you I do remember a little bit he did he worked in corporate when he was at GE and it is really with great sadness that that I'm here today in his memorial and I'm sure he was a great colleague and friend so you have my sincere regrets so you know what I what I thought I'd do today because I got very strict instructions from your leadership team not to make this a G commercial I'll do that in QA I
won't miss that I won't miss that opportunity what I thought I'd do is uh global about the world but talk mainly about leadership what I view is kind of some of the attributes of good leaders of this generation and and and then let you let the conversation go wherever you want to take it so I think if your CEO of a company that you have to have kind of a point of view of what's going on in the world and and you've got to invest
around what that point of view is so I would say there's kind of five big themes that that I think about from a standpoint of running GE that you know the first one is just the reordering of the global economy you kind of see that each and every day I joined you in 1982 in the decade of the 80s the developed world really generated about 80% of the economic growth in the next decade the emerging markets developing world will
be 80% of the of the economic growth with all the volatility that's in Europe the big message is that Europe will be a slower growth region you know my sense is that these problems have a way of getting solved but what it means is you may have you know another five or ten years of relatively slow growth in Europe for a businessman of my generation you I've already seen 25 years of slow growth in Europe so you
know you're a little bit conditioned for what that might actually what that might actually mean and aren't overly you know I'd say we're all concerned but but let's see that so reordering of the global economy number one I'd say the second big thing is just the the notion of productivity and cost the whole aspect and focus on having what I call more products or more price points you know as merging markets grow and even as
customers in the developed world have to have to have you know lower cost products we're going to have a lower cost high quality generation of oh geez and you've got to be able to sell products at lower price points and make good margins you know one of the staples of our healthcare business is NMR scanner that has certain field strengths 1/2 Tesla and you know it typically gets sold for 1/2 to 2 million
dollars in the vast majority of applications you know we're developing a product in China they can want to have Tessa amar that can be sold for $500,000 and it's got 55 or 60 percent margins and so you know you're going to have to have a real sense for productivity resource scarcity in some way shape or form your generation is going to live with with resource scarcity and what that means two things really one is that
the resource rich parts of the world are going to be quite interesting you know no one should have to explain to any businessperson China and India today you know if you don't already have that by the time you get a Stanford Business School there's not one thing I can do for you you know fundamentally but places like Angola are going to be quite interesting in your lifetime you know the the stands Kazakhstan Uzbekistan these are going to
be quite interesting there will be some form of reemergence of Russia over the next few years so a focus on both resource rich parts of the world but also on conservation technologies and what do you do post oil spill in the Gulf and how do you how do you take on these big you know kind of conservation economies are going to be quite important so that's that's the third thing the fourth thing is just the notion of being a networked
world you know I don't say that I say that post substantively from a standpoint of what you can do from a from an information technology standpoint but also just the importance of collaborations innovation joint ventures you know a lot of what GE does today in a growth standpoint is in the form of joint ventures Intel and GE are going to do a 50-50 joint venture in home health we couldn't get there
necessarily on our own they couldn't get there on their own but having the ability to be networked and collaborative from a substantive and strategic standpoint is also is also quite important and then the fifth one is just you know the state economy you you are in a going to graduate from here with the government intersecting more with business than in the last 28 years of my career you know basically when I joined
in 1982 there was a complete disassembling of government impact on business for almost 30 years whether the Republicans get back into power in the US this is unlikely going to stop in the short term and then you add to that Brussels I mean 60 percent of G's outside the United States Brussels Beijing all the other governments in the world are quite influential so this notion of being able
so so these are the five things we think about as background in terms of how do we plan our strategy and and and what do we do and we take it very seriously from a standpoint of how we view it now the the lectures on leadership so that's why I'm gonna spend the rest of my time really talked about because I you know my thesis is that leadership has almost no shelf life that basically the things
you're learning you know while you're here I hate to because you've showed out a fortune for your education going to be pretty irrelevant relat relat of lee seun so you know it's a you know so you have to be kind of thinking about what's next and we spend about a billion dollars as a company on education and we kind of do it in four attributes my first advice we spent a lot of time when people join the company your career is
going to have to be deep first in broad second the notion of leaving here as a general manager is not going to happen you've got to be good at something and we want our people to be good at something whether it's a function like finance or marketing or whether it's a business like wind power thing things like that so you're going to build a career that's deep first abroad second I grew up in a generation where basically
people were taught general management nothing is managed generally any more so so I would say that is a very profound difference between the world I grew up in the world that you grew up in then we do a lot of training on leadership and I'll talk a little bit about some of the traits that we tried but we try to match the way we assess people and what we're trying to train them on and we believe a lot in continuing education and we learn
