Illustration by Ket-le / iStock; photo courtesy of Jeff Immelt

Dan Morrell: In 2009, in the wake of the financial crisis, with ratings agencies weighing whether or not to downgrade its stock, GE CEO Jeff Immelt (MBA 1982) made the decision to cut the company's annual dividend for the first time since 1938. It was gutting for Immelt. He knew the financial impact such a move would have not just on the company, but also on its retirees—a group that notably included his own parents. In this second part of our Skydeck conversation with Immelt, we talk about the trials of the financial crisis, the loneliness of life at the top, and what his post-GE career in education and venture capital have taught him about the future of global business.

But we start with the moment that Jeff Immelt almost resigned as CEO of GE.

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Dan Morrell: I want to talk about an episode in 2009. This is in the wake of the financial crisis and you guys had just made a dramatic cut to the dividend. You were in a cab with your communications chief. And you told him that you were going to step down. Now of course you did not. What made you ultimately decide to stay there? And what also did that episode teach you about facing failure?

Jeff Immelt: One of the reasons that I wrote the book is that I teach now at the wrong school. Because …

DM: I wasn't even going to mention it. I wasn't even going to mention it.

JI: [laughing] ... nice weather. Look, I love HBS, but I hate the cold.

DM: [laughs]

JI: And, and you know, you find that, like, students that have been through the financial crisis and COVID, they know that life stinks sometimes. And they don't want to hear the seven pearls of leadership. They want to know how you figured it out when the shit hits the fan, right?

DM: Right.

JI: So the financial crisis was brutal. It's hard to describe how tiring, how embarrassing, how awful I felt every day. And our business model for GE Capital just got destroyed, right, with the financial crisis. So I was exhausted. And, I felt like I'd let everybody down. And just the endless criticism. You know, there are a couple reasons why I fired people when I fired them. And one is when they lost their confidence, right? When they lost the confidence in themselves to kind of get the work done and things like that. And I was afraid at that moment that I had lost my self-confidence. And when you're working with 300,000 people, look, people smell that. Like they smell fear and they smell indecisiveness. And I said "Look. I, I just, I'm just losing confidence. I don't know if I can carry the team.” You know? Will they still follow?" And I had a conversation with one of our directors, Shelly Lazarus. She basically said, "Look. You're the best person to lead the company out of this. Right? You can't look back. There's other people that are going to judge you. You can't judge yourself. You're the best person to lead us out of this."

And I think in the span of maybe 15 days or 30 days or two months during that time period, you know, I started to feel renewal and a sense that I could—you know, working with a great team—get us through it, right? And, and I write in the book, and I, I say this to students, which is, there's so many nights I went to bed feeling like a failure. Right? So many nights. Because at the end of the day, as much crap as we all take, we're our own worst critics. And I always was. But you have this sense of like you wake up the next morning and you look in the mirror and you say, "Gosh. You're the best looking person on earth."

DM: [laughs]

JI: "There's nobody that was ever born that is better, better than you. Better looking, better acting." And you just have this ability to kind of keep marching on.

DM: You know, there's this thread in the book that I noticed about your management style that I, wonder if you're, you're cognizant of. I'm sure you are. But a couple anecdotal examples here: Angela Merkel, you liked her because she served her own guests coffee. You know, you were constantly highlighting how you favor people who lack ego. You had these weekend meetings that would lead to promotions. And it struck me how feel-oriented and human some of these decisions that guided the future of such a massive business were. You know? And I wonder if you think that that approach, your approach to those decisions, differentiates you from your peers?

JI: It's a great question, Dan. You know, I think, you know, one of the things that I always say to people, like, knowing what to do is actually not that hard. It's troubling. Sometimes you're in crisis. But, you know, you sit there and say, like in 2009, we should cut the dividend. You know? But kind of like knowing when and how and who to do it with and all those other things are actually quite hard, right? So I think the data and analysis is always critical, right? And doing good work is always critical. And that helps inform what to do.

But there's a feeling about people. There's a feeling about timing. There's a feeling about, you know, the right metrics that I think you either learn through experience or you know, you can gain wisdom over time. Look, I'd say feeling, feeling was important. But not data-free. Right? Like, when I would do the weekends with leaders, I probably had a 40-page dossier on the leader that I would read before the weekends . But sometimes I, you know, Dan, really sometimes I would say to the leader, like at the end of the session, "Look. I read 40 pages on you last night. Don't listen to it. It's crap. [laughing] Those people don't know you [laughing], those people don't know you at all.

DM: [laughs]

JI: [crosstalk] cultural bias or something else. Here's the way you really should see it. And I think that's ... I think that's you know, that's what you have to say. You know? Like, when we decided to sell NBC, the media business, right there was lots of analysis that said, ... Look, it was a perfectly good business and things like that. But I saw Bob Iger at Disney doing things that we weren't going to do. And so, you know, like I observed somebody that I knew and, and admired and respected doing things in the same business we weren't going to do. And yet I looked at the team and said, "Okay, guys. It's time [laughing]. It's time to cash in. It's time to cash in here. Because this is going to go on a tangent that we're not going to support. And …

DM: Right.

