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GENERAL ELECTRIC COMPANY CASE

STUDY
 March 2014

Authors:
Dr. Osako Marie Ngoie (Djemo)

 Argosy University, Chicago, United States

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Abstract
This paper discusses different characteristics of innovation and change within General Electric
(GE) Company. Corporations are highly challenged in the business environment by the
competitors and the customer’s satisfaction. The advanced pace in technology and the
globalization aspect have allowed many corporations as well as individuals to use their creativity
abilities and leadership skills to innovate new products and services, also new ways of perceiving
and presenting things. The change in people’s needs and socio-environmental expectations has
led GE Company to work through imagination by turning challenges into opportunities and
weaknesses into strengths. Innovation is the game to play in order to remain successful and
sustainable in the current global marketplace for all industries. Keywords: Leading Innovation,
Change, and General Electric Company,

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Running head: GENERAL ELECTRIC COMPANY
General Electric Company Case Study
Osako Marie Ngoie (Djemo)
Argosy University – Chicago
DBA Program
GENERAL ELECTRIC COMPANY 2
Table of Contents
Abstract …………………………………………………………………………………………4
Introduction ……………………………………………………………………………………. 5
Background of GE Company ………………………………………………………………….. 6
Literature Review…………..………………………………………………………………. … 7
The Characteristics of Innovation and Change in GE Organization ………………………….. 8
GE Challenges and Commitments ……………………………………………………………. 9
SWOT Analysis of GE …………………………………………………………………….......10
Analysis and Evaluation ………………………………………………………… 11
Structure Idea Management (SIM) and the System of GE Company ……………………….. 12
The diffusion innovation theory ……………………………………………………………... 13
The diffusion innovation process ………………………………………………… 14
Inter and Intra-Networking Effects on organizations ………………………………………… 15
GE core aspect of leadership …………………………………………………………………. 16
Executive Leaders ………………………………………………………………… 16
Board of Directors…………………………………………………………………...16
Effects of Leadership Ethics ………………………………………………………………….. 17
GENERAL ELECTRIC COMPANY 3
Corning’s Five-Stage Stage-Gate Process ……………………………………………………. .18
The Stages of the process……………………………………………………... 19
The Gates of the process………………….……………………………….…...19
Leadership ….…………………………………………………………..…….. 20
The individuals…………………………………………………………………20
The inter-organizational network…...………………………………………… 21
Research Summary ……………………………………………………………………………. 22
Conclusion …………………………………………………………………………………..….23
References …………………………………………………………………………………….24
Graphics
The Structured Idea Management Process……………………………………………………..12
The graphical presentation of the process……………………………………………………. 14
Logistic function innovation process, “S curve”……………………………………………….15
Corning’s Five-Stage Stage-Gate Process model……………………………………………..16
GENERAL ELECTRIC COMPANY 4
Abstract
This paper discusses different characteristics of innovation and change within General Electric
(GE) Company. Corporations are highly challenged in the business environment by the
competitors and the customer’s satisfaction. The advanced pace in technology and the
globalization aspect have allowed many corporations as well as individuals to use their
creativity abilities and leadership skills to innovate new products and services, also new ways of
perceiving and presenting things. The change in people’s needs and socio-environmental
expectations has led GE Company to work through imagination by turning challenges into
opportunities and weaknesses into strengths. Innovation is the game to play in order to remain
successful and sustainable in the current global marketplace for all industries.
Keywords: Leading Innovation, Change, and General Electric Company,
GENERAL ELECTRIC COMPANY 5
Introduction
The globalization and the competition on the marketplace have led many organizations
to improve their products and services through innovation. Creativity plays a leadership role for
a successful innovation. However, does every new or creative idea lead to innovation? Should
the company credit the success of innovation to individuals (personnel) with new ideas working
toward innovating new products and services? Or should the company credit the leadership
momentum of innovative skill? Why some of the companies are successfully innovative while
others fail to implement their new ideas in order to produce innovative results? Do the diffusion
of innovations and innovation process play a grand role for the organizations success?
In this paper, General Electric (GE) Company is considered to be a case study to answer
these questions. GE is one of the highly innovative companies in the world. GE works on
toughest challenges to transform imagination trough creativity into innovations. They find
solutions for energy, health and home, transportation and finance. This company differentiates
itself by building, powering, moving and curing the world. GE ensures that they invest in their
leadership, personnel, and work environment to support the creativity and innovation.
The organization of this paper includes the Background of GE company, Literature
review, The characteristics of innovation and change in GE organization, The GE Challenges
and Solution Commitments, The SWOT Analysis of GE, SIM and the System of GE, The
diffusion innovation theory, Corning’s Five-Stage Stage-Gate Innovation Process, Application
of the Innovation Process, Inter and Intra-networking effects on organizations, The role of
Leadership, Role of Ethics and Responsibility, Principles and practices for implementing
innovation at GE, Research Summary, and Conclusion.
GENERAL ELECTRIC COMPANY 6
Background of GE Company
From the earliest days, GE Company has used the tools of research, combined with a
little inspiration, to create the world of tomorrow. The legacy of GE’s originality offers a rich
history based on the following question: “Why predict the future when you can create it?” For
