Profile in Leadership

Personal Ties

Michael Chen, MBA ’85 President and CEO, GE Capital – Media, Communications and Entertainment

by Merrill Douglas

When Michael Chen took his first sales position, he really started loving his career. “I never tracked how many hours I worked or how many hours I spent on the road,” he says. “I was working weekends. But it wasn’t work anymore.”

Michael Chen, MBA ’85
Chen’s mandate in that job, at GE Capital Aviation Services (GECAS), was to lease aircraft to airlines. But his mission was to forge human ties. He loved listening to customers, learning about their problems and needs, earning their trust, and discovering new ways to help their businesses grow.

Chen’s mission is the same today, and his passion for that role is a major element in his success as a leader.

Since 2007, Chen has served as president and CEO of GE Capital — Media, Communications and Entertainment, which provides financing to companies in industries such as cable, wireless, TV and radio, outdoor advertising, and entertainment programming.

"The first time I visit clients, we spend an hour or two making no presentation about what we do,” Chen says. Instead, the team listens. “We try to understand what they do and what their customers are like, and understand the business model.”
“We’re also making equity investments in digital media,” he says. “That’s the area that’s going to replace a lot of the traditional media over time.” This strategy involves working with sister company, NBC Universal, though the jointly owned Peacock Equity Fund, to buy stakes in promising ventures such as online gaming service, Bigpoint, the medical reference site, Healthline. com, and BlogHer, an online community for women. When Chen and his team approach a new customer to talk about financing or an equity investment, the most important tool he brings to the table is his talent for personal connection. The tool he usually leaves at home is PowerPoint.

“The first time I visit clients, we spend an hour or two making no presentation about what we do,” Chen says. Instead, the team listens. “We try to understand what they do and what their customers are like, and understand the business model.” It’s not until the second or third meeting that Chen and his team start suggesting solutions. Even then, they don’t make a straight sales presentation. “I like to have a discussion, spending less time on PowerPoint and more on dialogue,” he says.

That give-and-take uncovers valuable information. Even when these conversations don’t pay off in immediate business, they lay a foundation for the future.

“Michael was very good — and I’m sure he still is — at building relationships when there are no deals to do,” says Ken King, a retired GECAS executive who reported to Chen there starting in 1999.“That’s when you get to know the people, and that’s when you get invited to do the deals.”

Talk Uncovers Opportunity
Deeply rooted relationships served GECAS and its customers well, for example, after the terrorist attacks of September 11, 2001. As vice president and general manager, North America, at GECAS, Chen knew that his customers — the airlines — were hurting badly. Passengers weren’t flying.

“The last thing North American airlines needed was more aircraft leases from us or any other lessor,” Chen recalls. In fact, airlines wanted to break their leases and reduce their fleets. At the same time, however, GE offices abroad were reporting that the airline industry overseas was booming. “And they had a huge demand for aircraft.”

So GECAS let some North American airlines end their leases without penalty. The company then offered the returned planes to overseas airlines, which gladly paid a premium.

GECAS spotted this opportunity thanks to its close ties with the airlines, Chen says. “If we had waited and had not been talking to our customers, other lessors would have found out about it, and the price we got internationally might not have been as attractive.”

Conversations with airline customers also revealed a second opportunity for GECAS. “We found out that, because of 9/11, they were running out of cash,” Chen says. So, using planes that the airlines owned outright as collateral, GECAS offered them loans. It was a classic win-win. The airlines shed unwanted planes and got some much-needed cash. GECAS gained profitable leases overseas and also took on lending as a new line of business.

Robert Milton, president and CEO of Air Canada during the post-9/11 crisis, recalls vividly how Chen threw himself into the search for solutions for his customers. He remembers walking through a shopping center with his family late one evening during that time, talking on the phone with Chen.

“If you’re the sales guy for a leasing company, you can turn the phone off if you feel like it,” says Milton, now executive chairman of the holding company Air Canada Enterprises. “This guy was available around the clock.”

