Jeff Immelt on Crisis Management and Leadership (Podcast)

large they got more right than wrong. And to be blunt, I think he inherited a mess from Jack Welsh, who I've described as the most overrated CEO in history. There was an accounting scandal lurking there. Uh Jack paid himself an obscene amount of money, a four hundred and sixty million dollar seven paths package and just you know, manipulating earnings, pulling a magic penny out of g capital. And I gave himilt every opportunity of the throw well show under

the bus, and he refused to. In fact, he could not have been more generous to his predecessor, who um not only gave him a company with a ticking time bomb in it um, but a big conglomerate industrial company with a fifty pe how is it not inevitable that ge stock price was going to come back to earth a fifteen or is reasonable for a industrial conglomerate, not fifty, And so the stock performance was more or less, you know, out of his hands. He is super knowledgeable, really just

a tremendous guy. Under different circumstances. I think his reputation as a CEO and a leader would be up there amongst the best in the world. But because of the situation he stepped into. Literally his first day of work was September tenth, two thousand and one, and he tells him fascinating stories about it. I found the book to be really interesting, totally transparent, very honest, and very educational.

There's a lot to learn from his experiences and uh, just really a fascinating person with an incredible work history and and just a lot to share. Uh. He now is teaching at Stanford Business School and his adventure partner at one of the larger venture capital funds. So, with no further ado, my conversation with former g E CEO Jeff Emilt, this is Mesters in Business with very renults on Bluebird Radio, my extra special guest this week is

Jeff Emilt. He joined General Electric in n in the plastics, appliances and healthcare division. He eventually led Gees Medical system Dam's division from nine seven to two thousand, rising to the role of CEO, where he led General Electric from two thousand and one to two thousand and seventeen. His new book is Hot Seat, What I Learned Leading a Great American Company. Jeff Emmilt's welcome to Bloomberg. Hey, Barry, Thanks,

It's great to be here. So tell us a bit about your path to becoming the CEO of one of America's crown jewels. Your dad was an employee at ge, wasn't he, Yeah, Berry, I grew up in Cincinnati, Ohio. My dad was a career kind of manufacturing guy in our aviation business. So I kind of grew up in the shadow of the company, if you will. Um, I you know, went away to school and uh and went to a business school and I graduated in two And

it wasn't necessarily that my father had worked there. But what I thought I'd do is go someplace where I can learn to be a man for you know, kind of learned what general management was like. G had a great reputation. So I went to work in two in the plastics business. I thought i'd stay five years, and I ended up staying thirty five years. So you know, I would say careers are based on performance and luck,

and my career had both of those. I started in the plastics business really commercially, selling in Detroit and in the western half of the US, and that was really interesting and fun. I learned so much by selling two big companies like General Motors and Ford, which at that time we're kind of the giants of American industry, and they were really a challenge. And then I had my first real break when I was in my early thirties.

I was moved to our appliance business to run the service business during a major act recall, and so I was at a very high profile job at a very young age. That was extremely difficult. I had lots of exposure to Jack Walsh early in his UH CEO tenure, and you know, I think getting noticed at an early age is actually, you know, one of the things that

helps people push them along in their career. I later went back to the plastics business, and then right before I became CEO, went to our healthcare business, and that was just a perfect fit. It was relatively small business, but it was very technical, very global. It played to a lot of my strengths, and that was the platform that ultimately I moved from to become CEO of the

company in two one. So before we moved to your tenure as CEO, I have to ask when you started the medical systems division was relatively small, but that eventually became a pretty substantial growth driver. Tell us a little a bit about the general electric medical systems division you ran, Yeah,

So you know, I went there again. I had been really in the appliances and plastics, and I went there in I remember I had been there for about two months and I was talking to Jack on the phone and I said, you know, Jack, this is a huge industry. You know, trillions of dollars. Uh. It seems to me like we've got a pretty good footprint. A lot of people respect us, but our business as a peanut, it's

three billion dollars. You know. We we need to be more adventurous, we need to be uh, taking more risks. And I think he it just resonated with him. It was kind of the right comment at the right time, and he became quite encouraging right right after that to both do acquisitions but also to help grow globally and

invest in organic growth and technology. So, uh, you know, to your point, and so that from three billion became a one billion dollar business by the time I retired, and you know, yep, today it's still you know, there's plenty of opportunities in healthcare. So it played to my strength. I would say in my career, I was a good product manager. I was good at you know, kind of

marketing and sales. I knew how to strategically think my way through a business problem, and all of those things kind of came to the forefront when I was in gee healthcare business. So you become CEO. Your first day on the job is September two thousand and one. Tell us about your second day on the job. What was that like? Yeah, so, you know what, you have to

kind of understand the era a little bit. You know, the nineties, we're just a moment of tranquility, the U. S economy, the economy was growing, the US was the dominant player in the world. The world was at peace, and so that was kind of the let's say, the environment which I grew my career, at least the last

