Lessons learnt in the hot seat

Jeff Immelt took over from Jack Welch, arguably among the most famous CEOs, in September 2001. Less than a week into his tenure, the 9/11 terrorist attacks happened; it also set off years of crises and volatility which Immelt had to contend with. From the 2008 global financial crisis to the 2011 meltdown of GE-designed nuclear reactors at Fukushima, Immelt’s leadership was down one rocky road. By his own admission, the stock market rarely rewarded his efforts and GE struggled to transform for the digital age. In a candid book, Hot Seat, Immelt writes about his tenure in searing detail. In this Zoom interview from the US, Immelt talks about Welch, India, and what motivated him to write the book.

Title: Hot Seat: Hard-won Lessons in Challenging Times Author: Jeff Immelt Publisher: Hodder & Stoughton Price: ₹500

Jack was a fantastic CEO of his era and he was the first CEO who really pioneered management practices. What always struck people was he could lead at scale, could communicate well, was very facile and could reach everyone in the different segments of the company. He built a very unique business model of industrial cash flow going into financial services with a high multiple.

When I took over, I saw that GE had run out of ideas from a technical standpoint; I wanted to make us a more technological company and wanted to make us more global in terms of being able to sell around the world and put us closer to the customer.

From the people standpoint, I wanted to make us more diverse, more women, more people of colour and with more global talent. In 2016, when I looked back, we had made progress along all those frontiers, never as much as we wanted to as there was a lot of volatility in between. But those were the big things I wanted to try inside GE.

They were very different eras. The era he led in was very US-centric and very financial services-centric. The world too was very calm. I joined GE the year he became CEO, so I had a 20-year run (before becoming CEO) and I had never seen a terrorist or a Black Swan event; then you turn the page to the 21st century, and it began with the 9/11 crisis, then a financial crisis, then geo-political volatility with more nationalism and countries getting less global and then Covid happened.

It started with 9/11, which took place around the same time as the Enron bankruptcy, and that led to a whole generation of volatility.

Any time you go through a crisis, you have a chance to reset your company. I had a chance to reset the financial services and industrial mix of the company, but I didn’t do that. I kept trying to grow our way out of the challenges and invest more in the industrial companies. That worked till the financial crisis and when it hit, that didn’t look very smart.

I’m very clear with what I would have done differently: I would have run it with more small P&Ls, more independence among business leaders; we could have had a generation of leaders who were more flexible, more independent and creative. I see those were the two things that if I could take the clock back, I would change.

I go back all the way to when we rediscovered India, when Rajiv Gandhi opened up the country and I led a delegation. We invested in India over many years to develop capability, and I can say from a capability standpoint it had a profound impact on GE, whether it was Genpact or technology or the multiple manufacturing facilities.

The market was quite challenging for us; we make high-tech infrastructure products that go into power, healthcare and so on and we had to be inventive on how best to serve the local Indian market. We did financing, did joint ventures, like the one with Wipro, we built factories to access the market and over time the market grew dramatically for GE. But it was like one step forward and two back. I write in the book about the Indian rail tender for locomotives and how it took 15 years and we had to bid for the tender five times; it worked in the end, but was fraught with challenges.

What’s different with Covid versus the other crises we have experienced is its breadth. Covid has impacted every market, country, every person. 9/11 had a profound impact on aviation and the insurance industry; the financial crisis had an impact on the finance industry; the Fukushima crisis had a profound impact on the power generation industry, but Covid had an impact on every country and everybody in some way.

Crises tend to create winners and losers and it’s almost not fair, in some ways, as it’s not due to managerial skills. In the Covid crisis, digital platforms have massively advanced and physical platforms were disadvantaged.

For example, Zoom had a higher market cap than every airline in the world; they didn’t do anything particularly special, they had the right technology at the right place at the right time. That’s how Covid is different from any other crises that I experienced.

When you look at the financial performance, the quality of our initiatives and global solutions, the number of good people we had in the company… the company did pretty well when I was CEO. But when you look at the stock price and what’s happened in the past two-three years, it hasn’t been that good a story.

What I tried to do in the book is not compare myself to Jack or complain about anything but just to say this is what happened. I allowed the reader to sit in my chair and asked what would you have done in my position? I wrote the book for two reasons, one was to add context to a complicated story; and the other one was to allow the reader to learn something about leadership during volatile times.

Good leaders don’t point fingers or pass on blame and try to figure out a way to make progress; so be comfortable making decisions but don’t make decisions with one person behind closed doors; do it in front of 20 or 30 persons so they can see how you think, they know what your purpose is. You may get blamed later for not listening, but it’s worth it in terms of gaining support. You need to have imagination and courage to invest in the future; be a good communicator; always show people the best version of themselves that they can be and lastly, persevere; you will get punched in the face a couple of times, you just have to keep going.