Latest / Masters in Business / Jeff Immelt on Crisis Management and Leadership (Podcast)

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Jeff Immelt on Crisis Management and Leadership (Podcast) · Masters in Business

0:02
Speaker 1: This is Mesters in Business with very Renaults on Bluebird Radio.
0:08
Speaker 1: This week on the podcast, I have an extra special guest.
0:12
Speaker 1: His name is Jeff Immelt and he is the former
0:15
Speaker 1: chief executive officer of General Electric, one of America's biggest
0:20
Speaker 1: and best known companies. I was really impressed not only
0:25
Speaker 1: with his book Hot Seat, but with our conversation. He's
0:30
Speaker 1: absolutely fourth right. He takes complete ownership of the errors
0:36
Speaker 1: that were made at General Electric. I mean, by and
0:38
Speaker 1: large they got more right than wrong. And to be blunt,
0:43
Speaker 1: I think he inherited a mess from Jack Welsh, who
0:46
Speaker 1: I've described as the most overrated CEO in history. There
0:51
Speaker 1: was an accounting scandal lurking there. Uh Jack paid himself
0:55
Speaker 1: an obscene amount of money, a four hundred and sixty
0:58
Speaker 1: million dollar seven paths package and just you know, manipulating earnings,
1:03
Speaker 1: pulling a magic penny out of g capital. And I
1:07
Speaker 1: gave himilt every opportunity of the throw well show under
1:11
Speaker 1: the bus, and he refused to. In fact, he could
1:15
Speaker 1: not have been more generous to his predecessor, who um
1:19
Speaker 1: not only gave him a company with a ticking time
1:22
Speaker 1: bomb in it um, but a big conglomerate industrial company
1:26
Speaker 1: with a fifty pe how is it not inevitable that
1:29
Speaker 1: ge stock price was going to come back to earth
1:32
Speaker 1: a fifteen or is reasonable for a industrial conglomerate, not fifty,
1:38
Speaker 1: And so the stock performance was more or less, you know,
1:42
Speaker 1: out of his hands. He is super knowledgeable, really just
1:46
Speaker 1: a tremendous guy. Under different circumstances. I think his reputation
1:51
Speaker 1: as a CEO and a leader would be up there
1:55
Speaker 1: amongst the best in the world. But because of the
1:58
Speaker 1: situation he stepped into. Literally his first day of work
2:03
Speaker 1: was September tenth, two thousand and one, and he tells
2:06
Speaker 1: him fascinating stories about it. I found the book to
2:09
Speaker 1: be really interesting, totally transparent, very honest, and very educational.
2:14
Speaker 1: There's a lot to learn from his experiences and uh,
2:18
Speaker 1: just really a fascinating person with an incredible work history
2:22
Speaker 1: and and just a lot to share. Uh. He now
2:25
Speaker 1: is teaching at Stanford Business School and his adventure partner
2:28
Speaker 1: at one of the larger venture capital funds. So, with
2:31
Speaker 1: no further ado, my conversation with former g E CEO
2:37
Speaker 1: Jeff Emilt, this is Mesters in Business with very renults
2:44
Speaker 1: on Bluebird Radio, my extra special guest this week is
2:49
Speaker 1: Jeff Emilt. He joined General Electric in n in the plastics,
2:55
Speaker 1: appliances and healthcare division. He eventually led Gees Medical system
3:00
Speaker 1: Dam's division from nine seven to two thousand, rising to
3:04
Speaker 1: the role of CEO, where he led General Electric from
3:08
Speaker 1: two thousand and one to two thousand and seventeen. His
3:11
Speaker 1: new book is Hot Seat, What I Learned Leading a
3:14
Speaker 1: Great American Company. Jeff Emmilt's welcome to Bloomberg. Hey, Barry, Thanks,
3:20
Speaker 1: It's great to be here. So tell us a bit
3:22
Speaker 1: about your path to becoming the CEO of one of
3:26
Speaker 1: America's crown jewels. Your dad was an employee at ge,
3:31
Speaker 1: wasn't he, Yeah, Berry, I grew up in Cincinnati, Ohio.
3:35
Speaker 1: My dad was a career kind of manufacturing guy in
3:38
Speaker 1: our aviation business. So I kind of grew up in
3:41
Speaker 1: the shadow of the company, if you will. Um, I
3:45
Speaker 1: you know, went away to school and uh and went
3:48
Speaker 1: to a business school and I graduated in two And
3:52
Speaker 1: it wasn't necessarily that my father had worked there. But
3:55
Speaker 1: what I thought I'd do is go someplace where I
3:58
Speaker 1: can learn to be a man for you know, kind
4:01
Speaker 1: of learned what general management was like. G had a
4:04
Speaker 1: great reputation. So I went to work in two in
4:08
Speaker 1: the plastics business. I thought i'd stay five years, and
4:12
Speaker 1: I ended up staying thirty five years. So you know,
4:15
Speaker 1: I would say careers are based on performance and luck,
4:22
Speaker 1: and my career had both of those. I started in
4:27
Speaker 1: the plastics business really commercially, selling in Detroit and in
4:32
Speaker 1: the western half of the US, and that was really
4:35
Speaker 1: interesting and fun. I learned so much by selling two
4:39
Speaker 1: big companies like General Motors and Ford, which at that
4:42
Speaker 1: time we're kind of the giants of American industry, and
4:46
Speaker 1: they were really a challenge. And then I had my
4:49
Speaker 1: first real break when I was in my early thirties.
4:53
Speaker 1: I was moved to our appliance business to run the
4:58
Speaker 1: service business during a major act recall, and so I
5:02
Speaker 1: was at a very high profile job at a very
5:04
Speaker 1: young age. That was extremely difficult. I had lots of
5:09
Speaker 1: exposure to Jack Walsh early in his UH CEO tenure,
5:14
Speaker 1: and you know, I think getting noticed at an early
5:16
Speaker 1: age is actually, you know, one of the things that
5:19
Speaker 1: helps people push them along in their career. I later
5:23
Speaker 1: went back to the plastics business, and then right before
5:26
Speaker 1: I became CEO, went to our healthcare business, and that
5:31
Speaker 1: was just a perfect fit. It was relatively small business,
5:35
Speaker 1: but it was very technical, very global. It played to
5:39
Speaker 1: a lot of my strengths, and that was the platform
5:41
Speaker 1: that ultimately I moved from to become CEO of the
5:44
Speaker 1: company in two one. So before we moved to your
5:47
Speaker 1: tenure as CEO, I have to ask when you started
5:51
Speaker 1: the medical systems division was relatively small, but that eventually
5:55
Speaker 1: became a pretty substantial growth driver. Tell us a little
6:00
Speaker 1: a bit about the general electric medical systems division you ran, Yeah,
6:04
Speaker 1: So you know, I went there again. I had been
6:07
Speaker 1: really in the appliances and plastics, and I went there
6:10
Speaker 1: in I remember I had been there for about two
6:16
Speaker 1: months and I was talking to Jack on the phone
6:20
Speaker 1: and I said, you know, Jack, this is a huge industry.
6:24
Speaker 1: You know, trillions of dollars. Uh. It seems to me
6:28
Speaker 1: like we've got a pretty good footprint. A lot of
6:30
Speaker 1: people respect us, but our business as a peanut, it's
6:33
Speaker 1: three billion dollars. You know. We we need to be
6:37
Speaker 1: more adventurous, we need to be uh, taking more risks.
6:42
Speaker 1: And I think he it just resonated with him. It
6:45
Speaker 1: was kind of the right comment at the right time,
6:48
Speaker 1: and he became quite encouraging right right after that to
6:51
Speaker 1: both do acquisitions but also to help grow globally and
6:55
Speaker 1: invest in organic growth and technology. So, uh, you know,
7:01
Speaker 1: to your point, and so that from three billion became
7:04
Speaker 1: a one billion dollar business by the time I retired,
7:08
Speaker 1: and you know, yep, today it's still you know, there's
7:11
Speaker 1: plenty of opportunities in healthcare. So it played to my strength.
7:16
Speaker 1: I would say in my career, I was a good
7:19
Speaker 1: product manager. I was good at you know, kind of
7:23
Speaker 1: marketing and sales. I knew how to strategically think my
7:28
Speaker 1: way through a business problem, and all of those things
7:32
Speaker 1: kind of came to the forefront when I was in
7:35
Speaker 1: gee healthcare business. So you become CEO. Your first day
7:40
Speaker 1: on the job is September two thousand and one. Tell
7:44
Speaker 1: us about your second day on the job. What was
7:47
Speaker 1: that like? Yeah, so, you know what, you have to
7:51
Speaker 1: kind of understand the era a little bit. You know,
7:54
Speaker 1: the nineties, we're just a moment of tranquility, the U.