part of my group before it became CEO. And so September eleventh happened, and it was just a horrible tragedy, and to a certain extent, even though we didn't know it at the time, it really marked a change in the world, right it It marked to change in globalization, how companies were viewed, what tail risk was. So there's a bunch of stuff that actually happened. But from a

practical standpoint, you know, here I was. I had run let's say, seven billion dollar healthcare business, and all of a sudden, I'm running a hundred whatever billion dollar conglomerate. And a day into my job, I had to start making decisions. There was no honeymoon, there was no prep time. I had to start making important decisions like do we land airlines money? What do we do we restructure our

aviation business, how should we think about insurance? And I'm doing that in real time in the first, second, third, fourth week on the job. I had to communicate now to several hundred thousand people who kind of looked in horror at what was going on in New York City. I had to employees that died tragically in the in the event, so you know, kind of there was just no warm up and no prep to get ready for making billion dollar decisions late at night that you had

to be made under pressure. And you know, I just grew up quite quickly, and that and that in that context, like like most crises do you know, it's um you just don't have a chance. You know, it's kind of like life gets lived forward, not backward. And so I was experiencing that in real time that I had the kind of you know, there was no way to kind of say, Okay, I'm gonna sit this one out. You were just living life as it as it came at you.

So I like the way you use the chapter structure, the titles of each chapter to go into a deep dive about all sorts of broad topics in leadership. And one of your chapters is leaders Persevere in a crisis. Give us a little details about how you persevered. Let's start with September eleven, and then we could go on to what you learned about crisis management at Fukushima. Yeah, so I think very maybe we'll take three of them.

Let's take nine eleven um, and then let's take the global financial crisis and will take Fukushima because I had all of those, let's say between two thousand and one and two thousand eleven. I think in the in the in nine eleven, you know what you learned is is really two things. I would say one was that during a crisis, you have to hold two truths. And one is that the worst thing that you know can happen.

And the other thing is that you shouldn't give up hope that a better future is out there once you make it to the other side. So we had to restructure our commercial aviation business because clearly airlines are gonna

be traveling less. But in two thousand and two, Alan Malally, who isn't gooing at the time, he launched the idea of the Dreamliner, which was a revolutionary new aircraft that was going to take a billion dollars to make the engine, and we won that that that order in that commitment, So we made a billion dollar decision at the absolute worst time in the history of the industry. And so you need to hold two truths at the same time. I think the other one is just the need for communication.

I think so much changed around nine eleven, and what you really find is that, uh, in a crisis, you have to be willing to talk about what you know and what you don't know, and people just want to hear your voice. So those were the two things I

learned during the financial crisis. The financial crisis, I think just if you're in financial services, probably the three months after Layman Brothers went bankrupt, there's just no describing how every day brought a new challenge, every day brought fear, and it was just you just really had to be on your toes, you know, kind of twenty four hours a day. And what I learned in that crisis was

that you needed to have contingencies. You needed to have like I'm gonna try this one day, I'm gonna do something else the next day doesn't work, and so you just had to take wave after wave of contingencies. You learned that leaders have to absorb fear. I mean, one of the things that unique about g and Times that were half our company was in financial services, but the other half was doing fine. It was in healthcare and

aviation and a whole series of different businesses. So you know, it wasn't coming on me not to allow anything that was going on in financial services to spill over into the other parts of of the company. So you really learned that you have to stay flexible and you have to absorb fear. And then when I moved to Fukushima, you know when I learned in Fukushima is the importance

of risk management. So Fukushima was a It was a tsunami in Japan and it impacted seven nuclear reactors forward Ge that were installed in the nineteen sixties and early nineteen seventies. And I was in Australia when it happened. I was traveling, and I had my assistant send me the contract that was from the nineteen sixties that we had signed with the with TEPCO, who is the big Japanese utility, just to kind of read what it said and and meet, you know, what our liabilities might be

and things like that. And I was so impressed by the work that our lawyers and engineers had done in the nineteen sixties to envision all kinds of natural disasters and all kinds of contingencies. And you know, I would say, unlike the other terrorist events, in the case of Fukushima, that just was a very robust risk manager process and even foresaw a horrible natural disaster like the one in Fukushima. So every crisis is different. I think a little bit

about COVID today and what's similar and what's different. But I think the things that are always true are the leaders necessity to absorb fear, to hold two truths, to make timely decisions, and to be a good communicator even if what you're communicating is you don't know so And as one of your chapters is titled, leaders also have to maintain optimism. Yeah, I think again it's there's a lot that gets written today about it's better to be

a pessimist than an optimist. But I think I think you always have to understand that what you know, you have to lead people through the toughest times, but you need to show them what the future could look like if you if you really work well together. Yeah. There's a wonderful book about quote, The Triumph of the Optimists, that just explain why the pessimistic perspective in the twentieth century was really the wrong side of the trade. Yeah.

