Renewing American Leadership

I realize this is Army-Navy weekend and that you are the underdog. I was a football player in college, so I don’t have any eligibility left. I could give you a diesel locomotive to open a few holes.

West Point graduates are responsible for some of the world’s greatest engineering feats.

They’ve led some of the most important advances in aviation and medicine and information technology. They’ve founded colleges and business and charities.
We have 11,000 veterans working at General Electric; 238 West Point graduates, and nearly 600 from all the service academies. We actively recruit from the military because we have learned that the values you bring to our company are essential to our success.

Three West Point graduates from GE join me today. Dave Ferguson, Class of 1990; Alonzo Ford, Class of 1998; and Steve Mumm, Class of 2002.

Dave leads all of GE’s military recruiting. Dave served as a Scout Platoon Leader, a Tank

Platoon Leader, as a Battalion Supply Officer, a Company Commander and as a Major, with his last duty as a Battalion Executive Officer.

Alonzo has been with GE four years and served as an armored cavalryman for seven.

After being promoted to Captain, Alonzo served in combat with 3rd Brigade, 3rd Infantry Division in the initial attack on Baghdad in 2003.

Steve is now a project manager at GE’s Oil and Gas business in Houston. Steve spent five years as a combat engineer officer and deployed to Tikrit, Iraq to support combat and reconstruction efforts throughout the province.

Dave, Alonzo, Steve and all our other Academy graduates learned something profound and rare in their education here by the Hudson River. It is their commitment to the values of Duty, Honor, and Country. And my point today is to tell you: it’s something every person in the United States—from business and from government—can learn from.

A recent Gallup poll asked Americans: “Who do you admire?” It will please you to know that the military finished first, with a 77 percent approval rating. Conversely, big business and congress received approval from only 20 percent of our fellow citizens. People have lost faith in many big institutions.

We sit in a very unique moment in the history of our country. We are at war. I know that the President was here last week to commit more troops to Afghanistan. Please know that you have the respect and prayers of a grateful nation.

At the same time, there is economic and social unrest inside our country. Unemployment is at 10%; we have endured the worst financial crisis since 1940; trillions have been lost in financial assets and housing prices. People are angry and frustrated.

The world is being reset. But, I know that our future will be better than the past. I am convinced that American leaders will come together to solve our problems.

Importantly I want you to know that I am as committed to take care of you in the future, as you are to take care of me right now.

To realize a better economic future, our country must change how we compete. In order to change, we must have: an understanding of what happened; a plan to win; and leaders who have the courage to change themselves and others.

So what happened?

Throughout my career, America has seen so much economic growth that it was easy to take it as a given. But, we started to forget the fundamentals, and lost sight of the core competencies of a successful modern economy. Many bought into the idea that America could go from a technology-based, export-oriented powerhouse to a services-led, consumption-based economy—and somehow still expect to prosper.

While some of America’s competitors were throttling up on manufacturing and R&D, we deemphasized technology. Our economy tilted instead toward the quicker profits of financial services.

Our country was built on great undertakings that brought out the best in government and business alike. But that kind of economic vision, that kind of focus on essential national goals, has been missing.

We need a new strategy for this economy. We should clear away any arrogance, false assumptions that things will be “ok” if we stick to the status quo. Rather, we should dedicate ourselves again to be the most competitive country in the world.

This is our vision for the American renewal. We need to invest more in innovation. We need to target this innovation toward fulfilling big needs like clean energy. We need to make products here and have the self-confidence to sell them around the world. And we need business and government to work together instead of arguing while other countries win.

This begins with a significant increase in research and development. The only way to sustain a real competitive advantage is to invest in the needs of tomorrow.

The federal government has always been an important contributor to innovation. Similarly, businesses need to invest more in technology and take more risks. Engineering has been underemphasized in this country for a generation. If we’re going to be serious about innovation, then we’ve got to do a much better job training the next generation of innovators.

Technology is what makes people and countries feel wealthy. Technology is also the source of competitive advantage. An American renewal will be built on technology.
America should apply our innovation toward addressing the biggest global opportunity—clean and affordable energy.

For decades now, the most vital of commodities has been largely left to the control of others. The price for these commodities will rise due to increased consumption in emerging markets. We’re in for terrible risks if we follow this path of increased dependency. It’s essential that we create a position of affordable, clean and secure energy for America.

