Podcasts: Jeff Immelt - Chairman And CEO of General Electric - "The Next Big Thing"
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The Johnson School welcomed Jeff Immelt to the school to deliver the second talk ("The Next Big Thing") in its Distinguished Speaker Series. Immelt has served as General Electric’s chairman and CEO since 2001. Immelt is well regarded by the business press and its readers. Baron's twice named him one of the "World's Best CEOs," and since he began serving as chief executive officer, GE was named "America's Most Admired Company" in a poll conducted by Fortune magazine. Immelt serves as chairman of The Business Council and he is on the board of three non-profit organizations: Catalyst, devoted to advancing women in business, Robin Hood, focused on addressing poverty in New York City, and the New York Federal Reserve Bank.
Immelt earned a BA in applied mathematics from Dartmouth College in 1978, and an MBA from Harvard University in 1982.Now, we’re not big for the sake of being big. In other words, I always talk about size from the concept of being able to use our scale to drive future growth. And so when you’re sitting here today—you’re a lot younger than I am and you’re thinking a little bit about the future—you know, basically what we do, what I do in my job is I make bets. And on behalf of our investors and employees we kind of bet on six big themes if you look at the next five, 10, 15 years that I thought might be of interest to people in the room today.The first one is infrastructure and whether it’s in the developed world or developing world people don’t have enough transportation, they don’t have enough energy, they don’t have enough roads, they don’t have enough water, and we’ve become kind of the definitive infrastructure company in the world. We’ve got about $60 billion in revenue. You know what, we’ll probably double that in the next three years. I mean, we are the profound . . . whether it’s in emerging markets or the developed world there’ll be about $5 trillion invested in the next six or seven or eight years in infrastructure. And one of the things I learned in business school—you may want to write this down—is that if you want to grow hang around people that are spending money. It’s one of those things that always works and so we hang around people that are spending money and right now they’re investing in infrastructure.The second thing is emerging markets. I joined GE in 1982, as Carl said. In 1982 the entire company was $24 billion in revenue; in 2007 we’ll have $32 billion just in the emerging world: China, India, Middle East, Africa, Latin America, South Asia. This is your future. You know, whether it’s because of demographic growth or the amazing transfer of wealth into oil and natural gas in natural resource producing regions, this is a long standing trend that I think is going to carry forward for many years. And so your future as business school students, no matter what your nationality, is largely going to be played out over the emerging markets over the coming five, 10, 15 years.The third place we invested was environmental technology, environmental science—an initiative we call ecomagination. That’s $14 billion in revenue inside the company. This year it’ll be 20, by 2010 that’s just accelerating, exploding. Renewable energy, water desalination, hybrid technologies. This is going to be, again, a big growth platform for my company and a big place where a lot of you are going to have to continue to invest. Now, high energy. Prices help drive it. The need to reduce greenhouse gas emissions—that drives it. But this has gone from being kind of the purview of far left wing thinking in the United States and liberal centers and things like that—this is mainstream today in the U.S., and Europe is ahead of us, Asia is ahead of us, and this is going to be a big part of where we go in the future.The fourth place for investing is demographics. You know, we are long in healthcare and we’re long in consumer finance. We’ve made a lot of investments because whether it’s aging population in a country like the United States or more access to healthcare in the emerging world, healthcare is going to be a big important market and GE wants to have that basic foundation in healthcare when we look at the future. So demographics are going to be a big driver of what your future’s going to look like.The fifth area is digital connections. We’re big in the entertainment business, we’re big in the financial service business, we’re big in the healthcare business. The transformative role that the internet plays and digitization plays is going to transform all of those businesses and we’ve made big investments both in terms of business development and also in terms of what we do in the company to make sure we’ve got a great digital framework as the company goes forward.The last thing that I really consider one of the important areas is what I call origination and risk management. In financial services today there’s still a lot of liquidity out there but we’ve invested in 12,000 originators, 5,000 risk managers. We know how to get access to pools of capital, redeploy them, earn money for our investors, and we think companies that know how to do that are going to be successful in the future.So infrastructure, emerging markets, environmental technology, demographics, digital connections, and origination of risk management. These are the six things that are going to drive the growth of GE in the next five or 10 or 15 years. We’re big in big markets and there’s no reason why our company couldn’t double in size in the next five to 10 years, but it’s by doing those things well.I would say for business school students, I grew up in the era that . . . I would say the first 20 years of my career what I learned in business school was about people and how to do things. We were kind of the ‘how’ generation—management tools, process tools. What I would tell you today in a provocative way is I think kind of the era of general management is over. In other words, being generalists and being trained just in general management, I think that was kind of the world I grew up in; that’s not the world you’re going to grow up in. You’re going to grow up in what I would call the ‘what’ and the ‘where’ generation. You’ve got to pick people that know how to pick products and you’ve got to know where to sell them. So I would say generalists, the era of generalists has kind of ended and now it’s the era of domain—people that know science, products, technology, services, and