Crisis can be a great time to drive change and shift market share: Jeff Immelt

In the pantheon of star-crossed CEOs, Jeff Immelt, formerly the top boss of General Electric (GE), occupies a special place. A day after he took over the job from Jack Welch, counted as one of the finest CEOs ever, the Twin Towers fell in the 9/11 attacks—and with it the stocks of GE, which had high stakes in the aviation industry. By the time he retired in 2017, Immelt had faced more downs than ups and a constant barrage of criticism for sinking one of the world’s finest companies, co-founded by none other than Thomas Alva Edison, who discovered electricity.

While there is more than a grain of truth in such accusations, Immelt also inherited a business whose direction needed reform in the 2000s. Moving away from the organic growth model of Welch, Immelt stepped on mergers and acquisitions, some of which, including acquiring the French energy company Alstom for a whopping $11 billion, proved costly for GE.

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Three years after his retirement and months after Welch’s death in March 2020, Immelt has written a book about his tenure with GE, which ran for over three decades. Hot Seat is candid, sometimes contrite, an attempt by Immelt to explain his questionable decisions as a manager. Above all, the book is a retrospective reckoning with all the mistakes he made as a leader and required reading for CXOs.

Edited excerpts from an email interview:

What made you decide to write Hot Seat?

I’ve had three years to reflect on my tenure at GE and also to watch how the story of the company has been told. I came to the conclusion that there is much more to the story of GE, and I wanted to share a more complete telling of that story. Mostly for the GE team that deserves better than what has been shared. I also wrote the book because all business management today is crisis management. Leading a company with that understanding is absolutely necessary today. After my experiences and hard lessons at GE, I think the book will give readers real insight in terms of what it feels like to lead through crisis and volatility.

You took over as CEO from Jack Welch, one of the best ever in the industry, aware of his ambivalent legacy. Was your strategy as the new CEO going to be reactive from the very beginning?

Jack was a great CEO, and he was the right leader for the company during the time he led GE. When my tenure began, I knew that I had to adapt to a rapidly changing environment. I had never seen a true tail-risk event up until that point. It was clear that my tenure would be different, and I had to make decisions to keep the company current and growing. I felt we needed to invest in technology and our industrial businesses and be more of a global company.

On your second day as CEO, 9/11 happened. Would you say your career might have played out differently had it not upturned the markets so massively? Or were the changes you made already foregone conclusion?

As CEO, I lived through four tail-risk events, three global recessions, and every industry went through a rough patch. During the toughest of times, the tendency can be to retreat into old habits, to hide, or to wait for a return to normal. In Hot Seat, I talk about the need for leaders to “absorb fear” in the face of uncertainty and to hold "two truths" in a crisis – preparing for the worst while making investments for growth. In the midst of the financial crisis, for example, we continued to make big investments in technology and globalization; we approved billions of dollars in engine commitments in our aviation division. Today, the company leads in that industry. Crisis can be a great time to drive change and shift market share.

You are particularly critical about Steve Bolze, especially his lack of a “CEO’s intuition”, in his handling of GE’s power division. Could you explain what the phrase “CEO’s intuition” means to you in this context?

The hardest part of writing the book was writing openly and honestly about the people, but that is part of telling the complete story of GE. The story of GE Power is complicated, but its troubles were rooted in difficulties in the energy sector and poor leadership decisions that ultimately hurt the company. Leaders need to have conviction; to see what’s coming next and to act on it.

What are the decisions, irrespective of positive and negative outcomes, you are most proud of during your tenure as CEO?

I am incredibly proud of how global GE became during my tenure. We were ahead of the curve when it came to localizing in markets and building an on-the-ground presence in important regions around the world. The company was able to make an impact on communities in critical areas such as healthcare, power, and transportation. It was incredibly rewarding to be part of that.

During your time at GE, you turned to Silicon Valley for inspiration, and you still advise start-ups there. What is about the work culture and energy of the place that appeal to you?

After so many years of “thinking big” at GE, I wanted to ‘think small” again. It’s been an immense joy to work with company founders and to give back. One of the things I admire most about the culture in Silicon Valley is that it’s a learning culture. Individuals are always trying new things, which may not always work out. If something fails, you can pivot from the mistake and change strategy to create something successful. It becomes an environment where we can all learn.

Any thoughts on the current business scenario in India?

India is a vibrant market with excellent people. It is a great place to test new ideas and to learn. There are moments of volatility for sure; but over the long term, India is an important place for every multinational to invest. In Hot Seat, I describe the difficulties to land the India Rail project (a locomotive deal in Bihar that GE worked on for years). But today, that project is a success. It is important to view global markets over the long term and see them through the eyes of the people on the ground.