#116 Jeff Immelt: Leadership In A Crisis
50:14 Share

Good leaders absorb fear in a crisis. So they absorb all the things that are going on, but they don't point fingers and they don't point blame. They just kind of soak it all in. They're able to keep a flexible point of view and what I call two truths, which is great things can happen, terrible things can happen. And you need to kind of keep your mind open to both those things at the same time.

Welcome to The Knowledge Project, a podcast about better thinking, problem solving, and decision making. I'm your host, Shane Parrish. If you're listening to this, you're not currently a supporting member. If you'd like special member-only episodes, access before anyone else transcripts, searchable transcripts, and other member-only content, you can join at fs.blog. Check out the show notes for a link. Today I'm speaking with Jeff Immel, the former CEO of General Electric.

Jeff was the CEO during three major crises.

9-11, Enron, and the financial crash. His legacy at GE is at best controversial. In this wide-ranging conversation, we dive into what happened and why, what it's like to follow in the footsteps of someone who many consider to be a great leader, and the reality behind that. Getting the information you need to make decisions, activist investors, fighting complexity, the mismatched timelines between CEOs and shareholders, unions, and so much more.

It's time to listen and learn.

The IKEA Business Network is now open for small businesses and entrepreneurs. Join for free today to get access to interior design services to help you make the most of your workspace, employee well-being benefits to help you and your people grow, and amazing discounts on travel, insurance, and IKEA purchases, deliveries, and more. Take your small business to the next level when you sign up for the IKEA Business Network for free today by searching IKEA Business Network.

Your legacy at GE is at best controversial. You made thousands of decisions impacting millions of people, often under extreme uncertainty and constant media scrutiny and second guessing. You inherited a pile of shit following a cult-like leader and then steered the company through 9/11, Enron and the financial crisis. What was the hardest part of your tenure at GE? Oh, gosh, the hardest part was really the financial crisis in that

It was sheer fright for probably 60 or 90 days. You know, it was such a big company with so many people. There was so much going on. There was so much unknown. And I literally didn't want to go to bed at night because I didn't want to wake up the next morning because you just didn't know what you'd see. So I'd say for an intense period of time, that was the hardest stretch of 90 days I've ever had to go through.

And then I would say following a very successful leader, but tripping into a completely different time. So it wasn't that he was bad or good. He was great in the time that he lived in. But the time that I was leading the company was so dramatically different. It was more global. It was more technical. There was more interest in social concerns, activist investors, you go down the list.

And just taking a group of 300,000 people and saying, I know this is the way we did things. Now we have to do things differently. That takes persistence and add to it three black swan events and four recessions.

It's just perseverance every day. You took over September 10th, 2001, and everybody thought GE was great on the outside. It's one of those things that looks great on the outside, but inside you knew it wasn't quite right. It's hard to drive change when your team and everybody feels like it's pretty perfect.

And I'm looking back, I'm curious as to the lessons you learned. It seemed that you inherited a team of, I don't know, sycophants and idol worshipers. How did you approach that? I tried to be directional, but I almost had to be incremental. So, you know, I think when you take over for somebody that's that famous, if you will, you have to say, look, here's where we're going. We're going to be more technical.

we're going to be more global, we're going to be closer to the customer, but we're going to change step by step versus saying, "I'm going to blow the place up and we're going to start over, we're going to reset everything." I think to a certain extent, it worked until the financial crisis. I wanted to pivot into being more industrial, I wanted to invest in healthcare and

aviation and life sciences and renewable energy and things like that. And that's what we were doing. We're kind of using the financial service cash to help fund some of those things. You know, our investors really all they recognized was kind of like earnings per share growth. So, you know, we were doing it in a language that they understood. The financial crisis really set us back in that context. So what did I learn? Look, I had a strong point of view of what I wanted the company to be. I stuck with that.

I, in many ways, brought the team with me, right? So the good people stayed and we were able to make that transition. I think we're rebuilding the investor base in a very positive way. But, you know, what I say in the book in the last chapter is, you know, I had probably a window of time after 9-11 that I could have put a couple stakes in the ground and said, look, this is just going to be a very different company. And I didn't pick that way. I mean, there are good reasons why I didn't, but I didn't pick that path and, you know,

one thing led to another. Look, it was certainly something I think about for sure, you know, because you couldn't have seen the financial crisis at that moment. But by the time the financial crisis hit, not having GE Capital be smaller

you know, clearly was a mistake, right? So again, right after 9-11, the world was in such disarray. Having the world in disarray, a new CEO and a new strategy all at the same time seemed too risky for the company, let's say. But, you know, I could have made a different decision and didn't. Is that something you regret now? Or is that something that you made the right call? It was just hard to live with.