what regions of the world to take them. That’s who’s going to be successful in the future.I graduated from business school in 1982, went to work for GE right away. I was a product manager in our Plastics business so I basically worked with automotive industries to get them to apply our plastic to instrument panels. That’s how I started. So I went from doing cases, being the CEO to being a guy right in the trenches doing marketing. And then I was a sales manager in our Plastics business and I was in Texas and I would go to Lubbock, Texas to sell plastics to molders who would make parts—computer housings and stuff like that. And then I was a global sales leader in our Plastics business. And then I went to our Appliance business and I ran our Service operation in Appliances and I helped fix three and a half million compressors and I used to have a uniform that had my name on it and I would go out and make tech rides with the guys in the field. I was the worst screwdriver guy in the history of the company but I did it. And then I ran our Plastics business and then I went from running our Plastics business to running our Healthcare business and I started, when I started it was about a $3 billion business; when I left it was about a $10 billion business. And then I became CEO. Who would have thunk it? But I started it, basically came straight off this campus, just like you, and went right to Detroit and started selling Plastic. Didn’t think about, you know, hey, I can’t do this; I have an MBA. You know, that’s what I did.And I’d say a couple of things I would tell you about a career. The first one is do what you love. In other words, follow your own internal compass. Don’t, you know, business school students are notoriously bad at picking what’s next. You tend to follow what’s now. What’s now is almost never relevant five years from now. So since you’re not going to guess which industry’s going to be successful, do what you like to do. And I never cease to be amazed, you know . . . My business school class put two people in GE—two, and 18 people went to work at Atari. Anybody ever hear of Atari today? Okay? So don’t follow your friends; follow your soul.The second thing, be a listener. Listeners do better. And be a learner. Listen and learn. Because basically all you basically learn, you know, in business school is this ability to learn and you don’t want to let that go to waste. A 65 year old in GE who still can learn is vital to me; a 30 year old who thinks they know it all has no value to me. So be a learner.Third, be a risk-taker. I know that this is a great school and all your schools are great schools. You’ve spent a lot of money to go to business school. The one thing that having an MBA gives you is the chance to take risks and whether that’s five years out of business school, or in my case 25 years out of business school, you know what? I have a risky job but I know I can get another job, right. And so this knowledge, whether you’re 25 or whether you’re 55, the knowledge that you can get another job always gives you a little bit more courage to do the things that you want to do.And the last thing I would tell you, my least favorite course in business school was organizational behavior. I thought it was a big bore, you know. I wanted to do the capital asset pricing model, finance, marketing—give me something real to do. But you know, all I spend time on today is people. I wish I had paid a lot more attention in OB than I did. So pay attention to people.And if you do those four things: Follow your heart; be a learner; have courage; and care about people. If you do those four things, if that’s how you leave business school, you’re going to have a great and successful career.So Carl, with that, let’s take questions. It’s great to be here with you and we’ve got a great talent from CNBC here with us today so I’ll look forward to the questions. Q&ACarl: Let me just follow up on a couple of things.Jeff: Shoot.Carl: A practical question for an audience of business students. The class of ’07 was graduating at a time when Blackstone was going public. There seemed to be no end for appetite for young people who had an education in finance. Class of ’08 is going to face a much different reality. You’re a grad student getting your MBA in ’08, are you worried about the job market?Jeff: Look, I think the job market is going to be not quite as good as it was in ’07 but there’s still going to be a lot of jobs out there to be had. We’re going to recruit, other people are going to recruit. I’d urge you just not to pay any attention. In many ways, what I would tell you is that 2007, 2008 will be more normal than 2006. 2005 and 2006, when you look back in your business careers, will be viewed as being goofy stuff, you know—the private equity competing with consulting firms and stuff like that. It was just unnatural. There was just too much capital. Again, remember, I graduated in 1982 from business school and I basically had $50,000 in debt and all I had was a Visa card, Carl, at the end. In fact, I was out of money at the end and I had a Visa card that had a $300 limit and I was at like $700 and I kept getting these letters from Visa saying, you know, “Cut your card up and send it back in,” and I’d say, “Yeah, right, guys. I’m really going to do that.” Unemployment in the United States was in double digits, interest rates were 18%, oil in those days was very high, and what you learn is that these things come and go, these eras come and go. And what you’ve really got to do is kind of follow what you want to do.Carl: And to follow up on that, as you said at the top, you’ve seen many bubbles burst, you’ve seen lots of markets reprice—$40 billion though in write-downs from Financial Services so far, and there’s more to come—why aren’t you more worried about the spillover effects onto the American consumer from things like a housing recession, from things like a capital markets meltdown?Jeff: You know, Carl, again, I don’t want to be casual about it because I think there still can be contagion, right. There still can be contagion. But unemployment in the U.S. is 4½%—basically everybody that wants a job has a job. When I look at very fresh data it says people are still going to the store, they’re still buying things. And so as you know, I think, Carl, basically you’ve got a housing recession but a lot of this other stuff is what I call pro on pro. It’s a hedge fund and a money mutual fund and it’s just a bunch of guys that just dropped their guard and did stupid