I ♥ Jeff Immelt
Jeff Immelt, CEO of General Electric, was on MSNBC’s Morning Joe (GE owns NBC, MSNBC, CNBC…) today. Some pearls (paraphrased):
- The U.S. graduates just 4% of our engineers.
- The “service economy” was a delusion. It’s time to make things again (especially for export, help reduce trade deficit)
- Advice for Obama: invest in #1: Infrastructure, and #2: Technology
- Set a goal for U.S. exports and work backwards, including educational needs (see “We Shall Overcome” post)
- Solve the health care crisis not by cutting medical research, but by solving access (a hornet’s nest of influence from insurance and pharmaceutical industries and malpractice costs: good luck!)
- Letting the market sort it out is yesterday’s playbook. These times call for investment.
Immelt’s taken some heat for GE’s worse-than-expected earnings (from his predecesor, Jack Welch, no less). Welch made efficiency Job #1 at GE, making a gold standard out of the (originally Motorola’s) Six Sigma practice. He also generated huge earnings, quarter after quarter, for GE and is credited with creating the obsession with shareholder value, stock options, and excessive executive compensation.
This emphasis on short-term returns, combined with a deadly lack of accountability and loss of real value (i.e. production), ultimately fueled the financial meltdown that’s made our economy so sick.
Immelt’s direction has been different. Since becoming CEO, Immelt has emphasized investment in technology and emerging markets. In other words, GE has invested in the future with a strategy that’s focused on growth and resilience. He’s looked for new niches that are ripe for innovation, and invested in these opportunities as well.
Most CEOs have bowed to the pressure to play to next quarter’s earnings, a pressure so intense that it commands most of a company’s resources, at the expense of long-term investment. It doesn’t take much to hold the future open, but it does take courage. It takes a leader that’s can tell the board and stockholders that investment in future profitability is worth taking a slower rate of growth today. That investment should be captured in a diversified innovation portfolio: short-,mid-, and long-term products that optimize brand position and resources.
The concept of diversification isn’t new to the financial industry, it’s just that short-term plays got greater rewards than long-term. We need to incent innovation; if Wall Street doesn’t provide it, then it has to be generated as a part of the business model. This is what Immelt’s done at GE, the third largest company in the world.