Learning and leadership by Jeffrey Immelt

Most people know about General Electric (GE), the most admired company on the planet, and its charismatic chief executive, Jeffrey Immelt. But here's something you may not know. At the core of Immelt's leadership philosophy and of GE's innovation engine is a concept as simple as it is powerful. In today's rapidly and ever-changing global business environment, the basis for success is not how much you know, but rather how quickly you can learn. Call it leadership through learning.

Immelt himself had to learn the CEO ropes quickly. His first day as the ninth chairman and chief executive officer in GE's history was relatively calm. But on his second day, September 11, 2001, the world changed forever. It was into this tumultuous environment that Immelt's leadership mettle and ability to learn quickly were tested.

Learn quickly he did. In his nearly five years at the helm, Immelt has guided GE in reshaping its business portfolio, making landmark acquisitions in health care and entertainment, and reducing the company's dependence on financial services. He has also been a driving force in reforming executive compensation, including his own, to be more closely linked to company and stock performance. As a result, like his predecessors in the GE corner office, Immelt has proved to be a guiding light, offering management ideas and practices for other companies to follow.

More About Jeff Immelt
Immelt began his GE career in 1982. Over the 24 subsequent years, he has held global leadership roles in GE's plastics, appliance, and medical businesses. He became an officer of the company in 1989. Immelt graduated from Dartmouth College in 1978 with a degree in applied mathematics and earned his M.B.A. from Harvard University in 1982.

He recently joined me in a discussion about innovation and learning for "Leadership by Example". Here are excerpts from the conversation.

How did learning become a foundational philosophy for you?

From a very early age, my parents emphasized education. They believed that a good education was the great social equalizer, something that stays with you your whole life and that allows anyone to live their dreams. At GE, I have the chance to see real learning and continuous improvement in action around the company and at Crotonville [GE's renowned training center].

On a day-to-day basis, how do you learn?
I benefit from the chance to meet and talk with just about anyone in the world. One of the perks of my job is that anyone will have dinner with me -- at least once. All you have to do is be curious about important issues and forward enough to go and meet with world leaders, thought leaders, social leaders, and other CEOs. So I can be out there learning from these people all the time and gaining new experiences.
What's the link between learning and leadership?

Every time we sit down to assess our people on leadership and decide who we want to promote, we look carefully at their ability to learn quickly. We believe that this is a core aspect of success in today's environment. We see it as a constant theme of good leaders. Almost every great CEO whom I've met is focused on continual learning.

At a macro level, I think learning is going to bifurcate society. You're going to see people who want to keep learning, especially about scientific or technical things. They're going to be fine. But those who don't are going to be left behind. There's going to be a broad separation of opportunities between those who keep learning and those who don't.

In the U.S., the college system is excellent. But the secondary education system is where people get separated. At GE, the largest source of our charitable giving and volunteerism is secondary education in math and the sciences. We put our money where our mouth is vis-à-vis the importance of education, especially in math and the sciences.

How do you bring an outside perspective into the company?
One thing we've done with all of our employees as part of the Crotonville experience is to make them go out and benchmark hundreds of companies every year.

Who do you benchmark, and what are you measuring?
The three companies that we have benchmarked the most are Toyota (TM), Dell (DELL), and Procter & Gamble (PG), each for a particular reason. From Toyota and Dell, we're looking at and learning from their process excellence. From P&G, it's their marketing and commercial excellence. If you compile a list of all the companies that we've benchmarked and take the top three, these are the ones that we admire the most.
To get a lot out of benchmarking, you have to pick up not just new ideas, but the processes around the ideas that these companies have been able to put in place to make them work. Ultimately, that's what's going to be the kind of thing that changes a company like GE.

Who are some of the business, social, and other leaders who have really caught your attention?
I'd have to put Warren Buffett, Steve Ballmer, and Bill Gates on this list. I also get together as a member of a small group of CEOs around the New York City area. The others are Sam Palmisano [IBM], Ken Chenault [American Express], Steve Reinemund [PepsiCo] and Bill Weldon [Johnson & Johnson]. The five of us have gotten together once a quarter for the last five years to talk about important issues facing our companies and our jobs.

Outside the business world, there are quite a number of different individuals who I learn from, but one good example is economist and Columbia professor Jeffrey Sachs, author of "The End of Poverty: Economic Possibilities for Our Time". He has been a very important guy to learn from vis-à-vis social and environmental issues.

How do you think about growth and innovation for a company as large as GE? For any initiative to have an impact, the numbers have to be gigantic.

What we try to do is not run GE as one big company. Rather, we try to break it up into individual businesses and initiatives. And then we try to make size a source of growth, not an impediment to growth.
For example, five years ago, we were doing less than a billion dollars in China. Today we generate more than $5 billion in revenue there. In order to grow like that, we have to be able to leverage our size in a way a small company cannot.

It's hard for a company as large as GE to grow at, say, 40 percent a year, the way a $15 billion company might. But we're constantly looking for and finding ways to make size an advantage for us, not a disadvantage. Following this approach, I think we can consistently grow at a multiple of two- to three-times the rate of GDP.
In the history of innovation, it's generally understood that incumbents defend and protect, whereas new entrants attack and innovate. Do you agree with this premise?

