Wednesday, April 12, 2017

GE: The company with no competitors

GE is the perfect example of successful strategy implementation. Their continuous success can be explained by their constant innovation, along with a strategy that couldn't be emulated. GE’s core business profile and strategy created a competitive advantage that would require other companies “financial and cultural commitments over decades” to have a chance to compete (GE’s Growth Strategy: The Immelt Initiative). 

GE’s business profile can be perfectly explained thru them adhering to the concept of capability coherence. As discussed in the 'Coherence Premium' article, capability coherence is what determines long term success. It is where company figure out what they are good at and develop only that. With the leadership of Jeff Immelt, GE moved from a conglomerate to areas where they excelled (The Interview). GE figured out their strength, and developed them until no one can compete with them. At least, not without rewinding time by a couple decades to conduct massive investments and research development. By selling their weaker businesses, such as NBCUniversal, where they couldn't focus all their energy and money due to some inherent weakness, they are able to instead expand businesses in their area of expertise ('The Interview' and "GE goes with what it knows”).

Immelt also seems to be a great leader with extreme foresight, and ability to take things one step at a time. Despite the initial setbacks and lack of expected growth, he persevered and continued following his goal, knowing that it might take a few years for returns. He did not sacrifice long term growth in exchange for short term boost, like many companies did when they cut down on research and development. As such, GE could maintain a double-digit growth that closely matched the performance of the S&P 500. 

Looking at the case study of GE and Immelt’s leadership, there is a clear path for strategy, although one that can’t be easily emulated. The most value lesson to learn from him is to start early and plan far ahead, even if there is no immediate return. The long term benefits can be immense if the right plan is made. But most importantly, to stick with what you are good at instead of blindly following what’s been successful elsewhere. As Immelt even said, if his strategy can be found on the Wall Street Journal, it is likely not a good one. Instead, learn about what you are good at and work on growing that. Some strategy may seem like a such a great idea, that those in power are blinded to the dangers. They either don’t recognize the downsides, ignore the dangers, or falsely believe what worked for an other company will also work for them. When company do attempt to move to adjacent markets, to merge to capture synergy, or not listen to market signals, they are often on their way to failure (Seven Ways to fail Big). If the company truly understood their business, had capability coherence, and listened to objective third parties, many failures can be avoided. 

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