« Freakonomics Radio

452. Jeff Immelt Knows He Let You Down

2021-02-17 | 🔗

Not so long ago, G.E. was the most valuable company in the world, a conglomerate that included everything from light bulbs and jet engines to financial services and The Apprentice. Now it’s selling off body parts to survive. What does the C.E.O. who presided over the decline have to say for himself? 

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
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If you'd like to listen to free economic radio without ads the place to do that is sticker premium five dollars a month and you can get a free month trial by going to stick your premium dot com and use a promo code freak. You also get access to all our bonus. Episodes and you'll be supporting our show to that sticker premium. Dot, com, promo code, freak thanks. So there is a silly question that a lot of authors get asked, which is why you rate this book silly cause- it's usually obvious, but in your case, don't think it's such a silly question, because a u dont need the money, let's be honest and be you don't have a tale of triumph to tell so. Why did you write the book? I say really two reasons I felt like the story had been out there but lacking context and quite honestly not always be true. Fleet told, and the second thing is tat.
leadership is crisis leadership and I have a lot to offer to the debate that is Jeff em out I worked g for more than thirty five years. I was the ceo fur. Sixteen and yes gee. That's general Electric gave him out a lot of experience with crisis leadership lived and lead at a time of immense volatility, and change always did my best. Something's worked in something's did ok, let's start with what didn't work out when email, inherited the ceo position in two thousand one from the legendary Jack Welsh. The stock brace was around thirty eight, alors representing a market capitalization of just over four hundred billion dollars. When em out left in two thousand seventeen, the stock price had fallen to around twenty five.
Hours with market cap of round two hundred and twenty billion a drop of roughly forty five percent, and now for years and to see Ios later John Flannery lasted just fourteen months and Larry. Cope now has a job g stock has fallen. Even further in the company is only worth around a hundred billion dollars or one slash four of what it was when Jeff came out took over in two thousand and one as recently as two thousand and five GE was still the most valuable company in the world. Today, it's not even in the top one hundred of companies when ranked by market cap. The financial collapse is only part of the story for decades general electric as the quintessential american Corporation, a combination of scientific ingenuity and muscular execution. It was founded in the eighteen
nineties to capitalize on the inventions of Thomas Edison, including his light bulb for years its headquarters. were in Schenectady New York built up around and Edison's own machine works. I happen to have been born in Schenectady G was the biggest fixture on the horizon. Literally, famous cursive logo, visible for miles in the night sky and economically to it was by far the biggest private employer in the region and many would say, the best employers Gee had grown into an industrial conglomerate, making airplane genes and locomotives gas turbines and medical equipment. During the Jack Welsh ERA, it became a much broader conglomerate, expanding into financial services, insurance, commercial, real estate, even the NBC television Network, some of its growth was spent.
Particular just as the economy in California is larger than that of most countries. Jeez finance, Gee Capital was bigger than most banks, but in the past decade, plus g, he has been selling off body parts to stay alive, including last year, its iconic lighting division. In two thousand teen g was removed from the DOW Jones Industrial Average, it had been the last of the original twelvemonth and then there are the allegations of accounting and other financial fraud wrought by the Securities and Exchange Commission and the Department of Justice. in two thousand nineteen g agreed to pay a one point: five billion dollar penalty for its misrepresentation of the sub prime residential mortgages. Its old there the two hundred million dollar penalty last year for violating a number of accounting and anti fraud provisions and a similar, fifty million dollars.
