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I'm Mike you same and I'm here with
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McCool Ponyo the editor in chief of
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knowledge at Wharton and we're going to
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be speaking with Beth Comstock who has a
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new book out it's got a great title he
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imagined it forward courage creativity
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and the power of change and Beth had
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many senior roles at General Electric
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before she then wrote this book
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including vice chair of the board of
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directors so Beth great to have you here
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today thanks it's great to be here thank
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you gotta begin on maybe a more personal
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note here just get us going on why you
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came into GE what what attracted you and
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then far side of that I think you had an
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offer from one Steve Jobs to leave GE
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and why did you take a pass on that and
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let's go into GE another yeah yeah so I
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am I was at NBC thinking my future was
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going to be in median I got I got had
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been exposed to Jack Welch because we
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had done a lot of things like the the
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announcement of Microsoft where I got to
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work with Jack Welch and Bill Gates it
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was a pretty good introduction to him
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and I got a call one day saying hey come
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up and see me I went up to see him in
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the office at GE and at NBC and he said
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I'd like you to come and work at GE and
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he was in the early stages of his
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succession and was looking for someone
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to come in and lead communications and
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advertising and he said I'd like you to
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do it and it was the farthest thing from
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my mind I did not imagine my future at
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GE and I don't really know why I said he
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has to be honest because one I'd say
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Jack's a pretty persuasive makes a
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pretty persuasive offer but I was
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curious about GE it was a big platform
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it was a big company it was a way for me
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to learn and see you know kind of see a
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side of business that I hadn't seen
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through media so I was just incredibly
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intrigued and curious at the time Jack
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wasn't the Jack Welch he became but it
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was it was an amazing time it seemed
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like it would be an amazing time in the
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company and the transition that was
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ahead and then I ended up having a great
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run and a great career there and midway
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through I went to GE Jack Reed retired
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Jeff Immelt took over and they shipped
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me back to NBC and at that time was a
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pretty tough job the digitisation of
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media was happening and I got to know
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the team at Apple I we were working with
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them on some digital deal
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and they approached me about a job and
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one day I picked up my phone it was like
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hey it's Steve Jobs I know you've been
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talking to the team I'd like you to come
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and work here you know sort of raining
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in the raining it in at the end and I
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had said no to the job it wasn't the
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right job for me and then a few months
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later he called me again and said hey
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there's this other job I was thinking
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about could you come out and we talked
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about it and I did and I made it really
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intriguing at the same time it just
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didn't seem like the right job for me
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and so I ultimately called him up and
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said no and I put it in the book because
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it's one of those moments where I knew I
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had a good reason for saying no the
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strategy was sound but I did regret it
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at times he went on and Apple went on to
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be this incredible company I sort of
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regretted the chance not to make myself
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better and of course I regretted those
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stock options that I never thought were