stuff. And so it doesn’t have to blow back, I don’t think, on the broader economy. Again, I think there’s lots of liquidity. These sovereign funds around the world have $15 trillion of capital out there waiting to be placed. These are places like Saudi Arabia, Abu Dhabi, Dubai. They have an incredible amount of money. The Russians have an incredible . . . So there’s still capital out there to be placed, it’s just be repriced. And this massive repricing, you know, there’s just going to be a lot of carnage while we go through that. But unemployment’s low, interest rates are low, there’s a lot of things that I think can say it doesn’t have to be devastating. What it means is a slowdown in the U.S. and reasonable strength on a global basis.Carl: One last question about leadership. You’ve been characterized as a CEO who has worked harder to maybe form consensus, build teamwork than some of your predecessors at GE. How do you foster that kind of an environment and yet remind people that when you make a decision it’s a firm one?Jeff: Carl, what I would say is that when I think about the top 50 people in the company, any one of them at GE can go run a Fortune 200 company, you know, any one of our top 50 leaders. I mean, we were on the cover of Fortune a couple of weeks ago as the best company for leaders. That’s terrible for me, right. Because the headhunters say, “Hey, my god, let’s go get a GE guy. That’s great.” But you know, at the end of the day any one of them can go run their own company. What I can give them is a better platform, you know, really a great canvas to paint on. Now, five or 10 times a year I look around that room of 50 and say, “Okay, I’ve heard enough, here’s where we’re going. And I don’t want any, I don’t want any lip from anybody. Okay. Saddle up, here’s where we’re going.” Now if I did that 15 times I wouldn’t have the best 50 people in the world. And if I did that three times we’d have anarchy. We wouldn’t get anywhere. But I think generationally, you know, there’s a lot of different styles that are out there. What you’ve got to do is have a style that works for you and you have to have a style that works in the time that you’re in. And basically the people that I’m working with today are between—you know, immediately—are between 35 and their mid 50s and they’re turned on to different things than people were of the last generation and you’ve got to be able to captivate these people if you want to lead them in the future. It’s just the way it goes.Carl: Thank you, Jeff. Now’s the time that I know you’ve all been looking forward to, some questions from our audience. We’re going to begin here at Cornell. I think we have a couple of questions from people who’ve actually presubmitted their questions so we’ll start right here with this young lady at the mike.Q: Hi, thank you for being here today. My question for you is how do you encourage innovation while maintaining short term profitability?Jeff: You know, it’s always a great question to ask because as a big public company, for me to say that I wasn’t at all caring about quarterly earnings and things like that, my nose would grow, right. You’ve got to be able to do both but at the same time I run a company that has been around for 130 years and so a lot of what we do has to be about the future. And so what I basically do is I pick leaders but I also kind of override what those leaders do, and I protect $6 billion of funding in research and development. And I have line of sight to it and I protect it and I make sure that that money gets spent in technology and innovation. But look, we’ll do an engine called a GE-NX engine for the Boeing 787. This is a billion dollar program, a billion dollar program. It’s got new materials, it’s got probably a lot of stuff that people from Cornell, engineers from Cornell have done the work on. It’s a billion dollars. That engine breaks even in 2018, right. It’s nothing but a negative in the third quarter or fourth quarter this year. But yet the team will keep investing and keep spending because they know that it’s going to set up future generations of profit pools and of customer satisfaction. So that’s what we do. So look, the reason to come to work at a company like GE is because we do have the resources and the spending and the funding that’s going to let you live your dreams. What I tell people at business schools is you can go to work in a lot of different places, right? If you want to be in the front seat of history, come to work at my company. You know, whether or not China is going to be big, whether or not India is going to be big, whether or not there’s a future for nuclear power, whether or not there’s an electronic medical record in the United States, whether there’s a cure for Alzheimer’s, how big solar becomes, you know. I’d love to whip out and say, oh, these are going to be entrepreneurial companies. Rubbish. Rubbish. It’s going to happen at GE. It’s the company that’s going to, you know, we bought this crappy little Wind business that today . . . when wind was nothing but a hoola-hoop—25 cents a kilowatt hour, nothing but a hoola-hoop. Now it’s six cents a kilowatt hour because we’ve industrialized it. It’s a $5 billion business. So, you know, look, I mean, big companies take a lot of heat, some of it deservedly so for being short termers on long term things like that. But if you want to see history, I just won’t concede any of it has to happen in Silicon Valley in somebody’s garage. I think we can do a lot better, a lot more effectively, and a lot more efficiently inside our company.Carl: Great. Let’s go live to Columbia University, the Lions in New York. Columbia, do you have a question for Jeff.Q: Hi Jeff, I’m Miranda Channin, second year MBA student at Columbia Business School. Had a quick question for you. GE’s aiming to grow organically two to three times faster than global GDP. At the same rate, 10 years later, revenue would approach $750 billion. At what point is GE just too big?Jeff: Well, you know, that’s always a great question. I always tell people we’re just like everybody else, it’s just more zeroes. But you know, in 1982 when I joined, GE was considered a big company and we were turning $20 billion. In 2008 we’ll be $195 billion; we’re still considered a big company but it doesn’t feel any different in 2007 than it did for me in 1982. So I think in some ways it’s all about how you run the company. To run a company our size you’ve got to have great people, you’ve got to have great processes, and you’ve got to have leaders who