Before we leave your career and start delving more into general electric I have to just ask a couple of questions about what you're doing post g E. How do you enjoy teaching at Stanford. Yeah, so I teach a class at Stanford on what we assistants leadership, but it's really leading through disruption. And I'd say I always wanted this will be my fourth year. I always wanted to kind of try my hand at teaching. By the way, it's a lot harder than I ever thought it was

going to be. But I think students, uh, you know, they're so smart today. They keep you young. They're very hungry for not just the theoretical but the practical experience. And I think one of the things that you know when you're when you're a business school student, you think you know it all. And one of the things that that I always hearkened back to them is, look, every job looks easy to you're the one doing it right.

You may have read a case and you think the CEO is a dumpy, but someday you're going to be that dummy. Right, Someday you're gonna be in those shoes and you're gonna have to make the decisions and you can't judge them, and someone working some won't. And so your ability to persevere through that kind of criticism is really key to who you are and what you'll do.

And then I also do venture capital. I always wanted to work when I retired with small companies, with innovators, with founders, mainly in healthcare, but a little bit in techt I have to say, between the teaching and my venture work, I really like it. I really enjoy it. I think it's a way for me to stay fresh, but it's also a way for me to get back two leaders of the future and hopefully help them through

their through their journey. So you're a venture partner at New Enterprise Associates, which is one of the larger venture shops out in California. How different is it thinking about companies that are tiny really at the conception with the potential of of changing the paradigm, versus running behemoth conglomerate.

You know, that's a really great question. In some ways, it's extremely different, right because you know it, e we just had massive scale and massive diversity, and and when you're in a startup, you're small and you really focus on one thing. I mean, most startups so narrow and deep, and that's what makes them successful and then they begin to grow. So on one hand that those are very different. On the other hand, whether you're going from ten employees

to a hundred or a hundred to a thousand. Learning to scale is an important trade. There's an important skill and something that every startup has to do, and that's something that I can be very helpful with. You know, how do you how do you hire first line managers? How do you put in performance systems? What does a good human resource leader look like? Those are a lot of the questions that many of the founders I work with are asking, and I can be extremely helpful in

that regard. So, you know, what, what you're trying to do when you're in a role like mine is find what is most useful but the company you're working with and play that role. I guarantee there's something I can be helped with on every company. But there's some things that my skill set doesn't play as much for and I don't try to overdo it. I try to just find my niche and play it as well as I can. Quite interesting, let's talk a little bit about some of

the challenges of running such a big company. What was it like managing three hundred thousand employees? Well, I think that you know, you've got to think about several things when you manage its size. You know, one is you've got to divide the company up into what I would call both vertical and horizontal cohorts. Right, So in the case of a conglomerate, you've got many different businesses and ultimately from most of the people in the company, the

business is who they identify with. So that's that's what I call a vertical group. You have to create a hor as on a network. So you basically look at you know, kind of officers of the company or senior vps or business leaders, and you want them to be part of a collective whole. You want them to drive common initiatives. You want them to be accountable for each other in terms of in terms of mission and metrics

and things like that. You've got to instrument the company in a way that you know whether you're doing well or doing poorly. So some metrics are important. And lastly, you know very you know, if you if you go through change, there's probably two or three or four initiatives that you want to embrace across the company because your unique scale can really drive substantial change. Right. So so it's it's really about communication, It's about creating good cohorts.

It's about metrics, and it's about one or two were three really good initiatives that can leverage your scale. But you work it every day because the you know, size can be an awesome advantage, it also could be a huge disadvantage, and you're always teetering right between making an advantage and letting it be a disadvantage. Interesting, So, becoming um public is less and less popular these days than

it used to be. How do you balance the various constituencies between your employees, your customers, your shareholders, and your board of directors. That seems like a lot of balls to keep in the air while at once, Yeah, look it's this is you know, I've heard this question asked, you know, in many different ways, over many different eras, and it's it's still you know, the answers change over time. They're never totally satisfying. But that's part of the paradox

of running a public company. So I would say, you know, the answer is that investors own the company and unless you're you're doing something that that is aligned with them, um, you're gonna get in trouble. Right, So, so there there is a sense that if you're a public company investors have a huge say increasingly, and particularly when I compare with let's say two thousand one, the intersection between companies and society has in government has never been greater than

it is today. Right, Government is a big actor in every industry and that's not going to change. So so investors are key. Government and society hugely important today versus the past. And then you know, having led through a couple of three or four crises, in a crisis, the people that matter most of your employee, you know, some other words like like when you're when you're taking incoming

every day. The only way to get out of a problem, The only way to get out of a mess is if your team is aligned and if you can help bring them with your help them, you know, have them help you solve the problem. So it's complicated. Uh, it's more complicated to be honest with you today than it was twenty years ago. But there's never going to be

a nice, simple, easy answer to your question. So in the book, I I found your criticism of the under investment at GE for the decades that preceded your tenure was pretty legitimate, considering this is the company founded by Thomas Edison, how much under investment in R and D took place at General Electric prior to your tenure, and

what were the ramifications of that under investment. Yeah, so, you know, I I took over for a really good CEO who was extremely well known and who was I would say in the in the decade of the nineties. You know, it was really kind of leveraging that decade where I would say financial services and management practices were valued, and what most general managers worked on were those two things.