I don't think it's necessarily true. What I would say is that if you're an incumbent, there's always a danger that you will protect what you have and become blind to new market factors. But the fact of the matter is that, when you know a marketplace the way we know health care, energy, consumer finance, and our other businesses, you can really dominate and innovate.

I tend to be a big fan of knowing a lot about markets and combining in-depth market and customer knowledge with a real predisposition for change. With that combination you can drive real innovation.

To that point, it's hard to find a company as enthusiastic as GE about destroying its own creations.
That's very true. I think its part of this company's DNA and something that Jack [Welch] helped create that endures today. But I also think that you have to combine this attitude with really in-depth market and customer knowledge to pick up on the trends and chase them down.

How valuable is sports as a laboratory for learning and leadership? You played football in college at Dartmouth. If you think back to your own development as a leader, what role did sports play for you?
I think it's huge. Sports combine a bunch of important things. It's about competitiveness; it's about teamwork; it's about knowing when to lead and when to follow; and it's about dealing with both success and failure.

I think competitive, collaborative activities, of which sports is a good example, all help shape very important skill sets for the business world. We look for people who have had teaming kind of events -- such as the military, sports, or theater -- activities that have forced people into group situations and made them learn how to collaborate and compete.

Three Leadership Lessons From GE's Jeff Immelt
Success in today's dynamic world is based less on how much you know than on how quickly you can learn.
Broaden your scope and experience by meeting and speaking with the smartest people you can outside your company.

Sports or other competitive collaborative activities are an exceptional way to develop leadership, teamwork, and the ability to deal with success and failure.

How do you bring an outside perspective into the company?
One thing we've done with all of our employees as part of the Crotonville experience is to make them go out and benchmark hundreds of companies every year.

Who do you benchmark, and what are you measuring?
The three companies that we have benchmarked the most are Toyota (TM), Dell (DELL), and Procter & Gamble (PG), each for a particular reason. From Toyota and Dell, we're looking at and learning from their process excellence. From P&G, it's their marketing and commercial excellence. If you compile a list of all the companies that we've benchmarked and take the top three, these are the ones that we admire the most.
To get a lot out of benchmarking, you have to pick up not just new ideas, but the processes around the ideas that these companies have been able to put in place to make them work. Ultimately, that's what's going to be the kind of thing that changes a company like GE.

Who are some of the business, social, and other leaders who have really caught your attention?
I'd have to put Warren Buffett, Steve Ballmer, and Bill Gates on this list. I also get together as a member of a small group of CEOs around the New York City area. The others are Sam Palmisano [IBM], Ken Chenault [American Express], Steve Reinemund [PepsiCo] and Bill Weldon [Johnson & Johnson]. The five of us have gotten together once a quarter for the last five years to talk about important issues facing our companies and our jobs.

Outside the business world, there are quite a number of different individuals who I learn from, but one good example is economist and Columbia professor Jeffrey Sachs, author of "The End of Poverty: Economic Possibilities for Our Time". He has been a very important guy to learn from vis-à-vis social and environmental issues.

How do you think about growth and innovation for a company as large as GE? For any initiative to have an impact, the numbers have to be gigantic.

What we try to do is not run GE as one big company. Rather, we try to break it up into individual businesses and initiatives. And then we try to make size a source of growth, not an impediment to growth.
For example, five years ago, we were doing less than a billion dollars in China. Today we generate more than $5 billion in revenue there. In order to grow like that, we have to be able to leverage our size in a way a small company cannot.

It's hard for a company as large as GE to grow at, say, 40 percent a year, the way a $15 billion company might. But we're constantly looking for and finding ways to make size an advantage for us, not a disadvantage. Following this approach, I think we can consistently grow at a multiple of two- to three-times the rate of GDP.
In the history of innovation, it's generally understood that incumbents defend and protect, whereas new entrants attack and innovate. Do you agree with this premise?

I don't think it's necessarily true. What I would say is that if you're an incumbent, there's always a danger that you will protect what you have and become blind to new market factors. But the fact of the matter is that, when you know a marketplace the way we know health care, energy, consumer finance, and our other businesses, you can really dominate and innovate.

I tend to be a big fan of knowing a lot about markets and combining in-depth market and customer knowledge with a real predisposition for change. With that combination you can drive real innovation.

To that point, it's hard to find a company as enthusiastic as GE about destroying its own creations.
That's very true. I think its part of this company's DNA and something that Jack [Welch] helped create that endures today. But I also think that you have to combine this attitude with really in-depth market and customer knowledge to pick up on the trends and chase them down.

How valuable is sports as a laboratory for learning and leadership? You played football in college at Dartmouth. If you think back to your own development as a leader, what role did sports play for you?
I think it's huge. Sports combine a bunch of important things. It's about competitiveness; it's about teamwork; it's about knowing when to lead and when to follow; and it's about dealing with both success and failure.
I think competitive, collaborative activities, of which sports is a good example, all help shape very important skill sets for the business world. We look for people who have had teaming kind of events -- such as the military, sports, or theater -- activities that have forced people into group situations and made them learn how to collaborate and compete.

Three Leadership Lessons From GE's Jeff Immelt
1) Success in today's dynamic world is based less on how much you know than on how quickly you can learn.

2) Broaden your scope and experience by meeting and speaking with the smartest people you can outside your company.

3) Sports or other competitive collaborative activities are an exceptional way to develop leadership, teamwork, and the ability to deal with success and failure.