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gonna go anywhere or at least we're
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never gonna go as big as they've gone so
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sort of coin a phrase instead of buyer's
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remorse we had decliners remorse yeah
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well it was it was a mixed bag because I
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had all the reason to leave at that time
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because I was in a tough spot at NBC it
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was a really tough job but it just
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didn't seem like the right thing for me
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so I knew that but there's also that
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those moments of those paths you take in
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your career could've should've would've
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and I frequently went back to that
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especially when you know they had a
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tough time or the Apple stock did really
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well you're like what what what was that
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so but I again I'd come back to say that
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wasn't the job that I really wanted to
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take Thank You Annette Beth let's get to
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the heart of the book which is the
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challenge of changing anything
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especially for a century-old company an
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icon a Thomas Edison got it going many
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years ago it had an incredible run under
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Jack Welsh and when a company has a good
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run people are thinking we've got a
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great model don't foul it up don't tell
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us to change anything as we are doing
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extremely well now and you write a
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length about the challenges of working
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with that kind of mindset that culture
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to become more innovative more adaptive
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more digital so just walk through a
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couple of the challenges that you face
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and it will talk about the the motors of
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change but let's talk about the barriers
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you ran into
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well I mean for one when I came into GE
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the performance culture was incredibly
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strong and you know you need performance
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in any company and that was very strong
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I came in on the height of the sort of
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Six Sigma revolution that had really
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transformed the quality the the focus
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everybody in GE had to do Six Sigma I
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remember joining it at NBC going what
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why are we doing this but everybody had
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to be immersed just remind us Six Sigma
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Six Sigma was a quality program that
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basically was about eradicating defects
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in the manufacturing process it became a
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bit of a management creed at GE at the
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time and it had a lot of good with it
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but I came into G as I was starting to
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grow in GE Jeff ml took over the world
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was changing dramatically it was just
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after 9/11 happened growth was somewhat
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elusive in the future and you had to go
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much more globally to find it you had to
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go into new markets and so in many ways
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the growth that had to happen was was in
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areas we weren't that strong where the
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old management principles of be number
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one or to do it with precision no longer
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worked in an area where maybe it best
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should be number six in a market if you
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wanted to enter it and so it was a time
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of kind of a renewed effort to grow from
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within to be much more global and and I
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was just at that time when the sort of
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what got you there wasn't necessarily
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what was going to get you ahead the
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problem we've always got is the breaking
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the egg problem we got to sort of break
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the egg then to cook the egg and how did
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you go about making the case that we've
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got to go we got to be more market
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focused for example we've got to be more
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digital yeah GE I think everybody knows
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now is into 3d 3d printing plate awhile
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for that to come in so just talk about
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the the levers you use to get people to
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think about becoming more adaptive more