You know, it's funny, I've always been comfortable being myself. I never wanted to be him. And in some ways, I never felt burdened by all that he stood for and all that he did. Earlier, you know, probably in the mid 90s, I almost got fired. And, you know, what that teaches you is you really don't need that person. When you go through a process,

of almost getting fired, you kind of say to yourself, okay, he's great. I admire him, but I can live without him because he can live without me. And so that was a good thing to go through. The hard thing was outside the company, right? The hard thing was I spent 15 years hearing every Jack Welch story. What was it like to follow him? What was he like? Things like that. And I remember like I was in Japan in 2013 and I was talking to a big conference, uh,

And the reporter beforehand said, you know, you've had such an interesting career. What was it like, you know, following Welch? I laughed. I said, oh, you know, I've been asked the question in every language. I just kind of shrug it off, et cetera, et cetera. So we go out in front of 2,000 people. It's the first question he asks. I want to say, dude, I thought we handled that backstage. Do we have to go through this again? So, you know, those things were a nuisance, but anyway.

I enjoyed working for him immensely. I liked him a lot. I learned a lot from him. But the world just changed so dramatically that a different playbook was required. Tell me about the story of you almost being fired. Yeah, I was in GE's plastics business for a lot of my early career. And in 1994, there was a lot of inflation and we were stuck with some long-term contracts.

We couldn't get price up fast enough. We got crushed with inflation. Our margins went down and we missed our numbers by probably 25% or 30%. We always had a kickoff meeting and he seeks me out at the kickoff meeting and corners me like in the lobby of the hotel. And, you know, I was talking to some friends and pretty soon they all disappear. And it's just the two of us. And he said to me, you know, Gary,

you just had the worst year in the company you're the worst human ever you're the worst person ever you just did a terrible job and i just stood there and took it and i said look jack you're never gonna have to fire me i'll quit on my own but we're gonna get this turned around it's gonna work et cetera et cetera you know careers are good days and bad days and what it teaches you is like you're kind of the same person on a bad day as a good day

And you can kind of make it through those things. And you don't need, I said, look, after having been through that, I said, I don't need him in my life. I can be a good employee, but not say he's not going to define who I am and what I do and how I think about myself. He just won't. Oh, that's awesome. What would you say is the most important lesson you learned from Jack? What Jack did as a masterclass was how to lead at scale. He created an aura.

He had a voice for 300,000 people. He had a voice for 500 people. He had a voice for 20 people. He had a voice for one person. He could change octaves in how he spoke. He knew how to measure people to create success. So he knew how to instrument. He was a great communicator.

And he more than anything else put human resources on the map. You know, HR was a backwater kind of stooge-ish function in the 1970s and 80s. Everybody that got ahead in HR had been in union relations at a moment in time when, you know, professional workforces were exploding. And he really put, he really cared about people and the human resource side. And so you add all those things up, he could manage big institutions

I think better than anybody I've ever seen before or after. And that's just based on messaging or charisma or how do you describe like? I think, no, I think it's also the little things, instrumentation, his own personality, but creating horizontal teams, knowing how to set measures, set priorities, set goals, you know, consistency of message, investment in talent and building pipelines of talent and

All those things I think added up are really key to running things that matter. You couldn't help, I think, in some of the research I did for this, work for Jack and not respect him. And then there was a certain sadness, I think, to the fact that he went on CNBC multiple times and threw you under the bus. How did that make you feel? Yeah, it was a complicated relationship.

You know, Shane, so I would say he was a guy I loved and learned from. I ran the company in a different way. He wasn't always as supportive as I thought he could be, including that time on CNBC. But every time we had a very tough decision to make, I would always call him. Even after we'd had bad relations and bad words.

when I had something really difficult that I wanted to think my way through, I would pick up the phone and call him and pick his brain. So,

You know, like I said, it was a complicated relationship, but one that was, you know, at the end of the day, I had more respect for him, but I wish sometimes he had done things differently that would have been more helpful. I want to come back a little bit to the financial crisis. Was there a moment where you feared for bankruptcy? Oh, I think there was a moment, Shane, during the financial crisis when we basically felt like the capital markets could actually close.