8:00
Speaker 1: S economy, the economy was growing, the US was the
8:04
Speaker 1: dominant player in the world. The world was at peace,
8:07
Speaker 1: and so that was kind of the let's say, the
8:10
Speaker 1: environment which I grew my career, at least the last
8:12
Speaker 1: part of my group before it became CEO. And so
8:15
Speaker 1: September eleventh happened, and it was just a horrible tragedy,
8:20
Speaker 1: and to a certain extent, even though we didn't know
8:22
Speaker 1: it at the time, it really marked a change in
8:24
Speaker 1: the world, right it It marked to change in globalization,
8:28
Speaker 1: how companies were viewed, what tail risk was. So there's
8:33
Speaker 1: a bunch of stuff that actually happened. But from a
8:36
Speaker 1: practical standpoint, you know, here I was. I had run
8:39
Speaker 1: let's say, seven billion dollar healthcare business, and all of
8:43
Speaker 1: a sudden, I'm running a hundred whatever billion dollar conglomerate.
8:48
Speaker 1: And a day into my job, I had to start
8:51
Speaker 1: making decisions. There was no honeymoon, there was no prep time.
8:56
Speaker 1: I had to start making important decisions like do we
9:00
Speaker 1: land airlines money? What do we do we restructure our
9:03
Speaker 1: aviation business, how should we think about insurance? And I'm
9:07
Speaker 1: doing that in real time in the first, second, third,
9:10
Speaker 1: fourth week on the job. I had to communicate now
9:13
Speaker 1: to several hundred thousand people who kind of looked in
9:17
Speaker 1: horror at what was going on in New York City.
9:21
Speaker 1: I had to employees that died tragically in the in
9:24
Speaker 1: the event, so you know, kind of there was just
9:27
Speaker 1: no warm up and no prep to get ready for
9:31
Speaker 1: making billion dollar decisions late at night that you had
9:34
Speaker 1: to be made under pressure. And you know, I just
9:38
Speaker 1: grew up quite quickly, and that and that in that context,
9:42
Speaker 1: like like most crises do you know, it's um you
9:47
Speaker 1: just don't have a chance. You know, it's kind of
9:49
Speaker 1: like life gets lived forward, not backward. And so I
9:54
Speaker 1: was experiencing that in real time that I had the
9:57
Speaker 1: kind of you know, there was no way to kind
9:59
Speaker 1: of say, Okay, I'm gonna sit this one out. You
10:01
Speaker 1: were just living life as it as it came at you.
10:04
Speaker 1: So I like the way you use the chapter structure,
10:08
Speaker 1: the titles of each chapter to go into a deep
10:12
Speaker 1: dive about all sorts of broad topics in leadership. And
10:18
Speaker 1: one of your chapters is leaders Persevere in a crisis.
10:23
Speaker 1: Give us a little details about how you persevered. Let's
10:27
Speaker 1: start with September eleven, and then we could go on
10:30
Speaker 1: to what you learned about crisis management at Fukushima. Yeah,
10:35
Speaker 1: so I think very maybe we'll take three of them.
10:38
Speaker 1: Let's take nine eleven um, and then let's take the
10:42
Speaker 1: global financial crisis and will take Fukushima because I had
10:45
Speaker 1: all of those, let's say between two thousand and one
10:47
Speaker 1: and two thousand eleven. I think in the in the
10:51
Speaker 1: in nine eleven, you know what you learned is is
10:55
Speaker 1: really two things. I would say one was that during
11:00
Speaker 1: a crisis, you have to hold two truths. And one
11:03
Speaker 1: is that the worst thing that you know can happen.
11:07
Speaker 1: And the other thing is that you shouldn't give up
11:09
Speaker 1: hope that a better future is out there once you
11:14
Speaker 1: make it to the other side. So we had to
11:17
Speaker 1: restructure our commercial aviation business because clearly airlines are gonna
11:21
Speaker 1: be traveling less. But in two thousand and two, Alan Malally,
11:26
Speaker 1: who isn't gooing at the time, he launched the idea
11:29
Speaker 1: of the Dreamliner, which was a revolutionary new aircraft that
11:33
Speaker 1: was going to take a billion dollars to make the engine,
11:36
Speaker 1: and we won that that that order in that commitment,
11:41
Speaker 1: So we made a billion dollar decision at the absolute
11:45
Speaker 1: worst time in the history of the industry. And so
11:48
Speaker 1: you need to hold two truths at the same time.
11:51
Speaker 1: I think the other one is just the need for communication.
11:54
Speaker 1: I think so much changed around nine eleven, and what
11:58
Speaker 1: you really find is that, uh, in a crisis, you
12:01
Speaker 1: have to be willing to talk about what you know
12:04
Speaker 1: and what you don't know, and people just want to
12:07
Speaker 1: hear your voice. So those were the two things I
12:12
Speaker 1: learned during the financial crisis. The financial crisis, I think
12:17
Speaker 1: just if you're in financial services, probably the three months
12:22
Speaker 1: after Layman Brothers went bankrupt, there's just no describing how
12:27
Speaker 1: every day brought a new challenge, every day brought fear,
12:33
Speaker 1: and it was just you just really had to be
12:37
Speaker 1: on your toes, you know, kind of twenty four hours
12:39
Speaker 1: a day. And what I learned in that crisis was
12:43
Speaker 1: that you needed to have contingencies. You needed to have
12:46
Speaker 1: like I'm gonna try this one day, I'm gonna do
12:49
Speaker 1: something else the next day doesn't work, and so you
12:52
Speaker 1: just had to take wave after wave of contingencies. You
12:56
Speaker 1: learned that leaders have to absorb fear. I mean, one
12:58
Speaker 1: of the things that unique about g and Times that
13:00
Speaker 1: were half our company was in financial services, but the
13:04
Speaker 1: other half was doing fine. It was in healthcare and
13:06
Speaker 1: aviation and a whole series of different businesses. So you know,
13:11
Speaker 1: it wasn't coming on me not to allow anything that
13:13
Speaker 1: was going on in financial services to spill over into
13:17
Speaker 1: the other parts of of the company. So you really
13:21
Speaker 1: learned that you have to stay flexible and you have
13:24
Speaker 1: to absorb fear. And then when I moved to Fukushima,
13:28
Speaker 1: you know when I learned in Fukushima is the importance
13:31
Speaker 1: of risk management. So Fukushima was a It was a
13:37
Speaker 1: tsunami in Japan and it impacted seven nuclear reactors forward
13:45
Speaker 1: Ge that were installed in the nineteen sixties and early
13:49
Speaker 1: nineteen seventies. And I was in Australia when it happened.
13:53
Speaker 1: I was traveling, and I had my assistant send me
13:57
Speaker 1: the contract that was from the nineteen sixties that we
14:02
Speaker 1: had signed with the with TEPCO, who is the big
14:05
Speaker 1: Japanese utility, just to kind of read what it said
14:09
Speaker 1: and and meet, you know, what our liabilities might be
14:11
Speaker 1: and things like that. And I was so impressed by
14:16
Speaker 1: the work that our lawyers and engineers had done in
14:18
Speaker 1: the nineteen sixties to envision all kinds of natural disasters
14:23
Speaker 1: and all kinds of contingencies. And you know, I would say,
14:27
Speaker 1: unlike the other terrorist events, in the case of Fukushima,
14:30
Speaker 1: that just was a very robust risk manager process and
14:34
Speaker 1: even foresaw a horrible natural disaster like the one in Fukushima.
14:38
Speaker 1: So every crisis is different. I think a little bit
14:42
Speaker 1: about COVID today and what's similar and what's different. But
14:46
Speaker 1: I think the things that are always true are the
14:50
Speaker 1: leaders necessity to absorb fear, to hold two truths, to
14:56
Speaker 1: make timely decisions, and to be a good communicator even
15:00
Speaker 1: if what you're communicating is you don't know so And
15:03
Speaker 1: as one of your chapters is titled, leaders also have
15:08
Speaker 1: to maintain optimism. Yeah, I think again it's there's a
15:12
Speaker 1: lot that gets written today about it's better to be
15:15
Speaker 1: a pessimist than an optimist. But I think I think
15:18
Speaker 1: you always have to understand that what you know, you
15:21
Speaker 1: have to lead people through the toughest times, but you
15:23
Speaker 1: need to show them what the future could look like
15:26
Speaker 1: if you if you really work well together. Yeah. There's
15:29
Speaker 1: a wonderful book about quote, The Triumph of the Optimists,
15:33
Speaker 1: that just explain why the pessimistic perspective in the twentieth
15:38
Speaker 1: century was really the wrong side of the trade. Yeah.
