Hot Seat: Jeff Immelt at GE

IN SEPTEMBER 2001, Jack Welch was a tough act to follow. The day after Jeffrey Immelt became CEO of General Electric, he had an even bigger challenge to deal with—the 9/11 terrorist attacks. Immelt states in Hot Seat: What I Learned Leading a Great American Company:

The best leaders absorb fear. I’m not talking about soothing people by blowing smoke or giving false assurances. I’m talking about giving people the truth but also giving them a way forward. In the wake of 9/11, GE’s people needed to hear, and to believe, that we had a plan and that, working together, they could help us execute it. They didn’t need to hear that I was so agitated that I struggled to keep food down.

True leaders are frank, but they don’t traffic in panic. The best leaders acknowledge mistakes, but they don’t tear colleagues down just to ease their own discomfort. Transparency is an admirable goal. But the real goal is to solve problems. When leaders merely unload their burdens without offering a plan of action, that’s selfishness masquerading as candor—the arrogance of false piety.

That’s baptism by fire.

Jack Welch led GE to some impressive numbers. In his twenty years as CEO, GE’s value had risen 4,000 percent. But numbers can hide looming issues until they don’t. GE had internal problems, it was overly reliant on GE Capital, and it was not digitally literate and innovative. And in 2001, the economic tailwinds that Welch enjoyed were about to shift.

Much of what needed to be done at GE were long-term propositions. It’s always a challenge to help the naysayers within your own ranks, let alone helping the investors and pundits understand the value of what needs to be done. This was the case with GE Digital, a new subsidiary created to provide software and Industrial Internet of Things services to industrial companies.

Tech start-ups define success, especially in the first decade, on how well they acquire customers, build capability, and penetrate their emerging markets. That wasn’t how GE had traditionally defined success. We were about increasing revenues and making our numbers. Analyzed by that metric, this little start-up within a big parent company was seen by many as a disappointment.

Immelt gives us an inside look—the other side of the story—at what happened at GE while he was CEO. He reveals the complexities of running a global company of over 200,000 employees. I don’t think if Welch stayed on, it would have been much different. Times were changing, hidden problems were beginning to surface, and unforeseen events were to impact the nation. What Welch built was not sustainable. There were lapses in judgment (Yes, he talks about the chase plane) and mistakes made, to be sure, as he admits in this book. GE Capital should have been reined in faster for one thing. Acquisitions were made in an attempt to move GE in a new direction in accordance with the marketplace and to shore up businesses GE was already in.

When stock value drops 30% on your watch, you can bet people are looking for a scapegoat. It’s easy to point fingers and have all of the answers from the sidelines, but when you’re actually in it working through the ambiguity, it’s another story. That should be a lesson for all of us.

Some people point fingers in a crisis, others solve problems, and there’s very little overlap between these two groups. In a blaming culture, people can stop working in order to cover their own asses. If you can nurture an ethos of “all for one and one for all,” it can save your bacon. Good people will stand alongside you in a righteous fight. When you have a strong team, you can weather any crisis. Without that, you are lost.

Building a strong connection to the people you work with is about two things: time and truth. You’ve got to spend the time, and you’ve got to tell the truth.

In situations of dynamic complexity, the effect of a leader’s action or decision is not immediately obvious, but only becomes clear over time. That, in turn, means conventional methods of forecasting and planning don’t work. Increasingly, we needed our leaders to get better at enduring ambiguity and being flexible as new data arose.

There are only a handful of leaders in any company who are true systems leaders. These are people who see what is next without losing sight of what is most important today; they see the long term while still delivering short-term results.

As leaders, we must remember that the world turns. Be humble and empathetic when times are good. And learn to recognize the difference between tailwind and good management. If someone impresses you when they are benefiting from good markets, you still don’t know much. When they thrive in a shit show, you have a gem.

When you are driving change—especially inside a big company—there are a thousand voices. A few of them really matter, because they are saying, “Here’s what you are not seeing; here’s how we can make this work better.” But those can be drowned out by the cacophony of voices saying, “Change is uncomfortable, so I don’t want to change no matter what.” To those attempting to transform their companies, I say this: make sure you’re surrounded by enough differences of opinion to find the voices that matter.

Jeff Immelt and his co-author Amy Wallace have written a very readable, inside look at Immelt’s 16 years as CEO of GE. There are many lessons and takeaways to be found inside.

Immelt is now a partner at New Venture Associates, a Silicon Valley venture capital firm. He also lectures at the Stanford Graduate School of Business.

“The media always look for a single person, a CEO or an entrepreneur, to personify the accomplishemnts of an entire company or industry. It makes good reading, but it’s simplistic.”
— Randy Komisar, The Monk and the Riddle

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Posted by Michael McKinney at 03:50 PM
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