penalty. In two thousand nine. Most of these alleged violations happened on Jeff Imelda watch. Although in a recent book called lights out about jeez decline, the Wall Street Journal reporters Thomas brighter and TED man right that fudging, the numbers with a standard g practice that went back at least to the Jack Welsh ERA The exposure of this practice can help explain the decline of general electric, but there were other reasons to according to his critics. Jeff emails strategy to modernize, the old industrial company was erratic, wayward eyeing, high and selling low, as he shuffle Jeez portfolio and placing bad bets barking up in the oil and gas sector, for instance, just in time for oil prices to tank so yeah. Those are the things it didn't work out for Jeff amount when he was
CEO of General Electric, the things that did that with the shorter today and for economics. Radio how emailed one the ceo job in the first place, Stephen near death experiences, are really good. Few one big reason things went sideways Gee, which amounts as no one could have prevented. We were kind of collateral damage. If you will we hear about his bitter end, What were the last month's like they were excruciatingly, sad and why Jeff amount will forever be marked, quite literally by the company that got rid of him. I google TAT too, Danbury, because I wanted to be far enough away that maybe nobody would recognize me? That's all coming up right after this I'm fine.
this is free. Nah mix, radio, the podcast, but explores the hidden side of everything. Here's your host Stephen abner I have to say you are my favorite kind of sea. Yo to interview a former ceo, because, when you're in the job it seems like. There is very little incentive and time honestly to really say anything interest Now you can speak your mind. You find that liberating you got a little bit more time to think about things when you're in the job it such an intense seven by twenty four job, They still have a desire not to trash people like that. I am able to be a little bit more frank for sure. Jeff emails, new book
is called hot, see what I learned leading a great american company. He doesn't trash alot of people in the book is primarily a defence of his performance which, not surprisingly, he rates substantially higher than his critics do this interview with email is part of an occasional series. We call the secret life of a ceo, we ve John Mackey from whole foods. Ingenuity who was then CEO of Pepsico and into doesn't eighty in. We had Jack, Welsh, insults, predecessor at G here is a relevant exchange from that welcome you. In length Ninety nine, not long before you retired from Jean. You said that your ultimate success would be determined by how well your successor grows accompanying over the next two many years when you said that jeez market cap was up north, the foreign and fifty billion. Now it's almost twenty years later, it's just north of two hundred billion, so talk to me about
I know that you I'd out jobs about that, you don't we, I mean it's public wreck. You gave any way you want, but I I haven't imagine my successor once in the twenty years and I dont engendered by now. You gains archway anywhere you want I'm. Where the right guy on a nod you gave numbers and one from those numbers would question how well I did that. I had not commenting, and I you, if you wanna, get me a black man, Gimme a black mark. I did the best. I could I take the eye. So why did Jack Welsh pick Jeff email, how did it may put himself in opposition and then what went wrong? Email grew up in Cincinnati where his father worked thirty eight years, for you guessed it general election
in the aircraft. Vision must was clear, wasn't sourcing of purchasing fan, blades and castings, and things like that. You know we used to go to an airport and watch planes land. We never miss and Open house where we would go, see, building eight hundred and see how engines were made just loved their loved, the business love the company Jeff amount studied math Dartmouth and got an mba at Harvard between. He worked briefly Procter and gamble where he was buddies with future Microsoft. Ceo Steve bomber after business school email took a sales job in the plastics division. Jeanne. He would go on to run or help run plastics appliances and healthcare. So I'm gonna tell you Jeff Mice, favorite G invention, and then I wanna hear years looking so my favorite story is about a physicist.
named Bernard Vonnegut, who worked at G research in Schenectady who discovered that if you fly up in an airplane and add droplets of silver iodide to the clouds you and make it rain. Okay, but even better his little brother Kerr worked as a pr guy for G there. You go for sure and then could, of course, when entourage These amazing novels with all sorts of fantastical elements, and I like to think that his big brothers G, whether experiments, played a role in Kurt Vonnegut na variety, the so that's my favorite g invention. What's yours, I always go to healthcare just because said so identifiable saw, I would say it somewhere between the altar fast see tee, which can freeze the beating heart. So you, can really diagnosed vascular problems in circulation problems
then I will go from there to the altar sound, a handheld ultra sound, which is sold in India in Africa. I have always found that there is just a great intersection between technology in solving problems. Ok, Years beats mine. I mean at least in terms of you no good for the world. So let me ask you this: when you look back at the technology that was either invented- were perfected or acquired during Jeez history. Its breathtaking to me that one company did all that, but in the well, let's say: thirty years: the innovation were much slower coming when it became more about selling off something's inquiring, others, it were often establish. So how did it firm that was so innovative, stop being so innovative. I would push back just a little bit you'll soon. We spend our time on investing in technology.
