GE's big plans for growth

GE has set an ambitious 'organic growth' target of 8% per year, based on its ability to keep operational costs low while maintaining an ever-growing record of innovation that leads to product excellence.

by Harvard Business Review
Last Updated: 23 Jul 2013

This needs to be coupled with superior marketing to ensure the products reap the best possible price in the market. As far as low, general and administration costs are concerned, GE's CEO Jeffrey R. Immelt expects this to go down from 11% to 8% in the next four years.

"We'll be cutting nongrowth costs as close to the bone as possible." GE will only 'fund for leadership' in its product markets; in other words, if it cannot provide the very best product in that market it will have to consider closing that part of the business down. It intends to focus entirely on where its strengths lie.

The company will aim to globalise its way of thinking (to have a non-US global viewpoint where appropriate) but Immelt admits this is an 'aspirational' goal and will take time to achieve. To show how they are trying to change their thinking to respond better to local markets, Immelt mentions GE's work on Ratan Tata's "1 lakh car" (estimated retail price: $2,250) which is likely to be made mostly of plastic – which is good news for GE's plastics business.

There are five leadership qualities for the kind of growth required: external focus; imagination and creativity; decisive, clear-thinking; inclusivity; and, 'deep domain expertise' in the different markets.

A crucial ingredient to GE's organic growth strategy is the launching of a few 'imagination breakthrough' projects every year such as GE's hybrid locomotive. These are protected from any budget-slashing and can ultimately earn $100m in new sales over a three-year period.

Source:
Growth as a Process
Jeffrey R. Immelt
Harvard Business Review, June 2006  
Review by Morice Mendoza

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