15:42
Speaker 1: Before we leave your career and start delving more into
15:46
Speaker 1: general electric I have to just ask a couple of
15:49
Speaker 1: questions about what you're doing post g E. How do
15:53
Speaker 1: you enjoy teaching at Stanford. Yeah, so I teach a
15:57
Speaker 1: class at Stanford on what we assistants leadership, but it's
16:01
Speaker 1: really leading through disruption. And I'd say I always wanted
16:06
Speaker 1: this will be my fourth year. I always wanted to
16:10
Speaker 1: kind of try my hand at teaching. By the way,
16:12
Speaker 1: it's a lot harder than I ever thought it was
16:14
Speaker 1: going to be. But I think students, uh, you know,
16:18
Speaker 1: they're so smart today. They keep you young. They're very
16:22
Speaker 1: hungry for not just the theoretical but the practical experience.
16:28
Speaker 1: And I think one of the things that you know
16:31
Speaker 1: when you're when you're a business school student, you think
16:33
Speaker 1: you know it all. And one of the things that
16:36
Speaker 1: that I always hearkened back to them is, look, every
16:39
Speaker 1: job looks easy to you're the one doing it right.
16:42
Speaker 1: You may have read a case and you think the
16:44
Speaker 1: CEO is a dumpy, but someday you're going to be
16:46
Speaker 1: that dummy. Right, Someday you're gonna be in those shoes
16:49
Speaker 1: and you're gonna have to make the decisions and you
16:51
Speaker 1: can't judge them, and someone working some won't. And so
16:56
Speaker 1: your ability to persevere through that kind of criticism is
17:00
Speaker 1: really key to who you are and what you'll do.
17:03
Speaker 1: And then I also do venture capital. I always wanted
17:05
Speaker 1: to work when I retired with small companies, with innovators,
17:08
Speaker 1: with founders, mainly in healthcare, but a little bit in
17:12
Speaker 1: techt I have to say, between the teaching and my
17:15
Speaker 1: venture work, I really like it. I really enjoy it.
17:19
Speaker 1: I think it's a way for me to stay fresh,
17:22
Speaker 1: but it's also a way for me to get back
17:25
Speaker 1: two leaders of the future and hopefully help them through
17:27
Speaker 1: their through their journey. So you're a venture partner at
17:31
Speaker 1: New Enterprise Associates, which is one of the larger venture
17:35
Speaker 1: shops out in California. How different is it thinking about
17:40
Speaker 1: companies that are tiny really at the conception with the
17:45
Speaker 1: potential of of changing the paradigm, versus running behemoth conglomerate.
17:53
Speaker 1: You know, that's a really great question. In some ways,
17:55
Speaker 1: it's extremely different, right because you know it, e we
18:00
Speaker 1: just had massive scale and massive diversity, and and when
18:07
Speaker 1: you're in a startup, you're small and you really focus
18:10
Speaker 1: on one thing. I mean, most startups so narrow and deep,
18:15
Speaker 1: and that's what makes them successful and then they begin
18:17
Speaker 1: to grow. So on one hand that those are very different.
18:21
Speaker 1: On the other hand, whether you're going from ten employees
18:24
Speaker 1: to a hundred or a hundred to a thousand. Learning
18:27
Speaker 1: to scale is an important trade. There's an important skill
18:32
Speaker 1: and something that every startup has to do, and that's
18:35
Speaker 1: something that I can be very helpful with. You know,
18:38
Speaker 1: how do you how do you hire first line managers?
18:40
Speaker 1: How do you put in performance systems? What does a
18:44
Speaker 1: good human resource leader look like? Those are a lot
18:47
Speaker 1: of the questions that many of the founders I work
18:49
Speaker 1: with are asking, and I can be extremely helpful in
18:53
Speaker 1: that regard. So, you know, what, what you're trying to
18:56
Speaker 1: do when you're in a role like mine is find
18:59
Speaker 1: what is most useful but the company you're working with
19:02
Speaker 1: and play that role. I guarantee there's something I can
19:04
Speaker 1: be helped with on every company. But there's some things
19:07
Speaker 1: that my skill set doesn't play as much for and
19:11
Speaker 1: I don't try to overdo it. I try to just
19:14
Speaker 1: find my niche and play it as well as I can.
19:18
Speaker 1: Quite interesting, let's talk a little bit about some of
19:21
Speaker 1: the challenges of running such a big company. What was
19:24
Speaker 1: it like managing three hundred thousand employees? Well, I think
19:30
Speaker 1: that you know, you've got to think about several things
19:34
Speaker 1: when you manage its size. You know, one is you've
19:37
Speaker 1: got to divide the company up into what I would
19:41
Speaker 1: call both vertical and horizontal cohorts. Right, So in the
19:46
Speaker 1: case of a conglomerate, you've got many different businesses and
19:49
Speaker 1: ultimately from most of the people in the company, the
19:52
Speaker 1: business is who they identify with. So that's that's what
19:56
Speaker 1: I call a vertical group. You have to create a
19:59
Speaker 1: hor as on a network. So you basically look at
20:02
Speaker 1: you know, kind of officers of the company or senior
20:05
Speaker 1: vps or business leaders, and you want them to be
20:08
Speaker 1: part of a collective whole. You want them to drive
20:12
Speaker 1: common initiatives. You want them to be accountable for each
20:14
Speaker 1: other in terms of in terms of mission and metrics
20:19
Speaker 1: and things like that. You've got to instrument the company
20:22
Speaker 1: in a way that you know whether you're doing well
20:25
Speaker 1: or doing poorly. So some metrics are important. And lastly,
20:30
Speaker 1: you know very you know, if you if you go
20:33
Speaker 1: through change, there's probably two or three or four initiatives
20:40
Speaker 1: that you want to embrace across the company because your
20:44
Speaker 1: unique scale can really drive substantial change. Right. So so
20:50
Speaker 1: it's it's really about communication, It's about creating good cohorts.
20:56
Speaker 1: It's about metrics, and it's about one or two were
21:00
Speaker 1: three really good initiatives that can leverage your scale. But
21:04
Speaker 1: you work it every day because the you know, size
21:06
Speaker 1: can be an awesome advantage, it also could be a
21:10
Speaker 1: huge disadvantage, and you're always teetering right between making an
21:15
Speaker 1: advantage and letting it be a disadvantage. Interesting, So, becoming
21:20
Speaker 1: um public is less and less popular these days than
21:24
Speaker 1: it used to be. How do you balance the various
21:28
Speaker 1: constituencies between your employees, your customers, your shareholders, and your
21:34
Speaker 1: board of directors. That seems like a lot of balls
21:36
Speaker 1: to keep in the air while at once, Yeah, look
21:40
Speaker 1: it's this is you know, I've heard this question asked,
21:43
Speaker 1: you know, in many different ways, over many different eras,
21:47
Speaker 1: and it's it's still you know, the answers change over time.
21:53
Speaker 1: They're never totally satisfying. But that's part of the paradox
21:57
Speaker 1: of running a public company. So I would say, you know,
22:02
Speaker 1: the answer is that investors own the company and unless
22:06
Speaker 1: you're you're doing something that that is aligned with them, um,
22:12
Speaker 1: you're gonna get in trouble. Right, So, so there there
22:15
Speaker 1: is a sense that if you're a public company investors
22:18
Speaker 1: have a huge say increasingly, and particularly when I compare
22:26
Speaker 1: with let's say two thousand one, the intersection between companies
22:30
Speaker 1: and society has in government has never been greater than
22:34
Speaker 1: it is today. Right, Government is a big actor in
22:39
Speaker 1: every industry and that's not going to change. So so
22:44
Speaker 1: investors are key. Government and society hugely important today versus
22:50
Speaker 1: the past. And then you know, having led through a
22:53
Speaker 1: couple of three or four crises, in a crisis, the
22:58
Speaker 1: people that matter most of your employee, you know, some
23:00
Speaker 1: other words like like when you're when you're taking incoming
23:04
Speaker 1: every day. The only way to get out of a problem,
23:07
Speaker 1: The only way to get out of a mess is
23:09
Speaker 1: if your team is aligned and if you can help
23:12
Speaker 1: bring them with your help them, you know, have them
23:16
Speaker 1: help you solve the problem. So it's complicated. Uh, it's
23:21
Speaker 1: more complicated to be honest with you today than it
23:24
Speaker 1: was twenty years ago. But there's never going to be
23:26
Speaker 1: a nice, simple, easy answer to your question. So in
23:30
Speaker 1: the book, I I found your criticism of the under
23:35
Speaker 1: investment at GE for the decades that preceded your tenure
23:41
Speaker 1: was pretty legitimate, considering this is the company founded by
23:45
Speaker 1: Thomas Edison, how much under investment in R and D
23:50
Speaker 1: took place at General Electric prior to your tenure, and
23:53
Speaker 1: what were the ramifications of that under investment. Yeah, so,
23:57
Speaker 1: you know, I I took over for a really good
24:00
Speaker 1: CEO who was extremely well known and who was I
24:05
Speaker 1: would say in the in the decade of the nineties.