from others we study people as diverse as Google and the US military academy to get good techniques to how to train leaders then we rotate we've got 50 big pls inside the company and we rotate them in about every 18 months to do team-based training how do you invest for growth how do you make sure you win how you benchmarking your competitors we make sure to give every business kind of an update on on on on leadership and and
how they execute better as a team and then the fourth thing we do is a lot on you know really the the predominant theme for me right now in G is managing a global enterprise so we work a lot on the hardware and software of how do you manage a company as diverse and like I said we're we're probably a hundred billion dollars outside the United States I joined you in 1982 the whole company was twenty four billion dollars
now we have 40 billion dollars just in the emerging markets alone so it just shows you kind of in one generation how much a company can can change so that's that's what we do one leadership so now what I thought I'd do is just change gears and kind of give you a you know kind of ten things and I'm thinking about visa vie what the next five or ten years of leadership training leadership
development some things you ought to be thinking about as you're leaving here and starting your career and the first one is what I would call analytical listening analytical listening you know why did the financial crisis happen what could we who are running companies what could we have not known and learned about faster how can you do a better job of kind of opening up outside forces and still you know you know running a
company at the same time so analytical listening surrounding yourself with people you trust listening to them matching with data and and working with it in 2007 I was at the GE Capital Board meeting and we saw a deal come in and it had no in financial services and this was a private equity firm that was going to borrow money on a deal that they were doing and they were able to get more debt than the size of their deal there
were no covenants they could basically reset the loan in 24 months right and I said this is strange right this is not the way capitalism was meant to work you know and so we didn't improve the deal and I hired Mackenzie and I spent three million dollars with McKenzie and said I want you to go study is this liquidity massive liquidity going to hat you know go on forever and they came back sixty days later and said
absolutely this is so this is going to happen you know don't worry about a thing you got all these sovereign wealth funds you got all this other stuff going on so I tried to listen I swear you know I really I really did but I think what we've tried to do what we try to replace that with is finding the people you know finding the people the right critical stuff about GE the naysayers who are the
naysayers out there and giving them a voice inside the company and when I talk about analytical listening I talk about really having Red Team Blue team having the people that are your worst critics letting them inside where you are and that you know that's a way that you have to be break down the barriers of of how you listen but I've never met one successful person in any field of life who wasn't a great listener who wasn't
curious about stuff and you're going to have to have a career of leadership that's all about that the second one is adaptability and perseverance and just being able to deal with volatility you know this is just more volatile world this is just a more volatile world I mean we're dealing with you know there hasn't been really a global business person that's thought about Greece for 2,500 years right and now having fun
Philly now now man it's like friggin Greece you got to be kidding me you know so so you know there's something about the world we live in it's just more volatile it's it's interconnected and so you know you want to cover like mine that's got 285 thousand people it's 160 billion dollars in revenue you've got to run it with an operating plan you know yet yet the world that your managers are dealing with is just more volatile than it used
to be and and you've got to find a way to buffer your investors or your employees from these wild swings and in volatility and you know that's something that I think you know quite important in the way you know the way we try to do it is recognized you know just how volatile the world is how adaptable you have to be and there'll be businesses that basically I run you know I run without an operating plan for 2010
I have rough boundaries and where they're going to go and then the other businesses that I have tight controls over and then in 2011 maybe the businesses that didn't have as tight a plan and 2010 will have a tighter plan but but managing your careers and and being managers that know how to how to deal with adapt abilities really is really good you know from - from 1982 until 2003 fundamentally the price of
oil was $15 a barrel the US economy really grew for about four and a half percent every year baby boomers from their peak consumption period those were twenty pretty good years I just think we live in a generation now where about every two or three years you are going to be shocked you know I mean we I oh you know we own NBC you know and seeing when squawk box is on on Sunday night I know something for hon but that's too
much too much volatility the third thing is just the notion of managing and being very open to managing relationships connections a lot of you I don't know how many people here will go to IT startups and things like I'm sure it's big chunk you can feel free to raise your hand I'm not going to there's nothing wrong okay I just was curious but I mean you know you think about you know technically trying to be Jesus
we've got a big installed base of products and with sensing technologies and information technology you know I I basically know what every jet engine is doing in the installed base in the fleet right now you know I know the fuel efficiency I know how its operating you know we can kind of study how every CT scanner is being used but being able to know how to take this pervasive information turn it into real knowledge
that is one aspect of just what what your generation is going to have to know how to do with the other piece is just being a good partner and that's not only to other companies but it's also - you know the government you know having an ability to purr to really thrive and impact and be a you know know how to manage relationships is going to be very very important so you know I think it's more seeing things from from
