GE under Jack Welch focussed on super efficiency drives, financial engineering, process centricity - all these made wonders in yesteryears- The new GE is moving into a performance framework of hard-nosed, investment, incentive and penalty laden with heavy emphasis on risky but with potential high return to fule high growth "Innovation & Imagination Breakthrough" projects. Inorganic growth is out and new portfolio management principles come into place.This the new GE. Businessweek writes Jeff Inmelt is turning GE's culture upside down, demanding far more risk and innovation. Excerpts with edits and comments added:
Jeffrey R. Immelt admits to two fears: that GE will become boring, and that his top people might act like cowards.He worries that GE's famous obsession with bottomline results - and tendency to get rid of those who don't meet them - will make some execs shy away from taking risks that could revolutionize the company. Immelt, is clearly pushing for a cultural revolution. For the past 3 1/2 years,he has been on a mission to transform the hard-driving, process-oriented company into one steeped in creativity and wired for growth. He wants to move GE's average organic growth rate - the increase in revenue that comes from existing operations, rather than deals and currency fluctuations - to at least 8% from about 5% over the past decade. The new imperatives are risk-taking, sophisticated marketing, and above all, innovation.
Inmelt is throwing away long-cherished traditions and beliefs. Immelt has welcomed outsiders into the highest ranks, even making one, Sir William M. Castell, a vice-chairman. That's a serious break with GE's promote-from-within past. He is pushing hard for a more global workforce that reflects the communities in which GE operates. Immelt is also encouraging GE managers to become experts in their industries rather than just experts in managing. Instead of relying on execs who barely had time to position a family photo on their desk before moving on to the next executive assignment, he's diversifying the top ranks and urging his lieutenants to stay put and make a difference where they are. The GE chief is tying executives' compensation to their ability to come up with ideas, show improved customer service, generate cash growth, and boost sales instead of simply meeting bottom-line targets. As Immelt puts it, "you're not going to stick around this place and not take bets."
Globalizing research has allowed GE to get closer to overseas customers.Most of GE's growth will come from outside the U.S. Immelt predicts that developing countries will account for 60% of the company's growth in the next 10 years, vs. about 20% for the past decade. Over the past 18 months, Immelt has agreed to invest $5 billion in 80 projects that range from creating microjet engines to overhauling the brand image of 3,000 consumer-finance locations. The hope is that the first lot will generate $25 billion in revenue by 2007 - cheap, if it works, when you consider what it would cost to acquire something from the outside with that level of sales. In the next year or two, Immelt expects to have 200 such projects under way.To Immelt, the best managers are great marketers and not just great operators. That's a rethinking of GE's long-held bias that winning products essentially sell themselves. Immelt is also looking for more leaders who are intensely passionate about their businesses and are experts in the details. "I want to see our people become part of their industries," he says. For him, reinventing GE is the only way to make his company dominate this century, much as it led the one before. As Tom Peters points out, "Kudos to Welch on talent development: All three of the finalists for his job—Jeff Immelt, Bob Nardelli at Home Depot & Jim McNerney at 3M are going gangbusters!".
Category : Change Management & Growth.