And then the industries that we ran like aviation and health care energy, we would be viewed both by patents filed and by customers and the markets is kind of the industry innovator. So there was certainly part of my strategy. I would say the differences so much of the innovation today is driven by information technology data and analytics, and this was something weird the change. But any coffee Could we wind a lots of stuff over time? The company would have made even bigger and more profound. that's in those areas earlier. I know that you who believed and invested in a software vision for g to harness the customer in other data that generated by your various machines and that really didn't work.
It did make me wonder: is the era of that kind of conglomerate? Just over oh gosh, I think the era of somebody that those jet, pensions tv shows that insurance that's over. As is investors, don't want it it's too hard to manage, I think, being able to do more type connected with aviation and power. Maybe health care. I think that's born. There is reason to think that's going to endure if you think about the conglomerates it today, talking about Amazon and alphabet, they haven't technical foundation, I would say G had, at least in the beginning of my career. Our foundation was management practices. It's like that, that's unimportant, but that wasn't enduring really- and I think when you look at the Amazon, their dominant software company and in some way
they perform everything. They do feeds off. That Google was dominant, a company everything they do feats of that right. So I think if you wanna be a conglomerate today, a technical foundation is a bust yeah, but their core is built around technology. That is also very scalable and very flexible, whereas what you We're doing still involved a lot of physical things with sunk costs, spur it all over the world, and that just seems like a hard thing to do. If you stepped back. I think What we saw as are core competency was the global framework infrastructure quit that rotating equipment and in the digital context for howdah optimism. Please get productivity, Dr Safety, and so we were relevant. a year and a hundred and fifty countries around the world because of the mix of businesses that we had not doesn't mean they dont cycle.
aviation on nine eleven was the world's worst industry right and then for fifteen years. It was awesome and then with covered its moral force, industry trade. So I think we need to separate natural, followed totally from a company that was basically winning the businesses. We were at from a market share standpoint, but it wasn't because they were cycle free. so you write about this incident back when you were running plastics, most of plastics, and you missed your and your earnings estimate by a law, fifty million dollars, which was really something at the time and as you right, Jack, Welsh, CEO Grey, you add a managers conference and said Jeff you had the worst year in the entire company. You are the worst person in the entire company, but he didn't fire you and interestingly Welsh
when he was starting out at g. He blew the roof off factoring. He was expecting to be fired, he hadn't been so I'm curious. What that event did for you, how that set you up to keep succeeding their Stephen near death experiences are really good. Few growing her, you know I'm through many of them, but being able to survive your own failure is part of life and part of a business career and nobody has a perfect career and I didn't it also to come. He bit like I could live. Then. Basically, he wasn't going to define how I thought about myself. So I told it look Jack. I'm gonna fix this and if I dont you have the fire Be able to quit say you became famous for hitting your numbers from there are now been really. The story of g during that period was a company that hit its numbers in Wall Street loved and the stock boom because of it, but the more posts
whoredoms that are done Angie, especially in this book lights out by two, whilst regional reporters, the more we find that allow those earnings were just pumped. You know inflated that, There were a lot of different ways to reach your earnings targets, including some really creative and aggressive accounting that was going on across a lie. the divisions that g for many years. So I'm not expecting you to come to any specifics or point any fingers, but looking back wasn't that a counter productive institutional practice. Well, what I learned growing up in G was how to be a good operator how to invest in growth. Habitat productivity how to manage cost those kinds of things interwoven in this story is always gonna, be the growth of financial viruses and financial services is less a historic I just been more fluid because, if the way reserves or die, and then things like that, but even in
power, where the way orders were booked and accounted for They had a time in the way that their predicted against an. Unreasonable and not realistic timeline. It just sounds as though there was a culture that was pronounced the Welsh and continued under you that led to a situation where you got back into a lotta corners. Is it not the case? So all accounting, a tea, was bottoms up. All of it. We pay extra auditors, hundreds of millions of dollars a year through your books, We had a twenty percent disclosure committee. There was made up of middle of managers that prove everything we said Emily. We ever dead we're rich favoured by the FED. For six years I had to audit committee chairs, one was retired, a ceo of tape, you Morgan the other than was the retired commissioner of the US. He see, I know what's been written Stephen, but all I can tell you.