And so when we got to the end of the nine nineties, GE was a company that had let's say, a relatively stale industrial portfolio, a very vibrant and fast growth financial services set of businesses, and a market multiple that exceeded a tech company. So we were just imbalanced. Um, you know, it wasn't that our industrial businesses all had high market share, but they weren't necessarily technical leaders. And we had not been in testing as robustly in in

R and D and innovation as we should have. And you know, if you looked at let's say, you know, the top uh D fifty people in the company that are called vice presidents or officers, only three were engineering leaders. Right, So if you think about the size of GE, and that's kind of symbolic of what was valued in terms of the organization and the functions. You know, that's kind of where we were in two thousands. So we had

a strong balance sheet, We had many good things. We just we just hadn't spent enough time thinking about how to be an innovator in the twenty one century. Interesting. I love the story early in the book of You, after you've been named as the incoming CEO, but before you actually start the job. Out golfing with some college buddies and you're getting dressed in the locker room and

some random person comes up to you. You start chatting and uh, you're wearing something with a GE logo, and he says to you, um, well, at least you're not that poor bactor to ask to follow Jack Welsh, it was. It was a funny story. So I'm in the locker room and I just met him, and I would ask him for directions and he says, well, what do you do? I said, I said, I'm playing with some friends, but I work at g And he said, gee, huh, Well, I feel sorry for that poor son of it that's

gonna follow Jack. So I went out to the first team and we just spent the day laughing. But you know, when you replace the famous guy, you're always going to have a certain you know, you know, kind of a complicated path. And I would say, you know, the main difference barriers just that the era of the two thousand's were just so different in the air of the nineties. The company had to change, no doubt about that. And

Jack Welch certainly was a tough act to follow. What specific challenges did you encounter after he left the CEO and did he set you up to succeed? Oh? Gosh, I think um. I think the challenges were to reframe the company's portfolio and rejuvenate the industrial businesses, uh, you know, for the century, and so I think that was kind of job number one. Job number two was to maintain sustain as many of the key leaders inside the company

as as we could. There's always going to be a moment of time when people have a certain comfort with how one CEO did it, and they're gonna they're gonna kind of wait and see are they on the new guys team? And then I'd say the third thing was to find a way to bring our investors with us. One of the things that you know, Jack and I did a few transition meetings with investors while he was still chairman and I was coming in, and I just

felt like investors didn't really understand the company. He just had such command, such charisma, such presence. Um, there just wasn't a lot of questioning and depth. And uh, you know, when you're the new guy, you're not going to be accorded the same level of trust, if you will. So I said, those are the three challenges that faced me

taking over the company. You know, the good part is we had a we had a strong balance sheet for sure, and uh, you know, we had we had good leaders, even though those leaders were going to have to change for what I felt like the company was going to face in the twenty one century. Interesting, some people have called him the best CEO in America. What are some of the more important lessons you learned from Jack? Yeah?

So when I so when in the year two thousand, Jack was named the best manager by Fortune of the previous century. So that's a pretty tall shadow. Um, I'd see what Jack did better than anybody I've seen before or after which he knew to me. He really knew how to manage scale. He knew how to manage at size, and he was incredibly skilled at that. So he created an aura. So let's say, in a company of three people,

everybody thought they worked for Jack. Everybody felt like you could intersect in their world any at any moment of the day. He was a great communicator. He knew how to communicate to hundreds of thousands of people, to a thousand people, to five people, to twenty people, to one person, and almost every size. He knew how to communicate. He built horizontal cohorts Bury what I talked about earlier. Of he knew how to kind of segment organizations and and

and how to motivate different groups of people. He did a great job of creating the right kind of instrumentation, the right kind of metrics that drove a good behavior. He prioritized. And the last thing is he and this is going to sound funny today, but I think he was the first manager of his era. They really understood the power of people. He treated human resource leaders with respect.