We can lead this energy technology renaissance. We should rebuild our nuclear power infrastructure; be a leader in natural gas exploration and usage; find ways to produce energy with clean coal; develop more cost efficient renewables; deliver the next generation of transportation, using hybrid technology. Leadership in Energy will insure our global competitiveness and security.

It will also create jobs. There will be 10 million clean energy jobs created in the next five years. Many will be in the United States if we act now.

To that end, we must make a serious commitment to manufacturing and exports. I’ve had people tell me that America has seen a natural evolution from farming to manufacturing to services. But there is nothing predestined or inevitable about the industrial decline of the United States, if we are prepared to reverse it.

To win, we must compete globally. Your generation must succeed by selling products to the billions of new consumers in China, India, Brazil, Africa … every corner of the world.
The United States ranks last among major manufacturers in export intensity. If we exported at the world average, we would eliminate the trade deficit and create new jobs.

To achieve these, we should welcome the government as a catalyst for leadership and change.

I believe in the endless possibilities of individual choice and private initiative. But this isn’t the first time that business and government have had to work together for national ends. We should work together again today, setting goals for productivity, job creation and exports.

There’s a long history in this country of government spending that prepares the way for new industries that thrive for generations. Think of the Department of Defense, and all the commercial innovations that came out of military investments—from computing to transportation to healthcare.

Through a real public-private partnership, we can dramatically improve America’s competitiveness. Today, people in this country want to see business and government work together.

An American renewal will be shaped by the public and private sectors, and—more than ever—by a willingness to act boldly for the good of the country.
GE will lead this change.

I am proud to work at GE, a great American company since the 1800s. Since I joined the company in 1982, GE has earned $230 billion—more than any enterprise in the world.
We are the oldest remaining company in the Dow Jones Industrial Average. This is not because we are a perfect company. We, too, had issues in financial services. But, through the years, we have adapted while remaining productive and competitive. We have globalized the company, while investing massive amounts in technology, products and services.

GE has never forgotten the importance of R&D. Each year, we put 6 percent of our industrial revenue back into technology—so much that more than half of the products we sell today didn’t even exist a decade ago.

We’ve made a business decision to focus all the innovative powers of GE to solving the problems of energy use and environmental stewardship.

We’ve brought to market 90 new products to help our customers benefit from renewable technology through serious reductions in the cost and use of energy. In only four years’ time, our revenues from environmentally friendly technology have grown to close to $20 billion.

We know how to make things in the United States and sell them globally. Nearly 60 percent of our revenue is outside the U.S. We are the country’s biggest exporter. We are adding jobs in places where we have invested in technology… and all of us are selling aggressively to fill our factories.

I joined President Obama’s economic recovery advisory board. He can count on my openness and honesty. More importantly, he can count on GE’s support to drive competitiveness and innovation that will improve the economy. We want to be a part of the solution.

So, we have an understanding of what happened. We know what it takes to win. But the real question in all this is who will lead us? This is what I really want to talk with you about today. Nothing of consequence is accomplished without leadership.

You are being taught leadership here at the USMA. Leadership is the essence of what you will do when you graduate.

We must build a new generation of leaders to create a different future. We have been spending some time at GE trying to understand what attributes of leadership will make an impact with the challenges of the 21st century.

Take a look at the first decade of this century… the terrorist attacks of 9/11, corporate scandals, globalization, technology changes, the recession, wars in Iraq and Afghanistan …what we know is that the environment in which leaders are operating is significantly more complicated, and less predictable than in the past.

Certainly there are attributes of leadership that stand the test of time…but the agenda for our country and complexity of our challenges requires us to rethink what aspects of leadership we need to emphasize.

We have found ourselves discussing this topic with a variety of people. We wanted broad insight and perspective so we have engaged in dialogue with other companies, and with an eclectic group of thought leaders, academics, historians, futurists.

It takes courage to rethink your leadership paradigm. But I recognized that if I wanted the company to change, that I would have to change myself. And, a good leader is never too old to learn.

By analyzing the best practices of others, we have compiled traits that I need to improve on, and you might want to develop.

First, we have to be better listeners. This sounds simple…but are we really listening? Do we really engage with people who have different opinions; are we ready and willing to accept critical inputs?

I recently read a book on D-Day, by Antony Beevor. I have read extensively about WW II. Eisenhower was a fascinating leader because he was a great listener. He didn’t shut any voice out, but was still able to make the tough decisions.

