During a recent discussion with for Senior Executives at Harvard Business School, Jeff Immelt, CEO of GE shared his insights on leadership, corporate culture, his current role in the company. Invited by Professor Ranjay Gulati, Chair of the HBS Advanced Management Program, the CEO of one of the world’s largest corporations gave an open and honest talk about what he considers to be some of his own mistakes and what keeps a CEO awake at night. With a market capitalization of over $200 billion, nearly 300 000 employees and interests in business segments as divergent as Industrial Production, Energy, Technology and Infrastructure, Capital Finance the list had the potential to be a long one.
Taking the economic perspective on running a business
Immelt began by saying that it is not possible to run your business without considering the economic perspective. He declared himself to be optimistic about growth and opportunities in the current climate, despite the volatility. There is still a great amount of potential if you pick the right business. Portfolio management and asset allocation are critical within this strategy as they allow you to choose the areas of high growth. It is precisely for this reason that the company moved into oil and gas.
“The advantage of GE is that we don’t have to do everything everywhere but we can do many things in many places.” said Mr. Immelt.
As the world’s biggest infrastructure company GE has constantly been looking for opportunities in various growth areas to invest in. GE has, however, not only bought many companies in recent years, but also has sold half of the company in the last ten years. In my opinion, the financial services sector has been the toughest area of business in the past ten years. The energy sector has also been changing dynamics in the past five years and companies have become more aware that every industrial company nowadays will eventually become a software company. GE has therefore moved into this sector.
Corporate Culture and its Impact on General Electric
GE is known for its financial strength but equally for its strong investment in training at its leadership institution. Immelt says that he is constantly thinking about how to develop the company, and one of the key ways to greater efficiency is by working on the size and the culture of the company. Training is key to this. Immelt considers that there are many people doing what might be considered to be low value work but equally important if the company is to become the best in the industry. The company needs to invest in training these people as well.
GE has also introduced lean management and processes that give the company more speed in execution. In fact, the company has adopted a policy of setting up some companies to generate more innovation and has been developing management practices that intensify speed in project development.
“There is no future today for a big slow company, it is all about getting to the market as quickly as possible.” he adds.
Leadership at a High Level
Setting performance standards are crucial to allow people to know where they are according to GE’s boss. In most failing organisations people don’t know how they are measured. These standards need to be put into a context of how your company fits in the world. Once you have identified these you can adjust by picking what is next and having the courage and the dynamism to push forward change.
Leadership should be seen as an ongoing process of listening and learning and picking talent. It is the ability to develop other leaders and the skill of projecting ability. In order to enable this projection of ability you need to promote informality. In fact, the previous CEO of GE, Jack Welch, kept a first name environment which allows access to information at all levels.
Being CEO after ‘The CEO of the Century’
Mr. Immelt confesses with a wry smile that taking over GE after Jack Welch was no easy task. Welch was CEO from 1981 until 2001 and during his two decade tenure GE’s value increased by some 4000%. Acclaimed by the press, Welch had even been named “CEO of the century”. How do you follow in footsteps like that? Far more self-effacing and soft-spoken that his predecessor, Immelt nevertheless set about continuing the work that had been done at GE. He considers that his success as CEO has been due to a constant willingness to learn.
“In order to learn you need to be yourself with a strong core. It is an intense journey and depends on how much you want to work and to change. This requires resilience and constant self-improvement.”
According to Immelt, learning demands an even greater effort when you are CEO level you because you don’t have any mentors.
Mistakes made by Jeff Immelt
In fact, Mr. Immelt is not shy when it comes to discussing his own failings. In his opinion, there are five major errors that he has been prone to throughout his career.
- Confusing good leadership with good workers. Some people are excellent at what they do, but are not able to lead. You need to clearly identify the relative skills of your colleagues.
- Not being able to give up on control. Delegating is one of the hardest things to do in management, says GE’s number 1, but you have to be able to see this as risk management. Sometimes you will delegate and mistakes will be made, but this will be rare and the benefits far outweigh the costs.
- Being too self confident. Such a claim comes as a surprise from such a soft spoken CEO, but M. Immelt warns against the dangers of becoming over-confident as you go from success to success. “Arrogance kills.” he says. “If you run GE and you don’t know as much about Amazon as possible, you will have problems.”
- Neglecting the base. Mr. Immelt states that your base is the core to your success. Usually, this is your family and your colleagues and they should not be forgotten.
What keeps the CEO of GE awake at night?
- Disruptive technology culture. The days of software vs. industrial companies are over, says Mr. Immelt. In fact, the two are now totally integrated and a company like GE has to adapt to this.
- War for talent. Talent is key to development within a business and Mr. Immelt says GE is constantly striving to get the best talent in different parts of the world. “Are we attracting the right people?” should be the question that a CEO is constantly asking.
- Public anger with some aspects of business. Mr. Immelt recognises that people have every right to be angry at the apexes of capitalism and this should be a concern for business leaders across the world.
Immelt states that a company should always stay aware of what the competition is doing. Business reviews at GE, he says, have a detailed analysis on competition with a good amount of external focus. In fact small-sized businesses can teach a corporation like GE many good lessons since they only focus on what is important. As a company that sees itself as “builders and not bankers” it is crucial that they maintain a culture that allows people the freedom to develop project in an entrepreneurial manner.
“We build, power, move, and help cure the world.” he concludes.