He spent a lot of time on people. You know, if you go back in the let's say seventies, eighties, and even nineties, most of the human resource professionals had come out of union relations. Based on where the US was at that moment in time, he kind of recognized it was all about the professional workforce, and he spent a lot of time in that. So I really think I've never seen a CEO before after that could manage its size the way Jack could. He was just awesome

at test. So you inherited a bunch of taking time bombs um, whether it was the accounting scandal or the message ee capital. You could have very easily in the book thrown well shown to the bus, but you chose not to. In fact, you were very very generous to Jack in the book. Tell us about your thought process. A lot of the headaches you were dealing with you

inherited from him, you know. So period we think about the book is, you know, kind of for twenty years, I've more or less kept my mouth shut, and and I generally felt like the reason to do that was that nobody at GE would benefit by me squabbling with Jack Um. What I try to do in this book was be truthful to what was to talk about h the things I learned from the things I loved being

around him for. But some of the places where the company had blind spots that needed to be fixed, like the ones we talked about earlier, was uh, you know, kind of lack of investment in technology, lack of globalization, Uh, not a good track record on diversity, you know, things like that, right as it as it pertains to where G was. So I wanted the book to be, you know, kind of an accurate perception of what it felt like to follow a guy who is a really great leader,

but in a time that was very different. And that's um, that's really what I tried to do. And and again I loved working for the guy, but he was a complicated. He was a complicated leader to follow. He was a great leader to work for, you know, and maybe your listeners, maybe your listeners in their own workplace, you know, I have had similar experiences where sometimes people are great to be a colleague with, are great to learn from, but they're not as much fun to follow. And that was

kind of the the experience I have with Jack. Interesting. When you were in the healthcare division, you identified what you thought could be a really significant acquisition accu Son, which Jack passed on, saying, oh, cal it's in California. The people out there are crazy. Siemens ended up buying it and it was hugely successful for them. Was this a case of a little political bias clouding his judge

what was around some of those missed opportunities? So so the book that Jack wrote and the expression he used while he was CEO is control your destiny, right, control your destiny? And I think his feeling about kind of the entrepreneurial systems in California was that you could never control them, right. And this was kind of a nineties

perspective you see here today. If you're a CEO of any kind of company, you really recognize you can't control much of anything and that and that what you really need to be talking about is you know, what are the right investments, what are the right risks to take? How do you grab the future? You know, those kinds of things are more operational than than controlling your destiny. So I remember the discussion that he and I had.

This was a very early two thousand and I was in the g boardroom pitching this deal and I thought I had it done, and he said, you can't do it because it's in California. And I just looked across the table and said, you gotta be Kidney. Really this is really like California is part of the world. I think that's an important part of the world. But you know, that's just I think in some ways it's a generational difference. It certainly was a philosophical difference. Yeah, to say, say

the least. I think in the nineties, California, if it was its own country, would have been the eighth largest economy in the world something like that. I just think if everything that's happened since then, you know, this is only more true, not less true. So in the book you you mentioned the infamous G E. Chase plain tell us about that. There were always rumors and stories about it. Um, what what was that about? Oh gosh, you know that this was something that was put in place by security.

It was really you know, for particularly for will travel, it was really a bad practice. Um. You know, to be honest, I never spent one minute talking to the people that ran our corporate travel, you know, a corporate air group. I should have, but you know, it's it's you know, there's no way to explain it other than say it was a bad practice, and I wish we

hadn't done it. Chapter eleven you right, leaders are accountable, and again, given the problems and g capital, given some of the issues you inherited, why not call Jack out too account You know again, Barry, I wanted this to be really my story, if you will, and the ability that that I would have to put more context around the company that I love, and so I really focused on the the issues I had and wanted to it.

Let's say a finer point on um. One of the reasons why I wrote the book is that I I spent three or four years after I retired kind of watching the way the story was covered, and I just felt like it had lacked any perspective in any context. And actually in chapter twelve, I kind of go through the four or five things that I clearly would have done differently had I had I thought about them differently

or had more time, uh to reflect. And what I talked about in that chapter is I would have I would have more dramatically changed the shape of the company right after nine eleven. I think any time the crisis takes place, a leader has an opportunity to really reshape the situations that they're in. I talked about the lack or our inability to get more value out of g capital. I said I would have on the company differently to

produce a different kind of leader. That I gave my board too many things to work on, and I wish I had said I don't know more, and I talked about that in chapters eleven and twelve. So I really wanted to focus on my role and just let the story play out around Jack and let readers draw whatever conclusions they want. That's fair enough, That's all anyone could ever ask. So, Jeff, I love what you did with the structure of your chapter titles. Leaders learn every day,

Leaders investing growth, leaders are transparent. Tell us a little bit about how you came up with this structure. It really worked well for this sort of book. Yeah, you know, So I decided to write a book in the second half of two eighteen. I hired a co writer, a woman named Amy Wallace. She spoke the seventy five people. We decided to write the book more or less chronological, and I had a few of my colleagues writing it side by side contemporaneously. So I took kind of an

outside end view. And what it basically is, if you read the book, is a series of stories that happened more or less chronologically from two thou really from two but really from two thousand one to two thousand seventeen. And then we sat back and said, Okay, what's the what's the message in and in each one of these stories? Right, so you know nine eleven leaders show up right? Uh, my career leaders learned every day. You know, early on, leaders invest in growth. At the end, leaders are optimist.