I decided that I needed to be a better listener coming out of the crisis. I felt like I should have done more to anticipate the radical changes that occurred. To that end, about twice each month, I invite one of our Top 25 leaders to a Saturday session where we talk about the company, the future and each other. At that session, we are “two friends talking.” I encourage an open critique of each other. Listening in this way has built trust and commitment. My top leaders want to be in a company where their voice is heard.
21st Century leaders listen. They use external inputs as a catalyst. They put their ego in check. They ask more questions than they answer. They welcome dissent and debate, and are constantly seeking more intelligence. As leaders, a big part of your job will be telling people what to do. But remember that real intelligence comes more from the ask then the tell.

Second, leaders must become systems thinkers who are comfortable with ambiguity. I am an applied math major and an MBA. In school, I loved science. My career has grown in a linear fashion. There wasn’t much ambiguity in my education. I grew up in a simpler world, both economically and geopolitically.

The future world is more complex, for both you and me. Success requires problem solving, and connecting the dots. This requires intellectual breadth and tactical depth. We must understand technology, globalization, politics, economics, human resources. We must understand how government, community, the environment, business, academics all connect. And we must apply this to solving problems.

Let me share a story about systems thinking. And it is one you can relate to. GE is helping to rebuild the electricity grid in Iraq. This is important for the peace process and it is also an opportunity to create jobs in the United States. We need to be successful at this. To be successful we must: have high tech products that can handle the heavy fuel found in the country; work with local contractors to get processes on line; train a new GE team and keep them safe in Iraq; coordinate with the military and state departments; and figure out how to get paid by the Iraqi Government! It certainly isn’t boring!

Bill Gates, the founder of Microsoft is my friend. I have been amazed at the impact Bill is having by applying systems thinking to philanthropy. Big problems can get solved—problems like reducing malaria in Africa or improving public schools in the United States—by apply systems thinking.

I didn’t learn any of this stuff in school. I have learned it through experience and getting comfortable with ambiguity. I don’t know all the answers, I often don’t know how things are going to turn out. What I do know is that 21st century leaders must be systems thinkers; they must be good at solving problems.

Third, leaders must build competency and move with speed. GE is a big organization, like the Army. The problem with size is that it can be too slow.

At GE, we must push decision-making down in the organization and we must delegate more. But delegation, in a risky world, is tough. It isn’t natural to give authority away, but that is what a 21st century leader needs to do. They have to empower others, and they have to develop the kind of followers who will make a call when it is the right thing to do.

At the top of a big organization, speed requires trust. GE is a believer in rules; but in point of fact, we work on trust.

Think about General Petraeus and the surge in Iraq. He is a great leader —and he moved with speed and certainty because he had the trust of the nation. His actions forever changed the shape of that conflict.

In the fall of 2008, in the peak of the financial crisis, it seemed like the world was going to end every weekend. I had weekly board calls, making frequent decisions, and doing things I never thought I would have to do. I am sure that my board and investors frequently wondered what in the heck I was doing. I had to act without perfect knowledge; I had to act faster than my ability to communicate or explain my actions. I could do this because we had built trust. And we kept GE safe because we moved fast.

Similarly, I have learned that speed is important as we globalize. I have been frustrated by our growth in India. We have missed opportunities because of our bureaucracy. So I moved one of our most talented leaders to create a “mini-GE” in India. I am giving him complete delegation of authority to pick up the pace.

But trust can only be built on competency. We are trying to build competency in to our junior leaders even more quickly, so they will be prepared for the complex situations and decisions that lie ahead.

To that end, we are launching a new Corporate Leadership Staff. These will be the best and brightest of our 22-30 year olds. We will give them accelerated experiences and training. The goal is to have them ready to run a big business by age 30.

We know this works. We have taken some of our best talent and given them intense and accelerated experience. It is the way you train in the military, and we know that intensive training and complex real experiences are the best tools for creating future leaders.

Speed means delegation; delegation requires competence. To develop both, we are focused on the “leadership bookends.” People at the beginning of their careers; and the top leaders in the company. If our “bookends” are better and stronger, then everything in between will improve.

Fourth, leaders must motivate with vision, but win through execution. This is something we have learned from you at West Point. We know that you build “leaders of character” and we know that you have to execute in extreme situations.

We respect and admire your understanding of leadership—so much so that we have asked Colonel Tom Kolditz and Colonel Pat Sweeney, instructors here at West Point, to teach at our leadership institution, Crotonville. We have learned a ton from you and we are excited by what the West Point leadership perspective provides to our business managers.