And if the capital markets actually closed, we were so big, it would have been hard to navigate through it. Everybody likes to dump on government, but Hank Paulson, Tim Geithner, Ben Bernanke, they did a great job. I'd say without that kind of sure-handed leadership, we would have had a real challenge making it through. How did the Warren Buffett deal come together? So if you think about the book, Shane, it's like crisis,

change crisis change crisis, so that's kind of the arc of the book. So chapter five is about the financial crisis and you know Washington Mutual, so most people think about the day Lehman Brothers went bankrupt as the worst day in the financial crisis, but it actually was the day Washington Mutual went bankrupt which was like two weeks later on a Friday because all the bondholders got wiped out. So that was a really bad day.

And my CFO came in my office at like Friday at six o'clock and said, look, we got to raise $15 billion on Monday. And I just said, I don't know what you're talking about. You know, we just did this one, you know, these three things. We should be safe for a while. He said, look, I don't care what you think. We're going to do a board call tomorrow morning. Goldman Sachs is on its way out here to Fairfield. And so that set off a weekend where, you know, I had a board call on Saturday morning.

all telephonically, so nobody was there. And I said to my board, "Hey, guys, you know, things are pretty shaky out there and we got to go raise $15 million on Monday." And you could just hear silence on the phone.

Roger Penske, who was one of my favorite directors, he leaps in and says, "Let's get the money, guys. Let's go. Let's go. Guys, good job. Let's go get it." So we spent the next 24 hours planning. And then Sunday evening, we had to launch the equity raise on Monday morning. Six banks in Europe went bankrupt. Wachovie was on the operating table and TARP, which was the government program, failed on Sunday.

And I had to make the decision whether we were going to go on that Monday, on Sunday night. And it was like the most pressure I could barely breathe that I'd ever felt. And we decided not to go. The market was down a thousand points the next day. We would have gotten crushed. And then in the interim 48 hours, I called Warren because he had done a similar deal with Goldman Sachs. Not so much that we needed his money, but we needed his seal of approval.

And we added him to the raise and we were able to go out on Wednesday of that week and raise, I think it was $16 billion, which was the second largest secondary raise in history after Visa, who had taken the company public. So it was just frightful. But again, you know, it's where the relationships I had built with Warren over time changed.

you know, paid off because I think he trusted me and he believed in the company and his investment really mattered at that moment in time. So when I look back, Shane, over 16 years, that was probably the single most important decision I ever made. You know, the next day I got my teeth kicked in for having to go to it, right? So...

you know the pastors yelled at me and you know the media was tough but man i certainly never felt bad i felt great about where we were i want to come back to leading in the crisis in a second but one of the things you said there's strikes me as really important you were almost paralyzed by fear but not quite how did you end up making a decision in that moment

I think there's two pieces to it. One is a sense of responsibility. And the other one is just like growing up and even when I was CEO, the sense of if you do your best and your intentions are right, you can live with the consequences. And, you know, there's a thousand books that get written about leadership and change and all that stuff. Actually, knowing what to do isn't that hard. Knowing how to do it isn't that hard. Knowing when to do it is really hard.

Having a sense of, okay, if I go Monday, I get killed. If I go Wednesday with Buffett, I make it to shore. Or doing a deal or selling a business or waiting too long or going. I think there's a sense of when that most good leaders have a perspective on. They wait, but they don't wait too long. Do you think that's intuition or is that something that you can learn? How do you navigate when?

I think it's a function of information. So some people need too much information. Some people say, look, I have 80% of what I need and that's enough. So what I find is that different people distill information in different ways. And so you have enough information to make a decision.

And then you try to balance other social factors, like if I don't move now, what happens next and things like that. And you have to balance those two things. I hate to call it intuition because it sounds too squishy. But I think it's some combination of intellect, curiosity, and just comfort in your own skin that there's not one thing you can do and not be criticized. So you're not really in the game of perfection. You're in the game of progress.

and particularly in a crisis. I see lots of leaders in a crisis look for style points. You know, sometimes style points are survival. You're breathing. You made it to tomorrow. That's great, right? Therefore, if you get criticized, it just doesn't matter that much. It strikes me that, I mean, you got to manage through three distinct crises. Very few CEOs have ever done that, especially about such a large company with such a long tenure. It strikes me that

There's people that finger point during a crisis and there's people that do things. And the overlap between those two groups is really small. I'm curious as to what you learned about leading in a crisis. What can companies take away from this today to prepare for future crises and do now? You know, good leaders absorb fear in a crisis. So they absorb all the things that are going on, but they don't point fingers and they don't point blame. They just kind of soak it all in.