over 130 years, GE has continued to innovate what has yet to be imagined.
Thomas Alva Edison opened a laboratory in Menlo Park, New Jersey in 1876 where he
was able to explore the possibilities of generator and other electrical devices that he had seen in
the Exposition. From that laboratory, Edison came up with the greatest invention of the age - a
successful radiant electric lamp. Edison brought his various businesses together in 1890 and
established the Edison General Electric Company.
Awkwardly, The Thomson-Houston Company emerged during that same period as a
dominant electrical innovation company led by Charles A. Coffin and became the Edison
General Electric Company’s competitor. Coffin is a former shoe manufacturer from Lynn,
Massachusetts. Both business expanded and realized that either company could not produce
complete electrical installations relying solely on their own patents and technologies. Therefore,
the two companies decided to combine their business in 1892. They called the new organization
General Electric (GE) Company.
Many of the Edison's early business contributions are still part of GE today. Some of
these contributions include lighting, transportation, industrial products, power transmission, and
medical equipment. Earlier of 1890s, GE produced its first appliances electric fans at the Ft.
Wayne electric works while a full line of heating and cooking devices were settled in 1907. The
U.S. government started to search for a company that could develop the first airplane engine
"booster" for the inexperienced U.S. aviation industry in 1976 and identified GE Aircraft
GENERAL ELECTRIC COMPANY 7
Engines that was established since 1987. Edison's experiments with plastic threads for light
bulbs in 1893 led to the first GE Plastics department, created in 1930.
Literature Review
Some people may argue that individuals with creativity ideas are more important for an
innovative company, but others will argue that the leadership plays a very important role for an
innovative company. Both views may be considered true at certain extends. However, the
perspective of supporting the leaders seems to be more relevant as the organizations have to
invest in their leaders to ensure that they do develop their own innovative thinking capabilities
and also have the ability to develop their employees’ and teams’ innovative-creativity skills.
Rowe and Nejad (2009) stipulate that most of the leaders’ strategies consider human capital as
an important factor in innovation and the creation of core competencies, and they expend
considerable effort sustaining the health of this resource (human capital). Therefore, the core
aspects of leadership are important to leading innovation and change within an organization.
Hobcraft and Phillips (2012) provide the abilities of leaders to support their importance
in leading innovation and changes within an organization. Leaders are able to link innovation to
strategies; they create focus, engagement and passion for innovation; they direct funds and
resources to good innovation programs; they speed good ideas to market as new business
models, products and services; and they ensure defined innovation processes in order to produce
sustainable innovations. Leaders play a vital role in the success or failure of innovation.
Innovation can be misunderstood and not explicit enough. Therefore, leaders have the duty to
clarify the role of each participant for accountability purposes. Also, leaders have to make sure
that the company has built an accurate innovative culture through organizational culture.
GENERAL ELECTRIC COMPANY 8
GE is one of the world’s largest innovative Companies. GE believes that imagination
equals innovation. The company is determined to solve the world’s biggest problems by putting
their collective imagination to work for a better future. The chairman and CEO of GE, Jeff
Immelt, agree that building strong leaders is a strategic imperative. When times are easy,
leadership can be taken for granted but when the world is turbulent, great leaders are
appreciated. GE culture is among its innovations. GE leaders have built the company’s
innovative culture by providing a place for creating and bringing big ideas to life. GE culture is
the unifying force for its many business units around the world.
The Characteristics of Innovation and Change in GE Organization
In today world of competition, companies are forced to meet the dynamic change of the
economy, customers’ satisfaction, socio-environmental requirements, etc. Companies have to
adjust to new competitions and new ways of doing business. Therefore, innovation is a must in
order to sustain and remain successful. Having a change management control process in place
ahead of time may reduce the cost of hindrances to leading innovation and changes.
The growth of a company is a process. GE Company needed to get out of the basement
in order to grow and be innovation driven. This describes a necessary practice for implementing
innovative processes for GE Company. GE is a great company, very innovative with big vision.
Despite all the threats and weaknesses that can slow the company’s performance and efficiency,
the strengths and opportunities build the company and allow it to survive through tough moment
in business. The “GE advantage” policy allows the company to achieve the competition
advantage and enhance the customer values. GE understands the importance of the employees’
system of innovation while ensuring a great leadership in order to be and remain successful and
competitive in the current marketplace.
GENERAL ELECTRIC COMPANY 9
GE Challenges and Solution Commitments
The world is faced with big challenges that constitute GE challenges, such as reserves of
oil and gas are being depleted, global recognition of reducing greenhouse gas emissions, lack of
clean water, new demands on natural resources, infrastructure, and access to energy. GE tackles
these challenges by helping the environment and customers while rewarding shareowners. This
action is fulfilled by applying the following commitments.
GE Company has two commitments: Healthymagination and Ecomagination.
Healthymagination is GE commitment to making sustainable health a reality through innovative