the other people's point of view it's the willingness to to partner the willingness to accept information on a pervasive basis this whole area of the network society I think is is quite important fourth knows how to simplify everything knows how to create simple structures simple metrics and accountability I mean this sounds incredibly basic but when I go in after a business's failed right
when you study on TV the spill in the Gulf right do you see do you do you sense simple lines of accountability people whose metrics were aligned you know when you go into any crisis in a residual way that's what I always see we're big in the water business we've got a two and half billion dollar water business and we fundamentally did it through acquisitions we did about ten or twelve acquisitions relatively quickly
we liked this space we wanted to be in it and we we did it more in organic we did a more energy and organically than organically about three years ago the business hit the wall really hit the wall so I fly down and you know the first thing I would start you know we need a crisis how are you organized so the CEO put the organization's out there unintelligible you know we had taken all of these acquisitions and put them in
like a nice neat GE matrix so nobody knew what their measurements were who the who they work for you know and they and they and you know you sit there like in the first 15 minutes you say we are screwed you know this is you know and it metrics not aligned organization chart unintelligible nobody was accountable you know one person the CEO might have been accountable for the P&L but it was distributed throughout the
organizations so you know anytime you get that you're going to go through a leadership change right and you come back and and you know the person comes back and says you know I know we wanted to make it this deep but let's de couple some of these things and you know three years later you have real simplicity and real focus and and and that's something to always in your own life and career and in your early jobs is make sure you
know how you're measured if you go into private equity you know make sure you know how to set up clear lines of accountability that are simple and well understood really critical number five this is something every school does poorly and I would my sense is that Stanford does as well though this is a great place is we need a generation of systems systems thinkers you know people that know how to pull together disparate
thoughts into solutions there's two problems that I kind of thought while I was at Co GE that I could have some kind of impact on one is clean energy and the other one's affordable healthcare and in 2005 we launched an initiative called eco imagination and in 2009 we launched an initiative called health imagination all of them really addressing how do we make money for investors by solving big
problems at the same time is energy an innovation challenge yeah yeah kind of you know but I can guarantee an energy there will be really innovative solutions that never see the light of day is a public policy problem you bet right so when all of your world gets set by the price of a barrel of oil today and most of your assets are going to live 30 or 40 years the only thing that can bridge those two time horizons is
public policy is energy a manufacturing challenge you've ahead because unlike information technology and healthcare to a certain extent best and breed almost never wins in energy this is a study of the second best solution well executed the second best solution at low cost almost always Trump's the most innovative that's high price so if you're passionate I don't know how many people here are going to leave here and go into
an energy related field probably a bunch of you and you guys are probably passionate about the science and all that stuff you better be a systems thinker you better be a problem solver because vision ain't going to get you there and that's something that I find colleges and business goals have done a bad job of really training most most really important things that that matter really require that kind of discipline
thinking a six you know the courage and patience to see a solution through you know to many people particularly big businesses but across the board investors things like that just are just day traders you know that there's just too many people that you know doing important new things really takes time and and the ability to stick with and fund and innovation and technology through a cycle over cycle is
really extraordinarily important one of the places where we put capital a lot of capital is in you know molecular diagnostics you know we're a big diagnostics company we do diagnostic imaging and life sciences and and information technology and health we've got about a twenty billion dollar healthcare business and so you know about in 2003 you know we just wanted to make a real bet that said you know someday you're going to be able to
screen Alzheimer's and a living patient work with a work with a drug company that can the onset of Alzheimer's and and if you can take the most difficult symptoms and delay them by five years that's a 60 billion dollar savings to the healthcare system what I just described you is 12 years 12 years right so you know our investors don't always like it our employees sometimes get bored you know but if you want to do
really neat stuff over time it's going to take this incredible debt you know vision and incredible dedication to stick with a generation of technology will do the jet engine for the Boeing 787 it's a billion dollar plus program it'll break even in eight years maybe something like that so so the notion to kind of stick with things and be able to Tibet is something that really sometimes is frustrating in big
companies because we don't do it enough said this is what I've learned the hard way a couple times which is you know I think really critically important for you guys as you know a lot of you will go to work and consulting or how many people here will go to work in consulting come on be brave it's really seriously it's nothing I like consultants it's a knowing and understanding you know on and this is
something I've thought about for a long time knowing and understanding how things fail now typically it's easy it's really fun to know when things are successful what they look what they look like but knowing the mode of failure of ideas and projects and and how to get a good conversation about I guarantee that nobody on Wall Street or nobody involved in subprime mortgages really said okay you know if everything went wrong what