They're able to keep a flexible point of view and what I call two truths, which is great things can happen, terrible things can happen. And you need to kind of keep your mind open to both those things at the same time. You know, really in a crisis, it's important for leaders to be great communicators. What is too much information? What's just enough? And then you want to be really observant to see who is with you. So, you know, in other words, Shane, I lived through the 9-11 crisis.

And some people ran for the hills and some people were steadfast. By the time I got to the financial crisis, I pulled the people that were steadfast and said, okay, those of you that are going to run, you know, you're not on the A-team. The A-team is people that were steadfast

during 9-11 because I know I can trust them to kind of give me the truth. So that's on one side. I think the other piece of your question, which is a really good question and really important, which is how do you pick up those risks, really tail risks that are really enterprise risks

for the company. And so one of the things that I get concerned with is, if you pick up an annual report for any company or a 10K or 10Q, they'll have 45 risk factors. If you have 45 risk factors, you really have none. I would much rather see a company list, here are the three biggest risk factors

and make the CEO, not the auditing firm, not the CFO, make the CEO write a letter to investors around those three risk factors. So if you think about the financial crisis, what did we get wrong? We were too big in aggregate size. It wasn't that we had a lot of toxic assets. It wasn't that we're redlining risk and things like that. We were too big. We weren't asking the right question

given the size of where we are. That's one we could have done a better job on. You know, with COVID, I don't know who's going to see a pandemic, right? Other than having a strong balance sheet. I think people that say they forecast COVID, I don't get it. I don't see it. Or 9-11, for that matter. But

Risk factors matter. It's important to have your fingers on what are the really essential risk factors. I want to ask a follow up to that before we do. I just want to ask, are there routines or habits that you had that helped you get through this, like exercise? Or what were the things that grounded you throughout the crisis? I've always been an exerciser. So having, you know, trying to try to stay as close as you could to

to kind of a normal lifestyle. I always got energy off of forward motion. So I didn't want to have a thousand meetings at headquarters. I wanted to go out and do a town hall in Cincinnati or Atlanta and hear what's on employees' minds and console them and make them feel better. So I was always in a crisis believed in forward motion. And I never canceled meetings. I see people

the second you start canceling meetings, particularly in a big company, you worry 300,000 people. You say to them, "Man, we are really in trouble."

And so you try to keep as much of a schedule as you possibly can. Now, I want to come back to sort of the Blackspawn preparedness, if you will. You said in the book, you're a trust me company until you're not. And I'm sure that's a powerful lesson when you're dependent on the kindness of strangers. Looking back, how do you feel about balance sheet management and fragility? How do you consider the need to keep up during the good times and balance that, which might mean carrying more debt with playing offense through the entire cycle?

It's a great question. So part of your question is transparency. There was a time, particularly early on, when investors invested in our company, but didn't really know what they were investing in. So after 9-11, our biggest shareholders sold half their stake when the markets opened after 9-11. And the reason they told me is they didn't realize how big we were in the insurance business. You know, you kind of said, well, that's not my fault. That's really your fault. Or it is my fault, but it's both of our faults. And

That's an element of transparency. One of the elements is making sure people know, outsiders know what they're investing in and why they're investing. Then to your point, I think the notion of not redlining in the good times and trying to be as thoughtful as you can, striking the right balance between growth and safety.

is something that is an art. It's something that's important. You have to think about that all the time. Let's switch gears and talk a little bit about decision making. As CEO, you have a lot of information coming to you all the time. How do you filter what's important from what's not? And how do you quickly determine who knows what they're talking about from who's bluffing?

I think some of this is philosophy and I've seen it change, but I always like to have meetings in big rooms with lots of people that were where the decision making was transparent. We had lots of different points of view. I think by the time, you know, when I started the job, I didn't know a lot about a lot of the businesses. But by the time I finished, I knew more. So when you don't know as much, you want more information both inside and outside the company. You try to create a situation where you have differing points of view or welcome different points of view.

And then ultimately you want an outcome, which is a decision. But I never wanted to do that by myself. I never wanted to do that with one or two people or just the board. And then I find in a room there's kind of four types of people, right? One are people that always are on point and always make good points and are always self-aware. The second are people that just talk too much and are always blathering and don't make a lot of sense and it's tough to filter through.