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focused on the market you know I think a
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lot of it started with vision I mean
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Jeff Immelt had had taken over a CEO and
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he was very much I think really as a CEO
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tried to continue the core operations
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but also make room for the future and
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encourage people like me and the people
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really this market back thinking I mean
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his vision was to come in we're going to
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grow by being global new technology
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getting closer to customer and so from a
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marketing perspective he resurrected
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mark
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I was the first chief marketing officer
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in 20 years it was about market back
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innovation it became that it was about
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seeing where change was happening it was
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about going and understanding what
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problem are we trying to solve in the
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market and so that was the journey that
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we went on and when you when you say
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that marketing is about living in the
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market suddenly you start to see the
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trends you see the patterns you see
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where clean tech is emerging you see
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customers that want it from there you
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see the digitization of media and the
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digitisation of media leads you to the
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digitization of industry so I think that
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was the fundamental shift that I was
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part of was that ability to kind of get
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outside the company open it up to
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partners to new ways of - new ways of
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seeing the world so here's a thesis
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implicit in what you've said you write
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in the book that having worked with Jack
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wells she didn't ask a whole lot of
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questions because he quote knew the
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answers person who was very confident
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about where he was going I infer though
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from what you've said that Jeff Immelt
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was a question asker number one number
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two the driver for change you were at
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the the tip of that spear but you did
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have level a top level support coming
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from the office of the CEO what do you
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think I mean and Jeff drove a lot of
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that absolutely championship from Jeff
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for kind of fighting for the future he
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believed in that he put people like me
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in that role I'd say Jeff was somewhat
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conflicted I mean again if you're a
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leader of a company you have to do both
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of those things right the core
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performance engine the quarterly
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earnings the the reliability that you've
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somewhat vetted over a business model
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and incubate and push for the new and so
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in some ways I think even Jeff as a
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leader was somewhat had to sort of
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balance that tension in his own head and
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so yes he did ask new kinds of questions
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but he also grew up in GE and had a lot
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of confidence in the systems he knew and
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I think all of us did that was some of
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the challenges we were trying to
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overcome I'll give you an example when
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we were in the clean tech space and
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trying to grow a new model of energy
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storage it was quite easy to say oh I
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know what you know from a lot of people
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this is exactly like how we used to run
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plastics so let's build a big factory
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build it and they will come it turned
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out to not be the right thing to do in
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the clean tech space what ended up would
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have been better for us would
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to have a small test and learn Factory
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get a good customer model validate the
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business model and then scale from there
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we learn but that's the some of the
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tension that happens in companies you
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take that this is what I knew in the
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past and you try to apply it to saying
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this is exactly the way we're gonna make