you trust and respect. I think at some point do we become too big? Maybe. At some point you just might run out of bandwidth and you might run out of management systems and it might be so distributed at some point that it’s really hard. I don’t see that yet. I think to me, if we can attract and retain, if we can recruit and retain the world’s best people, then we will be able to continue to scale and continue to grow. If ever we become too bureaucratic, if ever we become too slow moving, mainly because of our girth and our size, then we may have been too big. You know, I was watching one of the news shows yesterday and they were talking about subprime, and this guy was making the case that this is, you know, that guys like me don’t track the details—that’s why Citigroup failed or Merrill Lynch failed versus private equity and these guys are combing through the details. That’s B.S. We comb through details. We have processes that allow us to comb through details. And my boss, Bob Schweringer’s right here—he’s on the Audit Committee from Cornell, you know. Believe me, there’s not one point in time that any of us ever run GE like a big company. We run it like it was a grocery store on the corner. We look at details, we look at processes, we look at people like it was not some obscure big company, but like it was really . . . So we may run into it someday but we’ve been able to scale the culture and the values and the people in a way that I don’t think we’re close to that level yet.Carl: A quick follow-up. Have the parameters by which you decide whether something is a good strategic fit for GE changed since you started?Jeff: I think so, Carl. In other words, I’ve come to the conclusion that we basically have to nest businesses inside, let’s say, a market that we’ve already got some presence in. And so when I look at getting in new businesses like Water I try to associate them with a bigger concept like Infrastructure as fast as we can because they just get lost. And so you can’t let that happen. You know what I’d say, Carl, is everything we do has to be able to take advantage of scale at some point in time because that’s why we exist. We exist because the breadth and the depth of the company allows these new ideas to take place.Carl: Let’s go live to the University of Texas at Austin. Your question for Jeff.Q: Hi Jeff. This is Jerrod Grevo at the University of Texas. The question we have is GE is known for the development of great leaders. How has globalization affected how you identify and develop leaders knowing that western culture may not necessarily translate to emerging markets?Jeff: You know, that’s a great question. About half the people, about half our business is outside the United States, half inside the United States, and half our people are outside of the United States, half inside the United States. And our business outside the U.S. is growing at twice the rate as our business inside the United States. So driving globalization, keeping up with globalization is something that really is important for the future of the company. If you look at the top 500 leaders in the company about a third have a non U.S. passport, maybe close to 40% today. So the company is globalizing very quickly. Now, what I would say is that what we’ve tried to do over time is we’ve tried to incorporate inside our own culture as a company the new things we’ve seen and the new things we learn about China. We try to incorporate the things we’ve seen and we learned about Europe. We try to continue to evolve and change the culture of the company to reflect what it means to be a global company. And so we’ve tried to evolve the company successfully along those lines. At the same time we’ve tried to decentralize decision making so that local teams can develop products, can develop marketing approaches, pricing, risk management into their local countries. In the end, I’m convinced that business converges. You know, in the end I think that the culture and values to run a multinational company, you shouldn’t have five different cultures and seven different sets of values and 18 different processes—we’re going to have one. And I think over time that one evolves and changes because of what you’re doing around the emerging markets but it’s not different in the emerging markets versus what it is in the developed world. You just can’t run the company that way. And I would say I’m more convinced of it as time goes on. I’m just more convinced that business is one of the few institutions around the world that harmonizes. Now, it’s not to say that you don’t have to be fast. That’s not to say that you don’t learn new things. You’re constantly learning new things. But I think business is one of the few sciences that harmonizes as time goes on. And Carl and I were talking earlier about, you know, in case none of you heard, Fox launched a business channel, right, which is something we just want to crush. Nothing short of that. We just want to crush them.Carl: You did use that word.Jeff: But you know, I think unlike news, where people can have a point of view or one might be more right, one might be more left, and one might be more to the left and one might be more global, I think what Fox is going to find is that business is business; that the basic storytelling around business, there’s not two different ways to tell a business story. In the end there’s only one. And so I think GE will become a more global acting company but in the end we’ll have one culture and one set of values.Carl: You’ve had to translate ecomagination into a bunch of languages I’d imagine.Jeff: Every different language and really, I tell it differently in China than I do in France but it’s the same initiative, you know, it’s the same . . . You’re not going to lecture the Chinese government to say you can’t use coal, but you’ve got to have a set of coal technologies that work in China. And then what you do is you take them down the learning curve fast in China and you take that technology back to the United States. And that’s how you can use one management system even while the company globalizes in an incredibly accelerating way.Carl: Let’s go to Ann Arbor and get a question from the University of Michigan.Q: Hi Jeff. I’m Will Rich from the Ford School of Public Policy and I was wondering where do you see climate change legislation going? And what strategies do you think are viable for making sure that legislation is consistent with GE’s goals?Jeff: You know, I came about climate change really from a technical standpoint. In