Lessons For the Middle: GE CEO Immelt
Jeff Immelt, CEO of conglomerate General Electric has a vested interest in middle market companies. GE Capital, the company's lending division, acts much like a bank to middle market companies, and wants healthy borrowers.
But, in this economic downturn, that market needs a boost. "GE is so big, we can afford to make mistakes" Immelt tells a crowd of over 600 middle market executives, conceding that the same luxury is not afforded smaller players.
"The recovery is on the way but its a long, slow recovery. Now, confidence is everything. There's a lot of cash — there's 2 trillion dollars in cash, but there's not enough certainty to invest. I can do something about that, and the people in this room can do something about that," says Immelt.
This is, in part, why Immelt has invited the man he introduces as a "hero to every entrepreneur and every company in this country," Fred Smith, CEO ofFedExto speak at today's National Middle Market Summit. Unlike Immelt, who took the GE helm of a known-giant in 2001, Smith built FedEx from scratch using the thesis he wrote in college.
FedEx has since grown from small company, to middle market, to Fortune 100. It's operating profit in 1994 was $523 million; Seventeen years later, it's $2.4 billion.
Smith offers this advice: "If you look at organizational development, its pretty clear that you go through a number of gates. Invariably a company that's going from a start up to 10, 20, 50 million will have a crisis in management. The organization's needs will outgrow its people. If the entrepreneur is a hands-on type - he or she will have a difficult time letting go."
In light of the news of Steve Jobs passing, Immelt asks how to ensure a company can live beyond its leader.
Smith responds: "Any founder has a great responsibility to the people that work with them to have an effective legacy. You know, Steve Jobs, one of the smartest things he did was bring in Tim Cook. Being in the service business, we establish very early on a dynamic: people - service profit. We work at that. What do you expect of me ? What does it mean for me if I do well?"
Smith's take on the economy? "Our tax policy, our regulatory policy, our trade policy are optimally designed to impede growth. Until we address those things, it will be difficult to get back to a reasonable growth rate...It's no mystery as to why we're not producing jobs - we have inadequate investment."