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the future and it didn't work we had to
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write that business off Beth you've got
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a five factor framework for thinking
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about change and I like the wording on
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one in particular like the word in and
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all five but one in particular of the
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five caught my attention and you talk
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about agitated inquiry so just to bring
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that to life may be an example if I'm
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running the division that creates or
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manufactures and sells medical equipment
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and you come to me and you say look Mike
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you got to get more into agitated
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inquiry what does that mean well I think
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it's it's two things it's it's really
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about getting a heated debate and
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discussion going so the inquiry part and
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the agitate it is it's conflict right
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you don't you don't always like people
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asking you what problem you're trying to
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solve tell me something I don't want to
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hear what's wrong with this let's beat
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this up so it's this deliberate process
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of bringing in sparks from the outside
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who provoke and challenge and say you
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know too much you're not open to learn
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something new in the case of clean tech
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a lot of people thought centralized
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energy generation from fossil fuels was
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the only way the future was going to
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unfold we needed provocateurs from the
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outside to say no wind solar storage
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these things are taking off here's why
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so that's a bit of the agitated inquiry
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you need to create what I call
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challenger brands these are people that
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challenge the status quo I mean a lot of
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people call it challenger brands but I
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like that idea
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we did that at NBC with Hulu the ability
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to say we're gonna bring a young turk in
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Jason Kilar to seed and start hulu and
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challenge the traditional way of doing
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television that is agitated inquiry no
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one liked it except maybe Jason and
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those of us who are trying to seat it
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who spend a couple hours at Croton Ville
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the site of the famous training facility
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for GE goes back many many years and has
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been a model for years for other
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companies on leadership and management
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development and there's issue in
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particular
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inquiry if we go there you've got a
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session on that for people haven't
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encountered that phrase before how would
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you get that across to people who are
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gonna be kind of constitutionally
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skeptical yeah so how do you teach it I
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guess that's the question yes well the
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first thing I would do is I would I
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would set up kind of a debate I'd go
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back to high school debate team
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we called it red team blue team it's you
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know been documented out of military
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practices we adopted that I think this
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idea of just you're gonna take the pro
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side you're gonna take the con side and
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we're gonna you're going to do your
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research and often assigning people who
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had a point of view to take the opposite
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point of view we're going to facilitate
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that agitation we're gonna beat up the
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idea out of it's going to come some
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scenarios oh ha ha
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optimistic I'd posit a medium and a
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negative and we're gonna kind of debate
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those a bit so you're creating a
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facilitated way for debate I think the
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second thing is you'd ask people to ask
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different questions especially in the
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early stages of an idea
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you can't ask when are you going to be
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profitable you don't know what's your
