Steve Seargent: GE's Aussie Seargent

Steve Sargent has had a long and distinguished career with General Electric and he's loved almost every minute of it.

Steve spoke to Wealth Creator about what it means to be CEO of Australia and New Zealand in one of the largest corporations in the world.

General Electric's long term financial goals across its global network of companies are: 8% organic revenue; greater than 10% annual earnings growth; operating cash flow growth exceeding earnings growth; and a return on average total capital exceeding 20%. GE sets high standards, and that is no more evident when speaking to Australian CEO Steve Sargent.

Steve surfaced at GE in 1993 after establishing Westpac's Asset and Securitisation business in New York. Once his mission was fulfilled, he moved on and over to Connecticut where he was hired as Managing Director Asset Securitisation for GE capital Commercial Finance to develop GE Capital's securitisation business.

In the 13 years he has been with GE he has held positions as Six Sigma leader for GE Commercial Finance (1996), head of Small Enterprise Services Group (1998), Chief Quality Officer for GE capital (1999), for which he assumed global responsibility for driving GE's Six Sigma initiatives across its 24 businesses and 110,000 associates, and President and CEO of GE European Equipment Finance in London, overseeing assets of $10 billion and operations in 16 western European countries. Today, not only is he CEO Australia and New Zealand, he is also President and CEO of GE Commercial Finance, Australia and New Zealand. GE Australia and New Zealand is made of six business units including GE Finance (the largest of GE's six global assets with US$230 billion worldwide), GE Commercial Finance, GE Industrial. GE Infrastructure, GE Healthcare and NBC Universal.

WCM: Steve, you've had such vast experience, what has that taught you about leadership?

Steve Sargent: Leadership is about execution and what execution gets down to is choosing the right people and then understanding the measurements that ensure you are driving activity. I have seen some of the best-run businesses in the world, but I've also seen some amazing screw-ups and even GE didn't always get it right - when you don't have operating disciplines, you will find that your business is a disaster. If that is the case a good leader will restructure. When I was sent to Europe to one of our less successful operations - more than once for my sins - there was a group of businesses who had made a dozen or more acquisitions over a short period of time across 16 countries and could have integrated them better. So it was a matter of restructuring. It was a challenge time.

WCM: What type of restructuring did you have to undertake?

SS: We had too many costs and unfortunately we had to take people out. That is not easy to do in Europe, but we were able to turn things around. I remember having to pitch to the board to restructure, and I was sitting across the table from Jack Welch (GE's most successful and high profile CEO) and he said 'this is too aggressive for you', and it was, but we pulled it off. We turned an $80 million loss into a $250 million profit.

WCM: You had to deal with a range of different cultures across Europe to get the job done, how did you manage this?

SS: Every country you go to has a different culture: different language, different tax, different legal, different regulatory, and every one of those was tough to move, it was one of the biggest challenges.

WCM: How do those differences affect GE's operations globally?

SS: When you go to a well-known GE business in Tokyo or London, in less than 30 minutes you can sense the GE culture. We have very consistent operating disciplines and that is pretty much GE's key to success. It is also based more around the soft disciplines than the hard - we spend a lot of time on building and developing tomorrow's leaders. I spend about 40% of my time on people: coaching people, selecting people, assessing people, reviewing people and making sure I get the right people into the right positions, moving them up and exposing them to the right elements. There is an incredible focus on leadership development.

Secondly, we have a very strong culture, regardless of the country. Whether you're in France, New Zealand, Australia, Japan or England, the culture of accountability, performance and values is the same. That's not to say there is no room for the local cultures, but there are remarkable similarities across the organisation.

WCM: So how do you nurture that culture?

SS: Every company has a set of values, but do they hire for those values or assess for them? I'm assessed not only on the hard tangibles, but on values. The company performs 360-degree reviews based on my values. We also fire for values. We are not cut throat, but if someone is not behaving the way you expect, we let them know. We coach them and assess them and if there is no improvement, regardless of absolute performance, they will probably realise that GE is not the place for them to be and there are places that suit them better.

WCM: What are the GE values?

SS: Curiosity, passion, resourcefulness, accountability, teamwork and communication. You could probably go to other companies and they wouldn't differ much, there's certainly nothing fantastic here, but we are real about it. Then there's imagination and belief an action. We hire for it and assess performance against it and we turn over for the lack of significant deviation.