will it cost right I guarantee nobody ever said two trillion dollars well somebody said 200 million bucks you know they didn't do the analysis they didn't ask but this whole notion of designing systems to be reliable designing you know leadership processes for reliability that's what financial reform is about that's that's what the financial crisis is about that's what the Gulf spill is about is kind of business and ecosystems
that are just not reliable enough I go back to my aircraft engines business you know the FAA right and you want it to be this way because you we all fly planes the FAA when a plane god forbid crashes right I've got 200 people that work on Erika there's a business that this is all they do it's like poetry in motion you know they go to the side they analyze the black box they know what happened these
guys know within 24 hours basically every crash that since I've been CEO that's taken place it is not that you want to brag about that but that's a system that works and and so we're going to have to build that on a global basis and lots of different industries and being a big leader that knows how to ask not the fun question but the ones around mode of failure and being willing to dig and stick to it and ask questions until
you're satisfied that you've had that kind of that kind of focus is really really important eight something that I I were a little bit about your generation and and it's people have to know how to manage people that are different than they are you know you just too many of you like hanging around with you you know and and and that's there's nothing wrong with that but but you know when I look at some of the
angst that's in the global economy today you know basically the average American I'll say because that's where we are even though we're a global company says they're angry at Wall Street but really doesn't know what happens on Wall Street you know so that's not really why they're angry they're angry because they got left behind and they got left behind because people that are graduating from this place
fundamentally don't care about creating jobs and that's why they don't you know the day you step out of here most Americans are going to like you because they think you're affluent and you're arrogant and you just don't give a about anything but yourself and so you know I encouraged you early in your career and I'm that here you look how I'm a capitalist so I'm not here to give you any preaching stories I
say it for your own leadership skills I would find wait you know you just have to train yourself to like hourly factory workers salespeople the people on the front lines of whatever organization that you bench chemists and and learn how to motivate those people and and sit with them and understand the world through their eyes and and that's as important as anything you know you learn here you know I say this every business
where I go to the class I hated in business goal was organizational behavior hate it I thought it was boring I thought it was stupid I said like like when can we get back in finance right today I never do finance anymore right all I do is organizational behavior it's like it's like punishing me for all my sins after all this after all this time so so no no no something about that leaves from the front you know too few people
are accountable and that's something that's really important and people have to you know have to be more well-known for being in front of their companies and protecting the reputation and look this has been a challenge if you were running anybody in financial services the day the Lehman Brothers went bankrupt let me tell you you've taken some shots I sure have you know it's just you just weren't gonna there was no
place to hide when the storm started right so the difference is if you don't you know I got tougher through the whole thing about fighting for my company being willing to go and protect and be accountable and stand up for what GE was about and people don't always love us right but but we were able to maintain a reputation respect because we're accountable you know and I just think that's a that's a that's a whole thing
now most of you look and I think you should you should want to go make a lot of money you absolutely should there is nothing wrong with that nothing at all there's a few points in your career when you shouldn't make a lot of money right there's a few points in your career when you got to step back and say you know what I earned a lot of money this year I deserve a lot of money this year I like making a lot of money but I'm not
going to take a bonus why because I've been around a long time I have perspective I have context and I'm accountable for reputation whether it's deserved or not and so my message to you is not you know I want you to be aggressive and competitive and capitalistic and wanting to make a lot of money but I guarantee in the next thirty years there's going to be like two or three or four years where you will have earned a
lot of money and it's your there's no Washington law there is no board of directors that's going to tell you when the time is right to step back and say not this year not now that's got to come from you and that's why that's what people call authenticity that's what people call you know kind of accountability and you should want to be that way lastly it always helps to be a leader if
you actually like people you know it's a you know it is one of those things that's quite weird I worked for a lot of bosses in my career who didn't just didn't like people you know the last one actually did I have to say you know so he was a Welch but but you know simple things you know about treating people with respect and wanted to get the most out of them actually actually go a long ways so those are kind of five or ten
things that we try to incorporate into the way we train our leaders and and the way we think about leadership I actually like I say about every five years we try to upgrade you know you have to have a long enough gestation on how what you're training your managers so that you can drill it in your organization but you can't stay stale from a standpoint of what people are thinking about so I'd say we kind of run in a four or five
year cycle about what we're what we're trying to how we're trying to upgrade leadership and we're trying to teach people so that's my that's my that's my take on leadership you know good leader in the end what is that what is this CEO do I think you know basically I have two jobs you know I Drive change you know fundamentally the leader of a company like GE you know my job is to really is to really drive change