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hypothesis that's a good starting point
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what are you going to when you're going
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to know if it's proved so you're
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teaching people to ask different
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questions you're teaching people to
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allocate budgets differently so they can
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carve off money to test and learn and
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experiment and make room to do some of
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these challenge efforts so I think those
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are the things you would teach in a
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class and you'd show them examples of
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where that's happened but to me the best
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thing is to put them in the situation
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where they have to do it Beth when it
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comes to good ideas that seemed to work
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really well in one company sometimes
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there exportable sometimes they are not
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continuous improvement Toyota mastered
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that many many decades ago companies all
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of all over the world now have learned
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how to be a continuous improvement same
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for Six Sigma developed elsewhere but
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adapted and adopted by GE and has worked
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very well do you think on this agitated
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inquiry and in their four other pieces
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for the model that these can be thought
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about and maybe even applied or accepted
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and would they work well at other let's
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make it industrial firms but maybe
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beyond industrial firms as well yeah the
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fact that you're raising and I actually
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think that we do too much of that in
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business where we take a framework
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that's worked at some other company and
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try to apply it exactly so
00:13:21
came up with a framework as a prompt as
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a series of prompts to say here's some
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questions to ask yourself here's some
00:13:26
ways to challenge your mindset but you
00:13:28
have to adapt it to the way you work and
00:13:30
we did that and I a lot of work I spend
00:13:33
on what we called fast words which was
00:13:35
adapting agile Lean Startup to make the
00:13:38
company more at more more fast more
00:13:40
nimble more adaptable you have to make
00:13:43
it work for you I think you have to use
00:13:45
these as prompts it's about critical
00:13:47
thinking right it's about using your own
00:13:48
judgment to say this is going to work
00:13:50
for us or not
00:13:51
I really caution against taking a
00:13:53
blueprint that maybe worked at Nike and
00:13:55
saying it's going to work for you
00:13:57
because it's a very different company
00:13:58
the context is very different one more
00:14:00
question on the five-factor model your
00:14:02
fourth factor is story craft I like the
00:14:06
phrase tell us how we would exercise
00:14:08
story craft yeah well I think story is
00:14:11
too often what business people think we
00:14:12
do at the end to me it's where you start
00:14:14
story is your strategy strategy is your
00:14:17
story it is can you tell your vision
00:14:20
your vision where are we going and why
00:14:22
why is it relevant and I think that's it
00:14:25
that's the simple message and too often
00:14:27
we start with illogical outcomes the
00:14:30
financial outcome and we forget that
00:14:32
there's an emotional piece of it there's
00:14:34
an imagination piece that's about the
00:14:36
vision and it's sort of weaving those
00:14:38
pieces together to say where are we
00:14:40
going why does it matter to me what's
00:14:42
the the promise and outcome I'm going to
00:14:45
get where are you coming from so that I
00:14:47
have credibility that you're going to be
00:14:49
able to do what you're saying and I
00:14:51
think anyone can master the art of story
00:14:53
it's kind of what makes us human but we
00:14:56
don't invest enough in it so I'm trying
00:14:57
to make a case for here's some here's
00:14:59
some practices you can develop simple
00:15:01
questions maybe just start a challenge
00:15:03
people to say what's your story at an
00:15:04
individual level someone gets on an
00:15:06
elevator with you Mike a student and you
00:15:09
go what's your story
00:15:11
they probably freeze right because we
00:15:13
don't ask people that often enough
00:15:15
they're like your optimism about the
00:15:18
human condition if we think about
00:15:19
storytelling or agitated questioning we
00:15:24
become better at that and now to turn
00:15:26
that back on you and the account in the
00:15:28
book which is that many points very
00:15:30
personal you describe yourself in your
00:15:32
earlier zazz an introvert
00:15:35
and in particular just to pick up on one
00:15:37
moment you were called just to bring out
00:15:39
another facet you were called into Jeff
00:15:41
Immelt
00:15:42
office the chief executive and he said
00:15:44
Beth I want you to be more confident you
00:15:48
are no longer the introvert if you ever
00:15:50
were you're probably much more confident
00:15:52
in the way you work with the managers
00:15:54
how did you become less introvert --is--
00:15:57
and more confident in that public sense
00:15:59
well I think confidence comes after kind
00:16:01
of experience for sure the more the more
00:16:03
I frankly the more you try things and
00:16:05
realize you can you can actually do this
00:16:07
so it was a continual series of just
00:16:09
trying things and seeing what worked and
00:16:11
didn't builds confidence and for me I'm
00:16:13
still an introvert to me it's that a
00:16:15
sense of just needing to conserve energy
00:16:17
but I also was somewhat reserved and shy
00:16:20
and I realized that was standing in my
00:16:22
way I wasn't the one putting the ideas
00:16:24
out forcefully I wasn't asking questions
00:16:27
I missed opportunities to connect with
00:16:29
people and I realized it was getting in
00:16:31
my way
00:16:31
so while introversion might be good I
00:16:33
might be a good observer and listener it
00:16:35
was also holding me back so I had to fix
00:16:37
that I gave myself a series of small
00:16:38
