Even as General Electric reels, its widely-criticized former CEO Jeff Immelt is lecturing business leaders on how to succeed.
Immelt, speaking Thursday at the World Business Forum in New York, lamented the state of GE, the embattled conglomerate he led for 16 years.
“The company I was part of is in a tough cycle right now,” Immelt said. “There are things they have to fix, most importantly the business model itself.”
Even though many analysts say Immelt deserves at least some of the blame for GE’s downfall, the former boss didn’t take responsibility for the troubles of the iconic maker of light bulbs, jet engines and MRI machines.
“I still believe in the company. I own a ton of shares,” said Immelt, who left the company last year.
Those shares plummeted to nine-year lows this week. Years of bad decisions, including poorly-timed acquisitions, have caught up to GE. The company’s balance sheet is riddled with debt and its cash flow has rapidly deteriorated.
Now operating under its third CEO in less than three years, GE has slashed its dividend to a penny, cut thousands of jobs and put long-held businesses up for sale. GE’s accounting practices are also being investigated by the Justice Department and the SEC.
Immelt received about $168 million in total compensation since 2006, according to Equilar. Since stepping down as GE’s CEO in July 2017, Immelt has gone to work in Silicon Valley as a venture capitalist. He’s also teaching a management seminar at Stanford Business School.
Asked what he would have done differently at GE, Immelt cited a failure to fully separate GE’s industrial businesses from GE Capital, its money-losing financial arm.
While Immelt did sell much of GE Capital in 2015, the remnants continue to haunt the company. The long-term insurance portfolio recently suffered a $6 billion loss. And GE is facing a potential costly Justice Department settlement over WMC, the subprime mortgage lender that Immelt acquired in 2004 just before the housing market peaked.
“Believe me, it wasn’t for a lack of trying,” Immelt said of efforts to get rid of GE Capital. “It was just hard to do.”
Immelt also pointed to unspecified personnel decisions that he made at GE.
“The worst decisions you ever make are on people,” he said.
Immelt did not mention the infamous spare jet that followed him around the world. GE has said that practice, which was first reported by The Wall Street Journal last year, was stopped in 2014.
While he led GE, Immelt received praise for guiding the company through the Sept. 11 terror attacks, which took place just days after he became CEO. Barron’s named Immelt one of the “World’s Best CEOs” three times and he also sat on advisory panels under both Presidents Donald Trump and Barack Obama.
Immelt recalled the harrowing experience of leading GE through the 2008 financial crisis. In particular, he pointed to the difficult decision of having to decide whether to go forward with an $18 billion share sale just weeks after the collapse of Lehman Brothers.
“I remember walking down the hall and thinking, ‘I want my mommy,'” Immelt said to laughter. “I want someone to hold me.”
GE ultimately went forward with the share sale, which helped stabilize the company.
Immelt said he also learned not to obsess over media coverage of his company. He pointed to how he ignored the flurry of stories surrounding GE’s decision to sell NBC Universal, its media arm.
“Don’t read things,” Immelt told the audience. “I just went a month without watching TV or reading.”
Buying Enron’s wind business
One of the biggest criticisms of GE over the past decade is that too often it bought companies high and sold them low. For instance, Immelt’s acquisition of Alstom’s power business deal turned out to be a disaster, underscored by the $22 billion goodwill impairment charge recorded last quarter.
Immelt did not mention the Alstom deal, but he did cite GE’s acquisition of Enron’s wind business out of bankruptcy in 2002.
“I hated the wind business. I thought it was stupid, subsidized and too expensive,” Immelt said. Eventually, it got cheap enough where he let an executive go ahead and purchase it.
“I said, ‘Just don’t tell me what it costs,'” Immelt said.
Wind power has since taken off and it remains part of GE’s renewable energy division.
“Now I take credit for it as a brilliant, thoughtful strategy,” Immelt joked.