24:10
Speaker 1: You know, it was really kind of leveraging that decade
24:12
Speaker 1: where I would say financial services and management practices were valued,
24:21
Speaker 1: and what most general managers worked on were those two things.
24:25
Speaker 1: And so when we got to the end of the
24:28
Speaker 1: nine nineties, GE was a company that had let's say,
24:32
Speaker 1: a relatively stale industrial portfolio, a very vibrant and fast
24:37
Speaker 1: growth financial services set of businesses, and a market multiple
24:43
Speaker 1: that exceeded a tech company. So we were just imbalanced. Um,
24:51
Speaker 1: you know, it wasn't that our industrial businesses all had
24:54
Speaker 1: high market share, but they weren't necessarily technical leaders. And
24:58
Speaker 1: we had not been in testing as robustly in in
25:03
Speaker 1: R and D and innovation as we should have. And
25:06
Speaker 1: you know, if you looked at let's say, you know,
25:09
Speaker 1: the top uh D fifty people in the company that
25:16
Speaker 1: are called vice presidents or officers, only three were engineering leaders. Right,
25:21
Speaker 1: So if you think about the size of GE, and
25:25
Speaker 1: that's kind of symbolic of what was valued in terms
25:30
Speaker 1: of the organization and the functions. You know, that's kind
25:33
Speaker 1: of where we were in two thousands. So we had
25:37
Speaker 1: a strong balance sheet, We had many good things. We
25:39
Speaker 1: just we just hadn't spent enough time thinking about how
25:43
Speaker 1: to be an innovator in the twenty one century. Interesting.
25:48
Speaker 1: I love the story early in the book of You,
25:51
Speaker 1: after you've been named as the incoming CEO, but before
25:56
Speaker 1: you actually start the job. Out golfing with some college
26:00
Speaker 1: buddies and you're getting dressed in the locker room and
26:04
Speaker 1: some random person comes up to you. You start chatting
26:08
Speaker 1: and uh, you're wearing something with a GE logo, and
26:11
Speaker 1: he says to you, um, well, at least you're not
26:14
Speaker 1: that poor bactor to ask to follow Jack Welsh, it was.
26:18
Speaker 1: It was a funny story. So I'm in the locker
26:21
Speaker 1: room and I just met him, and I would ask
26:24
Speaker 1: him for directions and he says, well, what do you do?
26:27
Speaker 1: I said, I said, I'm playing with some friends, but
26:29
Speaker 1: I work at g And he said, gee, huh, Well,
26:32
Speaker 1: I feel sorry for that poor son of it that's
26:34
Speaker 1: gonna follow Jack. So I went out to the first
26:38
Speaker 1: team and we just spent the day laughing. But you know,
26:41
Speaker 1: when you replace the famous guy, you're always going to
26:45
Speaker 1: have a certain you know, you know, kind of a
26:46
Speaker 1: complicated path. And I would say, you know, the main
26:51
Speaker 1: difference barriers just that the era of the two thousand's
26:55
Speaker 1: were just so different in the air of the nineties.
26:58
Speaker 1: The company had to change, no doubt about that. And
27:01
Speaker 1: Jack Welch certainly was a tough act to follow. What
27:05
Speaker 1: specific challenges did you encounter after he left the CEO
27:10
Speaker 1: and did he set you up to succeed? Oh? Gosh,
27:14
Speaker 1: I think um. I think the challenges were to reframe
27:21
Speaker 1: the company's portfolio and rejuvenate the industrial businesses, uh, you know,
27:30
Speaker 1: for the century, and so I think that was kind
27:34
Speaker 1: of job number one. Job number two was to maintain
27:41
Speaker 1: sustain as many of the key leaders inside the company
27:45
Speaker 1: as as we could. There's always going to be a
27:47
Speaker 1: moment of time when people have a certain comfort with
27:51
Speaker 1: how one CEO did it, and they're gonna they're gonna
27:53
Speaker 1: kind of wait and see are they on the new
27:56
Speaker 1: guys team? And then I'd say the third thing was
28:01
Speaker 1: to find a way to bring our investors with us.
28:06
Speaker 1: One of the things that you know, Jack and I
28:08
Speaker 1: did a few transition meetings with investors while he was
28:13
Speaker 1: still chairman and I was coming in, and I just
28:17
Speaker 1: felt like investors didn't really understand the company. He just
28:22
Speaker 1: had such command, such charisma, such presence. Um, there just
28:29
Speaker 1: wasn't a lot of questioning and depth. And uh, you know,
28:32
Speaker 1: when you're the new guy, you're not going to be
28:34
Speaker 1: accorded the same level of trust, if you will. So
28:38
Speaker 1: I said, those are the three challenges that faced me
28:42
Speaker 1: taking over the company. You know, the good part is
28:44
Speaker 1: we had a we had a strong balance sheet for sure,
28:46
Speaker 1: and uh, you know, we had we had good leaders,
28:52
Speaker 1: even though those leaders were going to have to change
28:55
Speaker 1: for what I felt like the company was going to
28:57
Speaker 1: face in the twenty one century. Interesting, some people have
29:02
Speaker 1: called him the best CEO in America. What are some
29:07
Speaker 1: of the more important lessons you learned from Jack? Yeah?
29:11
Speaker 1: So when I so when in the year two thousand,
29:15
Speaker 1: Jack was named the best manager by Fortune of the
29:18
Speaker 1: previous century. So that's a pretty tall shadow. Um, I'd
29:24
Speaker 1: see what Jack did better than anybody I've seen before
29:30
Speaker 1: or after which he knew to me. He really knew
29:34
Speaker 1: how to manage scale. He knew how to manage at size,
29:39
Speaker 1: and he was incredibly skilled at that. So he created
29:45
Speaker 1: an aura. So let's say, in a company of three people,
29:49
Speaker 1: everybody thought they worked for Jack. Everybody felt like you
29:52
Speaker 1: could intersect in their world any at any moment of
29:58
Speaker 1: the day. He was a great communicator. He knew how
30:03
Speaker 1: to communicate to hundreds of thousands of people, to a
30:06
Speaker 1: thousand people, to five people, to twenty people, to one person,
30:11
Speaker 1: and almost every size. He knew how to communicate. He
30:16
Speaker 1: built horizontal cohorts Bury what I talked about earlier. Of
30:20
Speaker 1: he knew how to kind of segment organizations and and
30:24
Speaker 1: and how to motivate different groups of people. He did
30:28
Speaker 1: a great job of creating the right kind of instrumentation,
30:31
Speaker 1: the right kind of metrics that drove a good behavior.
30:36
Speaker 1: He prioritized. And the last thing is he and this
30:40
Speaker 1: is going to sound funny today, but I think he
30:43
Speaker 1: was the first manager of his era. They really understood
30:47
Speaker 1: the power of people. He treated human resource leaders with respect.
30:52
Speaker 1: He spent a lot of time on people. You know,
30:55
Speaker 1: if you go back in the let's say seventies, eighties,
30:58
Speaker 1: and even nineties, most of the human resource professionals had
31:03
Speaker 1: come out of union relations. Based on where the US
31:06
Speaker 1: was at that moment in time, he kind of recognized
31:10
Speaker 1: it was all about the professional workforce, and he spent
31:13
Speaker 1: a lot of time in that. So I really think
31:17
Speaker 1: I've never seen a CEO before after that could manage
31:20
Speaker 1: its size the way Jack could. He was just awesome
31:24
Speaker 1: at test. So you inherited a bunch of taking time
31:30
Speaker 1: bombs um, whether it was the accounting scandal or the
31:34
Speaker 1: message ee capital. You could have very easily in the
31:38
Speaker 1: book thrown well shown to the bus, but you chose
31:41
Speaker 1: not to. In fact, you were very very generous to
31:45
Speaker 1: Jack in the book. Tell us about your thought process.
