A leader’s ability to compartmentalise issues facing their organisation and hold two truths simultaneously is essential, particularly during a crisis, according to former CEO of GE Jeff Immelt. This means preparing for the worst while readying the company for necessary improvements. “The role of a leader is to motivate the organisation towards an uncertain future and deal with the unknowns. What counts is driving change in difficult times,” he said.
Immelt spoke to GIBS Interim Dean, Dr Morris Mthombeni during a Flash Forum about his new book: Hot Seat: Hard-won Lessons in Challenging Times. In the book he offers a candid view of himself and his time as GE CEO, detailing his proudest moments and his biggest mistakes.
Immelt took over as CEO of the global diversified group, with operations in aviation, healthcare, manufacturing, and finance, from Jack Welch in 2001. He remained at the helm for 16 years, leading the company through the 9/11 terror attacks, the 2008 Global Financial Crisis and initiated the transformation of GE from an industrial giant to a digitally focused organisation.
He advised leaders navigating through crisis, such as the current Covid-19 pandemic, to remember: “Things can always get worse, but there will be a future, and the people who work with you and for you want to know what that future is.”
“No matter where your business is, you need to be talking about the things that are going to shape your company years from now. Good people aren’t going to stay if they think it’s going to be a crisis every day. They will stay if the leader is going to make progress.”
Towards a Post-Covid world
Immelt said he believed the Covid-19 pandemic would have an irreversible impact on certain features of the business world:
- Digital transformation – “Whereas digital transformation has been a buzzword for the past decade, it’s now here.” It was essential for companies to focus on the digital aspects of their operations that would become permanent features, he advised.
- Government intervention - Government involvement with business has increased with each crisis, and “post-Covid, whether you like it or not, government is your partner. They will have higher requirements of what it means to be a businessperson going forward in the future,” Immelt argued.
- Future of work – Teams will have different expectations about where and how they work in the future, and as such, schools and businesses would have to change.
Digitisation and driving change
During his time as CEO, Immelt began the transformation of GE into a digital company through the provision of software and Internet of Things (IoT) services to its industrial clients. However, the transition didn’t go as planned. “Sometimes with big change initiatives you’re too late, sometimes you’re on time, and sometimes you’re early. In the case of digitisation, we were early,” Immelt said. Beginning in 2009, the group invested heavily and developed its own platform, “but it didn’t work the way I had intended. We started too big, too fast, and should have done more experimentation within the business, maybe starting slowly in one division.”
Immelt said he regretted not bringing in a strategic partner to give the venture more capability and staying power. He advised executives driving change in organisations to “be a zealot, be persistent. You need to be dogmatic about change. Big companies run on momentum and when the momentum slows down, things stop.” It is important for business leaders to be transparent and consistent regarding their strategy. Companies who have performed well during the current business cycle, such as Tesla, Amazon and Berkshire Hathaway, “have had the courage of their convictions,” he said. “They have done every day what they think is right.”
Luck, leadership and lessons learnt from Jack Welch
Immelt described his relationship with his predecessor Jack Welch as “complicated,” and said while he had learnt a lot, he had wanted to take the company in a different direction. “Welch was the best I have ever seen at running a company at scale. He created an aura around himself and the company and was good at creating horizontal cohorts of leaders.” Welch had “understood the value of human resources, including professional development, training and education as a central part of the company, and took it into the 21st Century,” he added.
Reflecting on his career and what he would have done differently, Immelt considered the role of luck in leadership and management: “You have to manage through business cycles and be accountable for your decisions.” He compared the performance of Delta Airlines and video communications provider Zoom during the course of the Covid-19 pandemic and asked whether their divergent performances in share price could be put down to luck, business cycle, or good management. “From a leadership standpoint, you need to understand when you’re lucky, not good, and when you’re good and not just lucky. Never confuse a tailwind with good management.”
“Life is a journey and perseverance is what matters most. Use every crisis and failure to learn and get better. If you can absorb pain and go to work with a smile on your face the next day, then you can really lead,” he concluded.
To watch the full interview, click here.