WCM: With the continued growth of GE across all of its business streams, what markets are left to conquer?

SS: What's fascinating about the company right now is that Jeff Immelt (GE global CEO) is working towards a more customer-focused identity. For years we have been renowned as an execution company, we can execute just about anything, we are renowned for solid technology in terms of aircraft engines, health care and in medical imaging. We are renowned as one of the best leadership development and CEO factories in the world, but can you sit there and say GE is a terrific sales and marketing company. No, you think Proctor and Gamble or Johnson and Johnson. Jeff is absolutely committed to changing this. So we have added another set of, what we call 'growth tracks', and it has an external focus.

WCM: With external change comes internal change, how do you manage that?

SS: Our organsation has become increasingly complex, where you need to work with people across many different boundaries and in many areas of expertise, so the way we work today is very different than the way it was, so we expect people to think clearly and communicate complex ideas and be prepared to get out there on the edge with new ideas.

If you think about the way GE works, we turn over a CEO about every 20 years. Jeff came in 2001, and what we almost always do is read the baseline and start building the company of tomorrow. We are a multi-product, multi-business company, and we take out the businesses we see have no potential for growth and returns. We started to move away from insurance and IT in 2001, and we have simultaneously built the world's largest water company.

WCM: Is that how you maintain GE's reputation as a business leader, by evaluating what you have done and changing direction if necessary?

SS: You can't be too proud to tear something down. If had stayed in just our lighting and appliances business, which are our two longest standing businesses, we'd probably be making a couple of hundred million as opposed to $20 billion. It's another key think about the GE concept, you have a group of people who see changes and opportunity and they embrace change, which makes the company a very exciting place to work.

If you look at GE, it was one of the first 30 companies on the Dow Jones and stock index back in 1896. Of those 30 companies, GE is the only one left. The reason why is because we bear absolutely no resemblance to the company we were 30 years ago, let alone back then. We continue to evolve and move into things like financial services, water and security. We are now the world's largest water re-usable company.

WCM: How do you keep ahead of those trends and how do you know what to look for in change?

SS: It starts with great people. Every company in the world will tell you its people are its greatest asset. I always do the calendar test: 'How much time in your calendar have you spent with your people?' If I look back over the last month, I can show you mine is almost half.

Secondly, you look at demographic trends. Less than one percent of the water in the world is useful. You look at population growth. In Australia we have a water re-use challenge. Most regional cities like Goulburn or Toowoomba, have significant water challenges and you look at that and say how can we use our technology so we can re-use water. We look for opportunities where we can help society. It was the same with security. The world changed rapidly after September 2001, and if you had to pick a trend, security was a priority because unfortunately it's difficult to imagine that things will quickly get better.

WCM: You obviously have to keep shareholders in mind, when you take up a new challenge?

SS: If a business doesn't have a growth characteristic we like, or if it does not fit into our modelling, we won't consider it. If it can't reach the double-digit growth figures that we are looking for, or consistency of earnings growth that we like it is not feasible.

WCM: If we can go back to the question of people, as a leader and CEO, how do you get the best out of people?

SS: What I try to do is create an environment where people can grow. You have to give people the opportunity to live their dreams and give them flexibility. As far as I'm concerned work is what you do, not where you go. So you work with your team and look for opportunities and create the right environment for people to come up with ideas and to take some big swings. If you look at our revenue growth last year, that's like building a new British Airways, Nike or Pepsi. You can't do that unless you have terrific people.

WCM: Just finally, you are the regional CEO of one the world's largest and longest standing organizations, are you happy with where you sit?

SS: I have always been a person who has focused intensely on what I'm doing. I work really hard at it and fortunately have been very successful under the belief that good things will happen, so I'm happy. I love working in this company, I love the work I do and I love the people. I've sent he world and learnt an awful lot. I certainly want to do more, but I'm not the type to plan my career. I focus on what I do today and sometimes when you work hard enough you get lucky.

Steve's (GE's) keys to success

1. Growth leaders - Inspire and develop people who know how to help customers and GE grow.
2. Customer value - Use our process excellence to create customer value and drive growth.
3. Innovation - Generate new ideas and develop capabilities to make them a reality.
4. Leadership in technology - have the best products, content and services.
5. Commercial excellence - Create a world class marketing and sales capability.
6. Globalisation - Create opportunities everywhere and expand in developing markets

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