and to develop other people you know you've got you what you are solely responsible for the culture and the values that permeate permeate the company so let me turn you talk about whatever or whatever you wanna talk about yeah first of all thanks thanks for the talk my question is I can you talk a little bit about your early career said you started with G in 1982 and how you managed a career if you had a vision
what your thoughts on leadership were and with some of the milestones or obstacles you may have faced especially in a big company like GE yeah so I looked at it as like a five year so I went to work in 82 and I was trying our plastics business and I basically my first job was to be kind of a product manager to sell plastic into instrument panels of cars and this was in the early 80s and cafe standards had just been
passed in Detroit and this whole conversion from metal to plastic was was quite significant and so I was the I would go sell a product called Norrell into pickup trucks on on cars and I had a kind of a five-year five-year vision and and wanted to you know kind of get into sales you know in other words what I wanted to start doing was being a you know broadening my capabilities so more from marketing to sales and I think
early your career it's really about getting good at something you know being recognized for you know I was a good good sales and marketing person and I kind of grew up to the plastics business and I tried to go after tough jobs and I tried to I try to get known early on as being a good manager so I people like workers you know I wanted people to like working for me and relating to so I went
from there to running a big sales force in the organization I had probably half the u.s. from a sales standpoint so I I tried to model my first five years on getting good at something and then and then from there becoming deep and then in 1988 or 89 so I've been there maybe 78 years given a presentation to Larry paucity in the plastics business and I was doing pretty well and what recognized and then a call comes with a
and my search is is Jack Welch you know and I said Josh yeah I thought it was one of my sales friends who was just you know busting my ass on my kids so he said look Jeff you're doing great we love you in plastics but we're having this incredible compressor failure in our appliance business and I need an outside I need a young talent outside set of eyes I know you don't know anything about it but but I need a
change right now and somebody that's got the passion and and he said and I don't like any of your bosses out there you don't work from them you work for me hangs up the phone so I'm I'm like 33 years old now same thing this is what's going on here right and that job probably made Mike it was a brutal job for three years it was it was so tough but that was my break and you know I wouldn't be CEO today if he hadn't
reached down which I try to do and gave me a high-risk high-reward a job and and so that's so so you know you kind of got if you got to have a couple five-year plans and I don't think you can ever dream about being the CEO of G or P&G or something like that it's just too weird you know so much like so much luck involved and I think what you do is you build if you want a company life which is you build a great foundation of
accomplishment and networking and and things have a way you know at higher levels of companies are really taking care of themselves and if you don't do it here you can do it someplace else but I stay focused coming out here in your first five years and and it's a and do what you you know kind of like don't play for the triple bank right I see a lot of business cool kids and say okay I'm gonna I want to run G someday right
so because I want to run G someday I'm going to go to work at BCG no maybe but I just realized I know the guy that runs BCG I'm quite fond of him we are as different our experiences our capabilities are that is different as is humanly possible right so I think that's what I call like the triple banker you know I'm going to I'm going to I say if you want to join venture capital joint venture capital
going to probably you want to join a company join a company 20 when you come back to your 20 year reunion successful people be successful and and the pathways will be wildly different Jamie Dimon was my good friend and business will we've been friends for 30 years he went to work for Sandy while you know I went to sell plastic and instrument panels we booked it okay you know it kind of in the end at all it all worked
out but our pathways I moved nine times you know he say New York but were great pals we we all do we do our thing differently but we do it effectively I hope and and that's that's what happens but fall in love with your job let it let it go don't don't worry about what your classmates are doing fall in love and let it let it happen a lot of questions yeah right there now we get the mic to you of it thanks for coming Jaffa speaking of Jack
Welch you had some pretty big shoes to fill back when you took over which you've done pretty successfully that's wondering if you can talk a little bit about that transition phase and how you went about implementing your own leadership style and in the process establishing your own legacy og so I'd say if given a choice it's a lot easier to follow a failure so that'd be just uh just hey just report some advice
if you if you get that choice a leadership is really a one-act play you know and and I never really thought about my job in terms of following Jack Welch and the trick when you follow somebody famous is you got to drive change every day without ever pretending anything was ever wrong and so it takes self-confidence and it takes it takes time and you don't need to obviously you know draw the differentiation between
the two of you you know I learned a lot from Jack I think Jack was a great CEO and and it's just that you know 2010 is is different from 1997 as it is from 1927 and and and there's just really no comparison to the worlds we're in it doesn't mean that some of the fundamentals of business like like integrity and performance aren't the same but look in your life you're going to follow some successful bosses and I
think the trick is to do it your way keep your mouth shut you know just just say hey there's we have no problems really fundamentally and and let let your own pathway work and in the end that's what people want that's what our board wanted that's what our team wanted is just you know people want leadership change in a world where leadership has no shelf life and you just have to go with it yeah we're you mentioned the
