Course: IT Strategy & Management Date: Jan 23, 2013 Reference: HBR Case – "GE's Growth Strategy: The Immelt Initiative"

1. GE’s Growth Strategy:
The Immelt Initiative
IM551
–
IT
Strategy
&
Management
–
KAIST
Business
School
By:
조성택,
김정민,
박지우,
신지은,
Anggri
–
Jan
23,
2013

2.
Question
#1
What
are
the
main
reasons
why
GE
has
sustained
so
long?

3. GE’s
Sustainability
Systematic Management with Innovation and Investment
- Ongoing Operation
Systematic
• Six sigma, digitization, process efficiency and simplification
Management - Growth Leaders, Develop 5 action-oriented leadership skills
- Investment through the down cycle for the future growth.
Investment - Increasing R&D budget.
• Building infrastructures, Developing new growth market.
- Disposal, Acquisition and Financial commitment.
Rebalance
• Subtract low return, low growth, low technology business.
The Portfolio • Add new tech. new geographies, new growth platforms, capabilities
2003 became the biggest acquisition year in GE’s history

4. GE’s
Sustainability
Investment
Systematic
Management
Change &
Innovation
People
Integrity
Portfolio
Service
Core Business
Business
Technolo
gy
Cash Generators + Growth Engine
= Sustainability

5.
Question
#2
Do
you
think
GE
is
a
process
enterprise?

6. GE
is
a
Process
Enterprise
Main
Concept
GE
Growth
Strategy
Traditional
vs
Process
A
Six-­‐Part
Process
Perspective
Traditional
Process
Central
Axis
Function
Process
Work
Unit
Department
Team
Job
Description
Limited
Broad
Measures
Narrow
End-­‐to-­‐end
Focus
Boss
Customer
Compensation
Activity
based
Results
based
Manager’s
role
Supervisor
Coach
Functional
Key
figure
Process
owner
executive
culture
Conflict
oriented
Collaborative

7. Examples
of
Process
Enterprise
in
GE
Growth
Leaders
Innovation
Great
technology
→
New
Generation
→
Imagination
Breakthrough
→
Lean
Six-­‐Sigma
1.
Purpose
1.
Purpose
1.
Purpose
-­‐
GE
need
People
with
3
things
-­‐
small
ideas
into
huge
business
-­‐
have
the
best
products,
contents,
1)
Market
depth
-­‐
To
drive
creating
and
services
2)
Customer
touch
growth
platform
&
Ideas
-­‐
reducing
working
capital,
3)
Technical
understanding
(projected
class
of
ideas)
improving
return
on
equity
2.
Specific
Process
2.
Specific
Process
2.
Specific
Process
-­‐
Developed
5
leadership
traits
1)
each
business
leader
1)
Define
problems
1)
external
focus
to
submit
at
least
3
proposal
2)
Indexing
Process
2)
think
clearly
a
year
(elimination
of
the
kinds
of
3)
imagination
and
courage
2)
Commercial
council
review
wastes)
4)
inclusiveness
and
connection
3)
Select
initiatives
3)
apply
the
new
Process
with
people
4)
Invest
money
for
ideas
※
Combining
Six
Sigma
5)
expertise
※
every
year
hundred
ideas
with
Lean
Speed:
-­‐
Became
the
Criteria
come
out
from
this
program
For
reducing
time,
1)
internal
training
programs
use
concept
of
Lean
2)
evaluation

8. Question
#3.1
What
is
your
opinion
about
GE’s
recent
difficulties?

9. GE’s
Recent
Difficulties
— Actually,
about
half
of
GE's
2001~Now Immelt’s Stock Performance
profits
came
from
GE
Capital
→
Big
problem
when
financial
crisis
happened
in
2008
— Accounting
fraud
in
2009
→
Bad
9.11 Terror
Financial Crisis
corporate
image
for
GE
— GE’
stock
didn’t
perform
well
under
Immelt
→
leadership
GE Stock Performance Comparison
problem?
Jack
Welch
Jeff
Immelt
— Pressure
of
delivering
increased
CAGR:
CAGR:
EPS
to
share
holders
→
23%
+53.4%
-­‐0.6%
growth
(1981-­‐2000),
7%
growth
(2001-­‐2009)

10.
Question
#3.2
What
would
you
recommend
to
GE
for
its
future
sustainability?

11. Our
Recommendation
for
Future
Sustainability
GOAL:
Excellence
in
these
3
dimensions
Profit
People
Economic Social
“I
find
out
what
the
world
needs,
Planet
then
I
proceed
to
invent
it.” Environment
– Thomas Edison

12. Create
Big
Challenges
to
win
back
the
Leadership
+
Company
Brand
+
Sustainable
Growth
ENVIRONMENT
HEALTH
— 1.4
B
PEOPLE
— 2.6
B
PEOPLE
STILL
DO
NOT
HAVE
ACCESS
TO
MODERN
ENERGY
LACK
ACCESS
TO
BASIC
SANITATION
— DOUBLE
THE
CARS
— 2
B
PEOPLE
EXPECTED
ON
THE
ROAD
BY
2030
DO
NOT
HAVE
ACCESS
TO
PRIMARY
HEALTHCARE
OR
CLINICS
— 80%
DECREASE
IN
CARBON
EMISSIONS
NEEDED
BY
2050
TO
STABILIZE
— 90%
INCREASE
THE
CLIMATE
IN
AGRICULTURAL
PRODUCTION
NEEDED
— 800
MAJOR
NATURAL
DISASTERS
EACH
YEAR
— 60%
OF
DEATHS
DUE
TO
CHRONIC
DISEASE
..for
a
better
planet
..for
a
healthier
population

13. Q
&
A

14. “The most important thing I've learned since becoming CEO is context.
It's how your company fits in with the world and how you respond to it.”
– Jeffrey Immelt, CEO of GE

15. Appendix

16. Product
Management
&
Sales
team
under
pressure
SEC
filing
of
“Inappropriate
Accounting”
–
(Aug
2009)

17. Divestment
of
assets
to
cover
losses:
Sale
of
Home
Appliances
(NYTimes,
May
2008)
NBC
Universal
to
Comcast
(timesonline.co.uk,
Nov
2009)

18. GE
Capital
became
liability

19. Decoupling
need
and
technology
is
the
key
Global
Energy
Related
Emissions
(Gt
CO2/
yr)
Energy
Efficiency
Entitlement
60
Sector Global Efficiency Opportunity (-Q BTU / yr, 2020)*
50
Industrial -­‐53.0
40
Residential
2012
-­‐34.5
30
-­‐13.5
Commercial
20
Total
Entitlement:
Transport -­‐13.0
~130%
of
US
Energy
Use**
10
Supply Power -­‐21.0
0
1990 2000 2010 2020 2030 2040 2050
*At
>10%
IRR,
McKinsey
**
’06
Usage:
100
Q
BTU,
EIA
IEA
Reference
Scenario
80%
reduction
path

20. As
people
age,
they
become
more
chronically
Almost
75%
of
the
elderly
(>
65)
in
the
U.S.
have
at
least
one
chronic
disease.1
About
50%
in
the
U.S.
have
at
least
two
chronic
disease.
This
is
not
just
a
U.S.
concern
Almost
72%
in
Hong
Kong
have
at
least
one
chronic
disease.
Almost
80%
in
Turkey
have
at
least
one
chronic
disease.
Worldwide shift to a larger elderly population is occurring.
• Source: Statistics Bureau, MIC, Government of Japan; United Nations; The Japanese Ministry of Health, Labor and Welfare
• http://www.stat.go.jp/English/data/handbook/c02cont.htm