So so we basically did the chapter titles last after really seeing sure all the stories and and and you know what I try to do very for the reader was, you know, kind of put them in my shoes on how we made the decisions we made, what decisions we made, also how I felt, you know, like when I was uncertain, when I was certain, when I was wrong, those kinds

of things. So I think we basically told the story and then we sat back and said, Okay, here's what people can benefit from, here's what people can learn interesting. So there are a couple of headings I want to give you an opportunity to go into a little more details. One that I thought was interesting was leaders make big companies small. Explain. Yeah, so right after the financial crisis, I was really kind of burnout, and I was trying

to uh remotivate myself. And one of the things I decided to do was just been more time connecting with people. So I began kind of a weekend, uh one weekend every month, I would fly a leader in and we would have dinner on a Friday night and then spend five or six hours on a Saturday without phones ringing. And I did this for eight years, and it was just a way to connect. We we retooled a lot of our training programs and systems and the ways we

communicated just to focus on connection. And really what we were trying to do was beef up the let's say, the software around the company so that we we we felt like we were getting more fluid communication, that that people were attached to each other. And and so that's I think what's chapter six in the book, which is really talking about it. At the core of any culture is connection and the extent to which people feel connected to their leaders or feel connected to each other. That's

how you make a big company small. You make you make a big company small by by having people see other people and not or charts or financial metrics or advertisements or other things and that's what we try to describe in chapter six. So now let's take the opposite of small leaders compete around the world. That's about as big as it gets. So I try to describe this in the sense of a big change initiative, but a change initiative that basically was one where we had to

kind of rewire our frame of thinking. And and this is a place where size and scale actually can be helpful, but only if you're empowering the front line. And so we went through a real change process inside the company to empower frontline leaders around the world, gave them capability and investment to win in the countries that they're in. And I also talk in that and that chapter just about the way globalization was changed. That that you know,

in two thousand, everybody talked about doing trade deals. By two ten, there were no more. There was no more discussion about trade deals. Protectionism was everywhere. I always tell people that. And Trump didn't invent protectionism, he just americanized it. And so and so global leaders had to be changing in order to in order to make progress. And one of the parts of that chapter is the discussion on China.

And probably you know, there may be people that are more experienced in Asia than I am, but not many. So I have a point of view on China, and I talked about that as well, in terms of how to think about it in a global setting. Yeah, you right, China matters most. To explain that a little bit, Yeah, just just say you know, again, there's a military context that's important that that I'm not necessarily the best to speak about. But from an economic standpoint, there's no going back.

You know, China is going to be as big as the US there. Their economic influence is huge. Our allies trade with them as much as they trade with us. The market is vasked for most things American companies do, and we have to learn learn how to compete there. We learn how to compete against them. But they're a factor. And one of the things that worries me is that when I see my students at Stanford or I see young people, they feel like they don't have to compete

in China. They feel like that the American government can protect them, or China doesn't played by the right rules, and and all this conversation. I think that's bad. Right. My generation had to learn how to compete in China. It was our only path, and in many ways G did it as well as anybody. So let's address some of those student concerns. You have issues in China with them hacking and stealing intellectual property really all the way down to things like the design of of an aircraft engine.

And you also have a structure that is not exactly a level playing field for any foreign competition that wants to come in. The forced partnerships, they forced the sharing of of data and processes. Isn't it a legitimate complaint by students, Hey, I don't want to go to China. They don't play by the rules. Sure, I think I think there's everything to be said that in the past, certainly intellectual property was critical and and uh they're challenges

that are put in front of you for sure. Uh, But you know, Berry G had a four billion dollar healthcare business in China. There was more profitable than it was in the US. We had higher market share in turbines in China than we had in Germany. We had market share of aircraft engines in the country where more planes are being purchased in any other country in the world.

So I'm not saying to be naive and I'm not saying not to be careful, but if you're gonna stay out of the largest market in the world for many of the things we do, including tech, um, this is gonna be a different place and ten or fifteen or twenty years and it is right now. In other words, they're gonna They're going to continue to be a country on the move. The European Union does more trade in China than they do in the US. Uh. You know, there's just all kinds of statistics you can look at.

So my hope is for the Biden administration to be very forceful on creating a level playing field. But my hope is that we don't disengage fair enough. You mentioned turbines. For a while g E power was booming. Um, you would think the move to renewables would be right in their sweet spot. What has that division done right and why are they not bigger? You would think this is a perfect environment for them. Oh, look, I agree. I I I still think our our business is a good business.

