“Investors love certainty. I just don’t think we’re going to live in a ‘certain’ time,” says Jeff Immelt, Chairman and CEO of General Electric, commenting candidly on the current business environment and how successful business players need to have a corporate culture and strategic process that is flexible and can adapt quickly.
During a recent trip to Singapore, Immelt breezed into a packed room at the Raffles Hotel with a big grin on his face, giving the air of a middle-aged rock star, who has already proved himself, but ready to show that he has more to give. His easy-going style and open demeanor belies the fact that, according to Forbes Magazine, he is the captain of industry, running the biggest company in the world (with Q3 2009 earnings of US$2.5 billion, although down 51 per cent from the same period a year earlier) which has diverse businesses such as medical instruments, jet engines, finance, nuclear power plants, media outlets and plastics, among many others.
He talked to the mostly business crowd about the world economic situation, how GE is positioning itself in the world, values of leadership and the Southeast Asian grouping, ASEAN. He’s quick to point out that GE makes more than half of its annual revenues outside of the United States.
“Everybody has a plan, until they get punched in the nose,” he says. The quote is, as he points out tongue in cheek, from “the great American philosopher, Mike Tyson, the boxer,” to the delight and laughter of those gathered. But the point was made: we live in an uncertain time with uncertain events.
A General Electric employee since 1982, Immelt was lined up as Chairman and CEO in September 2001. During his 27 years at the company, he’s seen ups and downs.
His comments began with the global recession and the notion that the financial services industry is being reformed and restructured around the world. He notes that the past four recessions (1974-75, 1980-81, 1990-91 and 2001-01) were largely restructured using credit to bring about economic recovery. “Once the interest rates get to zero, you can’t go much below that,” Immelt says. “Which is kind of where we are now right now; so the credit hammer probably can’t be liberally applied, given the deficits that the US has.” Given that, he says this recovery will likely look different and rely more on the principles of entrepreneurship.
Looking at the interconnectedness that many feel is responsible for the global meltdown, he says the “decoupling” of economies is happening, showing that economic engines of growth are emerging around the world and are “quite exciting and bigger than we thought.” He notes that China has remained strong by the government creating a “great (domestic) consumer spirit” and that resource-rich countries have also remained strong through the downturn. “So economies of the world have been able to fuel their own growth (and) thrive on consumerism.”
That progressive spirit notwithstanding, he notes that countries around the world (notably the US) are moving into an era of activist government. “I think the intersection between government and big business is more profound today than at any time in my career and I just don’t see it abating,” says Immelt. “I could give you lots of reasons why it should abate (laughter), I could tell you that I really wish it would abate (laughter), I just don’t think it will.” He adds that companies are going to have to be good at understanding regulations and the subsequent government impact.
With more than 300,000 GE employees looking to him for guidance, Immelt thinks a lot about “where next” for the company. “So when I sit down to do a plan for GE, the first thing I think about is you have to have really good businesses that you’re really dedicated (to) and fundamentally every business that you’re in, you’re going to have to be willing to invest in and grow and fight, compete and go to every corner of the world,” he says. “If you don’t have a strong stomach for the business you’re in, you’re in the wrong business.”
In addition to these business fundamentals, Immelt is a proponent of:
- “Playing all of the price points” (not just skimming the high-end) and laser-like focus on market share.
- Considering today’s global growth opportunities (GE looks to where future growth will happen next, such as “Rising Asia”).
- Profound dedication and leadership to emerging technology and services in this “product age” with more products at more price points, seeking competitive cost advantage in everything.
- Systems-thinking to align investors and technology to build a solutions-oriented future. Know how to profit through solving problems.
The GE CEO also talked about some core values of the 130 year-old conglomerate. He stressed that ‘commitment to integrity’ comes first, noting that the company is more important than individuals and that everyone must embody the best practices around compliance. Second, a “commitment to performance” where high-performing people are focused on results. Finally, a “commitment to change” where “knowledge has almost no shelf life,” according to Immelt. He says if you’re not reinventing yourself, or trying to do new things, you become static and are quickly beaten by the competition.
Talking more specifically about Southeast Asia as a place to do business, Immelt says that “five or 10 years ago, if you were looking at one of our (GE) strategic plans, we would have predicted the incredible demise of the ASEAN region, as a giant China basically stepped on the region and made it essentially irrelevant vis-a-vis development.” Now he believes that many countries (outside of China and India) have the ability to drive growth over the next five to 10 years and that it’s “exciting” to think about an ASEAN trading block of 600 million people.
In talking about GE investments around the region, Immelt notes that projects in Malaysia and Vietnam have done well. He adds: “It’s probably time for us to make a bigger statement in Indonesia and see what happens.” Regarding GE’s investment strategy that makes such forays possible, Immelt says the company is big enough to take on some financial risk in unproven emerging markets. But it cannot take any reputational risk. “We can’t be associated with a place where business can’t be done the right way, can’t be done transparently. And that’s ultimately what keeps us from investing or not investing,” he says.
Jeff Immelt was speaking at an American Chamber of Commerce event in Singapore on September 29.