idea of reversing innovation before so my question is do you think it is a main trend for the global companies to develop the technologies and products in the developing countries in future and do you see any challenges or this kind of innovation approach so we've talked a lot about this thing called reverse innovation you know companies like GE have been in you know globally dispersed for 20 years in some
cases but certainly 10 years a lot of cases and we have big research centers in in in China and India and Brazil and all over the world so when I tell what I talk about is you know we all started selling basically American products globally and then we localized manufacturing and you know kind of step by step by step but now we have great engineering and marketing teams in China and India and what we're trying to do is
understand the business models that get created in different regions of the world so that as change takes place in the developed world we can pull the technology or the or the business model and become better let's say in Chicago based on what we learned in China now one of these we've done in China and Health Care's maybe the best example of this one of these we've done in China is we got a huge health care business in
China we we develop almost all of our own products there and so you know that's where the $500,000 MRE is that's where our V scan ultrasound which is really an ultrasound with a PDA and these are products that have markedly lower price points but you know could be sold to a there's two thousand hospitals in the u.s. that don't have an mr scanner primarily rural hospitals can be sold to a rural hospital that has never
been able to afford that at a different price point so that's what we mean by by reverse innovation India is different you know what I find most fascinating about India is that it's it's not just different technology but it's a different business model you know and so how can we study the way to let's say healthcare information technology's done in India and bring that back to the u.s. that becomes a an established principle
as well now you know your world basically guys my age basically could move work anywhere they wanted anytime they wanted with no consequence so in the generation of American business leaders are more less my age we were able to do whatever we wanted to do with no consequence that's changed that's changed the advantage of a multi business company like GE is we can do a little bit of stuff everywhere and so if
if all we did was move all of our technology and all of our innovation to India or China that would make it very unpopular with our customers in the u.s. in the garden and the government so the trick is to be a drone up as a company to do a lot of different things in a lot of different places and try to optimize your technology base and your cost base to be able to do those things and that's
what you know that's what we've prided ourselves and being good at and that's what we really are trying to be good at today you know you add to that you know we've driven lean through the company for almost 20 years now you know kind of lean manufacturing techniques so we can make a refrigerator with an hour and a half of labor if you can if you have really weaned through your cycle time you can almost start making things any
place you want to relatively cost-efficient regardless of difference in wages and things like that so you know that's that's what we learned so the last thing you know just going to the person we're honoring here today you know sometimes there's we started Genpact gym packs a great company in its own day that was kind of reverse innovation really what we did is we took call centers we had the United States
and we replicated them in India with better people at a lower cost I mean you know when you get when you get that you know when you're replacing people that have a high school education with people that are PhDs who you pay less sometimes that works you know that's that's a so but you know I was convinced that we would choke to impact if we just kept it as a G business and sometimes you got to recognize what business models we can do
a good job at what is a good G business and where are we better off letting things letting things go other questions yeah right why don't you shout it out and I'll repeat it because they're never going to get a mic to you thank you rightly referenced the fact that many of us during the meet here and doing very small orientations your investment managers and stars that we start work go to help Ron guess my
question is you know sitting is the leader of the pyramid training ground for leaders of large organizations what can we learn from GE those of us who want to get small companies so look I think it's a great question the question is small companies what can you learn from big companies there's a lot of things that are very transportable right in other words I think the the idea on focus the idea on how to motivate people
relating you know relating to a variety of different people you can really learn that really well in GE and you might not get that from a 50 person startup or things like that but there's other ways that there's bad things to learn from big companies as well you know like like if you're running a startup forget about Six Sigma for about ten years you know really it's just you're going to waste
money it's not why people it's not why you exist and so the trick is keeping keeping the things that are good and really you know you and I are alike you know I want to grow you want to grow I want to see ideas hit the streets you want to see ideas hit the street so we've tried to make a company that aspirationally isn't that horribly different than a start-up you know there's differences you know you come to
GE you work for me right if you want to boss don't come to work for GE you know in other words or if you don't want to boss don't come to work for GE if you want to be your own boss to it a startup you know I'm my own banker that's my advantage trade if you don't want to go out beg for money join GE I'm the bank you only have to convince really a couple people let's start up different we've tried to make
GE a good convener I don't think it has to be either/or you know we are a big collaborator with kleiner perkins at our global research center about every other month we'll have big venture capital companies on mass come and share ideas and talk about things we probably have 100 meaningful equity stakes and startup companies and in those cases we try to bring to them management practices that will work for them but keep away things that