I think it's being well run today. But it wasn't well run. We we we had some of the wrong leaders in place for a while, and I own that. But my sense is there there it's a good team. Now um with wind energy, they've built, you know, an excess of a fifteen billion dollar business with gas turbans, they still have a very strong position as well as

a new grid technologies. I think I think the challenging place in the power space today is solar because the equipment makers in solar lose money and the only people that earn money are kind of in the project finance side, and so I think in order to be more successful there, G has to kind of invest more in the project

finance side and solar. But look, a third of the world still doesn't have electricity, and and there's going to be a real transition from hydrocarbons to renewable to the takes place over decades, it's not going to take place in a year or two, and G should participate in that. Very interesting. Let's talk about consultants. They play such a large role in so many businesses. What do you think

of the role of consultants in strategy? Did Ge use a lot of consultants, whether it was Arthur Anderson or Mackenzie or you know, insert your favorite consultancy here. What's your views on this? Look? I think we used our fair share. I always think it's good to get an external perspective. They shouldn't be here to operate the company. They're here to give you a perspective. I never like to rely on one group or another. I like to mix of different perspectives. But I think there's always there's

always room to get an outside of view. You know, My sense today is the largest clients for consultants are really private equity and and you know some of the people that are in kind of serial acquisition business, and I think that's a place where consultants can be of most use. Where you basically have a financial firm that has capital that wants to make an investment. They want to get market data and insight, and consultants can really

provide tremendous value there. So the their their business model has evolved as well. Um. But again, I think extraal perspectives are always good and terms like Mackenzie, you know, they just have good people and they can bring good perspectives to to your decision making. Talk a little bit about succession planning. It was a factor in the transition from your predecessor to you, and you describe in the book grooming various candidates and prepping the transition process, what

went right at GE during various transitions, and what went wrong? Yeah, Look, I mean my my changes. He clearly didn't go the way any of us had planned. It was. It was a little bit rushed. I would say there were certainly problems in markets that that I left behind, that that I wish I hadn't taken place, and that made my successor's job tougher. But I'd say two other things, you know, kind of hurt that process. Um. One was my successor. It was a good a good guy guy that I

supported and really thought I could do the job. He had to come in and make a lot of fast decisions and that didn't play to his strength. And I would say the board was in a little bit of disarray as well. So if you had in tough markets, not playing with somebody's strengths and a little bit of disarray on the board, that's that's a chemistry that that just doesn't work. I go back to when I took over, Look,

I had fast decisions to make. For sure. I was probably a little bit more skilled or more willing to make those decisions. But I had a really stable and mature board, And and and that wasn't the case probably seventeen years later. So I owned my share of the blame and all those and it's it's hard to get it right, particularly given you know, kind of the complicated world we live in today. Well, well, you own up a lot of errors in the book, and you take

responsibility for your tenure. What do you think the company doesn't get enough credit for? And what do you think you don't get enough credit for? Considering you spent a few hundred pages essentially accepting blame for so much. Yeah, look, I mean, I mean, I think what I what I wanted to do again in the book was to provide you know, context. So over over sixteen years, we generated more earnings in cash flow then the previous years combined. We were leaders in the industries we were in. We

developed good, good team. You know, there's probably more than thirty people that worked for me that went on to run fortune companies, public companies and were good initiatives, whether it's globalization and or digitization. I could go down the list. On the flip side, are our praise earnings ratio went from fifty to fifteen. So the stock didn't work the way any of us wanted we didn't get value as we went through the transition of g capital, and the

succession didn't worked away any of us wanted. So you know, I, I guess what I wanted to do with the book is show that we got more right than we got wrong. We we did a lot of good work as a team, and I didn't want that to get lost. And at the same time, I think in this generation, all leadership as crisis leadership, and Lord knows, we worked through more than our fair share. So I felt like other readers and other leaders could get something out of the book.

That's an interesting line. Um, all leadership is crisis leadership these days. You know you mentioned the pe ratio. I think that what happened to you was more or less inevitable, given that you came in with a fifty PE that was pumped up by both the nineties bullmarket. You arrived just as as that was deflating. Jack played the media better than anybody and never hesitated to show up on CNBC, which was a General Electric owned property, and burnished his

his reputation. So you showed up. Wasn't it all but inevitable that the pe multiple had to return back to something resembling normal. A fifteen to twenty price earnings ratio for a giant conglomerate. That's still pretty much what what the average is, isn't isn't that what a typical conglomerate? It's um, yeah, I mean what I'm saying asking is it wasn't an inevitable that g had to come back down to earth following the prior twenty years? Sure, and

again that's um. You know. What I try to do is tell the story, you know, in the words, what I wanted to do is just start on day one and then the day I walked out the door, and talk about my colleagues, the decisions we made, and lets and let people just have a full set of facts. You know. Look, there's there's not a day that doesn't go by that I don't think about the company. I know some people feel like I let them down. I get that, but but I by the same token. Look,

I worked with some great people. We we always did our best. And what I try to do in the book is just tell a complete, a complete story, and let other people judge who was good who was bad, you know, and just let it speak for itself. That's really what I tried to do with the book. Well, I think you succeeded. The book was not only fair,

