Online Extra: General Electric, the Immelt Way

The boss talks about his five years under the microscope as CEO and what's ahead for the company and the economy

It has been a tumultuous five years for Jeffrey Immelt, who took over the top job at General Electric (GE ) shortly before September 11, 2001. Amid war, post-Enron regulation, and investor boredom with blue-chip stocks, he has bought or sold businesses worth $100 billion. He has pushed for innovation and green technologies. Has it worked? Immelt thinks so, but investors have their doubts. GE stock (adjusted for splits and dividends) is worth less than it was the day he took over, and about a third below the highs of 2000.

Immelt spoke recently with BusinessWeek Senior Writer Diane Brady. Below are edited excerpts of their conversation.

You walked into a storm.

The first year was tougher than I could imagine. You had 9/11, Enron, and the recession. The way CEOs and companies were viewed changed 180 degrees in 15 minutes.

I was a rookie CEO…following the most famous guy in history. But the times were extremely different for my predecessor. The late 1990s was about every tree growing to the sky and admiration of CEOs.

Is there anything you would have done differently?

One thing I wouldn't have done—I think in early 2002—was tell BusinessWeek that I admire [former Tyco (TYC ) boss] Dennis Kozlowski and [ex-Vivendi chief] Jean-Marie Messier. In retrospect, I would have gotten to the internal organization we have today much faster. It created disruption and investors read a lot into every change. I could have moved faster.

How has life changed since you became boss?

One thing you get is too much service. Everybody wants to carry your bag. I will drive home in my own car tonight. I don't find driving to be particularly tough. You fight for normalcy.

Was your confidence ever low at any point?

I've always felt like I could do this job. But it's a lonely job. Jack [former GE CEO Jack Welch] used to say this, and it's true: Change has a constituency of one at the beginning. You've got to absorb the information and drive the initiatives. It's not like I'm weeping in the corner somewhere. It's a singular responsibility. I love it.

What's the downside of the public company experience these days?

The pendulum [on regulation] has gone too far one way and needs to come back some. My job is to play by the rules of the day. I tell people in GE, "You're not allowed to complain about the referee, at least not in public." We keep our mouths shut and just keep going. But money flows are just not coming to the New York Stock Exchange. You can say what you want about the GE stock, but the S&P 500 is lower today than it was in 2000. That's not good. Companies' earnings have doubled, tripled, or quadrupled.

Money flows to the NYSE have a lot to do with how people view the U.S. economy.

The U.S. economy over the past few years has been, in many ways, better than in the late 1990s. It's more sustainable. Even though interest rates will go up, I still think the economy is pretty gosh darn good. GE is half outside the U.S., and that's growing twice as fast as our business in the U.S. This is going to be a profoundly global company.

One of the things you never delegate is a feeling about a region. What GE does in China is very much a reflection of what I think of China. What we do in Russia is a reflection of what I think of that place.

So what do you think of Russia?

It's challenging.

Do you worry about China?

I always believe that you have to track governmental change very closely in China. Things can change very quickly. By and large, the government is very global in nature. They know they need global partners to be successful. But you've got to be mindful of political changes and legal changes.

Some say if you're a big multinational, you need your own foreign policy.

There's some truth to that. We're an American company and, to be successful, we have to do business every place in the world. We made another investment 18 months ago in Spain, and our people in Washington were concerned that Spain was really out at that time. It had pulled out of Iraq and everyone was angry. We've got a plastics factory there. Spain isn't out for us.

Vice-Chairman David Calhoun just left GE for a potential payout of $100 million to run [private media outfit] VNU. Has private equity changed the game?

A lot of dollars go to alternative investments now—hedge funds and private equity—dollars that used to go to the New York Stock Exchange, GE stock, and things like that. It's a very different job from what we do. We get to see ideas come together. That's what makes GE fun in a way that the private-equity experience isn't.

I remember the day when our sales in China were zero. Now, they're $6 billion. In private equity, you buy, fix, and sell. Here, you buy, invest, and build… Most of my best friends work for GE.

How do you get investors excited about the stock again?

My job is to figure out how to grow and manage risk and volatility at the same time. We're in better shape than we were in 2001. GE is 65% bigger, and earnings have doubled. We're going to outperform the S&P 500 in revenues, earnings, and return on total capital. I'll keep drumming that home.

There's a lot of attention on GE and others going green. Why now?

In 2004, we were going through our summer strategic plan, and about two-thirds of the business reviews included new products in energy efficiency, water conservation, environmental technologies, and things like that. So we turned it into a growth campaign. Until 2004, I had never camped outside. Never.

Do you recycle?

I'm not sure. Maybe somebody in my house does. It's not like I'm Johnny Appleseed here. This was purely about the science of business. I don't consider myself an environmentalist. I'm a business leader who says this is a very important trend in the eyes of our customers and society and the government.

The nonperformer right now is NBC.

We've developed more shows for the fall. Studio 60 is just phenomenal—edgy, funny, and shocking. And the Tina Fey show is great. Alec Baldwin plays the thug from GE, and he's hilarious.

What do you make of the Sumner Redstone/Tom Cruise blowout?

In my world, those things are kept private. In entertainment, it's about stars and great shows. Why is Disney (DIS ) going to have a great third quarter? It's because of Johnny Depp and a great movie.

What's next?

I think about the intensification of globalization a lot, and preparing the company for that. We sell MRI scanners that cost about $1.5 million in the U.S. Now it's about designing a scanner that can be sold for $500,000 in China. We need to do that 10 or 15 times.

How much vacation do you take?

A couple of weeks, I guess, but there's probably not a day where I disengage from the company. But that's not a burden. I love work. I have an exceptionally close relationship with my wife and daughter. We've all grown up that way. If I'm home four straight nights for dinner, they start to ask: "Don't you have something to do?"

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