31:48
Speaker 1: A lot of the headaches you were dealing with you
31:52
Speaker 1: inherited from him, you know. So period we think about
31:55
Speaker 1: the book is, you know, kind of for twenty years,
31:59
Speaker 1: I've more or less kept my mouth shut, and and
32:02
Speaker 1: I generally felt like the reason to do that was
32:06
Speaker 1: that nobody at GE would benefit by me squabbling with
32:12
Speaker 1: Jack Um. What I try to do in this book
32:16
Speaker 1: was be truthful to what was to talk about h
32:21
Speaker 1: the things I learned from the things I loved being
32:23
Speaker 1: around him for. But some of the places where the
32:28
Speaker 1: company had blind spots that needed to be fixed, like
32:30
Speaker 1: the ones we talked about earlier, was uh, you know,
32:35
Speaker 1: kind of lack of investment in technology, lack of globalization, Uh,
32:42
Speaker 1: not a good track record on diversity, you know, things
32:47
Speaker 1: like that, right as it as it pertains to where
32:50
Speaker 1: G was. So I wanted the book to be, you know,
32:54
Speaker 1: kind of an accurate perception of what it felt like
32:56
Speaker 1: to follow a guy who is a really great leader,
33:00
Speaker 1: but in a time that was very different. And that's um,
33:05
Speaker 1: that's really what I tried to do. And and again
33:07
Speaker 1: I loved working for the guy, but he was a complicated.
33:12
Speaker 1: He was a complicated leader to follow. He was a
33:15
Speaker 1: great leader to work for, you know, and maybe your listeners,
33:19
Speaker 1: maybe your listeners in their own workplace, you know, I
33:23
Speaker 1: have had similar experiences where sometimes people are great to
33:27
Speaker 1: be a colleague with, are great to learn from, but
33:29
Speaker 1: they're not as much fun to follow. And that was
33:32
Speaker 1: kind of the the experience I have with Jack. Interesting.
33:36
Speaker 1: When you were in the healthcare division, you identified what
33:39
Speaker 1: you thought could be a really significant acquisition accu Son,
33:44
Speaker 1: which Jack passed on, saying, oh, cal it's in California.
33:49
Speaker 1: The people out there are crazy. Siemens ended up buying
33:53
Speaker 1: it and it was hugely successful for them. Was this
33:56
Speaker 1: a case of a little political bias clouding his judge
34:00
Speaker 1: what was around some of those missed opportunities? So so
34:05
Speaker 1: the book that Jack wrote and the expression he used
34:09
Speaker 1: while he was CEO is control your destiny, right, control
34:13
Speaker 1: your destiny? And I think his feeling about kind of
34:18
Speaker 1: the entrepreneurial systems in California was that you could never
34:24
Speaker 1: control them, right. And this was kind of a nineties
34:28
Speaker 1: perspective you see here today. If you're a CEO of
34:32
Speaker 1: any kind of company, you really recognize you can't control
34:35
Speaker 1: much of anything and that and that what you really
34:38
Speaker 1: need to be talking about is you know, what are
34:41
Speaker 1: the right investments, what are the right risks to take?
34:44
Speaker 1: How do you grab the future? You know, those kinds
34:47
Speaker 1: of things are more operational than than controlling your destiny.
34:52
Speaker 1: So I remember the discussion that he and I had.
34:54
Speaker 1: This was a very early two thousand and I was
34:58
Speaker 1: in the g boardroom pitching this deal and I thought
35:01
Speaker 1: I had it done, and he said, you can't do
35:04
Speaker 1: it because it's in California. And I just looked across
35:08
Speaker 1: the table and said, you gotta be Kidney. Really this
35:11
Speaker 1: is really like California is part of the world. I
35:14
Speaker 1: think that's an important part of the world. But you know,
35:17
Speaker 1: that's just I think in some ways it's a generational difference.
35:20
Speaker 1: It certainly was a philosophical difference. Yeah, to say, say
35:24
Speaker 1: the least. I think in the nineties, California, if it
35:27
Speaker 1: was its own country, would have been the eighth largest
35:30
Speaker 1: economy in the world something like that. I just think
35:32
Speaker 1: if everything that's happened since then, you know, this is
35:35
Speaker 1: only more true, not less true. So in the book
35:40
Speaker 1: you you mentioned the infamous G E. Chase plain tell
35:44
Speaker 1: us about that. There were always rumors and stories about it. Um,
35:48
Speaker 1: what what was that about? Oh gosh, you know that
35:54
Speaker 1: this was something that was put in place by security.
35:58
Speaker 1: It was really you know, for particularly for will travel,
36:01
Speaker 1: it was really a bad practice. Um. You know, to
36:06
Speaker 1: be honest, I never spent one minute talking to the
36:09
Speaker 1: people that ran our corporate travel, you know, a corporate
36:12
Speaker 1: air group. I should have, but you know, it's it's
36:17
Speaker 1: you know, there's no way to explain it other than
36:19
Speaker 1: say it was a bad practice, and I wish we
36:21
Speaker 1: hadn't done it. Chapter eleven you right, leaders are accountable,
36:26
Speaker 1: and again, given the problems and g capital, given some
36:30
Speaker 1: of the issues you inherited, why not call Jack out
36:34
Speaker 1: too account You know again, Barry, I wanted this to
36:38
Speaker 1: be really my story, if you will, and the ability
36:45
Speaker 1: that that I would have to put more context around
36:50
Speaker 1: the company that I love, and so I really focused
36:54
Speaker 1: on the the issues I had and wanted to it.
37:00
Speaker 1: Let's say a finer point on um. One of the
37:04
Speaker 1: reasons why I wrote the book is that I I
37:06
Speaker 1: spent three or four years after I retired kind of
37:08
Speaker 1: watching the way the story was covered, and I just
37:12
Speaker 1: felt like it had lacked any perspective in any context.
37:17
Speaker 1: And actually in chapter twelve, I kind of go through
37:20
Speaker 1: the four or five things that I clearly would have
37:23
Speaker 1: done differently had I had I thought about them differently
37:27
Speaker 1: or had more time, uh to reflect. And what I
37:32
Speaker 1: talked about in that chapter is I would have I
37:36
Speaker 1: would have more dramatically changed the shape of the company
37:39
Speaker 1: right after nine eleven. I think any time the crisis
37:42
Speaker 1: takes place, a leader has an opportunity to really reshape
37:48
Speaker 1: the situations that they're in. I talked about the lack
37:53
Speaker 1: or our inability to get more value out of g capital.
37:59
Speaker 1: I said I would have on the company differently to
38:02
Speaker 1: produce a different kind of leader. That I gave my
38:05
Speaker 1: board too many things to work on, and I wish
38:10
Speaker 1: I had said I don't know more, and I talked
38:12
Speaker 1: about that in chapters eleven and twelve. So I really
38:15
Speaker 1: wanted to focus on my role and just let the
38:17
Speaker 1: story play out around Jack and let readers draw whatever
38:21
Speaker 1: conclusions they want. That's fair enough, That's all anyone could
38:24
Speaker 1: ever ask. So, Jeff, I love what you did with
38:27
Speaker 1: the structure of your chapter titles. Leaders learn every day,
38:32
Speaker 1: Leaders investing growth, leaders are transparent. Tell us a little
38:37
Speaker 1: bit about how you came up with this structure. It
38:40
Speaker 1: really worked well for this sort of book. Yeah, you know,
38:43
Speaker 1: So I decided to write a book in the second
38:45
Speaker 1: half of two eighteen. I hired a co writer, a
38:48
Speaker 1: woman named Amy Wallace. She spoke the seventy five people.
38:54
Speaker 1: We decided to write the book more or less chronological,
38:58
Speaker 1: and I had a few of my colleagues writing it
39:00
Speaker 1: side by side contemporaneously. So I took kind of an
39:04
Speaker 1: outside end view. And what it basically is, if you
39:07
Speaker 1: read the book, is a series of stories that happened
39:10
Speaker 1: more or less chronologically from two thou really from two
39:14
Speaker 1: but really from two thousand one to two thousand seventeen.
