GE’s Growth Strategy:The Immelt InitiativeIM551 – IT Strategy & Management – KAIST Business School By: 조성택, 김정민, 박지우, 신지은, Anggri – Jan 23, 2013
Question #1 What are the main reasons why GE has sustained so long?
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
GE’s Sustainability Investment Systematic Management Change & Innovation People Integrity Portfolio Service Core Business Business Technolo gy Cash Generators + Growth Engine = Sustainability
Question #2Do you think GE is a process enterprise?
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
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
Question #3.1 What is your opinion about GE’s recent diﬃculties?
GE’s Recent Diﬃculties Actually, about half of GEs 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)
Question #3.2What would you recommend to GE for its future sustainability?
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
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
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 Commercial20 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
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