off once again? Or could the last act of a remarkable career go disastrously wrong?

After months of contemplation, GE (Welch) has finally selected its successor. It has been an exemplary, though tortuous, process - one which has reportedly occupied Welch's thoughts for the last 10 years. No doubt Jeffrey Immelt is the best man for the job. The former head of GE's medical systems, Immelt provides the usual GE executive rigor with softer edges. He was also previously vice-president of GE Plastics - itself a $3bn business.

One wonder is that anyone would want the job. Welch is a near-impossible act to follow. He is charismatic, adored by the markets, and a hero of management literature (challenged only by a few bold sceptics such as Gary Hamel). Succeeding Welch is truly treading in the footsteps of giants. Who remembers the second man on the moon or the heavyweight boxing champion after Muhammad Ali?

That said, hats off to GE's succession planning. Last June the company appointed three key executives (David Calhoun, Joseph Hogan, and John Rice) as number twos to report to the three main pretenders to the top job (apart from Immelt, James McNerney and Robert Nardelli). The reasoning was flawless: whoever didn't get the top job would be on the phone to the headhunters (or vice versa) before the press conference was over so let's get their successors in place in good time. Sure enough, Immelt's deputy Hogan was immediately appointed to succeed him.

Now the bad stuff. Welch, 65 last month (November), is staying on beyond retirement age until the end of 2001. This is because of the need to integrate the massive $43.3bn takeover of Honeywell, reputedly at the insistence of the Honeywell board. So who's in charge for the next year - Welch or Immelt, now president and chairman-elect? In effect, the two will be in tandem.

This is a vital question. Mergers are already difficult enough. Although Welch has pulled off a probably unprecedented 1,000 acquisitions in his time, the Honeywell deal, which will increase GE's headcount by more than a third, is quantitatively and qualitatively a transaction apart. Testing both the relationships at the top and the group's ability to digest a huge new acquisition, the next year will therefore be a doubly challenging period. At that point, in theory, Welch will move happily to greener pastures. Immelt, a mere 44 years old, will be around a lot longer to pick up any pieces.

Perhaps the real winners are McNerney and Nardelli. Welch, obviously resigned to losing them, described them as "sensational people" who "will be courted by every smart company in the world".

No-one would turn down the top GE job. But perhaps the wisest career move will prove to be having almost, but not quite, got it.