GE case study solutions

GE's Growth Strategy: The Immelt Initiative -Challenge as the CEO role in 2001 • On Friday, September 7, 2001, Jeff Immelt filled in for Jack Welchc as CEO of GE. • The global economics is faced with turndowns, and four days after his taking office, the 9/11 attacks occurred and the world was thrown into chaos • Organizational innovation and management system was closely linked with Welch’s personality, but Immelt’s personality and style were totally different from Welch’s. • By the end of Immelt’s first week on the job, GE’s stock had dropped 20%. • Later that year, GE’s stock dropped again on suspicions from the Enron scandal. • Looking back on 2002, it was a horrible year for GE. Revenues were flat, corporate scandals were all over the news, the economy was struggling, and GE’s stock continued to slide, now 60% off of its all-time high from 2001. - Strategy for the future of GE • Between 2001 and May 2002, Immelt had devoted himself primarily to shoring up confidence among customers and investors and within the company in the aftermath of the various shocks to the USA and to business opinion. • Immelt constantly went out of his way to emphasize that GE was not an over-grown, slow to move, slow to react conglomerate. • He instead viewed the company as a collection of highly correlated businesses made up of world-class people, processes, and strategic initiatives. • Acting on this, Immelt created a growth strategy made up of 5 key elements as follows: 1. Technical Leadership – Immelt identified technology as a key driver of GE’s future growth and emphasized the need to speed up the diffusion of new technologies within GE and turn the corporate R&D into an intellectual hothouse. 2. Internationalization – GE’s major opportunities for organic growth would be in its overseas operations-particularly in China, India and Europe. 3. Services Acceleration – Take more of the back room resources and put them in the front room-more sales people, more engineers, and more product designers. 3. Commercial Excellence – Shifting focus from GE’s internal processes to external customer requirements. 5. Growth Strategy – Build new businesses based on high-growth and high-margin areas that will provide “unstoppable” opportunities and expand GE’s base. - Ongoing Operations of Strategy • Immelt identified cash flow as GE’s number one financial focus. He used tools like Six Sigma to realign the business around this objective. It was through improved cash flow that Immelt would continue to invest in the business. • Immelt hoped to adjust organizational structure of GE from the cold, results-oriented focus of Jack Welch, to a more open and less hard-edged architecture. He believed that the major changes that he would initiate at GE would be a result of the changing environment that GE faced and the shifting priorities that it faced.

- Rebalancing the Business Portfolio • Immelt believed that GE needed to reposition itself to maximize growth opportunities and to achieve growth targets through sound acquisitions. • As 2003 began, GE finalized plans to acquire Vivendi-Universal Entertainment. Immelt felt that this acquisition was crucial to growing the NBC business within GE as the deal would provide them with important content, production facilities, cable distribution and a strong management team. • Shortly after the Vivendi deal, GE announced plans to acquire a British life-science company, Amersham. Immelt felt that Biotechnology would be very important part of GE’s future growth. • There were many concerns about this second merger, particularly the idea that GE’s corporate culture would stifle the innovation and creativity that had made Amersham successful in the first place. Immelt vowed to not allow this to happen. - Focusing on Customers, Emphasizing Services • Immelt named Beth Comstock as GE’s first Chief Marketing Officer in 2001. This move was meant to stress GE’s new focus on their customers and less on their internal processes. • Acting on the momentum created by the new marketing emphasis, Immelt formed Commercial Council in 2003 to bring together GE’s top sales and marketing leaders. Immelt chaired that council himself. • GE began to work very closely with their customers to improve their customer’s business (focus on providing service for GE). In 2002, GE completed 6,000 Six Sigma projects with their health-care providers alone. • Immelt wanted GE service to be a critical part of their customer’s operations. - Driving for Growth: New Platforms, New Processes • GE’s top leaders identified 6 business growth platforms that would lead to way for GE’s growth opportunities over the next few years: 1. Health-care information systems, security and sensors, water technology and services, oil and gas technology, Hispanic broadcasting, and consumer finance. 2. These businesses were averaging a 15% annual organic growth rate. - Aligning Management: New People Profiles • As GE’s growth strategy began to take hold, Immelt worried that some of GE’s traditional managers may not have the skills to be able to succeed in the more entrepreneurial environment that he was trying to create. • Acting on this, HR developed new career paths for managers, focusing on more indepth job experience as opposed to job rotations. • HR also developed 5 action-oriented leadership traits that they would require all leaders to possess:

1. External (customer) focus 2. Think Clearly 3. Imagination and Courage to take risks 4. Inclusiveness and Connection with People 5. Expertise in a function • To develop these skills, 20-30 “pillar jobs” were created within each organization which required the continual use and development of these 5 skills. - Funding the Growth: Operating Excellence • Throughout GE’s re-investment itself, Immelt insisted that the company’s ongoing operations fund the growth. To accomplish this, Immelt enacted tools such as Lean Six Sigma • These efforts, as well as an overall simplification and consolidation of the business, allowed GE to save a considerable amount of money by the time 2004 rolled around. - Preparing for Liftoff: Innovation and Internationalization • By 2004, the world economy was turning around. By year’s end, 11 of GE’s businesses had turned in double-digit earnings growth compared to 2003 numbers. • Immelt felt that this was only the beginning and that GE’s focus on growth and reinvesting would soon start to pay off. - Imagination Breakthroughs • Imagination Breakthroughs (IBs) were identified as large projects or business opportunities that had the potential to generate at least $100 million in earnings within 3 years. • Within 1 year of launching an initiative to develop IBs, over 80 had been identified within GE. By 2005, 25 of these were generating revenue. - Town Halls Meeting and Dreaming of future • Immelt started holding Town Hall Meetings with customers to get a better idea of what they wanted out of GE and how he could serve them better. • He also created another type of forum known as “Dream Sessions” in which he would meet with major CEOs from major industries to discuss roadmaps, implications for GE, and future opportunities for GE. - Infrastructure for Developing Countries: A New Growth Market • In 2004, revenues from outside of the US including China, India, grew by 18%. • Leading the way was a massive increase from developing countries – an area that Immelt was particularly focused on for long-term growth - Reorganizing the Company structure for Efficiency • In 2005, Immelt reorganized the company into 6 major groups: 1. GE Industrial 2. GE Commercial Financial Services

3. NBC Universal 4. GE Health Care 5. GE Consumer Finance 6. GE Infrastructure • Each group was to focus highly on coaching, developing and supporting younger managers within the group. - Going Forward: Immelt’s Next Challenges • Immelt’s main challenge moving forward is to maintain the momentum that his moves have produced to date. • “GE thrives because we use our size to help us grow.” • “Our goal is not just to be big, but to use our size to be great.” • Ecomagination challenge • With new situation of the developing countries like China, how can GE Healthcare lead the healthcare markets?