that that aren't going to work you know we we have a solar company we now in 60% of its in Colorado just startup you know we we don't really touch it that much but when it comes time to have to go to the next commercial scale that's going to cost 250 million bucks on that day we're good you know that that's that's a so the trick is knowing what works and what doesn't work and and what things
can be helpful to a company that's just starting up but look I have a I have immense respect and a lot of time for the venture capital community I really do I've tried to develop good relationships and I do think that is a strength in this country that is second to none and I'm try to make GE a good partner to those firms yeah thanks for coming Jeff you mentioned energy um and G's got a lot of press recently for supporting
their climate bill released this month and a lot of people project that the carbon market will grow to be true trillion dollars the world's largest commodity so I'm interested in knowing what you think is a likely outcome of the of this slow shift and any opportunities for innovation that you see there so I got into this game on mass probably in 2004 having no real environmental credibility personally more as a company you know in other
words I've never camped really you know I've I've never I've never planted a flower and I stopped mowing my own grass a long time ago you know so I'm not a date I'm not a nature lover but in 2004 Ana by the way I spent 12 years of my career in our plastics business where you know and you just grew to dislike environmentalists really fun of Italy they you know there there was a healthy there was a healthy
angst between people in that industry in the environmental community and in 2004 I think or 2003 you know we were sitting through our strategy sessions and and about five or six Jean businesses we're all working on energy efficiency or carbon reduction you know and so I sat in in you know kind of sat through all those presentations and said gosh we ought to try to pull this together as a
corporate initiative and see if we can really uh put a notch up the Rd up the public presence up the Marketing up the customer engagement and we did that in launched in 2005 and we had about that we had you know kind of a third party that certified these technologies each of which would reduce the their predecessors carbon footprint by 25% so we started with 17 products we now have 93 products we started with about five
billion dollars in revenue we'll hit 20 billion dollars revenue this year so you know our thesis was Green is green we run GE under the Kyoto Protocol so we reduced our own carbon footprint it reduced visibility carbon the Kyoto Protocol and so that's how we got into it so when we started we we created three teams one studied public policy one study the science and we had kind of a Red Team Blue team study the science
and one team argue that global warming was a hoax the other team argued that that global warming was a technical fact caused by man and we try to we try to be you know relatively bipartisan about it and then one team talk to our customers write our big utilities or Airlines or things like that to try to frame so we we did probably nine months of pre-work before we launched in a big way in 2005 one of these if you're in the energy
business for a long time you know that it's a lot about innovation but public policy is you're just not going to you know it's just if you look today probably the lowest incremental cost and the power generation field is nuclear power right probably the cleanest and lowest cost all these plants are twenty five thirty years old and the CEOs that launched these plants twenty five or thirty years
ago all got fired they were the biggest problems they were horrible they're the regulator's would let them get finished you know so so the cheapest electricity today was placed wherever he got fired twenty five years ago and when you see that you know that nothing's really going to happen unless you have some form of energy policy now if you can have energy policy a lot to have energy security at ought to have job creation
ought to have a lot of things but one of the aspects needs to be a price for carbon you know the vagaries of the market are just too circumstantial and you need to be able to invest against some kind of constancy in price for carbon you can do that through a tax a tax is simpler easier to administer and some would argue the best way to go environmentalist don't like it because it has no certainty around it another
part is to do cap and trade and that's been you know very complicated in Europe it creates a lot of your oxy to get it done but it is certain in terms of where you go I'm convinced we need one of those you know we we've been on record to support energy legislation and is realized legislation that has Kappa trade in it I have very low hopes for what will happen this year just given the political environment and things
like that but look guys you know here's the this is your own choice in your life because it you know look any one of you guys can do my job if you graduate from Stanford business goal it's not about IQ you are smart enough to do my job let's just get that out of the way the questions do you want to you know do you do you want to and one of these weird things about life is to do something you have to do something I mean it's one of
these strange things so so here we are today right we're sitting there and you know we're in the only gas business so I'm not I'm not being critical but we're sitting there looking at this this environmental really difficult I mean I don't know where it'll go but boy it is this is one of the toughest things I've seen in my career what's going on the Gulf at any time we are doing nothing zero on energy some
people give them speeches on this other mumbo-jumbo nothing as a country on energy future so I think that's wrong that's wrong and and my and my corner of the world GE is going to do stuff we're going to up it you know we say we're going to spend ten billion dollars an hour and day between oh five and ten we did it we're going to do 15 billion between ten and fifteen so we're going I don't know if it's going to be in the US
or China or Turkey we're going to go wherever we need to go to be effective but we you know as this country has to be looking self in the mirror and be really ashamed of where we are today in energy and and which is you know we could be critical BP if we want as a country but boy you're not doing anything so you don't impress me you know as a citizen I'm I'm quite I think it's very hard yeah so as per Garth's
