20VC Jeff Immelt on Leadership Lessons from 16 Years as CEO @ GE, Incumbent Innovation; Why Some Have Failed and Other Succeeded, When Boards Have A Positive vs Negative Impact on a Company & The One Fear Startup Founders Are Allowed To Have

In this episode of 20 VC, Harry Stebbings interviews Jeff Immelt, venture partner at NEA and former chairman and CEO of GE. Immelt discusses his experience transforming GE, emphasizing the importance of leveraging scale in innovation and the challenges legacy companies face when adopting new technologies and cultural changes. He reflects on the pressures of CEO succession, the necessity of a supportive board, and the role of trust and loyalty in leadership. Immelt also shares his insights on managing fear and criticism, the value of perseverance, and the impact of having a strong personal support system. Additionally, he touches on the current state of venture capital and the need for companies to prioritize market fit and adaptability. Throughout the conversation, Immelt underscores the significance of education and tackling global issues like climate change and wealth disparity.

• Jeff Immelt, a venture partner at NEA, has an impressive background.
• He served as chairman and CEO of GE for 16 years.
• Immelt transformed GE's strategy, re-established its market leadership, and significantly increased emerging market revenue.
• He is on the board of Silo Nanotechnologies and Twilio, indicating his involvement in technology and healthcare sectors.

"And today we're joined by an individual in the hot seat who's been voted the world's best CEO not once, not twice, but three times in the past." "And prior to entering the world of venture, Jeff served as chairman and CEO of GE for 16 years, where he revamped the company's strategy, reestablished market leadership, and quadrupled emerging market revenue."

The quote highlights Immelt's recognition as a top CEO and his successful tenure at GE, where he led significant strategic and market changes.

• The CEO succession at GE in 2000 was a highly public event, unlike typical quiet transitions.
• Jeff Immelt was one of three candidates in a competitive process.
• He was informed over Thanksgiving weekend and had to meet with the then-CEO and the board in Florida.
• The process was stressful and the final selection brought relief rather than joy.

"Whereas most CEO successions, they are done quietly, this was done loudly, with three of us kind of competing for the job, if you will."

The quote describes the unusual and public nature of the CEO succession process at GE, which was competitive and intense.

• Upon being named CEO, Immelt felt relief initially, due to the intense selection process.
• After a brief moment to catch his breath, he began to consider the responsibilities ahead, which led to nervousness.

"So what basically happened was the process was so excruciating that fundamentally, I just wanted the process to be over."

The quote reflects Immelt's initial feelings of relief after a grueling selection process, before the weight of the CEO role's responsibilities set in.

• GE's innovation strategy capitalized on leveraging scale to turn size into an advantage.
• Successful innovation areas included global expansion, life sciences, and clean technology.
• GE built a $20 billion wind business and had significant success in life sciences and international markets.

"So the places where innovation worked were places where we could really leverage size and make size an advantage."

This quote summarizes the successful aspect of GE's innovation strategy, which focused on areas where the company's size could be used to its benefit.

• Immelt's experience with GE, a conglomerate, taught him to manage complexity and leverage ideas across various businesses.
• During his tenure, GE achieved organic growth of 5-6% annually, which is significant given the company's large revenue base.
• GE's early clean tech initiative in 2005 showcased its ability to identify and get ahead of market trends.

"You learn how to be a systems thinker. You learn how to look both horizontally and vertically in a market, and that's where things can take place."

The quote emphasizes Immelt's approach to managing a conglomerate like GE, focusing on systemic thinking and cross-sector innovation.

• Introducing new ideas that also require a cultural shift can be difficult for established companies.
• GE's early foray into the Internet of Things and industrial internet faced challenges due to the need for new talent, culture change, and internal leveraging.
• While GE built a decent-sized software business, the complexity of integrating new initiatives within a legacy company was a significant challenge.

"We started Internet of things industrial Internet initiative in 2009. We started it before anybody else got there and we could see the power that data was going to have on the machines that we made."

The quote outlines GE's early recognition of the potential for data and IoT in industrial applications, highlighting the forward-thinking approach to innovation despite the subsequent challenges.

• Jeff Immelt acknowledges his failure to rapidly change the company's culture to embrace new digital technologies.
• As a result, new companies have taken over many of the spaces previously dominated by legacy companies.
• Legacy companies struggled with adapting quickly enough to compete with smaller, more agile startups.

"I couldn't change the culture fast enough to grab kind of the next wave of digital technologies." This quote highlights the difficulty in shifting an established company's culture to keep up with rapid technological changes and the resulting missed opportunities.

• Jeff Immelt suggests that he would have partnered with startups or tech giants like Salesforce.com or Microsoft to create a separate currency and platform for innovation.
• He emphasizes the importance of having a compelling value proposition to attract talent.
• Immelt reflects on the advantage legacy companies have with their established use cases and global reach, which startups often lack.