39:17
Speaker 1: And then we sat back and said, Okay, what's the
39:21
Speaker 1: what's the message in and in each one of these stories? Right,
39:25
Speaker 1: so you know nine eleven leaders show up right? Uh,
39:30
Speaker 1: my career leaders learned every day. You know, early on,
39:34
Speaker 1: leaders invest in growth. At the end, leaders are optimist.
39:37
Speaker 1: So so we basically did the chapter titles last after
39:41
Speaker 1: really seeing sure all the stories and and and you
39:46
Speaker 1: know what I try to do very for the reader was,
39:48
Speaker 1: you know, kind of put them in my shoes on
39:51
Speaker 1: how we made the decisions we made, what decisions we made,
39:55
Speaker 1: also how I felt, you know, like when I was uncertain,
39:59
Speaker 1: when I was certain, when I was wrong, those kinds
40:01
Speaker 1: of things. So I think we basically told the story
40:06
Speaker 1: and then we sat back and said, Okay, here's what
40:09
Speaker 1: people can benefit from, here's what people can learn interesting.
40:13
Speaker 1: So there are a couple of headings I want to
40:15
Speaker 1: give you an opportunity to go into a little more details.
40:18
Speaker 1: One that I thought was interesting was leaders make big
40:22
Speaker 1: companies small. Explain. Yeah, so right after the financial crisis,
40:29
Speaker 1: I was really kind of burnout, and I was trying
40:35
Speaker 1: to uh remotivate myself. And one of the things I
40:41
Speaker 1: decided to do was just been more time connecting with people.
40:46
Speaker 1: So I began kind of a weekend, uh one weekend
40:51
Speaker 1: every month, I would fly a leader in and we
40:54
Speaker 1: would have dinner on a Friday night and then spend
40:56
Speaker 1: five or six hours on a Saturday without phones ringing.
41:00
Speaker 1: And I did this for eight years, and it was
41:02
Speaker 1: just a way to connect. We we retooled a lot
41:06
Speaker 1: of our training programs and systems and the ways we
41:10
Speaker 1: communicated just to focus on connection. And really what we
41:15
Speaker 1: were trying to do was beef up the let's say,
41:20
Speaker 1: the software around the company so that we we we
41:23
Speaker 1: felt like we were getting more fluid communication, that that
41:27
Speaker 1: people were attached to each other. And and so that's
41:32
Speaker 1: I think what's chapter six in the book, which is
41:36
Speaker 1: really talking about it. At the core of any culture
41:39
Speaker 1: is connection and the extent to which people feel connected
41:43
Speaker 1: to their leaders or feel connected to each other. That's
41:47
Speaker 1: how you make a big company small. You make you
41:49
Speaker 1: make a big company small by by having people see
41:52
Speaker 1: other people and not or charts or financial metrics or
41:57
Speaker 1: advertisements or other things and that's what we try to
42:00
Speaker 1: describe in chapter six. So now let's take the opposite
42:03
Speaker 1: of small leaders compete around the world. That's about as
42:07
Speaker 1: big as it gets. So I try to describe this
42:10
Speaker 1: in the sense of a big change initiative, but a
42:14
Speaker 1: change initiative that basically was one where we had to
42:17
Speaker 1: kind of rewire our frame of thinking. And and this
42:22
Speaker 1: is a place where size and scale actually can be helpful,
42:27
Speaker 1: but only if you're empowering the front line. And so
42:31
Speaker 1: we went through a real change process inside the company
42:33
Speaker 1: to empower frontline leaders around the world, gave them capability
42:39
Speaker 1: and investment to win in the countries that they're in.
42:42
Speaker 1: And I also talk in that and that chapter just
42:46
Speaker 1: about the way globalization was changed. That that you know,
42:49
Speaker 1: in two thousand, everybody talked about doing trade deals. By
42:52
Speaker 1: two ten, there were no more. There was no more
42:55
Speaker 1: discussion about trade deals. Protectionism was everywhere. I always tell
42:59
Speaker 1: people that. And Trump didn't invent protectionism, he just americanized it.
43:03
Speaker 1: And so and so global leaders had to be changing
43:06
Speaker 1: in order to in order to make progress. And one
43:11
Speaker 1: of the parts of that chapter is the discussion on China.
43:14
Speaker 1: And probably you know, there may be people that are
43:17
Speaker 1: more experienced in Asia than I am, but not many.
43:20
Speaker 1: So I have a point of view on China, and
43:22
Speaker 1: I talked about that as well, in terms of how
43:24
Speaker 1: to think about it in a global setting. Yeah, you right,
43:28
Speaker 1: China matters most. To explain that a little bit, Yeah,
43:31
Speaker 1: just just say you know, again, there's a military context
43:35
Speaker 1: that's important that that I'm not necessarily the best to
43:39
Speaker 1: speak about. But from an economic standpoint, there's no going back.
43:43
Speaker 1: You know, China is going to be as big as
43:45
Speaker 1: the US there. Their economic influence is huge. Our allies
43:49
Speaker 1: trade with them as much as they trade with us.
43:52
Speaker 1: The market is vasked for most things American companies do,
43:57
Speaker 1: and we have to learn learn how to compete there.
43:59
Speaker 1: We learn how to compete against them. But they're a factor.
44:04
Speaker 1: And one of the things that worries me is that
44:06
Speaker 1: when I see my students at Stanford or I see
44:09
Speaker 1: young people, they feel like they don't have to compete
44:12
Speaker 1: in China. They feel like that the American government can
44:17
Speaker 1: protect them, or China doesn't played by the right rules,
44:20
Speaker 1: and and all this conversation. I think that's bad. Right.
44:24
Speaker 1: My generation had to learn how to compete in China.
44:27
Speaker 1: It was our only path, and in many ways G
44:31
Speaker 1: did it as well as anybody. So let's address some
44:33
Speaker 1: of those student concerns. You have issues in China with
44:39
Speaker 1: them hacking and stealing intellectual property really all the way
44:45
Speaker 1: down to things like the design of of an aircraft engine.
44:50
Speaker 1: And you also have a structure that is not exactly
44:54
Speaker 1: a level playing field for any foreign competition that wants
44:58
Speaker 1: to come in. The forced partnerships, they forced the sharing
45:03
Speaker 1: of of data and processes. Isn't it a legitimate complaint
45:07
Speaker 1: by students, Hey, I don't want to go to China.
45:10
Speaker 1: They don't play by the rules. Sure, I think I
45:14
Speaker 1: think there's everything to be said that in the past,
45:17
Speaker 1: certainly intellectual property was critical and and uh they're challenges
45:25
Speaker 1: that are put in front of you for sure. Uh,
45:30
Speaker 1: But you know, Berry G had a four billion dollar
45:34
Speaker 1: healthcare business in China. There was more profitable than it
45:38
Speaker 1: was in the US. We had higher market share in
45:42
Speaker 1: turbines in China than we had in Germany. We had
45:45
Speaker 1: market share of aircraft engines in the country where more
45:50
Speaker 1: planes are being purchased in any other country in the world.
45:53
Speaker 1: So I'm not saying to be naive and I'm not
45:57
Speaker 1: saying not to be careful, but if you're gonna stay
46:01
Speaker 1: out of the largest market in the world for many
46:05
Speaker 1: of the things we do, including tech, um, this is
46:09
Speaker 1: gonna be a different place and ten or fifteen or
46:11
Speaker 1: twenty years and it is right now. In other words,
46:14
Speaker 1: they're gonna They're going to continue to be a country
46:16
Speaker 1: on the move. The European Union does more trade in
46:20
Speaker 1: China than they do in the US. Uh. You know,
46:24
Speaker 1: there's just all kinds of statistics you can look at.
46:26
Speaker 1: So my hope is for the Biden administration to be
46:30
Speaker 1: very forceful on creating a level playing field. But my
46:35
Speaker 1: hope is that we don't disengage fair enough. You mentioned turbines.
46:40
Speaker 1: For a while g E power was booming. Um, you
46:43
Speaker 1: would think the move to renewables would be right in
46:47
Speaker 1: their sweet spot. What has that division done right and
46:52
Speaker 1: why are they not bigger? You would think this is
46:55
Speaker 1: a perfect environment for them. Oh, look, I agree. I
46:58
Speaker 1: I I still think our our business is a good business.
47:02
Speaker 1: I think it's being well run today. But it wasn't
47:05
Speaker 1: well run. We we we had some of the wrong
47:07
Speaker 1: leaders in place for a while, and I own that.
47:10
Speaker 1: But my sense is there there it's a good team.