introduction of Roenick three of the things that he really cared about or travel relationships and spirituality so I was wondering how those show up in your life is a leader and as a person so you know travel is I think actually if you want to run a company like GE you have to be a globalist and so you have to live a life that sees things and touches people and is open to people you can read a book on China you know you
can read 30 books on China that's why I wouldn't read one you know if you in China go and spend hundreds of days not just in Beijing and Shanghai but in 30 other cities over 25 you know look I've been going to China since 1984 I have visited probably 30 cities I've started two businesses from scratch done joint ventures with the government I've I know private business people you want to be CEO GE that's the path you know or
any other companies so that's travel what was the second one so business is really a study of relationships you know I my own view is that people use the word you know in business if you can't make somebody more money you're not a good partner so I have kind of a linear view on what it means to be a good friend in business you know to be to be a good friend in business you better you better be able to see things through the
other person's point of view I'm on President Obama's Advisory Board I voted for McCain I'm a Republican but the president wanted to reach out and have different voices when I go and serve the president my role isn't to say here's what you should do my role is to say here's what I would do if I were you here's what I would do if I were you do you guys get the difference you know one has the benefit of context and
relationship versus the other one is just giving a lecture so relationships you learn your own new ones like spirituality if you want to do anything important people going to hate you more days than they like you people are going to not like you more days than they like you and unless you can take a good punch and do it with a smile on your face you went to the wrong place you you chose the wrong vocation you ought to be in
Divinity School or something like that so you're going to have to have deep understanding of yourself you're going to have to have other things in your life that are important than than just your job and you're going to have to have a sense that perseverance and an optimism and you know if you asked me to describe myself I'd say I'm a I'm a tough-minded optimist that's Jeff ml I'm tough minded and then
I like facts I like data I like doing stuff I don't mind taking risks but I'm an optimist because I like trying things you know pessimists are just minimalist they're just they're just horrible minimalist you know that's not I I want to try things and do things and see where the world goes and you know that what I would describe to people when they come to GE is look you're going to be the front seat of history
you kind of work to gee you know we're not a perfect company but I guarantee it where it's happening what's going on we're going to be somewhere close to where hit business history taking place that is the best calling card I can give for GE other questions yeah Jeff oh just other question you know some of the lessons learn if you could share with us some of the lessons learned and challenges faced during the recent
financial crisis within your management team look I think the the there's a lot of different nuanced things you can answer on on the financial crisis from both a system and individual but again I come back to listening harder being more focused on all the risks in the downside you know again we we did studies you know the McKinsey study stuff like that but I think companies just didn't do enough tough challenging what if this
goes wrong and listen to naysayers enough so you know that's that's how we've tried to change inside inside GE in that inside the crisis take one more bonus question does that hand up way the back will make this for last Kashi how do you think about I mean you talked about kind of taking the right risks and how do you think about which businesses to enter at what point and how to exit I don't know
if there were some specific processes or ways that you thought about that as a leader within GE and so I think when you run a couple like GE you know a big multi business company you need to be very tough minded about the entrance and the exits so we have a point of view about what we're good at you know what's our core business model what does a good G business have we try to study businesses that go through transitions
you know like like I was a plastics guy a star maker I sold the business three or four years ago because the industry itself had gone through terrible transit you know really horrible transition so we you know we could see that so we try to study big trends our own core competency and then secular deviations that tell us what business we like and what businesses we should be transitioning away from so today we're
the world's biggest infrastructure company and and one of the bigger commercial finance companies we like that mix of businesses but that wasn't the company that I took over in 2001 it's very different than that company you know intermedia you know it's it's just in the case of that specific decision it was what was the best use of capital in the GE context and I saw so many investing opportunities and our
energy and healthcare business that I just wasn't convinced that we were going to take the capital and put it into media over the long term and I and and I was convinced that the way the industry was going you either were going to have to be a consolidator or you were going to Road shareholder value so so that's why we did the joint venture with Congress timing you can't pick you know in other words I you know if you're in
if you're in private equity timing is everything really if you're going to have a kind of a five-year hold or two-year hold or seven-year hold in the case of gee yeah I think we have to be better at business model match than picking the right time look I but look when I when I see the Euro do what it's done the last couple weeks you know the companies got maybe a hundred billion dollars of cash today I
look and say where can we swoop you know I call the BD guys and we look at our game boards you know every company in Europe that we've been looking at you know why not if it's on strategy I would do it if wasn't on strategy but sitting around at this moment of time with 100 but you know almost harder Bennett cash is not a bad hand to have you know right now so that's this may be this may be a good time look have fun of your careers and you