what we tried to do so. Ok, Jeff, you were a g lafer at one point: you are in a bake off to replace Jack. Well, dear the youngest sky. By quite a bit why did you win if no, I never feel is no, because these are things you don't know. I would say to a certain extent, in a big company, your peers, promote you and not the other, guys didn't, but I had really good pure relationships at that time. That certainly helped. So you reward is getting to replace Jack well too, Fourchan magazine named manager of the century, so tough warm up act and there's a story tat the book this encounter just before you
an appointed to take over. This was at a dinner in London, where a legendary british executive, as you call him, says, to Welsh Jack. How do you do it? How do you get a fifty p? Let's praised earnings ratio for this to Socrates, how'd, you get a fifty p with that baggage. You ve got me g and you re how you are shocked that someone would say to his face what Shirley other people were thinking. This was right before you get the big job. Obviously the big job is extremely desirable. Did That comment, however, make you want to run just a tiny bit in the other direction. You know everybody roared with laughter the guy said it, and I realise that what with the Joker Zombie really strikes me, they read about the complicated history of G during Jacqueline's. His tenure ensures that you need
to make a lot of decisions, often under time pressure and like any human. That makes any decision. You often have incomplete information, and the stakes are. keenly very high, so I hate to say it, but the primary lesson: took away from reading. Your book was don't be a Theo? It is frickin impossible for FUCK's sake I would say in the last twenty years have just been filled with me. You know, so I basically went to work less about eighteen, eighty, it from nineteen. Eighty two, two thousand I ever seen a terrorist cover. They didn't know what they were really ever. Nine. Eleven happens in progress, she might happen, the financial crisis and covered, and so let us today almost haven't seen any people act, kafkaesque events, so, among other things, yet some pretty bad timing. I mean look, you become CEO just in time for night eleven you, I would say not only nine, eleven but Enron,
you were maybe the biggest trust me company and then you trip over her into a world where there is no trust. That's a big change. Give me your thumb nail of getting settled that first year to trying to figure out, what the company actually was and where needed, to go yet so the ritual things just get through nine right. We not only were bigger the aviation business, but we're a big and the aviation leasing business we had insurance product in, but it was just a panic here. We used to have these nightly calls and we had to lend airlines money to keep them going. Let's at nine o clock at night, you're too, after nine eleven and that she Catholic, I say we need to buy two dollars. Have American Airlines Double BT seas by tomorrow morning, and you know my question is what the deficit He sees me for having no delay which will retire about some making decisions like that was hard. I mean at least it's good for the G capital members right yeah. We made some good loans
but that we started willing away on how do we start reinvesting again in technology that can help industrial business and we started planning a path of saying look. All of our industrial businesses need to be retooled even NBC right, even though, that large our goal was to make G capital smaller, but keep it but keep it. We had to let you can go for awhile, because we needed the cat the decision we made was to try to do that in the context of continued, oh earnings pressure, because it was the only lie which investors understood and was that the kind of path dependence that weltered set you on that you had to hit that dividend number look at me. I just think it was it's the kind of company you were. It was the kind of company we were look at. It probably had a window to reset the company after nine eleven and not doing it probably wasn't mistake. So I kept us on that path. It has started work in,