The truth is, people want an emotional connection that inspires action and commitment.

They need charismatic vision. I want GE people to believe that they can change the world. But this requires words and action. Our slogan is “Imagination at Work.” The work part is quite important.

There is no “one style of leadership” that you should emulate. But great leaders always match vision with execution. And leadership in general must welcome both purpose and power.

Let me give you studies in contrast. One of my heroes was President Reagan. President Reagan was very charismatic. He could give speeches all day long and you would never be bored. At the same time, he was responsible for an aggressive reform agenda that forever changed our country.

On the other side is the Chinese government. Talk about boring! But they are executing their eleventh “five year plan.” They do exactly what they say they will do. They will likely be the biggest economy in the world someday. Man, these guys are good!

GE has a vision to transform healthcare, called “Healthymagination.” We want to reduce cost, improve quality and increase access. It is a great vision. But we are also spending $6 billion to launch 100 new products; conducting healthcare delivery experiments around the world; moving ideas from the United States to China and back again; dedicating our best human talent; and I am spending about 15 percent of my time on the initiative. In the end, actions speak loudest.

I believe in mission-based leadership. This requires clarity of communication, transparency of purpose and unity of team. Change requires incredible determination.

You will always be criticized when you challenge the status quo. So we want true believers. GE is not the right company for everybody. We want people who see a purpose bigger than themselves.

21st century leaders will have the vision …and they will connect with people in a way that enables people to follow. When the vision connects with actions … when the head connects with the heart … drastic changes take place.

Last, leaders must like and respect people. I think we are at the end of a difficult generation of business leadership, and maybe leadership in general. Tough-mindedness, a good trait—was replaced by meanness and greed—both terrible traits. Rewards became perverted. The richest people made the most mistakes with the least accountability. In too many situations, leaders divided us instead of bringing us together.

As a result, the bottom 25% of the American population is poorer than they were 25 years ago. That is just wrong.

I was recently at an event with some unemployed steel workers. Their stories are truly sad. They just want to work. They want to be led.

What is my responsibility? What will your responsibility be someday? Technically, nothing. Financially, nothing. We do not have to care. But we should.

It begins by people telling the truth. We do have to compete to be great; we must improve training and education; we cannot protect everyone in a global economy. In my career, I have had to deliver difficult news that I believed was in the best interest of the enterprise.

At the same time, ethically, leaders do share a common responsibility to narrow the gap between the weak and the strong. I have taken on the challenge to increase manufacturing jobs in the United States. These are the jobs that have created the Midwestern middle class for generations. Manufacturing jobs paid for college educations, including mine. They have been cut in half over the past two decades.

Many say this is a fool’s mission. I don’t have all the answers. What I can bring … what GE can bring … are investments, training and operating approaches to help everyone win.

The residue of the past was a more individualistic “win-lose” game. The 21st century is about building bigger and diverse teams; teams that accomplish tough missions with a culture of respect.

We are committed to renewing American leadership.

We are developing better listeners; systems thinkers. We are creating structures that build speed around competency. We are exciting people with vision and action. And we plan to bring everyone with us.

This new spirit of American leadership—much of which is derived from this great institution—will be the foundation of renewal and change. Institutions that endure, like GE, like West Point and the Army, have three things in common: A commitment to integrity, a commitment to performance; and a commitment to learn and grow stronger.
In closing, let me end where I began, by expressing my admiration and gratitude for West Point, for the service you will give our country, for the service of those who came before you and for the values you exemplify.

Like all Americans, I read about the sacrifices you and your colleagues have made in Iraq, Afghanistan, and around the world. And I am sure that all of you have friends who have been killed or wounded during the war.

Their example, and the example of every American who stands in harms way so that we may be secure in our freedom to build our businesses and follow our dreams and improve our lives, is the voice of our national conscience.

Few of us will ever do what many of you will do for duty, honor and country. But America doesn’t expect heroism from all of us. It does expect us to be good citizens of this country where no one’s dreams are too big, a country that is defended so bravely by others. It expects us to honor the sacrifice made on our behalf by making the best use of the freedom you protect. Wherever our talents lie, and whenever our conscience requires, we must all, to the best of our abilities, help keep America the great face for good it has long been. We are trying to do that at GE.

America is at a turning point. The U.S. Military defends our freedom to succeed, and your values will help to direct our renewal. It has been a great privilege to talk with you.