The July 2004 issue of Business 2.0 magazine contains a terrific article about General Electric’s renewed commitment to innovation under the leadership of CEO Jeffrey Immelt (sorry, no link is available yet; you’ll have to buy the magazine to read this one). The article explains the strategies that this industrial giant is utilizing to reinvent itself:
“In a sense, Immelt has concluded that to power his $134 billion goliath forward, his managers must view GE not so much as a collection of huge, multibillion-dollar businesses but as a vast network of entrepreneurial, Silicon Valley-style – or better still, Edison-style – tech startups. He has ordered them to grab the scientific lead on the far technological frontiers of markets from clean energy to medical diagnostics to nanotech to security to jet-propulsion systems. And he wants to harness that revved-up innovation metabolism to a more highly developed and systematic marketing effort than GE has marshaled in many years, if ever.
The result, Immelt believes, will be a GE that looks like an entirely different company – more entrepreneurial, more science-based, and generating much more growth from its own internal operations than by simply acquiring other companies. ‘Constant reinvention,’ Immelt says, ‘is the central necessity at GE.’”
The article highlights four major strategies that GE is employing to accomplish this major transformation:
1. Chase big change: GE is targeting markets undergoing transformation, such as energy, healthcare, transportation and security for potential billion-dollar scores.
2. Repurpose everything: GE managers have been ordered to find new markets for existing products; modifying medical imaging technology to monitor industrial systems, for example, is expected to bring in $1 billion in 2006.
3. Sell like crazy: Immelt created the post of chief marketing officer, named marketing executives for each of GE’s 11 major divisions, and added 5,000 new salespeople.
4. Unleash the mad scientists: Immelt reinvigorated the famed House of Magic research center, hiring hundreds of new scientists to dream up groundbreaking innovations.
Under the leadership of Jack Welch, GE grew primarily through acquisitions. Immelt is committed to leverage the opportunities for growth and innovation that exist within each of its divisions and core technologies, while still pursuing acquisitions on a limited basis.
This is a fascinating article that outlines not only the opportunities but the challenges of innovation in a company this large. Based on its early successes, as documented by this article, I believe GE will succeed in its efforts to reinvent itself.