The third is people that know the right answer but don't speak. And then you have the people that know that they're right, they know you're smarter than you, and they just silently sit there and smolder. You know, the fourth kind are the ones that always say, I told you so, after the fact. And the other three just kind of learn to live with it. And that's how every time goes. But

I coach leaders to make decisions in a big room, in a big room where people know what you were thinking, why you were thinking it, what the options were, and here's why you did what you did. Can you double click on that a little bit in coaching people to make decisions? What are the patterns that you see repeated over and over again, the mistakes that people make or the patterns of success that you see?

Yeah, I'd say the key points of success and failure are people need the right instrumentation. So they need to know what metrics, what analysis they need to see and what matters. So that's number one. They need to have a team, a core team that gives them expertise and wisdom, right? That's number two. And they need to have their own self-confidence, right?

to just pull the trigger. That's three. And I say when I work with companies today, the first two are pretty easy to put in place, but I think you've got to push sometimes leaders to say, "Just make the decision." I think in a crisis, maybe the time we live in today, maybe it's always been true, but

I actually think it's a bigger mode of failure when people don't know, won't make a decision than when they make decisions and some of them are wrong. I weigh those two unevenly because I just think progress is more important than perfection. You don't make progress unless you make decisions. That takes a certain amount of confidence. So you're just going to have to make clear yes and no answers. But instrumentation, team, confidence, those three things matter.

And then there always has to be feedback loops. You know, what do we learn? Why did this work? Why did this not work? Some people can only make a decision in private. They only want to make a decision. They'll say, okay, the meeting ends. You walk in your office with one other person, your CFO, let's say, and you say, okay, we're going to do this.

and then all the 20 people that you're with are all saying why did she do that what was she thinking you know what was the reason and i think that's less optimal than when you make the decision and live with the consequences i like that a lot where does the confidence come from where does the confidence to make a decision especially during a crisis or a difficult period of time come from so i'd say some of it is just environment you grew up in what what you're what you're used to what you're willing to do

And some of it's just experience. You know, some of it is just you get a pattern recognition. You know you can survive your own failures. And some of it's experiential. You know, Keith or Beth, they're super smart in this area. If they say yes, I'll never overrule Dennis. If Dennis says don't do it,

I wouldn't care if there was like the entire Marine Corps outside the door. I'm not going to do it. You know, so you start having good pattern recognition around which voices break out, which ones you trust.

There's nothing that makes a team crazier than repetitive analysis with no action. It's just, and I'd say particularly today in times of crisis, people, if you're waiting for the perfect moment, it doesn't, it's not going to come. Yeah, we're not asking people to solve every problem simultaneously, but let's solve the most important one simultaneously.

with a real priority. How did you fight complexity at GE? I'm going to give you two prisms. I'd say one strength of people today has to be harnessing complexity. There's a difference between being complex and being complicated. And there's a difference between being simple and simplistic. I would say Amazon is complex, but it's not complicated. It's a software company. They have certain things they stand for.

Walmart is simple, but it's not simplistic, right? It's everyday low prices. And so one piece of it is learning how to look kind of horizontally. How do you share practices across a conglomerate? How do you make good systems thoughts about, you know, if I'm in the aircraft engines business and I'm in the financing business, there's ways that we can use that for great success. And I would say harnessing complexity is actually a strength.

Being complex is it takes 20 signatures to sign a lease, 12 layers of management between the factory floor and somebody that's running a business. That's complexity. You don't return your phone calls. You make your assistant return phone calls. That's complexity. And so I think you have to constantly be on the lookout for, you know, how fast is it to make decisions?

How much overhead costs do you have? How do you know who people work for? If you have a bunch of people that are double dotted line. I went chain to a factory in Peterborough in Canada one time where we made large motors, traction motors, and they were doing terribly. And I was traveling through Canada and I said, let's stop at Peterborough because they really are struggling. And I sat in a room with maybe 15 people and we went around the room.

And there was no plant manager. Everybody had a different boss, somewhere in New York, somewhere in Atlanta, somewhere in Houston. And I said to the person traveling with me, okay, let's cancel this afternoon. I'm going to draw an org chart for this factory.

