GE Imagination Breakthrough

Assignment Questions:
Q : 1 What is your evaluation of Immelts new organic growth strategy? Why change GEs
existing successful strategy? Is it reasonable to expect that a $125 billion global giant can
significantly and consistently out perform the underlying economic growth rate?
Immelt inherited a GE that was highly focused on cost and operational effeciencies coupled
with acquisitions to drive growth. But at the time Immelt tookover the world economy was
facing a downswing and oil prices were rising with the USA attacking Afghanistan post
9/11 followed by Iraq a few years later.
The Internet bubble had burst with a number of internet companies going bust .
Simultaneously the World was witnessing a number of start up developing new
technologies and selling off to larger companies for huge sums of money.
Immelt realized that focusing only on the acquisition route for new technology or chasing
new trends could lead to GE paying huge sums of money hurting their already weakening
top line and bottom line.
He was sure that GE could succeed in the new world only if it was a technology leader. Thus
by being the first to innovate or introduce new technology they could extract a premium
from the customers and beat the underlying economic growth rate.
Also the trend which began in 1960s wherein organisations started becoming more
customer focused culminated in the customer service and finally customer relationships in
2000s. GE had become too internally focused during this same time. Thus a change was
needed .Immelt being a salesman himself correctly identified that GE needed to go to the
customers to understand their needs and develop products that were ahead of time.Thus
the increased focus on marketing and creating and recruitment and transfer of talent to
marketing.

Q : 2 Is Immelt betting on the right things to drive growth in GE ? Can he hope to change a
company whose growth was driven by acquisitions and productivity improvement into an
organic growth company dependent on innovation, entrepreneurship and risk taking
particularly in such a large complex performance driven corporation?
Immelt has grown through the ranks mentored personally by Jack Welch. Jack Welch the
legendary CEO of GE who helped GE earn returns of 23% per year over 2 decades
personally selected Jeff Immelt to takeover the reigns of GE from him over several
contenders. Jeff was groomed in several of GE businesses and repeatedly proved himself to
be an able contender for CEO.
Through his prior experience he saw the importance of marketing to the organization.
Immelt also had to think on his feet as 4 days after assuming office as CEO the World trade
Center attacks took place. He was also witnessed to the dotcom bubble and the rapid
improvement in technology over the past few years. He thus must have realized that the
methodology adopted by his predecessor Jack Welch in which he focused on efficiency and
productivity could not be continued. With the growing ease at which information was
available and the spread of internet the company needed a more outward focus on
customer needs rather than the inner focus which the company currently had as a result of
Jack Welchs strategy.
He was witness to a World in which a technology was introduced hit its peak and then
crumbled (internet bubble) in a few years. Thus if GE needed to repeat the 23% growth
figures it needed to be a technology leader by identifying the customers needs and
developing suitable products and cashing in on these before competition(especially from
China) replicated these innovations. GE should be spending on its own R&D and entering
businesses rather than buying out startup at a much higher cost and then suffering due to
the decline of technology due to the shortened technology lifecycle.
To drive this new organic growth strategy he made several organizational changes such as
creating a post of CMO, shifting several senior level executives to marketing roles,
introducing VP level marketing officers in each of GE businesses, recruiting engineers,
setting up of Global Research Center in Shanghai to focus on emerging economies with
China estimated to be the largest and a similar GRC in Munich to focus on European
customers to make GE a truly international organization. Also after decades the courses at
GE executive training center at Crotonville were change to inculcate imagination and
external customer focus in GE executives.
He also introduced imagination breakthroughs (IB) in which he looked in to personally to
ensure that his organic growth strategy was a success. The session 1 was also renamed
growth playbook to highlight the desire for organic growth and to internalize the thinking
in the organization.

All these changes had begun to bare fruit with the GE transportation EVO project and
subsequent iterations gaining widespread customer acceptance. In fact out of 83 IBs
approved 35 were launched and converted into $2 billion sales proving the success of
Immelts strategy.

Q : 3 How have the Locomotive IBs been able to survive in the wake of the failure of the AC
6000, the initial difficulty in obtaining orders for EVO, the continual redefinition of the
global EVO product and the failure to make hybrid commercially viable ?
The locomotive IBs in a very stable and mature industry that locomotive is caught the
attention of Jeff Immelt the CEO. The focus on customers needs and thorough analysis of
the future market coupled with innovative offers such as leasing engines to the railroads to
garner customer confidence helped with initial orders.
Understanding the future trends in adavance and favorable environment such as the rising
fuel prices,emission norms and growth in rail traffic put GE with the right product at the
right time and offered to the right customer lead to the success of EVO after the AC 6000
debacle.
For the GML project recruiting a member Gokhan Bayhan who had worked in Kazakhstan
for a GE project helped in gaining insight on the customers needs and thereby influenced
suggestions of the Tiger team and the modification of GML to the more adept GMF engines .
GE also sensed an opportunity to sell other products while selling the engines and so
started bundling the Signal and servicing options along with the engine sales negotiations
thereby increasing revenue to GE from a single customer.

Q : 4 What action should the Transportation business take regarding the Hybrid
Locomotive?
Post the AC 6000s disaster the company successfully introduced and sold the EVO engine at
a premium price by gaining the customers confidence.
Its thorough market analysis and product analysis in the growth playbook sessions clearly
for and EVO type engine. Even though there were very few orders in the start the sales
started to boom.

However looking at the issues faced with the Global Modular concept for which GE received
orders from China government. A technical team evaluated the feasibility of the project for
widespread implementation around the world and suggested tinkering with the concept to
form Global Modular family.
Similarly for Hybrid project the concept is ahead of time but as Comte suggested that the
long term trend was away from fossil to Hybrid and government was also ready to fund the
project. This proves that Hybrid technology was the future.
So GE transport should not shelve the project. They should take government funding and
transfer responsibility of developing the battery technology to Global research center as
the same tech may be needed in other GE businesses.
If taking funds from the government can be avoided as other GE businesses contribute to
the battery technology development that would be in line with GE policy of avoiding
government funding and eliminate future arm twisting from the government.
GE transportation can with the remaining funds available pursue development of the other
engines till Hybrid is ready for launch.
Thus GE transportation can reduce their own opportunity cost while simulataneously
contributing to development of Hybrid.