challenges really behavior shifts it's
00:16:41
about I mean here in the land of Adam
00:16:43
grant this the master behavior science
00:16:45
but I think it's that kind of mindset
00:16:47
shift give yourself the shift of mindset
00:16:50
to just say I'm going to take small
00:16:52
deliberate steps to make that happen
00:16:55
and that's what I had to do just say I'm
00:16:57
going to ask a question here I'm gonna
00:16:59
go in and I'm going to participate in
00:17:01
this meeting I'm gonna go meet somebody
00:17:02
at this event a networking event and so
00:17:05
when Jeff said you need to be more
00:17:07
confident I wasn't I wasn't showing up
00:17:09
enough I had to adapt that I then had to
00:17:12
next time show up in a meeting and make
00:17:13
sure I had prepared a question that I
00:17:15
was able to challenge somebody who had a
00:17:17
perspective that I might have a point of
00:17:19
view on and do it with my strengths I
00:17:21
wasn't going to go in and like rally
00:17:24
about about gap accounting because I
00:17:26
didn't have expertise in gap accounting
00:17:28
but I knew insights I knew where the
00:17:30
market was going I knew the customer so
00:17:32
I'd have to come back and have that
00:17:33
point of view that's that's kind of
00:17:35
builds confidence because you say okay I
00:17:37
know these things I can bring that
00:17:39
forward but the final question on this
00:17:41
terrain before we move into a different
00:17:43
direction how do you know when you
00:17:46
achieved what you wanted to achieve
00:17:48
and pushing a company to be more
00:17:50
market-driven or more outside in or more
00:17:52
innovative or more digital what would be
00:17:55
a typical metric to know if operation of
00:17:57
division an office had moved in the
00:17:59
right direction well I think customer
00:18:01
satisfaction would have been one I think
00:18:04
sheriff wallet would have been another
00:18:05
one where you're seeing same customers
00:18:07
buy more from you because you're able to
00:18:09
adapt and offer applications or products
00:18:12
that they previously didn't know you
00:18:14
understood that they wanted I think as
00:18:17
we got more into innovation new revenue
00:18:20
from new sources would have been things
00:18:22
who would have asked for I think I think
00:18:25
just the the quicker speed to adoption
00:18:28
of new products meant that they were
00:18:29
simpler to use the user experience was
00:18:31
more clearly defined I think just growth
00:18:34
from new markets is another metric that
00:18:36
you were actually able to not just
00:18:38
define a market opportunity but start to
00:18:40
recognize it Beth let's think about the
00:18:45
company historically you go back to
00:18:47
Thomas Edison you're your founding
00:18:48
inventor and over the years GE has not
00:18:52
had a whole lot of the hundred years
00:18:53
plus have not had a whole lot of chief
00:18:56
executives the famous Jack Welsh was in
00:18:58
office for 20 years his successor Jeff
00:19:00
Immelt I believe it was 17 years though
00:19:04
recently you brought in a new person
00:19:06
John flirty and he I think was there for
00:19:10
less than 14 months going back to your
00:19:13
phrase what got you here won't
00:19:14
necessarily get you there just to pick
00:19:17
up now and the McCool's gonna come in on
00:19:19
this as well what do you think has
00:19:22
helped derail the the innovativeness and
00:19:25
the success in the market that Jeff Jack
00:19:28
Wilshere was there I think the CEO of
00:19:30
the decade at one point the century
00:19:33
story it was the century guarantee CEO
00:19:36
of the century how about that so that
00:19:38
got him there but these successors have
00:19:41
had more of a struggles so what's going
00:19:43
on do you think well I guess I first I'd
00:19:45
say I've worked at GM most of my career
00:19:48
it's a really good company and they are
00:19:49
innovating if I could take you today to
00:19:51
Cincinnati Ohio where they're inventing
00:19:54
the future of manufacturing in the
00:19:55
aviation business through 3d printing
00:19:57
and metals they're totally transforming
00:19:59
not just aviation but manufacturing
00:20:01
the digitisation of Industry is
00:20:03
happening the clean energy revolution
00:20:06
not all of them have scaled fast enough
00:20:09
big enough still questions about it so I
00:20:11
think I would say there is still
00:20:13
innovation alive there but I think
00:20:15
you're seeing business at a crossroads
00:20:17
through a lot of the the GE story in
00:20:20
some ways I mean G had a big run up in
00:20:22
scale complexity and trying to come up
00:20:26
with new models and globalize the
00:20:29
company from a market perspective figure
00:20:31
out new models at work obviously
00:20:33
conglomerates had fallen out of favor
00:20:34
the need to reset and kind of shift
00:20:37
gears with GE Capital all that created a
00:20:39
lot of complexity and so I think that's
00:20:42
what you've seen and some certainly the
00:20:44
the stock market reaction some of the
00:20:46
the challenge is just the depth of
00:20:47
complexity and so any later today and
00:20:50
big companies like that has to know how
00:20:52
to navigate complexity and I I'm I think
00:20:54
it was perhaps even more complex and
00:20:56
insiders and Outsiders appreciated about
00:20:58
the company so I'd like to come back to
00:21:01
what you just said it stock market in a
00:21:03
bit but was very fascinated by what you
00:21:06
were saying about Jack Welch and also
00:21:08
Jeff Ament
00:21:08
yeah since you've worked with both of
00:21:10
them I wonder if you could speak to some
00:21:14
what was some of the differences between
00:21:15
the two as leaders yeah and and how did
00:21:18
you view their strengths and weaknesses
00:21:20
yeah it's I appreciate that question a
00:21:22
lot I mean Jack was incredibly you know
00:21:27
bold Jeff was bold they were both bold
00:21:29
in in different ways obviously Jack
00:21:33
really used financial services as a way
00:21:36
to scale the company up and and that was
00:21:39
a model that worked until it didn't the
00:21:41
financial crisis called that into
00:21:43
question jack was a really he really
00:21:45
believed in the investment in people
00:21:46
seeded a lot of the people development
00:21:48
at GE was very intense and focused but
00:21:53
he was at the time think of the company
00:21:54
at the time it was a very hierarchical
00:21:56
leadership it was very much command and
00:21:59
control because that's the the business
00:22:01
world we lived in at the time Jeff
00:22:03
Immelt comes in really overnight 9/11
00:22:06
happened and sort of called into
00:22:07
question a lot about the global nature
00:22:09
of the world and I think Jeff was a much
00:22:11
more market focus customer focused CEO
00:22:15
much more distributed in how he saw the
00:22:19
networks and partnerships off shot
00:22:21
opportunities and I think needed a more
00:22:23
distributed leadership team to be able
00:22:26
to do some of that but maybe the
00:22:29
conglomerate structure was made it more
00:22:31
difficult to do to do that but both bold
00:22:34
both invested in people but did it in
00:22:37
very very different ways now you
00:22:39
referred to earlier the stock
00:22:41
performance and that that may be one
00:22:43
difference also that has been reported
00:22:45
about in the media I remember there was
00:22:48
a story in Fortune sometime ago that
00:22:50
talked about the fact that if you look
00:22:52
at the performance of the GE stock