47:13
Speaker 1: Now um with wind energy, they've built, you know, an
47:17
Speaker 1: excess of a fifteen billion dollar business with gas turbans,
47:21
Speaker 1: they still have a very strong position as well as
47:26
Speaker 1: a new grid technologies. I think I think the challenging
47:28
Speaker 1: place in the power space today is solar because the
47:33
Speaker 1: equipment makers in solar lose money and the only people
47:38
Speaker 1: that earn money are kind of in the project finance side,
47:41
Speaker 1: and so I think in order to be more successful there,
47:45
Speaker 1: G has to kind of invest more in the project
47:48
Speaker 1: finance side and solar. But look, a third of the
47:51
Speaker 1: world still doesn't have electricity, and and there's going to
47:54
Speaker 1: be a real transition from hydrocarbons to renewable to the
48:00
Speaker 1: takes place over decades, it's not going to take place
48:02
Speaker 1: in a year or two, and G should participate in that.
48:06
Speaker 1: Very interesting. Let's talk about consultants. They play such a
48:10
Speaker 1: large role in so many businesses. What do you think
48:14
Speaker 1: of the role of consultants in strategy? Did Ge use
48:18
Speaker 1: a lot of consultants, whether it was Arthur Anderson or
48:21
Speaker 1: Mackenzie or you know, insert your favorite consultancy here. What's
48:26
Speaker 1: your views on this? Look? I think we used our
48:28
Speaker 1: fair share. I always think it's good to get an
48:30
Speaker 1: external perspective. They shouldn't be here to operate the company.
48:35
Speaker 1: They're here to give you a perspective. I never like
48:39
Speaker 1: to rely on one group or another. I like to
48:41
Speaker 1: mix of different perspectives. But I think there's always there's
48:46
Speaker 1: always room to get an outside of view. You know,
48:49
Speaker 1: My sense today is the largest clients for consultants are
48:54
Speaker 1: really private equity and and you know some of the
48:57
Speaker 1: people that are in kind of serial acquisition business, and
49:01
Speaker 1: I think that's a place where consultants can be of
49:04
Speaker 1: most use. Where you basically have a financial firm that
49:08
Speaker 1: has capital that wants to make an investment. They want
49:11
Speaker 1: to get market data and insight, and consultants can really
49:15
Speaker 1: provide tremendous value there. So the their their business model
49:20
Speaker 1: has evolved as well. Um. But again, I think extraal
49:25
Speaker 1: perspectives are always good and terms like Mackenzie, you know,
49:29
Speaker 1: they just have good people and they can bring good
49:32
Speaker 1: perspectives to to your decision making. Talk a little bit
49:37
Speaker 1: about succession planning. It was a factor in the transition
49:42
Speaker 1: from your predecessor to you, and you describe in the
49:47
Speaker 1: book grooming various candidates and prepping the transition process, what
49:53
Speaker 1: went right at GE during various transitions, and what went wrong? Yeah, Look,
49:59
Speaker 1: I mean my my changes. He clearly didn't go the
50:01
Speaker 1: way any of us had planned. It was. It was
50:05
Speaker 1: a little bit rushed. I would say there were certainly
50:10
Speaker 1: problems in markets that that I left behind, that that
50:15
Speaker 1: I wish I hadn't taken place, and that made my
50:18
Speaker 1: successor's job tougher. But I'd say two other things, you know,
50:23
Speaker 1: kind of hurt that process. Um. One was my successor.
50:30
Speaker 1: It was a good a good guy guy that I
50:31
Speaker 1: supported and really thought I could do the job. He
50:35
Speaker 1: had to come in and make a lot of fast
50:37
Speaker 1: decisions and that didn't play to his strength. And I
50:41
Speaker 1: would say the board was in a little bit of
50:43
Speaker 1: disarray as well. So if you had in tough markets,
50:47
Speaker 1: not playing with somebody's strengths and a little bit of
50:50
Speaker 1: disarray on the board, that's that's a chemistry that that
50:55
Speaker 1: just doesn't work. I go back to when I took over, Look,
50:59
Speaker 1: I had fast decisions to make. For sure. I was
51:04
Speaker 1: probably a little bit more skilled or more willing to
51:07
Speaker 1: make those decisions. But I had a really stable and
51:11
Speaker 1: mature board, And and and that wasn't the case probably
51:15
Speaker 1: seventeen years later. So I owned my share of the
51:18
Speaker 1: blame and all those and it's it's hard to get
51:21
Speaker 1: it right, particularly given you know, kind of the complicated
51:26
Speaker 1: world we live in today. Well, well, you own up
51:29
Speaker 1: a lot of errors in the book, and you take
51:31
Speaker 1: responsibility for your tenure. What do you think the company
51:36
Speaker 1: doesn't get enough credit for? And what do you think
51:39
Speaker 1: you don't get enough credit for? Considering you spent a
51:42
Speaker 1: few hundred pages essentially accepting blame for so much. Yeah, look,
51:48
Speaker 1: I mean, I mean, I think what I what I
51:50
Speaker 1: wanted to do again in the book was to provide
51:53
Speaker 1: you know, context. So over over sixteen years, we generated
51:58
Speaker 1: more earnings in cash flow then the previous years combined.
52:04
Speaker 1: We were leaders in the industries we were in. We
52:09
Speaker 1: developed good, good team. You know, there's probably more than
52:13
Speaker 1: thirty people that worked for me that went on to
52:17
Speaker 1: run fortune companies, public companies and were good initiatives, whether
52:22
Speaker 1: it's globalization and or digitization. I could go down the list.
52:27
Speaker 1: On the flip side, are our praise earnings ratio went
52:30
Speaker 1: from fifty to fifteen. So the stock didn't work the
52:35
Speaker 1: way any of us wanted we didn't get value as
52:39
Speaker 1: we went through the transition of g capital, and the
52:43
Speaker 1: succession didn't worked away any of us wanted. So you know, I,
52:48
Speaker 1: I guess what I wanted to do with the book
52:51
Speaker 1: is show that we got more right than we got wrong.
52:56
Speaker 1: We we did a lot of good work as a team,
52:59
Speaker 1: and I didn't want that to get lost. And at
53:02
Speaker 1: the same time, I think in this generation, all leadership
53:07
Speaker 1: as crisis leadership, and Lord knows, we worked through more
53:11
Speaker 1: than our fair share. So I felt like other readers
53:15
Speaker 1: and other leaders could get something out of the book.
53:18
Speaker 1: That's an interesting line. Um, all leadership is crisis leadership
53:22
Speaker 1: these days. You know you mentioned the pe ratio. I
53:27
Speaker 1: think that what happened to you was more or less inevitable,
53:32
Speaker 1: given that you came in with a fifty PE that
53:35
Speaker 1: was pumped up by both the nineties bullmarket. You arrived
53:40
Speaker 1: just as as that was deflating. Jack played the media
53:45
Speaker 1: better than anybody and never hesitated to show up on CNBC,
53:51
Speaker 1: which was a General Electric owned property, and burnished his
53:56
Speaker 1: his reputation. So you showed up. Wasn't it all but
54:00
Speaker 1: inevitable that the pe multiple had to return back to
54:06
Speaker 1: something resembling normal. A fifteen to twenty price earnings ratio
54:11
Speaker 1: for a giant conglomerate. That's still pretty much what what
54:16
Speaker 1: the average is, isn't isn't that what a typical conglomerate?
54:20
Speaker 1: It's um, yeah, I mean what I'm saying asking is
54:23
Speaker 1: it wasn't an inevitable that g had to come back
54:26
Speaker 1: down to earth following the prior twenty years? Sure, and
54:31
Speaker 1: again that's um. You know. What I try to do
54:35
Speaker 1: is tell the story, you know, in the words, what
54:37
Speaker 1: I wanted to do is just start on day one
54:42
Speaker 1: and then the day I walked out the door, and
54:44
Speaker 1: talk about my colleagues, the decisions we made, and lets
54:48
Speaker 1: and let people just have a full set of facts.