"I would have either bought a part of a startup company or done a joint venture with maybe Salesforce.com or Microsoft and created a new co created separate currency and really be able to give a platform for the people to plug know." The quote indicates a strategy for legacy companies to stay competitive by leveraging partnerships, acquisitions, or joint ventures with innovative firms to foster a culture of innovation.

• Immelt discusses the challenge of recruiting and compensating talent in a way that is competitive with startups.
• He suggests that legacy companies need to create a separate currency if they cannot match the compensation offered by startups.
• The conversation touches on how some legacy companies, like Walmart, have successfully adapted by acquiring startups and investing in talent.

"You have to solve the comp problem, really." This quote underscores the necessity for traditional companies to address compensation issues to attract and retain top talent in a market where startups can offer competitive salaries and benefits.

• Immelt reflects on the shift in value within the S&P 500 from industrials and financial services to technology and startups over the past two decades.
• He expresses a belief that legacy companies can achieve anything with the right mindset, despite acknowledging that this may be a naïve perspective at times.

"In the year 2000, industrials and financial services, let's say between those two it was 40% of the s and P 500 value, now it's 15%." This quote provides a statistical perspective on the significant change in the market value distribution among different industries, highlighting the rise of technology companies.

• Jeff Immelt talks about the need for big companies to project confidence while being realistic about their capabilities.
• He mentions how important it is to set ambitious goals but also to listen to critical feedback from trusted individuals.
• The importance of having a team that provides constructive criticism rather than just opposing ideas is emphasized.

"Big companies run on momentum and you need to be able to talk a big game. But behind closed doors, know what you can do and can't do." This quote captures the balance a leader must strike between inspiring confidence in their company's direction and understanding the practical limits of what can be achieved.

• Creating an environment where leaders are open to feedback and dissenting opinions is crucial.
• Immelt stresses the importance of surrounding oneself with trusted individuals who have diverse perspectives.
• He critiques modern management theories that advocate for listening to everyone, suggesting that it can be as problematic as not listening enough.

"You need to be around people you trust, really, you need to be around. You've got to have some people around you that you've been through the battles with and that you trust." The quote emphasizes the value of having a trusted team that can provide honest feedback and contribute to better decision-making.

• Jeff Immelt discusses the importance of discernment in leadership, particularly in the context of startups.
• He advises founders to be selective about the advice they take and to have a keen sense for what is beneficial for their company.
• The conversation acknowledges that successful leaders like Jeff Lawson of Twilio are discerning listeners who do not listen to everyone all the time.

"I think having this kind of on switch and off switch, being able to pick out what's really important, discarding things that aren't helpful, that's what I try to coach people on, and that's what the best founders know how to do." This quote suggests that effective leadership involves knowing when to listen and when to ignore distractions, focusing on what truly matters for the success of the company.

• Immelt shares his experience transitioning from managing a corporate board at GE to participating in startup boards.
• He enjoys the role he plays in startups by choosing areas where he can contribute the most based on his broad experience.
• He expresses a preference for private boards over public ones and describes the best boards as joyful and the worst as contentious.

"I know how to sell, I know how to globalize, I know how to hire managers. I know what really bad shit looks like." The quote reflects Immelt's confidence in his ability to provide valuable insights to startup boards based on his extensive experience in various aspects of business management.

• Boards can maximize momentum when things are generally positive.
• Boards often struggle on a company's worst day.
• It's essential to consider how board members will act during tough times.
• Good board members prioritize the company over their own reputation.

"When it's a question of maximizing momentum, boards can be really helpful... I think boards are typically not that good on the company's worst day."

This quote emphasizes that boards are most effective when a company is performing well and maintaining momentum but may not be as effective when a company faces significant challenges.

"I always say to the CEO, when they're bringing in board people, don't picture them today. Picture them on the worst day."

Jeff Immelt advises CEOs to evaluate prospective board members based on how they might react during the company's difficult times, not just during the good times.

"Too many board members put themselves first. Their own reputation, and not enough board members put the company first."

Jeff Immelt criticizes some board members for prioritizing their own image over the interests of the company, suggesting that a board's effectiveness is compromised by such self-interest.

• A good board member transfers credibility to the CEO when needed most.
• The story of Jamie Dimon and Lee Raymond exemplifies the ideal board member behavior.
• Board members should be supportive and not self-serving during crises.

"So that's what you want. You want a board that is able to transfer their credibility... to the leader, to the CEO, in the very worst day."

Jeff Immelt highlights the importance of board members who support and bolster the CEO's credibility during challenging times, which is crucial for leadership.

• Insecurities may cause board members to focus on their own image.
• Effective board members should prioritize the company's needs over personal ego.

"Everything else is just wasted motion. Everything else is just scratching your ego or something else."