other words, I was doing business reviews inside GE in 2003 and we basically looked across our set of businesses and whether it was in our Locomotive business or our Jet Engine business or our Water business or our Gas Turbine business, we were working on technologies that fundamentally reduced emissions, improved fuel efficiency, made better use of natural resources. And so we studied, as a company I had teams of people studying the technology of global warming and I had teams study the public policy around both energy policy and global warming. And, you know, I just came to a couple of sets of conclusions. One is that global warming is a technical fact. It’s caused by man. You know, I’m an old, very old applied math major and it’s got kind of, you know, there’s all these causation. It’s a complex kind of linear programming model to see whether or not that means that there’s going to be icebergs in Manhattan someday or things like that. I don’t need to know that much to say okay, I know enough to think that the technology’s there. Any polling we did among people said that the consciousness and awareness was much higher around global warming. And we believed that technology could be a solution so we started attacking this from a, technology from a marketing standpoint and three or four years later we’ve gone from about $5 billion to $14 billion in revenue. We’ve doubled what we spend in R&D. We’ve lowered our own emissions and saved money doing that. And we’ve been transparent with public. Now, I come at this purely as a business person. I always tell people I’ve never camped, you know. I’m not an environmentalist. I have no fundamental touch for that, no soul for that, you know. This is not a corporate social responsibility program. This is purely one CEO that says look, you’ve got to be on the right side of society. You can’t run a company and be on the wrong side of society. And so it’s not a question of whether we get carbon cap in trade system; the question is when do we get a carbon cap in trade system in this country and it’s going to bleed on a global basis. It’s already happening in Europe. And so you get paid to see what’s next. Now, from a public policy standpoint I don’t think there’s any chance that we get legislation in this administration. I think if you get Democrats in the White House in 2008, I think it’s likely that you get some kind of combination energy bill and climate bill. And Republicans, I don’t know, it depends on who ends up in power. But I think you can’t be a CEO and be blind to changes in technology and changes in terms of where public policy’s going. And this is just one where, you know, there’s probably 30 to 50 companies that totally see the world the same way we do. Soon it’ll be a hundred, soon it’ll be two hundred. And this is just one where you’ve got to get on board.Carl: Did you see 30 Rock this past week?Jeff: I did. Unfortunately.Carl: Alex Baldwin’s character uses a green initiative to sell more GE washers. How do you navigate that kind of cynicism? That you’re in it for the money and only for the money?Jeff: Look, I mean, see, Carl, I think what’s perfect about this initiative from my standpoint is nobody really likes it. In other words, the left wing says exactly what you say. The left wing says, “GE, you’re 125 year old company, you’ve got superfund sites, you’re a complete bozo. And how dare you say that you can have an environmental initiative?” And the right wing says, “This is junk science. You’re full of it. This is crazy. It’s going to kill the economy.” And we’re perfectly in the middle, right. At the last shareowners meeting, at the very end I had Sister Pat, who always got on us on the PCBs in the Hudson River and she was arguing with the guys from the Cato Institute and they both typically pick on me but they were picking on each other. And I said, “This is beautiful. I’m in like this seventh ring of hell.” You know, it’s just one of those . . . But look, I sit here and say we’re going to spend a billion dollars to dredge the Hudson River because from 1950 to 1975 we put PCBs in the Hudson River, always using permits. Never did one thing illegal. All the people that worked in the PCB factories have now outlived all their peer groups so it’s been technically proven that PCBs aren’t a carcinogen, right. It’s been studied 25 times, it’s always been definitively proved that it’s not a carcinogen, yet society changed its mind. Society changed its mind. And we’re a good company that’s got money and we’re going to spend it to clean it up. So having seen all that, you know, when you see stuff like this, you just can’t listen to all these groups. You’ve got to get our investors and our company out ahead of it because that’s what you get paid to do, instead of taking a popular stance.Carl: And you can do it without coming out talking about causation in a way that some might find political?Jeff: Look, I think everything gets politicized today, Carl, right? I mean, everything gets politicized today but I say I’m pro science. GE as a company has the ability and has the credibility to say I’m not political but I’m pro science. Let’s study science, let’s drive innovation, and quite honestly I think it’s one of the things that’s wrong with this country, is that we’ve given up our mantel as being the scientific and innovative leader in the world. And look, that may be okay for everybody else, or the Republicans and the Democrats; that ain’t okay for GE. That’s not a position that my company’s ever going to take. We’re about innovation, we’re about technology. That’s who we are.Carl: Let’s go live to Duke, get a question for Jeff.Q: Hello, Jeff. My name is Yantafan from Duke University. Here is my question. GE has always been able to invent itself and remain at the forefront of innovation. What do you think contributes the most to that?Jeff: You know, I think generation after generation in GE is that we believe that we kind of stand for three things. You know, one is integrity. And first and foremost it’s always been a company that has been trusted and we guard our brand and we guard our image very closely. The second thing is we’ve been a company that’s always been dedicated to performance. And so financial performance, doing what you say you’re going to do, there’s just nothing that replaces that and we don’t apologize for that. We’re a tough minded, performance oriented company. And the third thing is is we’ve always been dedicated to change. We have a healthy disrespect for history. And so when somebody comes