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- Jeff Immelt was CEO of GE for 16 years He turned to Silicon Valley for advice on keeping GE relevant and competitive In an essay published by the Harvard Business Review, he credits much of his inspiration to a 2011 article by Marc Andreessen, and the book “The Lean Startup”
Over his 16-year tenure as CEO, Jeff Immelt led General Electric through the effects of both 9/11 and the financial crisis of 2007-2008.
Along the way, he was always conscious of keeping GE relevant and competitive, and he turned to Silicon Valley for inspiration.
In a retrospective essay for the Harvard Business Review published weeks after stepping down as CEO, Immelt wrote that starting in 2009, he began making regular trips to GE’s controls and analytics lab and to the Bay Area to absorb as much information as possible about his company’s existing technology and how to take it to the next level. He met with CEOs like Amazon’s Jeff Bezos and Salesforce’s Marc Benioff to pick their brains.
Two pieces of writing popular in the Valley really resonated with him. “The two things that influenced me the most were Marc Andreessen’s 2011 Wall Street Journal article, ‘Why Software Is Eating the World,‘ and ‘The Lean Startup‘ – Eric Ries’s book, which I literally read in a day,” he wrote.
Andreessen is one of the founding partners of the highly influential venture capital firm Andreessen Horowitz, and his article was straightforward but prescient: The companies that are going to thrive are those that will embrace software; to have even a chance of survival over the next few years, all industries must learn from what is working in the tech sector.
Immelt wasted no time. “In 2011 we decided to hire Bill Ruh from Cisco to lead our industrial internet effort; to establish a major software center in San Ramon, California, that would support the transformation; and to insist from day one that we would infuse the effort with outside talent – our original goal was to hire a thousand software engineers,” he wrote. “Those decisions have led us to where we are today.”
“The Lean Startup” is the codifying of a theory first proposed by entrepreneur Eric Ries that essentially states that startups should experiment rapidly, dismiss failed ideas ruthlessly, and pivot to a new angle if the current iteration of the company isn’t sticking. It instantly made waves in Silicon Valley, earning the praise of people like Andreessen and inspiring a generation of entrepreneurs.
When Immelt read the book, he imagined teams throughout GE behaving as lean startups. Immelt made the book required reading for managers at GE and brought Ries on as a consultant. Together they developed FastWorks, an initiative that built teams around the lean startup ethos. For example, in 2013, a team in GE Appliances was tasked with creating a new refrigerator model with cutting edge technology and design.
The first version was a flop, the second fared better, and a few models in, they found something that connected with customers. This happened in a year; previous product development cycles, where the goal was to have a product to ship as close to perfect as possible, lasted five years.
In his article, Immelt wrote that while stock price underperformed in his tenure, he was proud of how he tripled earnings and reinvigorated GE.
“It will take years for GE to fully reap the benefits of the transformations. But as I contemplate my departure, I love where the company is positioned,” he wrote.