And by the time we leave here today, we're going to simplify this thing. We're going to name a plant manager. So all the people that these guys work for all were pissed off at me. But it was a way to send a signal that that kind of complexity can't exist in the company. I want to get back to one thing you did there. You went to the factory. You got firsthand experience. You saw what was going on. Correct?

corrected the problem. I'm assuming that the performance turned around after that. But one of the big problems I would assume being CEO, especially with 300,000 people is how do you see reality? You have all these filters between the problem and you, and then those filters are not only intelligence filters, like you can't rely on somebody who's to distill complexity into something simple.

because they might make a mistake, but you also have political filters. I'm vying for a job. I want to look good. I'm in competition with this other person. How do you get to the bottom of things? How do you see reality?

Some of it's culture, right? Some of it is empowering people that you trust. And hopefully if you empower people that you trust, then they empower the people they trust and it goes down, right? And you set a culture that works because people are empowered to make decisions. That's culture is one big piece of it. The other piece of it is you can't spend time in the office. You have to see things for yourself.

So I always made it a point to travel. I would travel to businesses. I would travel to customers. I would travel to markets, regions. And you would see from the ground up what was really going on, what was reality to the people that did work. And I became a good student of how people did their work. Right. It's not that I knew how to do everybody's job.

but I knew how to watch how they did their jobs. And so I could get a pretty good sense over the arc of my career in terms of what was productive work and what was unproductive work. And so I think how you spend your time is incredibly important. There's some metrics that matter, like management layers, meeting times, things like that, that you can manage an aggregate where

It always leads to more bureaucracy than you want. And then I think you have employee scores and things like that. So I think metrics, time allocation, culture, and you've got to make sure that when you're a big company that the size works.

It doesn't get in your own way. I remember reading in the book, you said some people say, just do the right thing. Don't worry about the share price at all. And I think your word was you call that naive. I'm wondering why was that naive? And then what are some of the other things that people that you hear that you feel are just really naive for somebody running a big company under all these different pressures and pulls?

All are derivatives, right? So they're all derivatives of how do you balance short-term and long-term thinking. And not that I always did it right, but I look at other CEOs and I look at people that I respect and they're always able to balance the right decisions in the short term and do the right things in the long term and not get confused between the two. And every time you say that, look, I don't care what the investors think, and then you don't own the company

and an activist investor shows up, you end up backpedaling on all the things you said about like, I don't care what investors think. And you end up spending all your time playing defense. So good leaders know how to fuse short-term and long-term. They know how to fuse social needs with competitive needs.

You've just got to be mindful of both. I grew up in a generation where we could move work wherever we wanted to and we could close factories. Nobody could get in our way for in the 1980s and 1990s and 2000s. That changed. That changed when the financial crisis

It changed when President Obama was president. It changed around the world. And, you know, President Trump didn't invent protectionism. He kind of Americanized it. But anybody that didn't see that train coming for like 10 or 15 years was crazy.

So in the 2000s, you started moving factories back. You started understanding that the number of employees you have is actually quite material to how the world looks at you, right? So that was completely different in 1990 and 2020, 30 years. Completely different. You know, you've got to just be able to...

smooth it out, make the pivot yourself when the pivots need to be made. Not be judgmental about one is right and one is wrong, but just say, look, those two have to coexist at the same time. I'm curious, one thing you didn't really go into much detail on in the book is unions. When are unions a good thing? When are they a bad thing? Did they ever prevent you from doing the things you wanted to do?

When do they help? When do they hurt? My father was a GE employee, so nobody ever had to explain to me the value of a job, the value of a GE job. And I carried that with me really through my life. I always met the CEO, the union leader was a guy named Bob Santamore. I actually write about him in the acknowledgments of the book. I liked Bob. You know, in other words, you never could say I liked him out loud because it would get him fired and maybe me fired.

But we spent a lot of time together. And what I liked about working with Bob was he was pure. He was solely about jobs. And you could work with him on health care, other things, as long as there was some way you could demonstrate to him that,

that we were willing to move jobs to help them out. And we did some, not hugely, but we did the ones that matter. And so I think, look, if you had asked me this question 15 years ago or even 20 years ago, I would say, I was trained to say unions are terrible. And if you're a plant manager and you get unionized in your plant, you're probably going to get fired. In some ways, there hasn't been enough texture, enough context around unions

working men and women and how important they are and how they should be treated. And to a certain extent, we're all paying the price for that right now. So wait, double click on that for a second. I don't I don't quite understand that. Yeah. Again, it goes back to say, look, I can close a factory, move all the jobs to Mexico, and I'm still going to be a hero. In 1992, you know, that was the world we lived in. You know, that can happen once or twice or three times. But when it happens for an entire generation,

you end up with a hollowing out of kind of the workforce that's not

constructive and not real. So if you take a job, let's say building a refrigerator, and you say in Mexico now you're going to pay somebody $6 an hour, and let's say Louisville, Kentucky, you're going to pay somebody $22 an hour or $25. You've got transportation costs, quality, automation, it takes you fewer people to make it in Louisville than Mexico. My hunch is you could go through product after product