into a management meeting and says, you know, “This is the way we did this in 1985,” or “We’ve never done it this way,” people roll their eyes and you get cast as an old timer. Right? And so we have these three things going for us, which is, you know, integrity, performance, and change. And I wouldn’t have it any other way. And the day after I leave, whenever that is, my replacement is going to say, “Whhhoooo cares about Immelt?” You know, really fundamentally. We live in this moment, we live in this day, we live in this era, let’s go. And you know, I happened to replace a reasonably famous guy. I forget . . . And I’ve got to tell you, you know, I’ve answered the question in the media 10,000 times in a thousand different languages, “What was it like?” You know, Jack Welch, Jack Welch, Jack Welch. Inside my company I’ve never once had to deal with any of that. Inside our company GE people like change, liked the fact that there was going to be change, wanted to do something. And that’s a big difference. You know, the one place I would never do a press interview was Japan because Japan built statues to Jack. You know, everybody else loved him but Japan, you know, he was like the idol of all idols. I remember one time I was in the JAL waiting room waiting to see the CEO and he had his family album there and I was looking, just gazing through his family album and he had a picture of his wife and his daughter’s wedding and there was a picture of Jack in his family album. I said, “Man, this is crazy.” I’d been doing it for five years and the Nikkei says, “We’ve got to do an interview with you.” I said, “I’ll do it but I just can’t do any Jack questions, you know.” So the guy, the reporter comes in and says, “I want an interview,” blah blah blah. I said fine, he says, “I know no Jack questions.” I said cool, “I’m cool with that.” He says, “Okay now, what was it like to work for Jack Welch.” Wowww. Change. Change. Have a healthy disrespect of the past. It’s why we always hire you. You know, each generation brings the fresh new ideas that are so critical to us.Carl: Speaking of which, Indiana’s been waiting patiently to ask a question. Jeff, let’s get a question from IU.Q: Good evening, Jeff. I’m Schweta. My question for you is in the last few years GE has shown an ever greater willingness to hook up with other companies, even if it has meant taking a minority position. By following this low risk and high return strategy of entering new markets does GE worry that it might be losing control or compromising its core competencies? Thank you.Jeff: You know, I think you always have to worry about can you bring enough to be as capable when you do joint ventures, particularly when you have the minority stake in joint ventures. But you know, what I balance with that is if you take the, really the two cross currents that you’re going to face when you graduate from the Johnson School—you know, one is globalization and the other one is technology. And basically what’s going to shape your lifetime are going to be those two factors, however they play out in the world over the next 25 or 30 or 40 years. Now when I think about technology, look, GE’s got a tremendous core of technology but when it comes to thin film solar technology maybe we can’t do that all in-house. So we might go take a 30% stake in an IPO start up, pre IPO, so that we can see where thin film goes versus mold silicone and we can place some bets across the board and I think the company’s ability to do that is really important. Geographically, you know, we looked at our playing board and we say gosh, it would be great to be in Turkey. So I go to the board and I say I’d like to make an investment in Turkey. And the board says, “What do you know about Turkey?” And I say, “Well, I don’t know, we’ve got 30 people there,” or something like that. I know where to find it on the map. But here’s the trajectories around Turkey, it’s going to be a place to be, it’s kind of the gateway between the Middle East and Eastern Europe. I believe that we’ve got to get there somehow. And so versus, you know, just building our own popcorn stand what we decided to do is invest a billion dollars and get a 26% stake in the third biggest bank in Turkey. So when we go, we go. Now, for me to go to the board and say let’s buy the whole bank, let’s spend $5 billion and the board would say, “Well, you don’t know anything about Turkey. What the hell are you doing?” And I wouldn’t have a second answer to that, right? They’d basically be right. But we can take a stake that we did three or four years ago and now four years later we’re big in Turkey, right. You know, we started with a minority JV, and we bought a turbine business, aircraft engines business, other things with it. So I think with the pace of globalization, the pace of technology, doing joint ventures is the only way that you can get out there fast enough. And I mean, sometimes you’re going to have to have minority stakes but you’ve got to pick your partners well and you’re going to make a few mistakes as you go through that.Carl: In a way they’re canaries in coal mines.Jeff: Exactly. That’s definitely the way to think about Turkey. And look, I’m a big . . . Not that I’m that smart, right, because you were already there. But look, solar is going to be one of the answers of the energy future. And there’s probably a half a dozen technical paths you can go down. You know, I’m big enough to put a chip on each one. They don’t all have to be 100% out of my brain into the field; some can be joint ventures, some can be . . . But what’s important is I don’t think anybody’s smart enough right now to pick which one’s going to win, but let’s sprinkle some seeds across the board. That’s the key.Carl: Let’s take another question, this one from our audience at Cornell. Yes sir.Q: Hello, Jeff. My name is Maneesh Bharkar. I’m a first year student at the Johnson School. My question is actually related to GE’s corporate strategy. Is GE planning to grow organically from its existing businesses, vertical and horizontal integration? Or is it planning to enter new businesses?Jeff: Every great company has to be able to do both. We set a goal in organic growth just because I thought that was an important metric in terms of how to build a growth culture inside the company. And organic growth is really a function of getting in the right markets and then having initiatives that are going to allow you to grow organically over a long period of time. And I’d like that to be the major thrust of what we do, is organic