00:22:54
during the 20 years that Jack Welch was
00:22:56
the CEO the stock went up by about 2700
00:23:00
times and at a time when the SNP 500
00:23:04
went up 700 times and if you were to
00:23:07
take the you know 17 years of Jeff
00:23:10
Emilie's tenure as CEO the stock
00:23:12
actually went down 30%
00:23:14
and so I wonder what some of the
00:23:17
decisions that you as part of the
00:23:19
leadership team made that led to GE
00:23:21
losing about a hundred and fifty billion
00:23:24
dollars in in market capitalization
00:23:26
during the second phase yeah well I
00:23:29
think I mean I think if you were to take
00:23:32
that arc and look back I think the the
00:23:35
run-up that you talked about in the
00:23:36
Welch era only happened in the last part
00:23:39
of his tenure as well right there was a
00:23:41
lot of volatility very early in his in
00:23:44
his run you look even back into the 70s
00:23:46
very flat GE performance so I think in
00:23:50
the arc of a company you can't just look
00:23:53
at one period of time I don't know you
00:23:56
could you you guys are the Business
00:23:59
School folk experts I mean there was a
00:24:01
huge run-up to scale is it possible to
00:24:03
keep growing company's growth on growth
00:24:07
like that forever and so I think as I
00:24:12
said earlier I think some of the issues
00:24:14
with GE conglomerate model that perhaps
00:24:16
fell out of favor looking at GE Capital
00:24:21
in a world that maybe that was not a
00:24:23
competitive advantage anymore those
00:24:25
things had to be cleaned up I asked a
00:24:28
broader question
00:24:29
as I think about it from a business
00:24:30
perspective do businesses at a certain
00:24:34
size scaled do they get reset moments
00:24:36
could she have had a bigger reset moment
00:24:40
maybe they're having one now that's
00:24:41
overdue would the public markets have
00:24:44
let GE have a reset moment should the
00:24:48
leadership have taken a reset moment to
00:24:49
me I asked more of those kind of
00:24:51
questions I certainly know in the
00:24:53
generation of GE that I was part of it
00:24:55
was definitely a vigorous approach to
00:24:58
grow to find new growth to return to
00:25:01
kind of some of the core basics of
00:25:03
making manufacturing high focus
00:25:05
technology to really simplify the the
00:25:08
portfolio that was seemingly what was
00:25:12
needed at the time
00:25:13
history I guess will judge if those are
00:25:15
the right things yes I've got a quick
00:25:16
question on that before we leave it you
00:25:19
mentioned that the era that conglomerate
00:25:22
is is over and we'll see where it were
00:25:26
it's going on net but two of the
00:25:29
arguments that GE historically made
00:25:30
about the value of the diversified set
00:25:33
of companies who are under the same
00:25:34
umbrella is number one it was a
00:25:36
leadership engine that could create
00:25:38
talent the way that others couldn't
00:25:40
and it could assign talent across those
00:25:42
divisions it was like an internal labor
00:25:44
market that was very well defined it
00:25:46
very well controlled
00:25:47
number two divisions or companies
00:25:50
however you want to label the separate
00:25:52
profit and loss centers sometimes in
00:25:55
very different industries would
00:25:57
sometimes share their research their
00:25:59
ideas or scientific innovations do you
00:26:02
think that in the first two decades of
00:26:05
this century that both of those became
00:26:08
less of a competitive advantage that
00:26:09
help define the Jack Welch era but in
00:26:13
the reverse sense kind of undermine the
00:26:15
Jeff a meld era yeah what do you think
00:26:17
well I certainly think the the scale and
00:26:19
complexity made the the Jeff ml era
00:26:22
challenging but I I'm always always a
00:26:25
big fan of the centralized Rd in a
00:26:28
focused way I mean III actually if
00:26:30
anything I think maybe we could have
00:26:32
done more to tell the value of that from
00:26:34
an investor perspective because I saw it
00:26:35
firsthand what would happen take 3d
00:26:38
printing that we talked about earlier
00:26:39
the ability to seed it in an aviation
00:26:41
business and then move
00:26:42
to power and move it to a rail business
00:26:45
it really was quite profound and the
00:26:48
speed and the the capabilities really
00:26:50
really did create a competitive
00:26:52
advantage I saw it I know it I believe
00:26:54
it it was the same on the market
00:26:55
innovation I led I think to the to the
00:26:58
other point about the the leadership
00:26:59
Factory I think that works if the
00:27:02
businesses are always going to be this
00:27:03
run the same way but suddenly you're in
00:27:05
a world where growth is in a different
00:27:07
way you're in different growth markets
00:27:09
the growth is not happening from the
00:27:11
markets where you were before what are
00:27:12
your choices you're going to keep
00:27:14
acquiring the growth which is not a sure
00:27:16
thing or you're going to try to grow in
00:27:18
the markets where you already are and it
00:27:20
requires a different kind of mindset
00:27:22
it's ok to say you're going to be 1 or 2
00:27:24
in a market but what often happens is
00:27:27
you narrow the opportunity of that
00:27:28
market and to grow you might have to be
00:27:30
number 5 6 4 to get to number 1 and that
00:27:35
requires a different kind of management
00:27:36
mindset it's more of a growth leader
00:27:38
kind of mindset where you're seeding
00:27:39
things you're making a market you don't
00:27:41
have the certainty yet it's more of a
00:27:44
commercial kind of market that is how I
00:27:48
would have seen that challenge where
00:27:49
maybe you needed different kind of
00:27:51
management capabilities to meet the new
00:27:53
challenge of a global marketplace just
00:27:56
to pick up on what you said about when
00:27:59
you make acquisitions it's not always a
00:28:01
sure thing every one one thing that you
00:28:04
know struck me there's a reference to it
00:28:06
in your book as well I mean when you
00:28:08
talk about the energy industry is the
00:28:10
2015 of Alstom you know the French a gas
00:28:14
turbine company I think it was acquired
00:28:17
for 10 billion dollars and Jeff Immelt
00:28:20
and also John Flannery played a very
00:28:22
active role in the acquisition now if
00:28:25
you look back about at what has happened
00:28:28
since the acquisition was done I believe
00:28:31
that in October there was a twenty three
00:28:33
billion dollar write-off much of it
00:28:36
attributable to the Alstom acquisition
00:28:40
there was wondering what are some of the
00:28:42
lessons that can be learned to your
00:28:44
earlier point that you know acquisitions
00:28:48
are not always a short yeah well I think
00:28:50
the the lesson I take away from looking
00:28:52
at the awesome situation I was always so
00:28:55
focused on the clean tech piece and I
00:28:57
remember in the early days the investors
00:29:00
didn't they had no time for that our
00:29:02
ecomagination effort seemed silly or
00:29:04
frivolous it seems so small yet 15 years
00:29:07
later why aren't you bigger and solar
00:29:09
why aren't you bigger renewable energy
00:29:10
and in fact that's been one of the
00:29:12
criticisms and so I think it's just
00:29:14
always tension in getting that short in
00:29:17
the long term right and so take you to
00:29:19
what to sort of remind everybody what
00:29:21
happened the decision was made after the
00:29:23
financial crisis the new regulatory
