EXCERPTS from an exclusive interview with General Electric Co (GE) chairman and chief executive officer (CEO) Jeffrey Immelt.
Q: I understand this is your second or third…?
A: I have been to Kuala Lumpur 10 times, maybe more.
Q: You had some sort of signing ceremony today (Thursday) with Malaysia Airlines. Congratulations.
A: Thank you.
Q: Maybe I could start off by asking you — it must be an exciting time for GE now with the transformation going on. Can you tell us why are you embarking on this transformation from hard iron big machines into a digital industrial company?
A: We have always been in our history… a 140-year-old company. We have always been willing to grab what’s next. If you are in the industrial world today, the nature of the products is one that generates data. Somebody is going to be a leader in terms of the digitalisation of industry. We think it can be us.
We think this is the bridge to achieving more productivity for our customers. So I would say that this is really being led by our markets and GE has always wanted to participate in where our markets go.
So if we want to be a great supplier to Malaysian Airlines or something like that, we need to be a data analytics company in the future. I would say we have no choice. This is imperative for the growth of the company.
Q: Is this the Microsoft version of the industrial world?
A: I think there is consumer Internet that is dominated by Google or Amazon, there is enterprise Internet that is dominated by Microsoft and there is industrial Internet that is wide open. We want to participate in the digitalisation of the industry. So we didn’t really think about being a software company per se but in order to be a good industrial company, you have to be good at software and analytics.
Q: To our readers and our viewers, what exactly is industrial Internet?
A: Let’s say a jet engine — now we are surrounded by 100 sensors. So the flight between Kuala Lumpur and Mumbai is going to generate a terabyte of data. The industrial Internet is really using data to optimise the performance of all of the assets in the world and there’s billions of assets. It’s just taking the power of information technology, combining it with the power of assets and physics and we will optimise the performance of all the assets that exist in the world.
Q: This transformation has been going on for a few years. What will be the form and shape of GE, say by 2020?
A: By 2020, we want to be a top 10 software company. We want to have approximately US$15 billion (RM62 billion) of revenue both in operating platforms and software embedded technologies for software. We are about half of that today.
Q: In terms of revenue contribution from inside and outside of America?
A: My sense is that the revenue profile will be roughly the same as it is today, with more than half the revenue coming from outside of the US.
Q: How has the journey been so far? What are the challenges?
A: I think in order to be successful you have to operate at three levels. One is you have to be able to recruit good talent and we have been doing this for five or six years. I think we can recruit really good talent. The second is investment in technology. So we have launched our own operating platform called Predix.
We build various technical suites around our assets. We have invested in cyber securities. So that’s technology.
And the third is how you approach your customers. The ability to build a partner network, drive outcomes for customers.
We have invested in all three levels inside the company and we have probably pivoted the strategy two or three times, so you are never going to get those right when you start but I think so far the industrial Internet is just beginning and we are in maybe one of the lead packs. Our future is not assured but we are pretty well-positioned with where this is going to go.
Q: Looking at the impact of industrial Internet as opposed to consumer Internet on companies like GE and marketplace and consumers that you serve, what will be the biggest impact on GE?
A: I think for our customers, the biggest impact is productivity. For the consumer Internet there basically has been half a dozen of platforms — Ali Baba, Google and Amazon. I think in industrial Internet there will be dozens of platforms. The industrial Internet is going to look different than the consumer Internet, I believe. But the outcome has to be productivity for our customers. I think that is going to be a big opportunity.
Q: You spoke about people and talent. Do you face any challenges in getting people to come on board?
A: I think we did for sure. When we first started, convincing people that we were serious, that we had a strategy, was hard five years ago. I think now they have seen some successes. I think they are fascinated by the technical challenges because if you are a data scientist, the amount of data, the unstructured data is vastly different from a social media company, so I think people like the challenge.
They like the space. They like healthcare, energy and transportation. Slowly but surely, we have had to build our reputation in order to be successful.
Q: We know GE is a very old company. It’s an industrial powerhouse, which started by making light bulbs. How do you change the culture and mindset of people working for GE in this new era?
A: I think it’s a combination of what I would say hardware and software. For hardware, you have to make the company leaner, simpler, fewer layers, simplify decision making and have faster tools, and then for software, you have to bring in new people from different cultures. You have to change the way you work. In our case, we moved the headquarter of our company to Boston from Connecticut. We were more surrounded by a start-up culture.