I thought it was generous. Before we let you go, Let's jump to some of our favorite questions that we ask all of our guests, starting with, given that we're all working from home and under pandemic conditions, what are you streaming these days? Tell us your favorite Netflix or Amazon Prime show? Yeah, so we're doing Amazon Prime show called tell Me Your Secrets. My wife and I like mysteries, and this is really a mystery and it's a fun watch for about halfway through. But that's kind of what

we do on podcast, you know. I like, um not like Stan mccrystal's podcast No Turning Back. I did Free Economics. I've always been kind of I've always liked the different angle the Free Economics uh takes place. And I think in the course of watching the book, I've I've I've found some new podcasts that I'm going to go back and and listen to. So yeah, that's But to your point, there's probably nobody that's benefited more from the pandemic than

Netflix has. It's Netflix Intelevince world. We just live in it exactly. Tell us about some of your early mentors who helped shape your career along the way. Yeah, I had two mentors. The first one was was the leader of the plastics business when I was young. When I was a young manager was a gentleman named Glenn Hiner and and he was you know, what it showed me, but Glenn showed me was that the leader could be you know, respectful and tough at the same time. And

it was good to see in him. And then later in my career, one of the chairman was a gentleman named John Opie. And John was really operationally, really sharp. And I love both those guys and learned so much from them. On the board, I always liked Chilly Lasters was a board member for a long time, and I always very much enjoyed talking with her and if I had a problem or something on my mind. Let's talk about some of your favorite books. What are your all

time favorites and what are you reading now? So, um, let's see my My all time favorite as Truman by McCullough, because of you know, it's kind of this great American story that that any person could be president and and I thought that was remarkable. I love that one I read a lot of military history because I think it's the best corollary of business, because military history is a subject of failure, like whoever feel the least wins, and

sometimes business feels like that. I've read. I've read over the last oh gosh, six months, a few books on the reconstruction in the US after the Civil War, just as you know, some of the seeds of some of the racial challenges we have today. Those have been good. And uh, I still read novels. I'm reading all of the There's a guy named C. J. Box that writes about a game board in Wyoming called Joe Pickett. So I mixed history and novels and and try to learn.

But I'm an avid reader, and I like to like to you know, I love to love to read. If you liked mccullus Truman, if if you haven't read his Right Brothers, it's really quite really good, you know, very spectacular. Somebody can't have worked at g and not read Wright Brothers. What sort of advice would you give to a recent college grad who was just being getting their career and thinking about working either for a large conglomerate or a manufacturer.

I think stay curious you know again, I think curiosity is this is the sole attribute that every successful person I've ever met has, or whether it's Jeff Bezos or Fred Smith or you know, I could go down the list of great people I've known. I just think curiosity is such an important part of being a lifelong learner,

And being a lifelong learner is really critical. I say in my class, you know when when I when I teach a business school, I said, like, everybody in that room has the capability to be CEO of a fortune five in our company. Right, But but you have to ask yourself kind of three questions, how fast can I learn? How much can I take? And how much will I give? Like by how much can I take? Is like you're going to it punched into those so many times some

people just give up. Right, It's not because I'm not smart enough, They just give up. But you also have to be willing to give back to others if you want people to follow you. So how much can you learn? How much can you take? How much will you give? Answer those three questions and you can start your career interesting. And our final question, what do you know about the world of leadership running a big company? The entire industrial process today that you wish you knew thirty or so

years ago early in your career. Oh, I think the importance of speed. I think the importance of speed. I just think sometimes when you work at a big company, you never feel the urgency the way you need to. And what I see in Silicon Valley, what they get right, is they just they just move quickly. They make mistakes, but they don't wallow in their mistakes. They just keep moving.

So I think I wish sometimes, you know, Barry, that I had worked for like twenty years and before I became CEO, I took maybe a three year sabbatical in Silicon Valley and then came back and became CEO. I would have run the place differently than I did. I think it's easy to move fast and break things when it's a three person shop as opposed to a three D person shot. We have been speaking with Jeff m alt Is, the former CEO of General Electric and author of the book Hot Seat What I Learned Leading a

Great American Company. If you enjoy this conversation, well, be sure and check out any of our previous four hundred or so. You can find those at iTunes Spotify, wherever you get your podcast fixed. We love your comments, feedback in suggestions right to us at m IB podcast at Bloomberg dot net. Give us a review on Apple iTunes. You can sign up for our free daily eating list. You can see that at rid Halts dot com. Check out my weekly column on Bloomberg dot com slash Opinion.

Follow me on Twitter at rit Halts. I would be remiss if I did not think our crack team that helps put this conversation together each week. Tim Harrow is my audio engineer. Atico val Brund is my project manager. Michael Boyle is my producer. Michael Batnick is my head of research. I'm Barry Rit Halts. You've been listening to Master's in Business on Bloomberg Radio