When Jeffrey Immelt D’78 became CEO of General Electric nearly a decade ago, only 30 percent of the company operated outside of the United States—over the course of his tenure, it has doubled to 60 percent. “Globalization is a big theme that is going to drive people of this generation,” he says. “A lot of our growth is going to come from that.” It’s one message that Immelt hopes to impart to Tuck’s class of 2011 when he delivers the keynote address at Investiture in June.
Immelt’s speech comes on the heels of his appointment by President Barack Obama as head of the new President’s Council on Jobs and Competitiveness, an economic panel focused on job growth and global competition in the coming years.
During his tenure at GE, Immelt has radically remade the company, selling half of its portfolio and investing heavily in large infrastructure industries such as alternative energy and health care, which the company believes will pay off in the future. “This is a slow-growth world, and you only grow if you innovate,” says Tuck professor Vijay Govindarajan, a former chief innovation consultant at GE. “He is betting on health, betting on energy, betting on emerging markets. He is putting GE exactly in the position it should be.”
Part of what makes the strategy difficult, says Immelt, is that it is no longer enough for American companies to develop products at home and distribute them worldwide, with only small adaptations to local conditions. To be successful today, companies must come up with products that integrate local technologies and take the needs of local consumers into consideration, he says. “We call it reverse innovation. It’s really about lower price points, more portability, more thinking as a system rather than a specific application.” Done right, says Immelt, some of the same innovations the company is piloting in countries like China and India may come back to the United States. “Just look at health care,” he says. “It costs much less per procedure outside the United States. Some of that is just the price point of the product.”
The need to innovate requires that students continue learning well after they receive their MBAs. “The dumbest I was, was the day I graduated from school,” insists Immelt. “One of their goals needs to be the ability to get smarter and look around corners as time goes on.” After all, in a reverse-innovation world, the CEO needs to be both bold enough to bet on uncertain new industries but also humble enough to look for new ideas in unexpected places. “The obvious things are obvious because you already know them,” he says. “To be successful,” adds Immelt, “you have to have a notion that people count. You need to treat everybody, from the factory floor to the board room, with respect.”