The New GE Way: Immelt on Steroids
(column by Thomas A. Stewart, Editor, Harvard Business Review)
An interview with General Electric CEO Jeffrey R. Immelt

General Electric is spending every waking hour to achieve an audacious aim - to grow organically two to three times faster than world GDP. Pursuing that goal, the company has invented a whole new set of management methods. When Jeff Immelt became Chairman and CEO of General Electric, he took the helm of a fine-tuned productivity machine. GE had long taken management innovation seriously. Immelt succeeded former CEO Jack Welch in September 2001, just in time to see the world change. Blows to the global economy came from corporate scandals and terrorist attacks on American soil. Immelt knew that GE could not cling to its status quo. Coming up on Jeff Immelt's fifth anniversary in office, Harvard Business Review offers the first deep look under the hood of Immelt's GE.

In a conversation with Editor Tom Stewart, Immelt pointed out that the challenge has been "to take this great operating company and not lose anything, but add to it." The nature of the addition? A new and disciplined focus on organic growth. Immelt puts two of GE's traditional strengths - process orientation and the ability to develop, test and deploy management ideas - in service of a different goal. That meant designing a process that could reliably draw new revenue streams from existing businesses. The goal GE has set for sustained organic growth - two to three times the growth of global GDP - translates to about 8% today. No company has ever achieved the kind of growth GE is seeking, and certainly not on a revenue base of $150 billion.

Que: You are determined to move GE from a culture of productivity to a culture of growth - organic growth that is - and not growth by acquisition. Why?

Ans: We're now in a slow-growth world. Things were different 25 years ago. Oil was under $30 a barrel; most growth came from the developed world; we were a country at peace. After I came in as CEO, I looked at the world post-9/11 and realized that over the next 10 or 20 years, there just was not going to be much tail wind. It would be a more global market, it would be more driven by innovation, and a premium would be placed on companies that could generate their own growth. We have to change the company - to become more innovation driven - in order to deal with this new environment. It's the right thing for investors. Productivity is still very important, but if you look back at GE's businesses over the past decade or so, those that have been managed for both productivity and growth have done the best.

Que: The first big thing you did when you became CEO was throw a billion dollars into research and development. That was a fairly attention-getting growth bet.

Ans: I put a stake in the ground about products, innovation research and development technology because there we could lean into an existing infrastructure that was decent, but needed to get out of the basement. This was the area where even small things would have an immediate impact. We put more than 100 million bucks into renovating our research center in upstate New York. We had already started a tech center in India, but we added new ones in China and Germany and I made the businesses themselves spend more in research and development. And we started getting a flow of technology.

Que: What was the rationale for the acquisitions you began making in the year 2003? How do they fit into the company's organic-growth objective?

Ans: We did a lot of heavy lifting in our portfolio because we didn't have enough juice. We saw where we needed to go, and we wouldn't get there with our existing businesses. Therefore, we bought homeland security, biotech and water businesses that would give us a stronger foundation for innovation. Around the same time, we started on the sales force and named Beth Comstock CMO to raise our game in marketing. By the end of 2003, we pulled together the best sales and marketing people in the company and formed the Commercial Council, which I chair. That turned out to be a big deal. The council was designed to share best practices and plan growth programs, but more fundamentally, it began to develop this idea of growth as a process.

Que: Why was that important? Why should organic growth be cast as a process challenge? Please explain.

Ans: If you run a big multi-business company like GE and you're trying to lead transformative change, that objective has to be linked to hitting levers across all of the businesses - and it must keep that up over time. So you've got to have a process. That's true from an internal standpoint, but it's also the only way you get paid in the marketplace. Investors have to see that it's repeatable. I knew that if I could define a process and set the right metrics, this company could go hundred miles an hour in the right direction.

Que: With stronger capabilities in place in sales and marketing, you can then start to connect the dots across the company. Isn't that the idea behind your push for more enterprise selling, where one salesperson can represent the company's entire range of offerings to a customer?

Ans: We've always done enterprise selling on an ad hoc basis, but we want to go beyond the convenient cross-selling opportunities and think more systematically about the kinds of customers that can benefit from our broad portfolio. If somebody's building a hospital, that might represent a total package of $1 billion, of which the GE market potential might be $100 million. We're probably already talking to the C-suite because we sell the medical equipment. What we need to do is set things up so that the medical rep can bring in the lighting rep, the turbine rep and so on. The focus here is on four or five vertical industries and a couple of big events like the Olympics. Enterprise selling is only maybe ten percent of the company's sales. But our market share is probably twice as high when we can combine things in that way.

(End of Thomas A. Stewart column)

How do you spell 'free'? D-e-a-d
(column by Akansha Pradhan)
Google, despite having mind boggling fame, will need to develop saleable products to grow, or even to survive

"Google's tools certainly can't compete on functionality, but the question is, do they have to?" says James Governor, principal analyst of London-based IT firm, Red-Monk. But wait... this isn't a story just about Google, rather a story of consumer choices, piracy, Microsoft , and all the four letter words that go on between them. On June 6, 2006, Google beta launched its interactive spreadsheet programme. Users can dynamically share information, much like an online basic model of Microsoft Excel. It also has Writely - a word processing tool that is already in testing phase. Actually, many have declared this as the start of another epic Google versus Microsoft battle.

But now, look at the Redmond-based giant Microsoft . A behemoth whose tools to its credit are so popular (and expensive) that people have continuously tried to hack, copy and pirate it. But Gates introduced an anti-piracy programme to counter the illegal MS Windows versions. In fact, on July 5, 2006, Microsoft 's Windows Genuine Advantage global initiative would complete a year; in India, the drive was launched recently on June 1, 2006. The plan includes a most innovative 'pirate-software' notification service. This is a pop-up that appears on the PC running counterfeit Microsoft soft ware alerting a user that he/she is a victim of software piracy. Of course, if one decides to ignore the alert, their 'illegal' versions will not be privy to non-critical updates.

An era in which Microsoft is hell-bent on forcibly converting pirated soft ware users, is unfortunately the same era in which the biggest threat facing Microsoft is the four letter word being thrown at it by Google, that is, "free". Especially, in an era where the $100 Linux-based laptop is being envisaged, where free Open Source Soft wares (OSS) are available, where Google is giving out free and functional applications. "I am not sure forced conversion is such a great idea - it certainly seems to be backfiring," points RedMonk's James Governor. So should Microsoft go the "free" way? There is no doubt it can afford to give away products at no cost to gain leadership, as Mukul Krishna, Industry Manager Digital Media, Frost & Sullivan, Texas, asserts, "Microsoft can give things literally for free. If you get in a price war with it, you can sink." But Ravi Venkatesan, Chairman, Microsoft India, disagrees - vouching for easy payment options -arguing, "Our FlexGo technology enables more flexible...purchasing options. The pay-as-you-go model...enables customers to pay for their computers as they use it through prepaid cards."

There appears to be some weight to Venkatesan's anti-free argument. Microsoft 's quarterly revenues of $10.9 billion (quarter ending March 31, 2006), are almost $8.7 billion above Google ($2.25 billion for the same quarter). While Microsoft 's majority revenues were from product sales, Google earned a measly $28,062 as licensing and other revenues in the same quarter; while earning $2.22 billion from advertising on Google web sites. With not one product in their stable for which users will ever pay money, how long can advertising revenues sustain Google's growth, and in fact, survival? Unless Google innovates drastically and starts "selling products", the question it will surely face is whether the four letter word "free" actually means another four letter word, "dead".

(End of Akansha Pradhan column)