54:51
Speaker 1: You know. Look, there's there's not a day that doesn't
54:53
Speaker 1: go by that I don't think about the company. I
54:56
Speaker 1: know some people feel like I let them down. I
54:59
Speaker 1: get that, but but I by the same token. Look,
55:04
Speaker 1: I worked with some great people. We we always did
55:06
Speaker 1: our best. And what I try to do in the
55:09
Speaker 1: book is just tell a complete, a complete story, and
55:12
Speaker 1: let other people judge who was good who was bad,
55:17
Speaker 1: you know, and just let it speak for itself. That's
55:20
Speaker 1: really what I tried to do with the book. Well,
55:21
Speaker 1: I think you succeeded. The book was not only fair,
55:24
Speaker 1: I thought it was generous. Before we let you go,
55:28
Speaker 1: Let's jump to some of our favorite questions that we
55:32
Speaker 1: ask all of our guests, starting with, given that we're
55:35
Speaker 1: all working from home and under pandemic conditions, what are
55:40
Speaker 1: you streaming these days? Tell us your favorite Netflix or
55:44
Speaker 1: Amazon Prime show? Yeah, so we're doing Amazon Prime show
55:49
Speaker 1: called tell Me Your Secrets. My wife and I like mysteries,
55:52
Speaker 1: and this is really a mystery and it's a fun
55:55
Speaker 1: watch for about halfway through. But that's kind of what
55:58
Speaker 1: we do on podcast, you know. I like, um not
56:02
Speaker 1: like Stan mccrystal's podcast No Turning Back. I did Free Economics.
56:07
Speaker 1: I've always been kind of I've always liked the different
56:09
Speaker 1: angle the Free Economics uh takes place. And I think
56:13
Speaker 1: in the course of watching the book, I've I've I've
56:15
Speaker 1: found some new podcasts that I'm going to go back
56:17
Speaker 1: and and listen to. So yeah, that's But to your point,
56:22
Speaker 1: there's probably nobody that's benefited more from the pandemic than
56:25
Speaker 1: Netflix has. It's Netflix Intelevince world. We just live in
56:29
Speaker 1: it exactly. Tell us about some of your early mentors
56:32
Speaker 1: who helped shape your career along the way. Yeah, I
56:35
Speaker 1: had two mentors. The first one was was the leader
56:39
Speaker 1: of the plastics business when I was young. When I
56:43
Speaker 1: was a young manager was a gentleman named Glenn Hiner
56:46
Speaker 1: and and he was you know, what it showed me,
56:50
Speaker 1: but Glenn showed me was that the leader could be
56:53
Speaker 1: you know, respectful and tough at the same time. And
56:56
Speaker 1: it was good to see in him. And then later
56:59
Speaker 1: in my career, one of the chairman was a gentleman
57:01
Speaker 1: named John Opie. And John was really operationally, really sharp.
57:06
Speaker 1: And I love both those guys and learned so much
57:10
Speaker 1: from them. On the board, I always liked Chilly Lasters
57:14
Speaker 1: was a board member for a long time, and I
57:16
Speaker 1: always very much enjoyed talking with her and if I
57:20
Speaker 1: had a problem or something on my mind. Let's talk
57:23
Speaker 1: about some of your favorite books. What are your all
57:26
Speaker 1: time favorites and what are you reading now? So, um,
57:30
Speaker 1: let's see my My all time favorite as Truman by McCullough,
57:36
Speaker 1: because of you know, it's kind of this great American
57:40
Speaker 1: story that that any person could be president and and
57:45
Speaker 1: I thought that was remarkable. I love that one I
57:49
Speaker 1: read a lot of military history because I think it's
57:52
Speaker 1: the best corollary of business, because military history is a
57:57
Speaker 1: subject of failure, like whoever feel the least wins, and
58:01
Speaker 1: sometimes business feels like that. I've read. I've read over
58:06
Speaker 1: the last oh gosh, six months, a few books on
58:11
Speaker 1: the reconstruction in the US after the Civil War, just
58:14
Speaker 1: as you know, some of the seeds of some of
58:17
Speaker 1: the racial challenges we have today. Those have been good.
58:22
Speaker 1: And uh, I still read novels. I'm reading all of
58:25
Speaker 1: the There's a guy named C. J. Box that writes
58:28
Speaker 1: about a game board in Wyoming called Joe Pickett. So
58:33
Speaker 1: I mixed history and novels and and try to learn.
58:36
Speaker 1: But I'm an avid reader, and I like to like
58:39
Speaker 1: to you know, I love to love to read. If
58:42
Speaker 1: you liked mccullus Truman, if if you haven't read his
58:46
Speaker 1: Right Brothers, it's really quite really good, you know, very spectacular.
58:51
Speaker 1: Somebody can't have worked at g and not read Wright Brothers.
58:55
Speaker 1: What sort of advice would you give to a recent
58:57
Speaker 1: college grad who was just being getting their career and
59:01
Speaker 1: thinking about working either for a large conglomerate or a manufacturer.
59:06
Speaker 1: I think stay curious you know again, I think curiosity
59:12
Speaker 1: is this is the sole attribute that every successful person
59:16
Speaker 1: I've ever met has, or whether it's Jeff Bezos or
59:20
Speaker 1: Fred Smith or you know, I could go down the
59:22
Speaker 1: list of great people I've known. I just think curiosity
59:26
Speaker 1: is such an important part of being a lifelong learner,
59:30
Speaker 1: And being a lifelong learner is really critical. I say
59:35
Speaker 1: in my class, you know when when I when I
59:37
Speaker 1: teach a business school, I said, like, everybody in that
59:41
Speaker 1: room has the capability to be CEO of a fortune
59:44
Speaker 1: five in our company. Right, But but you have to
59:48
Speaker 1: ask yourself kind of three questions, how fast can I learn?
59:54
Speaker 1: How much can I take? And how much will I give?
59:57
Speaker 1: Like by how much can I take? Is like you're
59:59
Speaker 1: going to it punched into those so many times some
1:00:02
Speaker 1: people just give up. Right, It's not because I'm not
1:00:05
Speaker 1: smart enough, They just give up. But you also have
1:00:08
Speaker 1: to be willing to give back to others if you
1:00:10
Speaker 1: want people to follow you. So how much can you learn?
1:00:13
Speaker 1: How much can you take? How much will you give?
1:00:15
Speaker 1: Answer those three questions and you can start your career interesting.
1:00:20
Speaker 1: And our final question, what do you know about the
1:00:23
Speaker 1: world of leadership running a big company? The entire industrial
1:00:27
Speaker 1: process today that you wish you knew thirty or so
1:00:31
Speaker 1: years ago early in your career. Oh, I think the
1:00:34
Speaker 1: importance of speed. I think the importance of speed. I
1:00:38
Speaker 1: just think sometimes when you work at a big company,
1:00:41
Speaker 1: you never feel the urgency the way you need to.
1:00:46
Speaker 1: And what I see in Silicon Valley, what they get right,
1:00:49
Speaker 1: is they just they just move quickly. They make mistakes,
1:00:52
Speaker 1: but they don't wallow in their mistakes. They just keep moving.
1:00:57
Speaker 1: So I think I wish sometimes, you know, Barry, that
1:01:01
Speaker 1: I had worked for like twenty years and before I
1:01:07
Speaker 1: became CEO, I took maybe a three year sabbatical in
1:01:10
Speaker 1: Silicon Valley and then came back and became CEO. I
1:01:14
Speaker 1: would have run the place differently than I did. I
1:01:17
Speaker 1: think it's easy to move fast and break things when
1:01:20
Speaker 1: it's a three person shop as opposed to a three
1:01:23
Speaker 1: D person shot. We have been speaking with Jeff m
1:01:27
Speaker 1: alt Is, the former CEO of General Electric and author
1:01:31
Speaker 1: of the book Hot Seat What I Learned Leading a
1:01:34
Speaker 1: Great American Company. If you enjoy this conversation, well, be
1:01:38
Speaker 1: sure and check out any of our previous four hundred
1:01:41
Speaker 1: or so. You can find those at iTunes Spotify, wherever
1:01:45
Speaker 1: you get your podcast fixed. We love your comments, feedback
1:01:49
Speaker 1: in suggestions right to us at m IB podcast at
1:01:53
Speaker 1: Bloomberg dot net. Give us a review on Apple iTunes.
1:01:57
Speaker 1: You can sign up for our free daily eating list.
1:02:00
Speaker 1: You can see that at rid Halts dot com. Check
1:02:03
Speaker 1: out my weekly column on Bloomberg dot com slash Opinion.
1:02:07
Speaker 1: Follow me on Twitter at rit Halts. I would be
1:02:10
Speaker 1: remiss if I did not think our crack team that
1:02:13
Speaker 1: helps put this conversation together each week. Tim Harrow is
1:02:18
Speaker 1: my audio engineer. Atico val Brund is my project manager.
1:02:23
Speaker 1: Michael Boyle is my producer. Michael Batnick is my head
1:02:26
Speaker 1: of research. I'm Barry Rit Halts. You've been listening to
1:02:30
Speaker 1: Master's in Business on Bloomberg Radio