And making it in Canada or the US is probably just about the same as making it in Mexico or China today. But nobody ever talks that way. Nobody ever wants to take that on. But that's true. And again, that's where people are going to stand up and be, you know, be counted as time goes on. And there's going to have to be a better sense of

balance of trade. If I sell in the US, I better have a certain amount of jobs in the US. If I sell in Germany, same thing. If I sell in China, same thing. And my generation didn't have to think that way, but the next generation is going to have to think that way. I want to switch gears a little bit here. There are times before you became CEO, you wrote about in the book that you wish you had spoken up. I'm thinking specifically around some of the GE Capital deals, but I'm sure there were other times. Why didn't you? And what gets in the way of a culture of honesty?

The first thing I'd say is, you know, one of the reasons why I got ahead in the company itself is because I was a little bit of a pain in the ass. I respected rules, but I didn't always follow all of them. And that actually is a way to kind of break out in a big company. So it wasn't that I was totally a lamb. But, you know, one of the things you have to worry about in big legacy companies is just the power differential. You know, you have to pick your spots.

And there is just such a disproportionate decision-making authority and things like that, that fighting every day doesn't make as much sense. My relationship with Jack, when I was in my domain, in the healthcare domain, I fought hard for the things I believed in and won more than I lost. But when I was running a healthcare business and on the GE Capital Board,

It wasn't my domain per se, so it was a harder thing to push back on, even though in retrospect, I wish I had. But I just think in a very fluid world, it's hard for the leader to always ask what everybody thinks, and it's hard for the subordinate to break through the power differential, particularly in areas where you don't have as much domain expertise. I'll give you a funny one that's going to sound so funny.

So in 1997, I was running the medical business. I wanted to put daycare on the facility. So I went about doing it. Jack hears about it and reams my ass. Says, look, you can't put daycare there. If you can't put it with the union guys in Louisville, we can't put it in Milwaukee, blah, blah, blah. And I said, ah, you're wrong. Let me go do some research. I'll get back to you.

So I went to the HR leader in Louisville, "We got to do daycare. You're not going to do it because it doesn't work for you, but it works for me. You got to have my back." So she says, "Okay, go for it. I have your back." So I kept calling chip away and finally said, "Look, go ahead and do it. Just don't tell anybody." So if you're persistent, if you continue to chip away, even when the power differential is vast,

You can get things done. But it's one of the challenges of a big company. It's just making the culture such that you feel all the right people feel free to speak. You mentioned something there about domain expertise, which I think is interesting. GE was for most of your time there and the time before you, I think under Jack, it was known for generalist expertise.

sort of management in place in a lot of the businesses. You'd be running plastics one day and aviation the next day. What are your views on that now and how have they changed? What I always say is that I learned so much working for Jack, but the world changed very dramatically between the 1990s and the 2000s and beyond. And I think that there is a role for generalists

but it's harder to be successful in the world today unless you're kind of deep domain, particularly technically. The best CEO I had working for me in GE was the guy that ran the aviation business. He was great at the technology, knew the people. He knew all the initiatives that the company was trying to drive, but he was just a really deep domain technical leader.

That was really what I was trying to groom and what I think is important today. If you look at Bezos, Amazon's a conglomerate, but it's a software company. Google's a conglomerate, but it's an AI company. Walmart is huge, it's a retailer. The companies that do well today are extremely deep.

I think to a certain extent, look, we had a ton of good people, but we were creating perfect managers for private equity. If you look at the basic GE toolkit that I grew up with, it was almost the perfect match for private equity where you took a company, you had five years to turn it around, you didn't have to make big bets on products and technology. And so I think to a certain extent, some of the people

who left GE did best in private equity versus going to run other companies.

But I think we live in a domain world. We live in a deep domain world. That's interesting. You said in the book that your peers promote you, but an erosion with your team gets you fired. Can you explain that statement? Yeah, I think when you're rising in your career, people know that those that are around you have to kind of support you, but your peer interactions aren't forced. They come naturally.

