What CEOs admire: Jeffrey Immelt of GE
We asked three prominent business leaders — Jeffrey Immelt, Ursula Burns, and John Donahoe — which companies they hold in high esteem, and why. Immelt, CEO of General Electric, (No. 15 on our list of Most Admired Companies) talked with reporter Daniel Roberts and listed a veritable Who’s Who of companies that continually raise the bar. Edited excerpts:
Q.Which companies do you most admire, and why?
A. I’ll give you three companies I really admire, because they’re different in terms of what they stand for.
First, FedEx. I find that Fred [Smith] and FedEx (No. 6) have been able to maintain a small company feel even as they’ve grown, and I think it’s just remarkable to see what they’ve done.
Second, I’ll give you IBM (No. 5): a 100-year-old company that has continued to evolve a business model over time.
For the third one, I’d pick Google (No. 2). For a 10-year-old company, they’ve done more things well in 10 years than just about anybody that I’ve ever seen.
So, one that’s new, one that’s been able to scale entrepreneurship, and then IBM, a classic American century-old company that has continued to evolve and change.
What are the attributes of these companies that have made them universally admired? A tech company like Google is so young — is it all about the good ideas, or is strong leadership the key?
It takes a combination of good ideas and good leadership. I think you can never overstate one to the exclusion of the other. The way that Google has driven search and the ancillary products around it has been a great idea. Take the whole business model behind American Express (No. 16). Even if these companies had great leaders, you know it’s the business model that does the talking. So I think the best companies have a good combo of the two. When people lean too hard one way or the other, that’s when you find your way off the Fortune Admired list. (Laughs)
Are the corporate attributes you admire today the same ones you admired at the outset of your career? If they’ve changed, what caused it?
What people admire is very much about the times. If you look at the way you think about a company today, having been through the financial crisis and all the other things, I think people have more of an appreciation for resiliency. Every company recognizes that you’re not always going in a straight line. It’s the people that keep paddling, even when the tide’s against them, that have done well.
I look at The Home Depot (HD), right, it’s a great company, but it had lots of years where the housing market stunk, and they kept challenging themselves. So I think everybody has much more appreciation today for resiliency than they did in 1997 or 2007, just given the economic times.
It’s something that we’ve all gone through, and that we recognize, and that we want to see in ourselves. Who gets better when times are tough, and who gives up when times are tough? That’s a standard we hold ourselves to, but we’ve also seen others be able to repurpose and change.
Of your CEO peers at other large companies, who do you look up to or look to for influence in how to build an admirable company?
Sam Palmisano of IBM, Fred Smith — these are great friends of mine. Frank Blake of The Home Depot — I know Eric Schmidt from Google — and people like that. We’re constantly reaching out to companies that we can learn from. We do a quarterly management meeting, and we always have outside people come and speak. We had Fred Smith come to our GE Capital meeting, and I’ve had Ellen Kullman from DuPont (No. 37), Dave Novak from Yum! Brands (YUM). Look, everybody’s searching for one good idea, right? That’s what you want to get.
I also get together quite frequently with a bunch of people in the New York City area, so Sam, Ken Chenault from American Express, Bill Weldon of J&J (No. 12), Indra Nooyi of Pepsi (No. 32) — I see them, and we have dinner like once a quarter. And then, you know, Jamie Dimon from JPMorgan has been a good friend of mine for quite some time, and I’m constantly reaching out to people like that for good input.
You were saying that what people admire depends on the times. Which companies do you think have handled the economic crisis especially well?
To a certain extent, I look at financial service companies, because they were in the middle of the storm when the crisis hit. You look at JPMorgan (No. 22) or Wells Fargo (No. 45), and you sit back and say “Well, good for them.” They were right in the middle of the financial crisis, and yet they’ve come through it stronger, on a relative basis. So I think it’s beyond just the recession itself, but when you look at people that really took direct hits, given where the crisis went, I think you have to give them the extra benefit of the doubt.
In the wake of the Citizens United decision, with the Supreme Court suggesting that corporations are people, what kind of person do you want your company to be?
I think we’ve always been a good and generous company when it’s come to corporate social responsibility around education and things like that. But personally, I think one of the things that this cycle is proving is that without competitiveness, nothing else really matters. I think in the end, GE is a competitive company, and in the end that might be the best source of CSR. It doesn’t matter how much you’re giving; if you’re not able to create jobs, it’s tough to be a good citizen today. And that’s not a bad perspective to have.
Havas CEO David Jones, in his book, Who Cares Wins, credits GE’s Ecomagination program as a beacon of good CSR…
You know, the essence of Ecomagination was that competitiveness and innovation are at the heart, and it’s not really CSR-driven. It’s more about innovation, and I think the more we can think about it that way, there are less trade-offs and more positive thinking.
So it sounds like Ecomagination’s reputation as a responsible, admirable program is just a happy side effect.
That’s exactly right.
Do you only benchmark your company against peers in your industry, or is it important to measure your performance against other best-in-class organizations?
We do try to look at a wide range of other companies. At the last management meeting we had, I had Marc Benioff come and speak, of Salesforce.com (CRM). So we try to look at people like that and say, Hey, is it all applicable to GE? No, but the notion of a CEO who can bring his iPad to a meeting and be tweeting about GE with his sales team while he’s talking to the GE leadership team — it’s pretty damn cool. Look, we don’t have a lot in common with Salesforce.com, but we better be good where they’re good and at stuff that counts. So we try to have a broader net than just where our competitors are.
Do you think large corporations are more admired today by the public than they were ten years ago, or less?
In some ways I think it’s maybe about the same. If you allowed yourself to talk about the general public being not just the American public but the global public, I think then there’s even more of an appreciation of what we do, because we’re every place in the world. Maybe it’s harder to be a global company in the U.S. today, maybe marginally, but there’s more appreciation for it globally. In many cases, I’d say GE (GE) is just one of a number of companies that have had to go out and sell our stuff in every corner of the world. I think people admire that in the end, because they know it’s hard.
What are other companies whose global operations you admire?
IBM clearly is a great global brand, for sure. FedEx is growing. Google (GOOG) not as much yet, but IBM for sure. We see them every place, and they’re admired every place. They’re a company that we benchmark ourselves against in terms of public appeal, really in every country in the world.
I happened to go last summer on a visit to Tunisia and Egypt with Senator McCain and Senator Kerry, and Coke (No. 4) was there, GE, Exxon (No. 27), and other companies. And I thought it was amazing what Coke does in local markets. As a great American brand, it’s extraordinary.
Do philanthropic initiatives really matter, and help a company’s reputation?
I think as long as they’re hooked to competitiveness and innovation, they have amazing pop. So even education, which is important, ties back to innovation and competitiveness. I think if you can link corporate social responsibility to those things that companies do best, which is compete, when you can touch those two, then I think they’re particularly strong.
If you’re just giving money to an art museum or something like that, I don’t think it helps as much. But if you can tie CSR to innovation for the environment, or making secondary schools better or big things like that, then I think it has extra oomph.
A shorter version of this interview appeared in the March 19, 2012 issue of Fortune.
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