the financial crisis hit those people to say you should have seen the financial crisis coming, and I recognise that. Maybe there are things that differently, but None of us really saw that as a terrorist right was so uncovered happen. My first reaction was you know, lifting source. It wasn't that bad right, it's prince, felt dislike a thousand times worse. You can make use of prepared, but you better be good at volatility in his new book. Female traits about the immediate aftermath of nine Slash eleven and the double whammy. The GE faced a huge hit too many of the core businesses, as well as a huge drop in its stock price. I tried to stay calm. He writes Gee was getting crushing. I heard from several shareholders, including our biggest one. We didn't real Gee was so big an insurance. I wanted to say I ve. Never
hidden it didn't. You examine our holdings when you bought our stock. Instead, I kept quiet, it is hard not to picture how Jack Welsh might have played things differently when Welsh was CEO, the markets love G stock in part because he made them love it by force of Will Stock markets are full of numbers, but those numbers are driven by stories and wealth sold. The g story enthusiastically and aggressively Jeff em out didn't hear again as well. RO about that shareholder call after nine eleven. Instead, I kept quiet. The markets seem to punish him for that that, in the simple fact that just email wasn't Jack, Welsh so by the time of the global financial crisis, G looks a lot like a financial services
company in hot seat, you re after Lehman brothers went bankrupt. I knew it presaged, not just the beginning of a down cycle for g, but the destruction of our business model, I'm guessing a lotta. People did not see that that was the destruction of your business model, not appreciating how reliant big g as you call them was on G capital can use our line were how intertwined and why you saw how bad this is going to be for you. We were what was called a wholesale funded finance company so basically we would borrow unsecured dead because we had no industrial cash flow and will return play and then we can lend that money out at a higher rate and the difference between what we could borrow
before and what we can lend money for created a very profitable financial services company in a banks had deposits. We had some deposits, but we are basically prohibited pre financial crisis from having deposits because we want to back holding company. So when I haven't brothers went down, it was really a missile into the unsecured dep market, more than anything we were kind of collateral damage. If you will and we were big, we're a huge, so the cat creation of our size, plus. The fact that we worked funded by deposits was a real one to punch. This is a crisis that came at you and way when they were, regulators went ultimately, which is probably exactly what they should have done just really disadvantaged us. It was really bad for G. Specifically, it sounds like the treatment is extremely bad. It was
hard to grow. It was costly. There was a huge challenge and you know it wasn't gonna be like a month or two: there is no vaccine. Let's say it was, can be permanent. So you re that after reading, I think was the first draft of the Dodd Frank legislation which set forward some regulations for the finance and banking industries. You say you felt that the federal government had pointed a candidate g specifically that they didn't want big financial institutions to also have an industrial arm, There may be a handful of others, but it really was at us and basically the first draft said we were gonna have to split off g capital from G which at that moment, in two thousand I wish you said: no wait even think about doing it. It was hard to consider what we would have to do so, like I said this, crisis came out us in waves, and this was another wave, so I'm sure TIM Gate had good reason to suggest this. I'm sure it wasn't folly
Why do you think that you had been singled out? I dont know exactly because seven. I never had a conversation, but my son was they probably boys had in mind of making us have fed regulated entity. I think they basically felt like for a financial institution to be the biggest share capital it needed to be under FED, regulation saw, I think, to a certain extent. They may have looked Ellen two steps and not one step, but I don't know September of two thousand seven. This was afforded to dollar stock and head broad support of investors and Allison. You know we're executing a strategy that seems to be working in was appreciated by our customers.
