(Yicai Global) July 3 -- Jeffrey Robert Immelt is currently the chairman of the board of the US-based conglomerate General Electric Co. [NYSE:GE]. Two weeks ago, GE announced Immelt would step down as chief executive, with John Flannery, current president and chief executive of GE Healthcare Ltd., taking over from August 1. The text of a June 19 interview with Immelt appears below.
Q: You have done so much to digitize GE's traditional businesses in the past years and expect GE to be 'Top 10 software company' by 2020, but last Thursday you also said, "Don't believe factories will be automated and run by robots in five years." How do you explain that?
A: Those are two different things. In other words, I think we believe that there's a huge industrial internet market and we want GE to be a real leader in the industrial internet. We've invested a lot, about six billion dollars in orders this year. We're growing about 25 percent a year, so at that pace we should double in the next three or four years. That's our aspiration. I differentiate that a little bit from the standpoint of people frequently say all work is going to be automated. And I take a different tack. I actually think one of the values of our digital strategy is to make existing workers more productive and more efficient, and therefore a little bit of a skeptic about saying everything's going to be done with robots in the next five or 10 years. I actually think that we're going to go through a wave where digital tools are going to help make workers much more effective.
I've seen so many different things in my career. I think I know how to get things from an idea phase to an execution phase, and I think that's something we always pride ourselves on at GE is that not only do we have the next dream, but we know how to make it happen.
Q: Do you use AI in your day-to-day life?
A: I don't use it yet in my day-to-day life, but we use it across the company to help frontline workers, factory workers, radiologists, field service engineers. I think using AI tools is going to be incredibly important.
Q: How do you think the present trade environment might influence GE's business globally?
A: I think we're not just in the face right now of more protectionism, so our strategy is to be more of a local player, whether we're in China, the US or Europe. It's really going to pay off and it's going to be a good strategy. I think a good relationship between the US and China is essential. I think it is the most important or strategic relationship over the next 10 or 20 years between US and China, so I hope we have a good relationship.
Q: In your letter to shareholders in February, you wrote "America will be less of a leader in trade." How do you evaluate a free trade environment and the trend of globalization?
A: The fact is that free trade has been eroding for a long time. You know it didn't start with President Trump. I think China has a role in it, Japan has a role in it, Europe has a role. And everybody's more a protectionist than they were five or 10 or 20 years ago. It doesn't mean there's an excuse for us to pull back, so we very much believe GE needs to grow around the world, but it's going to be more of what I call 'connected localization' rather than globalization based on trade. Look, I quite admire initiatives like the One Belt, One Road, and think it helps China be more effective globally and I very much wish the US would reauthorize the Export-Import Bank of China or do other things that would help make the US more well known in Africa and other places around the world.
Q: What kind of role do you think business leaders should play in politics and especially in the era of the Trump administration? Can big companies like GE exert more influence or play a more important role in improving and advancing Washington's policies in terms of trade?
A: All we can do is say what we believe and what we think. I think we're in a period where nobody trusts any big institution, including big companies, so I think we need to understand the mood in our own country, but at the same time we need to be a good partner with China with the long-term investments we've made. I think good companies like GE know how to be good American citizens, but still be a good partner to China Eastern or to Harbin or other places.
Q: I hate to mention stock price. But from your perspective, how could executives keep the balance between steering the company in the long run and satisfying and rewarding your shareholders?
A: Okay I think it's always an endless battle. I would say we have to lead market shares by everything we do, so we have the respect of our customers. We have a fantastic team, a global team, and the market cap of the company is high, but I think as a company all we can do is grow our earnings, grow our cash flow, continue to build our market position, with the understanding that eventually the stock price is going to reflect all that. You have to satisfy all three: your team, your customers and your investors. You know it doesn't always work overnight, but over time if you're doing the right things, they all work out.
Q: The 2008 financial crisis was a difficult time for GE; now 10 years have passed, what have you learned from that time?
A: Oh gosh, I think everybody that went through the financial crisis learned how to be a better risk manager. They know that really incredible, unforeseen events can take place. I think the company today is just much more rigorous and much stronger, much more resilient than it was then. You know I think we've really used not just that time period but much of the last 15 years to make our company have a better portfolio, more technology, more digital, more global. And I think today we're just a much stronger company than we were in 2000 or 2008 and I think that's all you can do is make your company better. I think of anyway setting up to John Flannery, now it's his turn to kind of take it forward. But globalization is not going to slow down, digitization is not going to slow down, the need to be faster and experiment with new business models, none of those things are going to be any easier, so I think the company is going to continue to evolve and change. One thing I know for sure is that GE will be a central company wherever the world is going in 5 or 10 years, whatever the future trends are GE will be in the lead. I'm totally comfortable about and confident of that.
Q: You have reshaped GE in various ways. How do you measure your success?
A: I don't think you're going to know that for five or 10 or 15 years. I mean the fact is that the products we use, the products we make, the technologies we innovate, they're all long-cycle, they all have an impact over time, so come back and interview me in 10 years and we'll have a good conversation and see how we did.
Q: Then what advice have you given to John Flannery?
A: Do it in his own way. I think these are kind of one-act plays so he should be comfortable and confident in taking his own ideas and the company into the future. And I'll be always there to support him.
Q: There was a time when getting a job at GE was a golden ticket, but today, I'm guessing that from time to time, some top engineer comes into your office and says, "I'm thinking of going to Facebook or Google," or a sexy startup. What would you say to that person?
A: Competition is good. Competition for talent is good -- and we're not for everybody. But I think we can look any young engineer in the eyes and say if you work for GE you're going to be in the front seat of history, you're going to be able to see life-changing technologies, you're going to be able to do it on a global stage, so we root for companies like Alibaba (Group Holding Ltd. [NYSE:BABA]), we think it's great what Facebook has done, but I don't think that really detracts from what GE does or from our capability. This is a great company, and if you want to know how great she is, just ask Jack Ma or Mark Zuckerberg or Sheryl Sandberg or Jeff Bezos, they still look to GE, they still think it's a pretty great company, so we care of them.
Q: What's your next plan?
A: You know, I haven't rested for 35 years. I've worked 100 hours a week doing one thing. I know there'll be a next act, but I don't know exactly what it's going to be, but I'm excited to think about it.
Q: Will you write a book, like Jack Welch has done several times?
A: I don't know. Writing books looks difficult. I do want to intersect with China, though, I've learned so much from it.
[Note: Yicai Global has partly redacted this interview content for the sake of brevity and to conform to our style guide.]