JI: ... we're better off doing it now versus waiting 'til it's too late."

DM: Jeff, one of the things you talk a lot about, too, in the book is the fact that being the CEO is a lonely job. Right? That it's lonely at the top. And I wonder in those moments who you would reach out to. Or how you dealt with that, generally.

JI: So I went from running a business, the health care business, and I was jammed. You know? Like I had stuff going all the time. I would see people, talk to people. People would be running in and out of my office, things like that. And then I became CEO and the phone doesn’t ring. Sitting there the first day and, you know, kind of like, thrumming your fingers and things like that. And I think what you learn is that you have to pick your action. You have to pick your spots. You have to pick your connections. And, you know, over time I became proficient at all those things.

So, you know, basically I would always spend a fair amount of time communicating externally. And I would initiate in the beginning. But over time those became two way relationships that I had. And then I would engage on problems. So I would engage with leaders on problems. But there would be times when I wouldn't talk to one of our CEOs for two or three weeks because, you know, she was doing fine. She didn't need me. You know, things were going well.

I think what you learn as CEO is where you can add value but also where your presence just screws things up. Right? You create busy work and, and, and you're going to create distraction and things like that. So I think over time, you know, I became good at initiating action, both inside and outside the company. And staying away from things that would be value destroying.

And then what you learn is, and I think this is true for lots of CEOs, like, everybody will have lunch with you once. Right? So if you want to see a Warren Buffet, if you want to see Mark Benioff, if you want to see Nitin Nohria, they're all going to make time to see you [laughing].

DM: Right.

JI: ... when you're CEO of a company. And I tapped into that. Right? I tapped into building those relationships.

DM: And was it important for you for some of those to be outside the organization? Because that-

JI: Oh, yeah. Massively.

DM: Yeah. Right.

JI: Yeah, no, no. Again, I always was my number one, two, three, four, five priority was GE. But a lot of my relationships were outside the company. Look, I had, in the early 2000s, I built relationships with Hank Paulson and Tim Geithner in different settings. So when the sky was falling in 2008, I didn't have to call Tim Geithner and say, "Hey, Tim, I'd like to introduce myself." [laughing] And, and so you need those relationships because you don't know when you're going to tap in. And, and again, I go back to what we were talking about earlier, is [that] you build those relationships out of sequence. You build relationships when you don't need anything.

DM: And I also think it would help because some conversation you don't want to have with GE employees.

JI: Oh, for sure.

DM: Right? Like, if you're looking for direction or you're just looking, you know, to complain maybe, or, or mentorship, or ...

JI: Yeah.

DM: ... to mentee. I mean, it's important to have those, right? Because then you can be frank, you know?

JI: There were five us, Dan, that got together once a quarter. IBM, GE, Pepsi, J&J, American Express. And the CEOs got together. And CEOs came and went over time. But we got together once a quarter and it was a Lonely Hearts Club. Right? It was like ...

DM: [laughs]

JI: ... oh my God, I'm getting my butt chewed out on this. Or you know, this board member's acting up. Or, you know, what kind of comp plan are you using? Or different things like that. And so we grew to love each other. Because each one of us had their turn in the barrel.

DM: You know, you mentioned by the end of your tenure at GE that you had sort of lost your empathy. You said that you had too much scar tissue. And I wondered first, what that looked like to you and how you noticed it. And then a little bit about why you think empathy, that characteristic, is so important for leaders.

JI: I think empathy is being really able to see the world through other people's eyes. And I grew up with that as a trait. But I remember, like, my first job in sales. I was good, right? But why was I good? I could always see GE through my customers' eyes. And because I could do that, it made me much more effective to gain market share or grow. And that just kind of went with me as time went on.

So, and like I said, look, I just had to do lots of tough stuff. And let's say in 2015—14 or 15—my executive assistant, who's a woman named Cathy Lorenz, she moved with me from Milwaukee to Connecticut. We'd worked together for almost 20 years. She wanted to retire. We brought her replacement in. She kept sending me notes about, "Hey, Jeff, let's talk." And I was busy doing other things. And finally she comes in and says, "Look. You're treating me like crap. I've worked with you for 20 years. Can't you see that I'm hurting?"

And this is a woman I loved. I love. And I said, "Cathy, like, I'm so sorry. I've become a jerk [laughing]. I've become a jerk. Like, I was unable at this moment to see how tough this was for you. And, and how badly you felt." Look, there's some people that are just jerks, right? That are never empathetic ...

DM: Sure.

JI: But I think most people are empathetic. But what happens to them over time is that they see so much that they become deadened sometimes to situations and people. And that's kind of what I feared in myself.

DM: Jeff, at the end of the book you list these series of five mistakes that you want to own. You say these are mistakes you made as CEO of GE and they range from not developing a deep enough bench of rising leaders to not saying “I don't know enough”. . But why did you feel the need to own those mistakes publicly?

JI: This is a complicated story. The GE story. I wasn't comfortable with the way it had been portrayed because I thought it was either incomplete and sometimes just wrong. So I hired a co-writer, a woman named Amy Wallace. And she spoke to 75 people over the course of two or three years. And I think our desire was to tell a complete story. Right? And so ...