to you and our investors, so I never play victim, but I think that's just the fat, but others saw the facts differently after the break I know that there are people that feel like. I let them down, and you know I think, but every day of my life- and it is this- Now we should say that use single handedly got Donald Trump elected think, but please please don't go that that's coming up in a minute. Also, please keep Europe is open for the newest podcast to join. The economic radio network is called to dear breaks the, internet featuring the Columbia University sociologist severe thank attach. He is also the author of Gang leader for day. You can see right now to sue dear breaks, the internet. So dear, is s you d, each eye are you can hear
preview now on any podcast app and the first episode will be out just how devoted was Jeff him out to General Electric the company he led for sixteen years and worked out for more than thirty five consider the story of the meat ball on his hip, the meat, all, is what g employees call their famous circular logo, so ever daughter, she's thirty four now, but when she was a teenager, I used to always say that I was gonna get a tattoo and She would just say yet dad big talk, no action, blah blah blah so one day I finally time into it today, I was in my office in fearful on Saturday, that's Fairfield Connecticut, where G had moved it.
Quarters in the nineteen seventeen. I google TAT two Danbury because wanting to be far enough away. The baby but he would recognize me damn. there is a little over twenty miles from Fairfield, and so I drove the different Connecticut went to a tattoo parlor. There's a woman, tattoo artists than I showed her? The g meatball I put on my wife's initials on top and my daughter's initials on the bottom She said why do this? I so I work at sea and I played a bowling league and I lost a bet. So this is what I have to do. My daughter comes home like three hours later and I showed it to her and she hits the floor. She screams. So you know sometimes year dad. You have to go the extra mile email. Plainly loved g and for a long time it loved him back the epilogue of the boy.
I mentioned earlier lights out is titled. Jeff is a friend when the authors, Thomas, greater and TED Man interviewed emails. Former coworkers those colleagues would routinely start off by saying. Jeff is. friends, but an then laid lay into him for all the bad things that happened on his watch. He did invest about a hundred seventy five billion dollars in acquisitions to grow the company's life sciences and alternative their g portfolios, among others, but there was another four hundred billion dollars of divestment as Imelda sold off the storied plastics division, major parts of G capital and and b C universal. The thing is for a long time, email felt his plan to streamline and reshape the company was working for the markets weren't buying. At one point, the activist investing from Tryin partners took a big position in g which earn them sit down.
Email in Fairfield they presented and eighty page white paper, whose title beautifully summed up Jeez dilemma transformation underway. But nobody cares. We were pivoting from fifty fifty financial thus fail to more industrial, that's not something you do with a day or two or weak, or to that takes time. I'd like you to talk for just a second about and you were ceo, your role as a de facto ambassador for american capitalism. Really at one point or another, you interacted many many heads of state around the world. What did they typically want from? you and what did you want from them? The first thing is: I try to maintain good relationships with all the administrations and the Secretary of State, and things like that, so I never was This freelancing, I always tried to understand here's. What the? U S? interests are so, I could meet with him.
