GE's Growth Strategy: The Immelt Initiative

-Challenge as the CEO role in 2001

On Friday, September 7, 2001, Jeff Immelt filled in for Jack Welchc as CEO of GE.
The global economics is faced with turndowns, and four days after his taking office, the
9/11 attacks occurred and the world was thrown into chaos
Organizational innovation and management system was closely linked with Welchs
personality, but Immelts personality and style were totally different from Welchs.
By the end of Immelts first week on the job, GEs stock had dropped 20%.
Later that year, GEs stock dropped again on suspicions from the Enron scandal.
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 GEs stock continued
to slide, now 60% off of its all-time high from 2001.
- Strategy for the future of GE
Between 2001 and May 2002, Immelt had devoted himself primarily to shoring up
confidence among customers and investors and within the company in the aftermath of
the various shocks to the USA and to business opinion.
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 as follows:
1. Technical Leadership Immelt identified technology as a key driver of GEs future
growth and emphasized the need to speed up the diffusion of new technologies within GE
and turn the corporate R&D into an intellectual hothouse.
2. Internationalization GEs major opportunities for organic growth would be in its
overseas operations-particularly in China, India and Europe.
3. Services Acceleration Take more of the back room resources and put them in the
front room-more sales people, more engineers, and more product designers.
3. Commercial Excellence Shifting focus from GEs internal processes to external
customer requirements.
5. Growth Strategy Build new businesses based on high-growth and high-margin areas
that will provide unstoppable opportunities and expand GEs base.
- Ongoing Operations of Strategy
Immelt identified cash flow as GEs number one financial focus. He used tools like Six
Sigma to realign the business around this objective. It was through improved cash flow
that Immelt would continue to invest in the business.
Immelt hoped to adjust organizational structure of GE from the cold, results-oriented
focus of Jack Welch, to a more open and less hard-edged architecture. He believed that
the major changes that he would initiate at GE would be a result of the changing
environment that GE faced and the shifting priorities that it faced.

- Rebalancing the Business Portfolio

Immelt believed that GE needed to reposition itself to maximize growth opportunities
and to achieve growth targets through sound acquisitions.
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
GEs future growth.
There were many concerns about this second merger, particularly the idea that GEs
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 GEs first Chief Marketing Officer in 2001. This
move was meant to stress GEs 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 GEs top sales and marketing leaders.
Immelt chaired that council himself.
GE began to work very closely with their customers to improve their customers
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 customers operations.
- Driving for Growth: New Platforms, New Processes
GEs top leaders identified 6 business growth platforms that would lead to way for GEs
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 GEs growth strategy began to take hold, Immelt worried that some of GEs
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, HR developed new career paths for managers, focusing on more indepth job experience as opposed to job rotations.
HR also developed 5 action-oriented leadership traits that they would require all leaders
to possess:

1. External (customer) focus

2. Think Clearly
3. Imagination and Courage to take risks
4. Inclusiveness and Connection with People
5. Expertise in a function
To develop these skills, 20-30 pillar jobs were created within each organization which
required the continual use and development of these 5 skills.
- Funding the Growth: Operating Excellence
Throughout GEs re-investment itself, Immelt insisted that the companys ongoing
operations fund the growth. To accomplish this, Immelt enacted tools such as Lean Six
Sigma
These efforts, as well as an overall simplification and consolidation of the business,
allowed GE to save a considerable amount of money by the time 2004 rolled around.
- Preparing for Liftoff: Innovation and Internationalization
By 2004, the world economy was turning around. By years end, 11 of GEs businesses
had turned in double-digit earnings growth compared to 2003 numbers.
Immelt felt that this was only the beginning and that GEs focus on growth and reinvesting would soon start to pay off.
- Imagination Breakthroughs
Imagination Breakthroughs (IBs) were identified as large projects or business
opportunities that had the potential to generate at least $100 million in earnings within 3
years.
Within 1 year of launching an initiative to develop IBs, over 80 had been identified
within GE. By 2005, 25 of these were generating revenue.
- Town Halls Meeting and Dreaming of future
Immelt started holding Town Hall Meetings with customers to get a better idea of what
they wanted out of GE and how he could serve them better.
He also created another type of forum known as Dream Sessions in which he would
meet with major CEOs from major industries to discuss roadmaps, implications for GE,
and future opportunities for GE.
- Infrastructure for Developing Countries: A New Growth Market
In 2004, revenues from outside of the US including China, India, grew by 18%.
Leading the way was a massive increase from developing countries an area that
Immelt was particularly focused on for long-term growth
- Reorganizing the Company structure for Efficiency
In 2005, Immelt reorganized the company into 6 major groups:
1. GE Industrial
2. GE Commercial Financial Services

3. NBC Universal
4. GE Health Care
5. GE Consumer Finance
6. GE Infrastructure
Each group was to focus highly on coaching, developing and supporting younger
managers within the group.
- Going Forward: Immelts Next Challenges
Immelts main challenge moving forward is to maintain the momentum that his moves
have produced to date.
GE thrives because we use our size to help us grow.
Our goal is not just to be big, but to use our size to be great.
Ecomagination challenge
With new situation of the developing countries like China, how can GE Healthcare lead
the healthcare markets?