Nanotech? Check. Molecular medicine? Got it. GE's Jeff Immelt is building the future, one billion-dollar business at a time.
How would you like to have Thomas Edison and Jack Welch as your warm-up acts? Four days before 9/11, Jeff Immelt took the wheel of the global empire of media properties, financial services, consumer electronics, and jet engines collectively known as General Electric. Today, the 47-year-old CEO is betting billions of dollars on everything from nuclear energy to the next Friends. As helicopters whirled in and out of GE headquarters in Fairfield, Connecticut, Immelt talked about China, wind power, and why he won't listen to John Doerr.
WIRED: You have some pretty huge shoes to fill. Do you ever find yourself thinking, what would Jack do?
IMMELT: Sure, then I pick up the phone and call him. Jack's a very good kind of predecessor, because he never says, "That's crazy. I'd never do it." What he'll say is, "Here's the way I'd think about it."
How different are you from Welch?
Jack's a PhD chemical engineer, and maybe because of that he's suspicious of technology. I came up through sales and marketing, where you very quickly learn the difference between a commodity product and a great one. Innovation sells itself.
Thomas Edison didn't have to think much about China. You just got back.
Every year China graduates 10,000 new electrical engineers. I think about China in three dimensions: the ability to sell into China, the ability to source from China, and the risk of competing with China. In my working lifetime, the first two are huge. Luckily, the last will be insignificant.
Cisco has some serious Chinese competition.
That's the anomaly about IT - so much of it is a commodity. Which is why John Chambers makes sure that Cisco's value is more than just selling boxes. There are 20 companies that sell routers.
So, it's the revenge of the material world?
You have to have the physics, but yes, the most important piece of building a jet engine is expertise in materials. That's why we're so excited by nanotechnology. We're looking at superlight alloys that can make aircraft engines half the weight they are today.
Is nanotech a future $10 billion GE business?
I'm not smart enough to say today whether 20 years from now GE will have a nanotechnology division. The good thing is that I don't have to be that smart - we can afford to cover a lot of bets.
You're not big on acquisitions.
I don't want GE managers to think we can just buy our way into every new idea. It's something I'm trying to fight against culturally. Organic growth has a substantially higher long-term return.
John Doerr would give you an argument.
That's what VCs do. I like John. He'll give you the most persuasive argument why you're a dumbass unless you buy into his 10 best ideas. Well, I go to our guys and say, "You're crazy if you invest with Kleiner Perkins. You ought to be developing computer-aided diagnosis or predictive failure analysis or whatever it is yourselves." I just signed off on $20 million to buy a startup that does video compression. I said no to our guys twice; I just wiped the floor with them. But we needed it, so I caved.
You're running a $130 billion conglomerate at a time when the days of the big, do-everything company are supposed to be over. Let's be optimistic and say you maintain GE's famous double-digit annual growth for a decade. Can you imagine - let alone manage - a trillion-dollar company?
We don't run it like a $130 billion monolith. We have 13 businesses, so you look at each one and say, OK, our medical business is a $10 billion business in a $4 trillion industry. Our energy business is a $20 billion business in a $200 billion industry. Every day, I get up and try to make size an advantage. Size means you never have to say, "It's a great opportunity, but we can't get there."
So, where are you putting your money?
Five years ago I was running a medical business and became convinced that molecular medicine was the future. This year, I spent $9 billion to prove it. We have big bets on security, oil and gas technology, Hispanic media, and water technology. In those industries together, we had zero sales in 2000. This year, it's $7 billion. We can take a $10 million idea and turn it into a billion-dollar business better and faster than anybody in the world.
What role do tax incentives play?
You can't base long-term investment decisions on government policy - it's too capricious. We just got into the wind business, but I didn't say yes until we could demonstrate that the technology would take us to 4 cents a kilowatt. Right now business is booming - and driven by subsidies. That's great. But the real way for the government to affect my long-term decisions is to help develop big, transformational technologies with broad applicability and multiple layers of risk. Hydrogen is a good example - it's not going to happen without a big government platform.
How much can be learned about leadership by reading a book?
I'm a voracious reader. Twenty percent of what I read are business books. I read all the journals. I read biographies, novels. But leadership is a learning-by-doing thing. There's no one I admire or love more than Jack Welch, but I've watched so many people try to copy him. It doesn't happen. Leadership is an intensive journey into yourself.