growth. I just think it’s the most investor friendly, it’s the most high return. And so, at our foundation we want to do organic growth. Now at the same time, we generate $25 billion of cash flow every year, probably $15 billion of free cash flow every year after we pay the dividend. So we’ve got a line of capital to do acquisitions and so we’ll always add to the organic growth some acquisitions that we want to do as well. I’d say for the next three or four years I don’t see getting into a brand new business. What I see in the next three or four years are making bigger investments in energy, bigger investments in healthcare, maybe a few bigger investments in the entertainment business, and building onto businesses that we’ve got right now. But I think every company, I think we’ve become as a company too dependent on acquisitions and that’s a bad place to be. You want to be able to, you want to be in a position where it’s nice to do deals but you don’t have to do deals because you’ve got good enough organic growth underpinning the company. And I think the luxury we have right now is the U.S. economy could go to 1½% in 2008 and because of the backlog I’ve got in infrastructure, I’ll grow the company 12% next year. So we’ve got momentum now as a company and we can be a little bit choosier about the acquisitions that we do.Carl: Let’s take another swing down to New York and get a question from Columbia.Q: Hi Jeff. I’m Matt Lowenbran, a first year student here at Columbia Business School. My question is about ecomagination. ecomagination has been an important theme at GE for several years now and GE recently announced that it’ll invest more than one billion in ecomagination R&D in 2007. Could you talk about some of the innovations we can expect to see in the near future and how we can expect them to impact our lives.Jeff: So, you know, we launched this in 2004 and now we have 52 eco products and these are products that we basically have a pipeline of more than 200 and we actually work with an outside firm in Washington, DC that helps us brand these eco products. And I’d say the two that are the most interesting to me right now—one is a hybrid locomotive, mainly because I’m fascinated with the battery technology and how it can be applied not just in a propulsion setting but also in a plug-in hybrid setting in the automotive industry. And so we’ll have one of the more, I’d say one of the biggest scale commercial hybrid programs outside the automotive industry once we launch this product. We’ll make about 100 of them in 2008 and ought to be able to scale up to maybe 200 of them in 2009. And that one I think, to prove out the hybrid technology, is really critical. And then we’re going to have an Appliance refrigerator that we’re going to launch next May that’ll have probably 40% less energy consumption and will have a chip inside that a utility could go in proactively and actually shut down your refrigerator at night to be able to manage electricity. The team doesn’t know it’s going to be launched next May yet but I do. And I don’t know how many of these we’ll actually make but I think it’s so important to get these technologies out in the marketplace. I can’t even tell you about everything we learned in the user interface. And I think one of the things that I’ve learned from watching Steven Jobs for a long time is his willingness to get products in the hands of customers and let them in some ways define the usage in terms of where they go. So one of the things that I’m trying to do inside the company is get these 52 products up to about 200 products, find ways to test and learn rapidly, and like I said with this refrigerator, we may only sell 5,000 of them next year but you’re going to see, I think, a real utility around how consumers use them that’ll make us better in terms of where we go in the future.Carl: And you’re working on the trash powered car, right?Jeff: The trash powered car will be there somewhere. But plug-in hybrids I think are coming in a substantial way. I really do.Carl: Last time Texas wanted to know about how GE builds great leaders. Let’s see what they have in store for us this time. UT.Q: Hi Jeff. Paul Watts. I’m a second year MBA student here at McCombs. As a father of three, I’m just interested to know how you’ve been able to successfully balance work life with family.Jeff: You know, I have been married for 22 years. I’ve got a daughter that’s a junior in college that’s 20 years old. And you know, I have a great family, I have a great family life. And I think it’s important to have some people around you who really don’t care who you are and what you do, and that keep you humble and that keep you balanced. But you do have to give up, I’d say, extended . . . You know, I don’t do poker night out with the pals anymore, golfing junkets, I don’t see extended family. I basically am with my immediate family or I’m at work. And you’re going to have to make some tradeoffs as time goes on. The other thing I’d say is I lead a simple life. I have one company, one wife . . .Carl: It’s a big company.Jeff: One company, one wife. I’m a clean liver. I basically don’t drink much anymore. Probably the last time I had too much to drink was 15 years ago. I work out every day. You know, you’ve got to lead a reasonably straight life because it’s a marathon. And so beyond just your family you’ve got to take care of yourself and you’ve got to be agile mentally to do a job like this. It’s not like you get two days away where you’re not checking your Blackberry. That’s not what you sign up for when you do this. But you can do it if you lead a . . . You know, I think you’ve got to lead a straightforward life and I think it’s important to have balance. I love my company, I love my family, I don’t think I have to compromise between the two. I think I can do both. But it means you’re going to have to make other tradeoffs.Carl: What percentage of the time are you on the road?Jeff: You know, Carl, I probably travel 60% of the time. But it’s all from the time . . . When my daughter was born, we lived in Chicago; I had the western half of the U.S. from a selling standpoint. It’s all my family ever . . . you know, if I was home four straight nights my wife would look at me and say, “Don’t you have to go someplace?” So it’s all we know, it’s all we’ve grown up with and that’s basically what it’s been about.Carl: One last question from Michigan.Q: Hi Jeff. My name is Jason Reiser. I’m a first year MBA at the University of Michigan. I have one last question for you and that