And so it's ways that you can observe who actually is natural at this, who's giving more than they're taking, who do people want to be around? And that's really important, right? And so when people see that, that's very encouraging. On the other side, like things go wrong all the time. Bad markets, bad cycles, you got to fix things. Those are things that happen.

A board shouldn't be critical of a team that's fixing things. But when direct reports are going around the leader to the board or acting out in meetings, then you know that when you're not there, the team's not dedicated to fixing things. They're dedicated to politics and bad behavior.

I think you can always observe when things are wrong. Sometimes leaders can pull their way out of it, but they can't do it without their team. I would say Shane, during the financial crisis, we were at rock bottom and

I helped cause that and my board knew that, but my team was always with me. The guy that ran GE Capital, he was committed, but so was the team at aviation and healthcare and they were pulling their weight and they weren't leaving the company. They were saying, "Hey, all of us have to row together." So, you know, I'm sure people on the board said, "Let's get rid of this guy."

But other people said, "Well, you know, we're in a shitstorm right now. Everybody seems to be with him. Let's let him work his way out of it." That's very different when you walk in, you're not making your numbers, and everybody who's there is running their own play. That's when a board has to step in and make a change. How did you go about personally learning while you were a CEO? I spent a lot of time networking.

So there were five CEOs in the New York City area. It was me and Ken Chenault from American Express, Sam Palmisano and then Ginni Romney from IBM, Steve Reinman and then Indra Nooyi from Pepsi.

and Bill Weldon and then Alex Gorski from J&J. And we had dinner every quarter. We would rotate slots and it was just kind of a lonely hearts club. And we'd sit around and talk about who's a good board member, how do you run your board meetings, how do you pay your team, different things like that. That was great. And then I spent a lot of time, you know, when you run GE, everybody will see you once. So I would spend a lot of time off the beaten path, getting to know scientists and people

startup people and political figures kind of out of sequence. Like when I didn't need anything, like Mark Benioff was an early friend, right?

when he was just starting Salesforce. And I'd go to California and say, teach me about cloud computing and how do you view CRM and not do it at a big meeting, but doing it one-on-one over dinner. I spent a lot of time just seeking people out. That's how you really learn. You've got to be the initiator. You have to be constantly curious.

You have to see people when you don't need anything. I mean, that's really one of the secrets to life. Like everybody, when they need something, they can't say, hey, buddy,

Can you help me on this? That's never when you're going to learn. And people hate that. I hate that. Other people hate that. Are there any small habits that you have that you think lead to remarkable results that other people don't realize? I'm not sure I'm going to be completely profound. I think being well-read is actually extremely important, more important than people give credit to.

watching how people work, just sitting and saying, why did you do that? How did you do that? Right. What did you what were you thinking about? You know, I would walk through a factory and I would stop at a station and I would just spend 20 minutes talking to the frontline people on why did you do the things you did? And I would screw up everybody's schedule. But it gave me kind of insight that was broader than getting kind of

canned presentations while working a factory. So asking people what they do, it sounds so silly and stupid, it's actually quite profound. Show me how you do, show me why you do what you do. Show me how you do what you do. I'm on the board of Twilio, a software company in California, and they make all the board members build an app.

I think that's brilliant, right? Because they sign you a developer. I built an app that my students could have so they could, after every class, they could send a text and say, this was terrible, this was good. They could give me a ranking. So it took me four hours to build that app. The guy could probably have done it in seven minutes.

That's the fun of it though, right? You're learning. Totally. It assigned me a developer who he and I still text today. He's a frontline guy at Twilio. Great person, but it was awesome. I want to end with a question. We've been getting a lot of emails from high school teachers lately who listen to our podcast in their class with business leaders and specifically are interested in what advice you would have for high school students.

Learn how to be a good friend. Learn how to be a good friend. You know, you live a life with ups and downs, no matter what you pick. And you never model your life for like a crappy day. You always model your life for a sunny day. I think if you think about yourself in terms of modeling for, you know, if you model your life to start thinking about risk at an early day, you understand that if you have a few people around you

You can make it through anything. And if you have nobody around you, when the inevitable really lousy day happens, it sets you back further than you think. That's a beautiful place to end this. Thank you so much, Jeff. Thanks so much, Shane. Hey, one more thing before we say goodbye. The Knowledge Project is produced by the team at Farnham Street. I want to make this the best podcast you listen to, and I'd love to get your feedback.

Thank you.

Until the next episode.