Besides making himself accessible to customers, Chen earns their trust by delivering on his word. Keeping promises — even the smallest — is a basic principle. “If I say I’ll call someone back the same day, I’ll make sure I don’t leave the office until I do so,” he says. Chen also is tireless in pursuit of information that will help him fashion a deal that works for both GE and its customer. Jeff Potter, now CEO of Exclusive Resorts, recalls meeting Chen in 1995, shortly after Potter joined Frontier Airlines as CEO.

Frontier, then a struggling, year-old carrier, needed access to new, more fuel-efficient planes. But few lessors would talk with the firm. As vice president of risk management at GECAS at the time, Chen visited Frontier to assess its business plan and recommend whether to offer a lease. “He spent two weeks, every day including weekends, understanding our strategy — why it would work, what the risks were if it didn’t work,” Potter says. His pointed questions forced Potter to rethink his assumptions about how the airline should operate.

Chen, too, was prepared to re-examine any assumptions he had brought to the meeting. “We had very specific needs and a very specific business model,” Potter says. “He was able to really dig into that and give full appreciation of our direction.”

A flair for nurturing productive relationships also marks Chen’s leadership style within GE. As a vendor to GECAS, John Feren, former vice president of sales for leasing and asset management at Boeing, was impressed by Chen’s ability to lead professionals who had been working in the industry for many years.

“Most of the people he managed were older than he was,” recalls Feren, now senior vice president of business planning at Aviation Capital. Young executives often have trouble in that situation, but Chen did not. “His team always respected him. I think he stuck up for them, so they never felt that if they took risks, they wouldn’t be covered.” Chen’s own drive also impressed the team, he says.

Four ‘I’s

Chen has thought long and hard about the qualities he aspires to as a leader. He calls them “The Four ‘I’s”: Integrity, Impact, Inclusiveness, and Inspiring people.
The ability to inspire people has grown especially crucial since the start of the current recession. Like many other businesses, GE Capital – Media, Communications and Entertainment has been forced to lay off employees, and it’s had to shift its emphasis from growth to protecting its core business and assets.

At the Peacock Equity Group, Chen has made a point of assuring employees that even in this difficult environment, GE Capital will continue to nurture their enterprise. “When you have someone at this level who picks up the phone, sits with people in their offices and gets them comfortable that this is a business he believes in — and you take him at his word, because he’s built up that trust — it really resonates with people,” says Tom Byrne, managing director and head of the Peacock Group. Chen’s personal involvement also motivates people to work through the challenges, he adds.

In times like these, it’s more important than ever not to cajole employees into “false exuberance,” but to develop “real optimism,” says Chen. That means understanding that even if the glass is only half full today, a well-focused, hard-working team can raise the water level back to the top.

Chen stresses to his employees — and to his four sons — that life isn’t fair. “The question is, how do you navigate? Life is kind of like a video game,” he says. A game without obstacles is boring. “Understand that there’s a barrier, and find a way to jump over it.”

For his own inspiration, Chen doesn’t need to look far. “He’s often talked about his parents, and the sacrifices his parents have made, particularly his father,” says Katy Choo, GE’s senior counsel for litigation and legal policy. Choo has gotten to know Chen through GE’s Asian Pacific American Forum (APAF), an employee affinity group, which Chen headed from 2006 until 2009.

During talks at APAF meetings, Chen has told moving stories of the sacrifices his parents made to raise his sister and himself in the U.S., and he has spoken of his gratitude, Choo says.

“He left everything,” says Chen of his father, who fled China after the Communist revolution with a bullet wound in his leg. In the U.S., the elder Chen put himself through the University of Michigan and then earned a Ph.D. from Columbia University. He worked for 28 years as a scientist at IBM, but he and Chen’s mother always lived modestly, saving their money to put Chen and his sister through school.

At 92, Chen’s father is physically frail but mentally strong. He lives with Chen and his family, and Chen says he cherishes the time they spend watching sports on TV and sharing stories. This close personal tie provides tremendous encouragement. “It makes me feel that no challenge in life is very big if my father could overcome the challenges he faced.”