Jeff Immelt points out that board members should avoid actions driven by ego, as they do not contribute to the company's success.

• Effective leaders absorb fear rather than amplifying it.
• Simplifying problems and focusing on immediate solutions is key during a crisis.
• Good communication is essential for leadership in uncertain times.
• Leaders must be able to envision a future beyond the crisis.
• Crises reveal the true character of team members.

"You want people that can kind of. The fear stops with me, people that can simplify and just say, okay, what problem do I need to solve today?"

Jeff Immelt describes the need for leaders who can contain fear and focus on solving the most pressing problem during a crisis.

• True behavior of individuals is revealed under pressure.
• Trust in team members is critical for navigating difficult situations.
• Leaders must be discerning about who they rely on during challenging times.

"You never know anything about anybody in a good day. You can only sense them, like, at five minutes to midnight."

Jeff Immelt discusses how crises are the moments when a person's true character is revealed, which is valuable for leaders to understand who they can trust.

• Trust is not the same as loyalty.
• Leaders should expect loyalty to the company, not to themselves.
• Diverse perspectives, including cynicism, can be beneficial.
• The current challenge for HR in tech is fostering company loyalty.

"I think it's hard to inspire and be aspirational if you think everybody around you starts at zero."

Jeff Immelt argues that starting with trust is more conducive to inspiration and aspiration than starting with skepticism.

"Trust is not loyalty. People confuse trust and loyalty."

Jeff Immelt differentiates trust from loyalty, emphasizing that trust is about believing in someone's capabilities and character, while loyalty is about commitment to the company.

• Leaders should define success for their teams and be transparent about it.
• Satisfaction can come from overcoming significant challenges, even amid criticism.
• Leaders like Jeff Bezos and Elon Musk have built valuable companies on their own terms.

"Probably the best year my team and I had, best two years was 2008 and 2009 during the financial crisis... We made it to shore."

Jeff Immelt reflects on a time of crisis as the period he and his team performed at their best, despite facing harsh criticism, illustrating the importance of resilience and determination in leadership.

• Jeff Immelt acknowledges that everyone faces criticism and that it can be difficult to handle.
• He emphasizes the importance of self-reflection, self-renewal, and perseverance.
• Immelt suggests that no one truly has thick skin, but people can choose to take the high road in response to criticism.
• He highlights the prevalence of criticism in today's world, possibly exacerbated by social media.

"Everybody lies and says, I've got thick skin. Nobody has thick skin. Sorry. Nobody has thick skin. You just choose to take a high road."

This quote underlines the common misconception that people can be impervious to criticism, suggesting instead that the key is to consciously choose how to respond to negativity.

• Jeff Immelt discusses the importance of having a support system, including family and friends, to cope with professional challenges.
• He kept his family insulated from his professional life, which helped maintain normalcy and provided unconditional support.
• Immelt also mentions having CEO friends, like John Chambers, who provide support on difficult days.
• He advises students to be the kind of person who supports others in tough times.

"You need a few people around you who are just in it for you, who are just there to have your back and to be with you."

This quote stresses the value of having a close circle of individuals who support you for who you are, rather than your professional success.

• Jeff Immelt believes that a certain level of fear and paranoia in founders is healthy and can drive success.
• He emphasizes the importance of having board members who can provide perspective and reassurance.
• Immelt advises founders to focus their fears on product-market fit, as other aspects like funding and team building can be supported by others.

"Be a slave to the market. Be a slave to your market position, but don't worry about so many other things."

The quote suggests that founders should prioritize their concerns, focusing primarily on achieving and maintaining product-market fit.

• Jeff Immelt acknowledges the fallacy of the self-made success story, pointing out that many wealthy individuals had significant advantages from the start.
• He admits to struggling with taking his own advice about having thick skin.
• Immelt lists curiosity, kindness, and persistence as the traits he most wants his children to adopt.

"We did it on our own. There's so many people that think they were self made. But most rich people started with a big head start on everybody else, and they need to remember that."

This quote challenges the narrative of self-made success by recognizing the advantages that often contribute to wealth.

• Jeff Immelt expresses a desire to see improvements in global education through access to great teachers.
• He is optimistic about making strides towards solving major world issues like climate change, wealth disparity, and healthcare.
• Immelt looks forward to continued progress and impact in the coming years.

"I'd say we'd be on our way to solving two or three of the world's biggest problems. Climate change, wealth discrepancy, affordable health care."

This quote showcases Immelt's hope for the future and his belief in the potential to address significant global challenges.

• Harry Stebbings appreciates the insights on leadership provided by Jeff Immelt.
• The conversation covered various aspects of leadership, personal growth, and the importance of support systems.

"So many incredible nuggets of wisdom and takeaways on truly great leadership."

Harry's closing remarks highlight the value he found in the discussion with Jeff Immelt, particularly regarding the qualities of effective leadership.