Again, I think we are seeking to change ourselves but we want to hang on to the things that have made us great. In other words, our reliability, our robustness is a big competitive advantage in the industrial Internet.
We don’t have to look like a start-up. We just need elements of the company to be more purposeful, faster and I think we are aspiring to be a combination of the old and the new.
Q: You are running a company with over 300,000 people. How is it like running such a big company?
A: I never really think of that. It’s a great question. So we are in 185 countries. In some ways, it’s like a small city in terms of the people. I think you have to pick really good leaders, so I think a lot about the people we put in place. We have the good processes that help hold us together and you have to build a culture of communication, openness, transparency.
So I think people, process, culture is the only way you can build a business like that and as a CEO, you always have to try to see the world through the eyes of the people who are closest to the customers and on the ground.
So when I am here in Kuala Lumpur, I am not thinking about all the problems back in the US. I am trying to see the company through the eyes of the team here in Malaysia so that I can have an appreciation about how they do their work.
I don’t want to be a faceless person to them. I want them to know me as Jeff. I want them to feel like they were teammates, we work together and I think you have to humanise the company in a very dramatic way.
Q: It’s some amount of engagement, direct engagement with…?
A: I think it’s informality and access. So those two words — informality and access — are really important for a big company. So it’s very important that I am Jeff, that I am a human, we work together and maybe I am their boss’ boss’ boss’ boss’ boss’ boss but when I am here, we are on the same team.
Q: Speaking about Malaysia, how strong is GE’s commitment to Malaysia and other countries in this region?
A: I think Asean has been a very strong growth region for the company. Malaysia is substantial in revenue presence, very good customers. We have about 1,400 people in Malaysia. So we are big in oil and gas, in aviation and we have a very strong presence.
We have got a good operation in Singapore, Indonesia, Vietnam. We are opening up in Myanmar. Thailand is a big region for us. So each part of the Asean region is important.
Q: Are you a proponent of free trade like TPP?
A: Yes. Look, I am a globalist. I believe that trade really benefits people. It’s very unpopular today in the US. To be honest with you, we are so global that GE can survive whether there is TPP or not. But I think it makes our country better. If you are an American having a partnership with countries like Malaysia that are beyond security issues that include economic trade, I think it’s massively important for the US. I think in some ways, the TPP debate has really got off on the wrong tangent in the US and we are going to regret it if we don’t find a way to pass TPP as a country, not as a company.
Q: If I may ask, what is the most valued quality in a corporate leader?
A: I think a good CEO drives change, set standards and develops leaders. I think to try to change, you need a combination of vision but you also have to have all of the structures and disciplines to drive meaningful change.
I think you have to be of high integrity both in terms of the world of compliance and also in terms of building strong dedication to results. And I think you have to have a good touch on people. You have to understand what terms people want, how to motivate them and how to develop leaders. I think that is what a good CEO does — change, builds leaders, set standards.
Q: How do companies strategise with the uncertainty and unpredictability given the current times?
A: I think it’s a great question. We live in a very volatile time. The first thing you do is you have to be a good risk manager. By that I mean there is always going to be this much risk and you have to take this much risk to gain this much reward.
So you have to have a good sense of risk but if you take no risk, you are going to fail. You have to be willing to take risks and be a good risk manager. The other one is I think you have to have the real conviction in what you believe in. If you need to read the Wall Street Journal or the Financial Times or your publication to figure out what my strategy is, I am going to fail. You have to be willing to take criticism. So I take conviction and be a really good risk manager.
Q: So you must believe in what you do as well as you have to be a risk taker?
A: Exactly. You have to have a good sense of risk that you want to take. But you have to take risks. Look, I believe or, in other words, I know what I believe in, I know what we stand for and I am willing to do that in good times or bad.
Q: You took over the company four days before 9/11. It must be very tough for you?
A: In some ways the whole world changes at that moment of time. We recently had the 15th anniversary of 9/11 in the US and it’s like it was yesterday. I think we entered into a new era not just as a company but also as a global citizen.
Q: Any last words?
A: I just think the fact that Malaysia is growing four per cent in a world that is uncertain speaks a lot to the people in the economy. I think your last question is maybe for all your readers and viewers to keep in mind, if you wait for things to be perfect, you are going to wait forever. But if you are able to see chaos as an opportunity, everything is out there to be had.