Bastards and things like that. So that's number one. I think if you want to be a good cop accompany you have to know how to make money in a country, and you have to know how to make money for country so, You have to be able to say things like hey, I want to sell you a jet engine, your highness bucket, I am also creating two hundred jobs, so let's talk a little bit about politics. At least the interface a company like yours and an administration keeping in mind. You know the financial crisis happening. The end of the book to hear and then the beginning of Obama's first term in an interview. You did with sixty minutes around this time. You write that Leslie Stall head said that most Americans see big corporations is greedy and selfish, and you pushed back you everybody in Germany Routes for Siemens, everybody in Japan, routes for Toshiba. I want you to root for me, so
does America, in your view, or at least a significant portion? America, just not lake capitalism, oh gosh! So I'd say: first of all, we had built our company to went around the world and we were either the first or second largest exporter after Boeing Right, so exporting creates incredible jobs, that of every to each other. There would be a in the supply chain, so it created. lots of competitiveness for the country, and the point I was trying to make with Leslie was, you know, exporting as a way to make a strong country at its heart, its harder than Almost anything else- and you should criticise us for that like I live the generation? Let's say from roughly nineteen You need a twenty twenty, where the wave of productivity hit hard information, technology and yell, certainly in the early part
so that time, shutting got factories in the? U S. Moving them to Mexico were doing backrooms in India. Are things like that? I think everybody view that as a common business practice and that anything we can do to be competitive and guess what that is that wasn't sustainable long term and it's hard to portray yourself as a it citizen, while that's happening earlier, in the Obama administration as part of the recovery from the great recession, the President asked you to chair the council on jobs and competitiveness in Europe. That you are really impressed with a bomb as intellect, but as you re o bomber, didn't quote empathize with the business community, I'm curious. What do you think were the biggest ramifications of
that may be up to and including the election of President Trump. A few years later, I was present also the job of the presence of creating jobs and whoever could help him create jobs in the. U S was a friend and whoever didn't was not a friend and things like tax repatriation behaviour that is whining from companies in terms of tax repatriation or the lack of repatriation keeping money out of the hands of U S. Tax collectors, weirded g rank among the offenders. We were on that list for sure by the summer retired seventy percent of revenues outside the union states, and so people made money around. The world looks like from the target list for sure. Suffice it to say that for a company that many people still think of his bed, a powerful, rich american company, you weren't contributing to tax coffers as much as that person like realise exactly because we were big US,
did you ask them? What they would say is an exercise that everybody should do is to go to any town and interview twenty five small or medium business people, because we all We say we love them, but I think both parties gotta the way to make their lives miserable in different directions. Yes, the indifferent directions. Tell me the ways in which party does that. Oh, I would say on the democratic side regulations for sure answer Play the more recent republican party, just volatility, volatility, globalization and different things like that. So when people ask me, I said: go create your own index of small and medium business, people and figure out what their lives are like, and if there are healthcare costs are going up fifty percent a year, it doesn't matter what the present of saying about you know how good a policies working they don't like it. Then we should say that you, single handedly, got Donald Trump elected the
please, please don't go there. Well, maybe not single handedly, but for those who don't recall the connection, you know G owned and be the universal at the time which air the reality showed the apprentice without which Donald Trump probably want to become even close to prison. I mean clearly the apprentice was a platform for him, but nobody when we're Through the apprentice ever said, there goes the present hissed eights affliction, it funny thing. Anyone ever said it No, you I understand are on record as Republican did you vote for him once or may be twice now by their voted for no, the imo, wrongly Republicans, others, twelve of us left. Can you assess, however, some things he did from a business community perspective as president that were beneficial. Oh, so Similarly, I would be very clear that I dont in any way make a comment about
supporting. What's happened, the last six months or a year. Really I don't I will say I believe in this regulation. I believe that everybody should help smaller. medium sized business and that's tended to be the way I've thought about politics, but I just think nobody, myself included, can support what's taking place the last six months. So let me just get back to the large picture there to mean stories that G observers tell about the downfall of g as we knew it one is it Jack, Welsh propped up the share price by bluster in bs and by mean a brow beating his directly ports into generating profits, even if those profits were only on paper and that he therefore left accompany behalf and that was in decline or disarray which you Jeff Emel, as incoming sir,
YO tried to modernize and globalize. That's one story, the other stories it you inherited agree. If you, slightly greying company and try to remake it in your image and wound up destroying it with a series of bad acquisitions, embed decisions, no which her story, people tell the ending is always the same, which is bad. So what's your version? Look, I guess I would just say two things. You know the results of the company. over the time I was there. We were number one in the industries we were and we set up a global foundation way ahead of others, other people that have adopted the initiatives that we started have one big right. So that's one piece, the other peace, including in the where one, the two I think markets were tougher, the tale of G.
