Ge'S Growth Strategies: The Immelt Initiative

GE's Growth Strategies: The Immelt Initiative

- Taking Charge: Setting the Agenda

* On Friday, September 7, 2001, Jeff Immelt took over for Jack Welchc as CEO of GE. Four days later, the 9/11 attacks occurred and the world was thrown into chaos.

* By the end of Immelt's first week on the job, GE's stock had dropped 20%.

* Later that year, GE's stock dropped again on suspicions from the Enron scandal.

* After a rough start to his tenure, Immelt realized that internal growth would be the key to GE's long-term success.

- Building on the Past, Imagining the Future

* Immelt constantly went out of his way to emphasize that GE was not an over-grown, slow to move, slow to react conglomerate.

* He instead viewed the company as a collection of highly correlated businesses made up of world-class people, processes, and strategic initiatives.

* Acting on this, Immelt created a growth strategy made up of 5 key elements:

1. Technical Leadership - A key driver of future growth

2. Services Acceleration - GE already had a large amount of product out in the industry that would eventually need servicing as the products aged and wore down.

3. Commercial Excellence - Shifting focus from GE's internal processes to external customer requirements.

4. Globalization - Main focus on China and India.

5. Growth Platforms - Build new businesses based on high-growth areas that will provide "unstoppable" opportunities.

- Investing through the Down Cycle

* Immelt felt that investing heavily in the business during the economic slowdown of the early 2000's was crucial to the long-term growth of the company.

* Immelt quickly made the following acquisitions: the Telemundo and Bravo television networks, Interlogix security systems, and water service provider BetzDearborn.

* He also committed to building several new R&D facilities around the world.

* Despite these efforts, GE's stock dropped another 39%.

- Ongoing Operations: Rigor and Responsiveness

* Immelt made cash flow GE's number one financial focus. He used tools like Six Sigma to re-align the business around this objective. It was through improved cash flow that Immelt would continue to invest in the business.

* Immelt also hoped to change the image of being CEO of GE from the cold, results-oriented focus of Jack Welch, to a more open and less hard-edged image. The main offspring of this effort was a renewed focus on social responsibility and the creation of a new role within GE: VP of Corporate Citizenship.

- Rebuilding the Foundation: Beginning a Marathon

* Looking back on 2002, it was a horrible year for GE. Revenues were flat, corporate scandals were all over the news, the economy was struggling, and GE's stock continued to slide, now 60% off of its all-time high from 2001.

- Rebalancing the Portfolio

* As 2003 began, GE finalized plans to acquire Vivendi-Universal Entertainment. Immelt felt that this acquisition was crucial to growing the NBC business within GE as the deal would provide them with important content, production facilities, cable distribution and a strong management team.

* Shortly after the Vivendi deal, GE announced plans to acquire a British life-science company, Amersham. Immelt felt that Biotechnology would be very important part of GE's future growth.

* There were many concerns about this second merger, particularly the idea that GE's corporate culture would stifle the innovation and creativity that had made Amersham successful in the first place. Immelt vowed to not allow this to happen.

- Focusing on Customers, Emphasizing Services

* Immelt named Beth Comstock as GE's first Chief Marketing Officer in 2001. This move was meant to stress GE's new focus on their customers and less on their internal processes.

* Acting on the momentum created by the new marketing emphasis, Immelt formed Commercial Council in 2003 to bring together GE's top sales and marketing leaders. Immelt chaired that council himself.

* GE began to work very closely with their customers to improve their customer's business (focus on providing service for GE). In 2002, GE completed 6,000 Six Sigma projects with their health-care providers alone.

* Immelt wanted GE service to be a critical part of their customer's operations.

- Driving for Growth: New Platforms, New Processes

* GE's top leaders identified 6 business growth platforms that would lead to way for GE's growth opportunities over the next few years:

1. Health-care information systems, security and sensors, water technology and services, oil and gas technology, Hispanic broadcasting, and consumer finance.

2. These businesses were averaging a 15% annual organic growth rate.

- Aligning Management: New People Profiles

* As GE's growth strategy began to take hold, Immelt worried that some of GE's traditional managers may not have the skills to be able to succeed in the more entrepreneurial environment that he was trying to create.

* Acting on this,