|Jeffrey Immelt, GE chief executive, at the United States Military Academy, West Point, New York, Dec. 09, 2009.
Jeffrey Immelt, General Electric’s - - GE - - chief executive, on Wednesday in a searing indictment of American corporate leadership, said of his generation of business leaders:"Tough-mindedness, a good trait - - was replaced by meanness and greed - - both terrible traits. Rewards became perverted. The richest people made the most mistakes with the least accountability. In too many situations, leaders divided us instead of bringing us together. As a result, the bottom 25% of the American population is poorer than they were 25 years ago. That is just wrong."
General Electric is America's biggest business conglomerate. In 1892, inventor Thomas Edison's Edison General Electric Company merged with a competitor, the Thomson-Houston Company and formed the General Electric Company. GE was one of the original 12 companies listed on the newly-formed Dow Jones Industrial Average in 1896 and is the only survivor. Jeffrey Immelt is the ninth chairman of GE and succeeded Jack Welch in 2001.
Last month, Lloyd Blankfein, the head of investment bank Goldman Sachs, apologised for his firm's shared responsibility for the financial crisis but Jeffrey Immelt's speech at the United States Military Academy, at West Point, New York, was one of the strongest criticisms by a senior American corporate leader of the compensation and business practices that dominated before the financial crisis.
Speech: “Renewing American Leadership”
"I was recently at an event with some unemployed steel workers. Their stories are truly sad. They just want to work. They want to be led. What is my responsibility? What will your responsibility be someday? Technically, nothing. Financially, nothing. We do not have to care. But we should," the GE chief said.
He added:"It begins by people telling the truth. We do have to compete to be great; we must improve training and education; we cannot protect everyone in a global economy. In my career, I have had to deliver difficult news that I believed was in the best interest of the enterprise. At the same time, ethically, leaders do share a common responsibility to narrow the gap between the weak and the strong. I have taken on the challenge to increase manufacturing jobs in the United States. These are the jobs that have created the midwestern middle class for generations. Manufacturing jobs paid for college educations, including mine. They have been cut in half over the past two decades."
Immelt, who is a member of a business advisory group established by President Obama, said business should welcome government as “a catalyst for leadership and change.”
He said GE would continue to shrink its financial services unit GE Capital, which accounted for around half of the company’s profits as recently as two years ago. He said it was wrong for the US economy to have “tilted toward the quicker profits of financial services” at the expense of the manufacturing industry and research and technology investments.
- "Great leaders match vision with execution ..Let me give you studies in contrast. One of my heroes was President Reagan. President Reagan was very charismatic. He could give speeches all day long and you would never be bored. At the same time, he was responsible for an aggressive reform agenda that forever changed our country. On the other side is the Chinese government. Talk about boring! But they are executing their eleventh “five year plan.” They do exactly what they say they will do. They will likely be the biggest economy in the world someday. Man, these guys are good!"
- "We can lead this energy technology renaissance. We should rebuild our nuclear power infrastructure; be a leader in natural gas exploration and usage; find ways to produce energy with clean coal; develop more cost-efficient renewables; deliver the next generation of transportation, using hybrid technology. Leadership in energy will insure our global competitiveness and security."
- "I have been frustrated by our growth in India. We have missed opportunities because of our bureaucracy. So I moved one of our most talented leaders to create a "mini-GE" in India. I am giving him complete delegation of authority to pick up the pace."
- "I needed to be a better listener coming out of the crisis. I felt like I should have done more to anticipate the radical changes that occurred. To that end, about twice each month, I invite one of our top 25 leaders to a Saturday session where we talk about the company, the future and each other. At that session, we are "two friends talking." I encourage an open critique of each other. Listening in this way has built trust and commitment. My top leaders want to be in a company where their voice is heard."
- "In the Fall of 2008, in the peak of the financial crisis, it seemed like the world was going to end every weekend. I had weekly board calls, making frequent decisions, and doing things I never thought I would have to do. I am sure that my board and investors frequently wondered what in the heck I was doing. I had to act without perfect knowledge; I had to act faster than my ability to communicate or explain my actions. I could do this because we had built trust. And we kept GE safe because we moved fast."
- "We are launching a new Corporate Leadership Staff. These will be the best and brightest of our 22 to 30 year olds. We will give them accelerated experiences and training. The goal is to have them ready to run a big business by age 30."
- "The problem with size is that it can be too slow. At GE, we must push decision-making down in the organization and we must delegate more. But delegation, in a risky world is tough. It isn't natural to give authority away, but that is what a 21st century leader needs to do. They have to empower others, and they have to develop the kind of followers who will make a call when it is the right thing to do."
- "America has seen so much economic growth that it was easy to take it as a given. But, we started to forget the fundamentals, and lost sight of the core competencies of a successful modern economy. Many bought into the idea that America could go from a technology-based, export-oriented powerhouse to a services-led, consumption-based economy - and somehow still expect to prosper. While some of America's competitors were throttling up on manufacturing and R&D, we de-emphasized technology. Our economy tilted instead toward the quicker profits of financial services."
- "Technology is what makes people and countries feel wealthy. Technology is also the source of competitive advantage. An American renewal will be built on technology."