Notes and Takeaways from Jeff Immelt: Leadership In A Crisis
When I listened to it: August 2021
Why I listened to it: Leading a company during both peacetime and wartime requires a unique combination of skills. Jeff Immelt was the CEO of General Electric for 16 years and led the company through three major crises. He shares some of his leadership tips in this podcast with Shane Parrish from the Knowledge Project.
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My notes
About Jeff Immelt
Jeff Immelt is a Venture Partner at New Enterprise Associates (NEA). Previously, he was the 9th Chairman of General Electric (GE) and served as CEO for 16 years. Following his predecessor Jack Welsh, He led GE through three major crises:
9/11
Enron, and
The financial crisis of 2007–2008
He is the author of HOT SEAT, a memoir of leadership in times of crisis. He has been named one of the “World’s Best CEOs” three times by Barron’s.
Jeff has a B.A. degree in applied mathematics from Dartmouth College and an M.B.A. from Harvard University.
The financial crisis of 2007–2008
According to Jeff Immelt, the hardest part of his CEO tenure with GE was the financial crisis where it was "sheer fright for probably 60 or 90 days" due to uncertainty.
Most people think the day Lehman Brothers went bankrupt was the worst day in the financial crisis, but the worst day was actually two weeks later when Washington Mutual went bankrupt.
Driving change in an organization
It’s hard to drive change in an organization when your team feels like things are going well. You have to be directional, but incremental. You have to have a strong point of view of what you want the company to be, stick with it, and bring the team with you. You say things like, "here’s where we’re going, but we’re going to change step-by-step." You don't say things like, "I'm going to blow the place up and we’re going to reset everything."
Deciding when is harder than what and how
Knowing what to do isn’t that hard and knowing how to do it isn’t that hard. But, knowing when to do it is really hard. Good leaders have a sense of when. They wait, but they don’t wait too long.
Knowing when is a function of information and requires a combination of intellect, curiosity, and confidence. Some people need too much information to make a decision, but good leaders can gather 80 percent of what they need and make do.
Progress beats perfection
As a leader, you're not in the game of perfection, you're in the game of progress. You're going to be criticized no matter what you do. If you do your best and your intentions are right, you can live with the consequences.
Not making decisions is worse than making imperfect decisions. Progress is more important than perfection. You don’t make progress unless you make decisions. Good leaders are always on the lookout for how they can make decisions faster.
Nothing makes a team crazier than repetitive analysis with no decision by the leader.
Leading in a crisis
In a crisis:
Good leaders absorb fear without assigning blame. They keep a flexible point of view of what Jeff calls the "two truths": great things can happen, and terrible things can happen too. The trick is to keep your mind open to both of these truths at the same time.
Leaders need to be great communicators, sharing just enough, but not too much information.
Leaders need to observe who is with them, noticing who's running for the hills and who is steadfast. Pull the people who are steadfast together into an A-team. You can trust them to give you the truth.
You want to maintain forward motion. Stay as close as you can to normal routines to avoid worrying people. For example, don't cancel meetings. When you start canceling meetings, you send a message to people that the company is in serious trouble.
Risk factors are important
It's important for company leaders to have a solid handle on the business's risk factors.
If you pick up an annual report for any company, they'll often provide a lengthy list of risk factors. Jeff prefers to see a list of the three biggest risk factors. This forces leaders to ask and answer the right questions about their business based on where it is today.
Striking the right balance between growth and safety is an art, not a science.
Make decisions in big rooms
Jeff coaches leaders to make decisions in big rooms with lots of people to make decision-making transparent. When you make decisions in a big room, people know what your options were, what you were thinking, why you were thinking it, and why you made the decision that you did. Making a decision in private is less optimal than when you make that same decision in real time.
In a decision-making room, Jeff says most people fall into one of four categories:
People who are on point, make good points, are self-aware.
People who talk too much, don't make a ton of sense.
People who know the right answer, but don’t speak.
People who know that they’re right, they know you’re smarter than you, and they just silently sit there and smolder.
How to make good decisions
According to Jeff, good decision-making depends on the right instrumentation (metrics and analysis), the right team (expertise and wisdom), and self-confidence (willingness to say yes or no).
Instrumentation and team are pretty straightforward to fix, but it's harder to help a leader become decisive.
Feedback loops
It's important to build feedback loops that answer the question, what did we learn and why did this work or not work?
Harnessing complexity is a strength.
There’s a difference between simple and simplistic.
Good leaders get to the bottom of things.
Part of this is empowering people that you trust and hoping that cascades down the organization and up again. The other part is going to see firsthand how things are working from the ground up. As a leader, you may not know how to do everybody's job, but you can watch how anyone does their job and be a student of their work. And you can spot the difference between productive work and unproductive work.
Fusing short-term and long-term needs
It's naive for leaders to say they don't care about a particular stakeholder. Good leaders balance short-term decision-making with long-term thinking. For example, they balance social needs with competitive needs because those two have to coexist at the same time.
Breaking out in a big company
One way to break out in a big company is to respect the rules, but not always follow them. In big companies, the power differential is huge. You can't be a lamb, but you also have to pick your spots. Domain expertise helps. As a subordinate, it's hard to break through a power differential in domains where you lack expertise. Domain expertise can empower you.
Domain expertise
As a leader, it's harder to be successful today unless you're a deep domain expert. The most successful companies today are deep in a domain. For example, Amazon is a software company. Google is an AI company. Walmart is a retailer.
As a CEO, things go wrong all the time and you have to fix things, but you can’t do it without your team. A board shouldn’t be critical of a team that’s fixing things. However, when your team is no longer with you, that's when the board has to step in and make a change.
How to learn
The best way to learn is to seek other people out. Be the initiator and be curious. See people when you don’t need anything one-on-one over dinner. For example, Jeff was in a quarterly dinner group with CEOs from American Express, IBM, Pepsi, and J&J.
Reading is an important way to learn.
Watching how people work and asking them questions is a great way to learn. Just be curious and ask questions like why did you do that? How did you do that? What were you thinking about?
The power of friendship
Life is full of ups and downs. If you have a few great people around you, you can make it through anything. Learn how to be a good friend.