Was longer and more volatile than we recognised. The people that I put in place at cheap power didn't do as good a job as they should have and at the end we have too much going on for the board an eye on that. So I will let others can applaud how they want to put that. But those are the two pieces. I give you so Jeff. You wound up stepping down as the EU a few months earlier than expected. Why'd you do that and what were those last month's lake, oh gosh. The answer to your first question is that we all felt there was probably the best interests of the company I guess one thing I'd like people to know what I know, not everybody. What can be the benefit of the doubt? Is I really love the company and I love the people and I always try to do the best for them more with less
a slight they were excruciatingly said this was my life and it wasn't gonna turn out the way I wanted to to, and I felt like I let people down, and that may be really said so after you left things got much worse for the company, the share, pray, his dropped. Much much more, there's been a pretty unbelievable, really dismantling of the conglomerates and deal J and, as he see investigations into improper accounting, including during your tenure, are you concerned about civil or criminal charges against you? Personally, I get I a lot that stand on its own. I will just go back What I described to earlier, which is to say, we bent over backwards to do it right. We had detailed transparency with our board. We had the best auditors that money could buy. We,
a multitude of relief and reviews, and things like that, so we tried our best to get all those things right. I am curious. What do you say aid to the long time shareholder, you know if it's a retiree, if it's a former g employed himself who watched the stock price just get pummelled. If I were to corner you at the firstly store and say you know you kind, I screwed up my retirement. What do you do with that? Even look! I'm sorry! I don't blame you for the way you feel here's. What we tried to do here are the actual results of cash flow generated and dividends, paid and earnings generated in market power, I should like to point out the context of what actually happened.
I end by saying I had every penny not that this great consolation, but I I never saw the share of cheese stock. I had every penny of my for one can t stock. I was always in it with everybody else. ok, but you had a lot more pen he's got out, I say, and it's not that doesn't give people, but I always start by saying that I understand the way you feel I really do, but here's what we tried to do, still own summer, all budget stock I saw a lot of you stock and I just bought some recently. I don't mean to put you on a couch here, but I'm curious. You sound conscientious enough in self aware enough that I'm guessing you feel a lot of guilt, you know your career ended poorly, but it was very good career for which you are obviously paid very, very well, and then the company is bad shape. Now is ETA killing of go. When you talk about looking back, I just I don't want to put a word on it. All that
people say I am. I don't hide, and you know I'm gonna try to continue to make. Contributions as best I can, these days Jeff emailed splits time between, Still South Carolina in Coastal Northern California, teaches a leadership Classic Stanford and he's a partner in venture capital. Firm, called new enterprise associates where he focuses technology and healthcare. So, at the beginning of your new boycott, see you rate about the inspiration for the book you doing a cue, nay, with the leadership class at you teach at Stanford, and this was right after Fortune magazine, unpublished, apiece called what the hell happened to G and it mostly argued you know I hate to say it to your face, but it mostly argued that Jeff MO is what happened to G E was a very critical pizza and one of your students asked you about the article, and you said:
I know some feel, but I have let them down in that will weigh on me for the rest of my life. So I'm curious. What does that feeling How much does it way on you now, a couple years out, o gas, there's not a day that I don't think about it, and that's despite the fact that you know I love what I do now, a very happy I have friends. I have a professional career that I enjoy a fan that I love, but there is not one day that goes by that sit back and say: I wish the site price war it was. I wish people were writing those things. I wish eight than certain things differently and I thought every day I live, have those moments. You know regional blocs. Easy to you're. The one doing at your podcast lesser should keep that it might just.
DE melts book. Co written by the journalist, Amy Wallis is called hot. That is our show for today will be back next week. Until then care of yourself and if you can, someone else to economics, radio is produced by stature and rendered radio. We can be reached at radio at for economics, dot com. This episode was produced by married to Duke our staff also includes Allison Craig low. Mccluskey Red, ribbon, Zactly Kinsky, Matt Hickey an immaterial help this week from Jasmine clear. Our theme song is Mr Fortune, but hitchhikers. All the other music was composed by Luis, carry the can.
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Transcript generated on 2021-03-09.