would be if you had one thing to tell a graduate student graduating from an MBA program, what would that advice be?Jeff: I think it’s just to follow . . . . This is going to sound really trite but basically you guys have 35 or 40 years to work, you know. And you don’t have to capture it all in the first six months. You’ve got a long time to build this resume and to build who you are and what you want to do. I think business is a great profession. It’s a place where you can use your social skills, you can use your thinking, you can do a lot of different things with it. But I’ve always given people advice to just follow the thing you want to do. And if you want to be an investment banker go work on Wall Street; if you want to be private equity, go join a private equity firm; if you want to be a general manager, work for a management company; if you want to be a consultant; work for BCG; but don’t say I want to run a company and then go work for Goldman Sachs, you know. It may work, who knows. You could be the lucky one. But that’s typically more storytelling than real. You actually do have to know things to do a job. In other words, I’ve been around products for 25 years—I’m a good product manager. Whether I’m in NBC or I’m at our Appliance business, the people talk to me about what they’re doing to position stuff, I can add value. I’ve been going to China for 25 years, I’ve built two businesses that started at zero. I know China. Nobody has to . . . I always say, you know, gosh, I’m thinking about kind of what’s going on with the banking system in India, you know, I just got back and somebody says, “Well, why don’t you go hire Henry Kissinger?” I said, “Henry Kissinger’s 85 years old.” I’m not going to go hire Henry Kissinger. I’ve been in India, been going to India for 25 years myself. So I’m a big believer that go on a path that gives you the experience that allows you to do things, that allows you to live your dreams, the triple bank shot, you know, where I’m going to do four years of consulting and then two years of private equity and then I’m going to go into GE—that probably ain’t going to work, you know. So build competency by going on that path would be what I’d say.Carl: The last question from me is is it true that at Dartmouth you and your buddies stole a Christmas tree from the Hanover Inn and put it in your dorm room?Jeff: You didn’t tell the best part of the story.Carl: I wanted to let you tell it.Jeff: Carl, in those days I wasn’t the only guy streaking, I swear. I swear it wasn’t just me. There’s some truth in that.Carl: You all have like the all-clear to do whatever prank you want now.Jeff: That’s right.Carl: Jeff, a couple minutes to sum up.Jeff: Great, Carl. Thanks again, Carl.APPLAUSE Carl’s done a great job for us on NBC and on CNBC, the second set on CNBC. And I’m proud of the CNBC team. The entertainment business is one that you’ve got to, you know, in addition to having great people and a great strategy, but it’s all about competitiveness and quick responses and you’ve got to take stuff personally. And this is one in CNBC where if you’re a business company like GE and you live in the business world, then you’ve got to have a great network that does business. So this is one where when Fox comes in we all strategize about what we need to do to be competitive and Carl and his colleagues have done a great job.Look, I’d make two comments. The first one is is that I can’t imagine a more exciting time to be graduating from business school and joining the world. You know, I would say that in many ways business school is time, it’s really a great time that you can reflect on what you want to do. And college is a great time when you can reflect on kind of what your dreams are and think through kind of the way you want to approach your life and what kind of person you want to be.And I would tell you that there’s a lot going on in the world. You’re in the middle of an election cycle and in an election cycle people tend to talk about, more about the things that are going wrong than the things that are going right, you know, when you’re in that. But let me tell you, it is unbelievably exciting, you know, what’s going to happen in your lifetime. There’s going to be cures for major diseases; there’s going to be an opening up of parts of the world that have never been seen before; there’s going to be an opportunity to work on energy policy, healthcare policy; there’s going to be an opportunity you all have by working with people that aren’t as fortunate as you to do something about the value gap and the wage gap that is taking place in the United States and around the world; there’s going to be people that need to be led by you that you can have a massive impact on. So I can’t imagine a better, more exciting time to be joining the business world. This is really going to be fun and it’s going to be exciting and you’re going to blink your eyes and you’re going to be as old as I am and you’re going to say, “What the hell happened to the last 25 years?” And that’s how much fun you’re going to have.The second thing I’d do—because I’m here today and nobody else is—is tell you that GE’s the best company in the world. I’m always happy to come to Cornell and it’s great to be at a great school but I want you to know that this is a company that’s about the future. It’s a company that will give you the platform in your business career to paint on the best canvas in the world, an important canvas, so that whether you’re a mechanical engineer or you’re an MBA student or your studying finance, no matter what you’re doing, you’re going to get a chance to see big ideas applied where you personally count and you can make a big difference.So it’s a great time I think in the world of business and I want you, as you think about the things you’re going to do and the internships and the programs and things like that, I want you to know that GE is going to be a great place, a great company where you can build a fantastic career. So again, I’d like to say thanks to Duke and Indiana and Michigan and Columbia and, Carl, did I get everybody? And Texas and Indiana. Columbia and Cornell did participate in the Dartmouth football victory program this year—I’d like to say thanks for that. And again, thanks to Cornell for hosting us today and look forward to many times to come back here. Thank you.Carl: Our thanks to Jeff. Thanks to all the schools that participated. Dean Thomas, thank you to you and to Cornell for being such a great host. Thank you for coming. Have a great night.