00:29:26
environment that G Capital just that
00:29:28
business model no longer worked for GE
00:29:30
get out of GE Capital yet from an
00:29:33
investor and from a running the company
00:29:35
perspective that created a huge gap to
00:29:37
fill in terms of earnings
00:29:38
cash other things that needed to happen
00:29:41
so the quick answer to that is to shore
00:29:45
up a installed base of energy products
00:29:49
that are going to be more creative in
00:29:50
the in the short term and gives a base
00:29:53
while the long term is trying to catch
00:29:55
up and gives a base for service and some
00:29:57
of the digital things so I think you
00:29:59
could understand why that why that would
00:30:02
be made I mean I think the debate for
00:30:04
business schools and others would play
00:30:06
that out would you have been better to
00:30:08
take that money and invest in
00:30:09
digitization and clean tech would you
00:30:12
have been able to would the market have
00:30:13
allowed you to do that you know you
00:30:15
needed something that was going to be a
00:30:17
creative near-term to earnings so I
00:30:21
think put yourself in that CEOs job not
00:30:25
everybody in the company thought that
00:30:26
was a good deal but you could also
00:30:28
understand why you had to do it right
00:30:30
and if you've got if you're Jeff and
00:30:32
you're John Flannery trying to balance
00:30:34
the near and the you've got people like
00:30:35
me going yeah more solar yeah but how do
00:30:38
I make money doing that right and then
00:30:41
you've got just this installed base that
00:30:42
you know how you make money that can buy
00:30:44
us some time while we figure this out so
00:30:47
I think you have to put yourself in
00:30:48
their shoes so I can understand based on
00:30:50
everything you've said why it might have
00:30:52
been so compelling to do it what I'm
00:30:54
trying to understand is why didn't work
00:30:56
and what lessons we can learn
00:30:57
that I mean I don't I think you're
00:31:00
declaring it hasn't worked based on the
00:31:02
point in time right now I I mean they
00:31:04
had to write off some of it the
00:31:05
valuation wasn't there I haven't been in
00:31:07
the company for so it's hard for me to
00:31:08
say what the justification was for the
00:31:11
for the for the write-off but I
00:31:14
certainly know they felt the strategy
00:31:15
was rationale I would say from
00:31:19
everything I understand from reading
00:31:21
again I haven't been in the company is
00:31:22
the market dynamic changed much faster
00:31:26
the the rise of solar and some of the
00:31:29
other factors have been much faster than
00:31:31
a lot of people in traditional energy
00:31:33
business anticipated in some ways I
00:31:36
think that's what a lot of us are trying
00:31:37
to rally for you need to be in the
00:31:39
market understanding and adapting to the
00:31:42
pace of change so some of those models
00:31:44
perhaps might have allowed for longer
00:31:47
term for these things to play out
00:31:48
and yet the nature and pace of change is
00:31:51
faster that would be one one answer Beth
00:31:54
to begin to bring it to a close Keith
00:31:58
John Flannery ran GE for a little more
00:32:01
than a year and now Larry cult who n on
00:32:03
the board who would himself earlier run
00:32:07
as a CEO of another industrial firm
00:32:09
there was somewhat diversified not
00:32:11
unlike GE if Larry called you in and
00:32:14
said Beth you've written a whole book on
00:32:16
a topic of how we get change going here
00:32:18
at GE what would be just looking back on
00:32:22
your time at GE and what you've said in
00:32:24
your book what would be your most
00:32:25
hopefully most value-adding advice to
00:32:28
Larry Culp looking forward now and he's
00:32:31
looking forward I'm sure and with
00:32:34
enormous pressure to get a write in two
00:32:36
months ahead
00:32:37
one I actually think it's I think it's
00:32:40
probably a good thing that Outsiders
00:32:41
coming in and bring in an outside in
00:32:43
perspective I'm a big believer in
00:32:45
bringing outside perspectives and he's
00:32:47
been on the board for a few months
00:32:48
enough to have a little hint of inside
00:32:50
insight so I think I think bringing that
00:32:52
outside perspective is helpful at this
00:32:54
time so I would encourage him to keep
00:32:56
that fresh perspective I would encourage
00:32:58
him to like also like communit one
00:33:00
what's your vision we need to give him a
00:33:02
little bit of time but he's buddy be
00:33:03
pretty clear that he has a thesis and a
00:33:05
vision for the company he's got to
00:33:08
recognize there are some strengths in
00:33:09
the company I mean gee
00:33:11
it's a really good company it still
00:33:13
makes things in the world that the world
00:33:14
needs you can't discount that there are
00:33:16
good things about the company what's his
00:33:18
plan the future of manufacturing
00:33:20
digitization clean tech and then what is
00:33:23
the focus on the near-term challenges
00:33:26
the cash that challenges that have to
00:33:28
happen GE Capital a lot was sold off but
00:33:32
yourself the good stuff first you don't
00:33:34
get you you're left with a lot of things
00:33:35
that are harder to sell off so in some
00:33:37
ways the job is hard to clean up the
00:33:40
things that needed that are on ongoing
00:33:42
part of cleaning up it's not like they
00:33:45
that I mean smart people tried to do
00:33:47
that so he's going to have to continue
00:33:49
that path of simplification and figuring
00:33:52
out what what's going to make sense so I
00:33:54
think he's got to do both things shore
00:33:56
up the now and continue to give us a
00:33:57
vision for the future and there's a lot
00:33:59
to work with
00:34:00
thank you on that near the end of the
00:34:02
book you write that after 27 years of GE
00:34:05
you might have stayed a little bit too
00:34:06
long I think many people feel that way
00:34:08
about me probably and in that regard
00:34:12
though passing up Apple along the way
00:34:16
they're giving a lot of thought to that
00:34:18
what's next
00:34:20
building on what you know what you've
00:34:21
done what you said in the book yeah well
00:34:23
I am one I've been focused this year and
00:34:25
getting the book out I wrote it for a
00:34:27
couple of reasons one anyone to
00:34:28
chronicle kind of the innovation evaders
00:34:30
journey in a big company it's not easy I
00:34:32
wanted to chronicle the struggle I feel
00:34:34
people at mid to early career need some
00:34:36
encouragement so I wanted to do that so
00:34:38
I feel like I've accomplished that this
00:34:39
year and I'm going to reenter business
00:34:41
in a much different way I'm gonna try to
00:34:43
take some advice in my book I'm gonna
00:34:44
get out I'm gonna give myself permission
00:34:45
to try new things discover figure out
00:34:48
what my story is probably beat some
00:34:49
ideas be beaten up in the process but I
00:34:52
I have a I like to begin again so I'm
00:34:54
going to be looking for places where I
00:34:56
can come in and kind of start over again
00:34:59
in a business context Thank You Annette
00:35:01
Beth Comstock thank you for joining
00:35:03
knowledge of Wharton today thank you
00:35:04
very much thank you thank you for an
00:35:07
excellent
00:35:10
for more insight from knowledge at
00:35:12
Wharton please visit knowledge Wharton
00:35:15
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00:35:19
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