DM: Mm-hmm [affirmative].

JI: ... one of the things we say in the book is that truth equals facts plus context. And that I wanted to portray a more complete context. So, look, I think you read the book and you say, "There's a lot of things to admire in GE." But there's no way that I could tell a complete story without owning the things that I felt like I could've done differently or better.

And so I think in the desire to be complete that's really kind of why I put those in there. Now, one of the other reasons, Dan, why I put them in there is because, you know, people say, "Okay, Jeff, you shouldn't have sold NBC in 2009 when the markets were depressed." Okay, thanks a lot [laughing].

DM: [laughs]

JI: Yeah, okay. Yeah. Yeah. Thanks a lot. But, you know, I needed the cash. There's just so much gibberish. You know, we live in a world without nuance. You know, what could a prospective leader learn by reading the book? It's not to pay attention to the gibberish. But to really double down on understanding what's really profound, focusing more on people, right? Being willing to say “I don't know.” Not giving a board too much to work on at any given point and time. Those are things that actually [laughing] ... You know, but, but not selling NBC in 2009, that's not one of them. Let’s be clear.

DM: Jeff, I wanted to take us sort of post GE at this point. Your life after GE. You're at New Enterprise Associates, which is a global venture capital firm. You've been there since 2018. And you've been teaching courses at Stanford GSB.

JI: At the warm-weather school ...

DM: At the warm weather school. How has your time in those roles changed your perspective on the future of business both here in the US and globally?

JI: You know, when I retired I wanted to ... I wanted to work in disruption. But I wanted to think small again. You know, I, I'd been at a big stage for so long. I wanted to go back to kind of like how do ideas work? Small teams. Working on solving big problems. And that's what led me to venture. My wife and I had lived all over the place but we had never lived in Silicon Valley and it was an experience I wanted to have before I retired.

Let's take it in two buckets. One, the companies. I have even more profound respect for technology and innovation now. You know, I just think we live in such a golden age of innovation. And even though I was an advocate when I was at GE, I could've done even more, right? So, I think that's number one.

And number two is just the strength of focus, right? You know, when you're a big company, and particularly a conglomerate, you can get de-focused every now and then. But there's something really inspiring about a company that's trying to solve specific problems. So, working with a small company to do health care insurance or additive manufacturing. You know, how much more quickly they can move, how much more dedicated they are. I think those are things.

And when I think back, like if I could have done a two-year sabbatical in the late 90s, in Silicon Valley, I probably would've been a better CEO over that era, right? So that's one.

The other piece I would say is I wanted to work with founders and with students because I felt like it was one way I could give back, right? You know, I've kind of learned as I've taught. You know, this generation, they've lived through crisis and they're just different, right? They're smart. But they're much less trusting of the system, right?

DM: Hm.

JI: They don't think that the system is capable of necessarily solving problems. So they need to figure it out on their own. So they're more willing to start their own companies. They're more willing to join startups. They want tools that are going to help them figure stuff out when they leave. Like problem-solving tools or ... Hey, I've seen this experience or how do you manage through crisis? They're just more pragmatic in that regard. So I'd say those are the things I notice that are different about the students today. And very, very helpful.

John Donahoe, who's CEO of Nike, when I retired from GE, and he was leaving Ebay at the same time. He said, "I want to work with young people in the next part of my life because it keeps you fresh. It keeps you young." I think that's really true. I think the ability to see down a generation is very helpful for people at my age.

DM: Jeff, given those characteristics that you've just described that you're seeing in students, how would you see a company like GE that is very established, and might be seen as, as more mainstream or traditional, I suppose, attract that new wave of talent that you're seeing?

JI: Yeah. Look. I think in two ways you've got to sell the mission harder. You know? And, and I think that's where big companies still have great strengths. Is that scale can help solve clean tech or globalization or things like that. So I don't think we've spent enough time selling the mission. And I'd say the second thing is you've got to get people mid-career. Like you got to be more willing to poach people out of startups and get people mid-career. Because, look, let's face facts. When I left HBS, if you looked at all students, not just HBS students, probably 90% of all graduates would think about going to work for GE in 1982. In 2021, that might be 50% just because, you know, it's an older company, it's a big company, there's more startups, there's more of everything. So, you've got to reposition yourself to be able to recruit the next generation of talent.

DM: How long did you actually spend writing the book, putting it together?

JI: Yeah. I'd say almost three years, probably a little ...

DM: Oh.

JI: ... bit more than three years. Right? I wanted to take my time. I wanted my co-author to talk to a lot of people. You know, Dan, everybody remembers the 70% of every story where they were the hero. But nobody remembers the 30% where they were the jerk.

DM: [laughs]

JI: But if you write a book the way I wrote the book, you get a chance to see all of it [laughs]. And that—and that takes time.

Skydeck is produced by the External Relations department at Harvard Business School and edited by Craig McDonald. It is available at iTunes and wherever you get your favorite podcasts. For more information or to find archived episodes, visit alumni.hbs.edu/skydeck.

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