Do you think there is a trend toward choosing younger CEOs, like Jeffrey Immelt, to run larger well-established corporations? I don’t think there is a single trend [except] that CEOs are in greater demand than ever before. There’s an enormous demand for top talent out there. Boards are being much less patient than they ever were before… This has sent people like us looking across the whole spectrum–young, old–wherever we can find good, solid CEO talent…

Do you think some of the older executives feel threatened by the younger and talented fortysomethings? I don’t think so.

Are older executives still sought after? Yes, that’s because of the shortage of management talent… Look at Sumner Redstone. He’s 77, and he’s doing a hell of a job with Viacom. Peter Drucker out there on the West Coast, he’s 91 and he’s writing the best management books in the world. So there’s hope for Gerry Roche.

Do you think that Jeffery Immelt has a tough job ahead of him, following in Jack Welch’s shoes? Absolutely. But I think he’s up to it.

What, in your opinion, does he need to do to succeed? He has to be himself. Nobody can ever be Jack Welch again. There is only one of him. Once in a millennium one of those guys comes along. Immelt should be his own man and do his own thing, and he’ll be fine. He’s inheriting a magnificent company that is disciplined, structured and poised for the future better than any corporation on the planet. Immelt’s got all the tools… and he’s got 20 years to give to GE.

What are the differences in style between Immelt and Welch? Jack Welch has a mystical quality about him that supercedes anything they teach at Harvard. He is truly, truly one of the most extraordinary executives I have ever met. He has the extraordinarily rare combination of being a visionary, of being conceptual, of being very bright, and yet, of being very operational… the other thing about Jack is his sensitivity to people… that’s what makes him great.

Do you think Immelt is as strong in those areas? Jeffrey Immelt is 44, Jack Welch is 65, so Jack Welch has 20 years on Immelt. Is Immelt right now exactly what Jack Welch is? No. Does Immelt have the potential to become a Jack Welch? I certainly think so. He has the potential to become a Jeffrey Immelt.

Do you think he’ll last? Yes.

Why? I think he’ll last because he’s that good. The thought, “Will he last?” has never crossed my mind. He will last.

You say CEOs need sensitivity. But aren’t most CEOs, including Welch, ruthless? That’s bulls–t! Ruthless CEOs don’t make it, over the long term. Can you think of a ruthless CEO who’s been successful? Ruthless people own the company and become potentates and they fall on their own sword. Jack Welch is one of the most sensitive guys. When he dumps a division or dumps a division head, you might call him ruthless, but I would say he’s very decisive. I think it’s uncharitable to keep somebody in a position who can’t handle it. It’s bad for the individual. If you want to call it ruthless to fire someone, be my guest, but that’s not ruthless, it’s decisive… it’s tough-minded.

What would you say is the largest mistake companies make when developing people for top management positions? Invariably, not working as hard to develop people as they should. My business thrives because boards and top management’s lack of attention to developing people. Jack Welch spends most of his time reviewing people’s backgrounds for promotion. He doesn’t spend all of his time studying statistical numbers for reviews…

Why doesn’t management pay more attention? A lot of these brilliant [management] types withdraw into statistical, financial, rational analysis, instead of the other side, which is much harder–the characteristics of leadership, sensitivity, thoughtfulness, empowerment, people-building. That’s harder. They don’t spend a lot of time on it in the business schools either…. I had one chairman tell me [of his CEO], “Well, he’s a big boy, we just assumed that he knew how to do this, it’s not up to me to tell him what his problems are.” Well, why not? It absolutely is his responsibility. His first responsibility is to sit down with his CEO and say, “Here’s the way we see it. These are your good points, these are points that need development, and here’s an action plan to improve your performance. Frankly, if you don’t improve within a year, you’ll probably be out of here.” Now that takes guts.

What are the most important qualities to look for when choosing a CEO? The leadership characteristics: sensitivity, good judgment, vision, courage, energy, decisiveness.

What about experience? Immelt is not the most experienced guy that Jack had to choose from. I’d say potential.

So experience only counts for so much? Some of the greatest failures in American business have had a lot of experience…