Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.
~Jack Welch, former CEO of General Electric
GE created by Thomas Edison in 1890 is a perfect reflection of the need of flexible strategies in a company to become renowned. This firm has a dynamic capability to keep pace with changes in the environment by updating its array of capabilities. Thus, strategies have to be dynamic and anticipatory.
On September 7, 2001, four days before 9/11, Jeff Immelt, who was an in-charge of GE Medical Systems for 3 years became the new CEO of GE. He believed "What we have is a company of diverse benefits whose sum is truly greater than parts."
The case study "GE’s Growth Strategy: The Immelt Initiative", highlights that leadership skills and strategies can be formulated but difficult to be emulated. Immelt was aware that he stood in the shadow of his predecessor, Jack Welch, who made GE successful by having a strong vision towards growing and thus doing timely acquisitions, resulting in double digit profit.
“In the words of the great philosopher Mike Tyson,” Mr Immelt says, smiling, “everybody has a plan till they get punched in the mouth." Immelt soon realised to change the strategy of GE to continue on the same growth of the last two decades. He possessed an extreme foresight and believed in innovation. He re-defined the growth strategy based on five important factors:
- Technical Leadership: Leveraging technology as the main driver for growth.
- Services Acceleration: Focusing to build a service business on GE's base of turbines, locomotives, jet engines to generate high margins and reduce competition.
- Commercial Excellence: Create a world-class commercial culture to match the engineering and financial oriented approach under Welch.
- Globalisation: Expanding the business in developing countries like India, China(Shanghai), Europe.
- Growth Platforms: Allocate resources to build new business platforms that would provide growth in future. Example: Ecomagination- development of wind farms in China.
The way Immelt utilised the company's size and diversity as strength is phenomenal and is a perfect example of strong leadership. Despite hardships and financial crisis, his constant effort to utilise technology as a tool, patience and the push for teamwork company-wide helped GE to be a competitive advantage. Example: Selling off NBC to Comcast, as he could see technology is changing and realised Comcast to be the best fit. Taking initiatives such as Townhall meetings and Dreaming sessions to further the growth platforms and innovation. Cutting of underperforming business like Insurance in GE, along with the cost of operations, to expand business portfolio aligned the business with the customer and market needs. He did not sacrifice his long term goal to achieve short term profit and sales which are a difficult task to do by any company.
The key take away from his strategic moves is to trust the capabilities instead of blindly investing in a business because everyone is following it. And today, more than a hundred years later, nothing has changed. GE’s pioneering objective remains the same: innovate, innovate, and innovate some more.
Sharing 4 minutes youtube video on GE works on the things that matter - Worth watching
3. Case: GE’s Growth Strategy: The Immelt Initiative (Bartlett, Harvard Business School, 2006)