technology and services focused on addressing three critical needs: lowering costs, touching
more lives and improving quality. Ecomagination puts into practice GE's belief that financial
and environmental performance can work together to drive company growth while taking on
some of the world's toughest challenges.
GE Company has a strong set of global businesses in infrastructure and finance aligned
to meet current’s needs, such as (1) the demand for global infrastructure; (2) growing and
changing demographics that need access to healthcare, (3) finance and information; and (4)
environmental technologies.
GENERAL ELECTRIC COMPANY 10
The SWOT Analysis of GE
Strengths
Weaknesses
Global recognition
Global strength and competitiveness
Diversified business portfolio and line
of operation
Strong research & development
(R&D)
Order backlog guarantees business
flow in the future
Excellent management & Strong
culture in terms of people, systems,
technology and measures
Environmental initiatives
Economic Leader
Under-performing energy sector
Bets on financial markets have proven
unsuccessful with economic turmoil
Weak revenue growth of industrial
segment
Underperforming in Asian markets
Leveraged
Generates more than half of its profits
from GE capital services, hard hit by
the economic downturn of 2008.
Threat to flexibility
Opportunities
Treats
Development of infrastructure
Aviation industry growth
Increasing global exploration and
production
Servicing and regeneration of
commercial airplanes around the
world customer services initiative
Rise of competition
Information security
Senior management - weak
performance by GE has put doubts on
Jeff Immelt's ability to be the next
Jack Welch
GENERAL ELECTRIC COMPANY 11
Mergers and acquisitions
Research and development
Rising commodity prices
Exposure to financial markets and
crisis
World economic slowdown in the
US and Eurozone, two of the most
important markets for GE
Media depictions
Analysis and Evaluation
The number of strengths in the above table indicates that GE Company is growing and
enhancing its profitability. Its global recognition, strengths strategies and competitiveness allow
GE to be in a favorable position as compared to its competitors, in the same sector. The use of
business units for management presents an effective way to manage the sprawling company.
This situation not only reduces the possibility of overpowering senior management with work
but likewise promotes productivity based on accountability expected from the business unit
managers. The company undertakes multi-activities which highly contribute to effectiveness.
This is enhanced by the mergers and acquisitions that have diversified the company's product
range and in turn leading to improvement on profits incurred.
GE strengths and opportunities have a lot of constraints. Countless threats and
weaknesses have creep up the performance of the company at some extend by presenting
restrictions on the company's management. Some of the threat elements to the company’s
survival include high levels of competition, financial crises and risk of information loss.
GENERAL ELECTRIC COMPANY 12
Weaknesses within the company including the poor productivity of the energy sector and
flexibility threat could impact negatively on the company.
In order to reduce the impact of threats and weaknesses, the company could use the
strengths and opportunities to alleviate them. The efficient management can also be used to
prevent loss of data through implementing proper control measures and to avoid losses which
could exemplify the situation caused by the financial crisis. And now, GE has a new theory that
is changing the way of doing their business called “GE Advantage” where GE is pride on
driving consistency, operational excellence, and enhanced customer value. For this reason, the
company is placing some big bets on 40 high impact projects that will help increase its speed to
market, improve the quality of its products and services, significantly reduce costs, and drive
competitive advantage for its customers and the company.
Structure Idea Management (SIM) and the System of GE Company
Structured Idea Management (SIM) can be defined as a structured process of effectively
collecting, evaluating and managing ideas from employees and any other stakeholder in order to
turn best ideas into innovation. In other words, SIM is a process where creativity and structure
are pooled to find efficiently optimal innovative solutions. SIM empowers companies to
continuously innovate, grow and remain competitive.
The Structured Idea Management Process
GENERAL ELECTRIC COMPANY 13
Source: Rowbotham and Bohlin (2003)
The former legendary CEO of GE (Kotelnikov, n.d.), Jack Welch, trained the company
by saying "Use the brains of every worker", "Make sure that it is the person with the best idea
who wins”. GE Company uses the employees’ system of innovation because of the established
idea of “may the person with the best ideas win”. GE Company knows how to use its
employees’ sense of creativity; Welch advised the rewards and celebration of new ideas do
encourage others to want contribute as well. The company must reward those who live the
company's values, show "guts".
According to Kotelnikov, the advises of Welch has led GE to become one of the most
innovative, profitable, and admired companies on earth. At its core, SIM is a very simple
concept based on the premise that those closest to the work know its best. When the ideas of
those people, irrespective of their functions and job titles, are solicited and turned immediately
into action, an unstoppable wave of creativity, energy, and productivity is unleashed throughout
the organization. SIM is intergrated in GE as a work out "Town Meetings" that give the
corporation access to an unlimited resource of imagination and energy of its talented employees.
SIM can be used to resolve resistance to change in case the company is losing market
share or can no longer afford to compete. The company may be very slow, and even resistant, to
the adoption of new ideas. But, change takes place in a social system and requires acts of
communication and management.
The diffusion innovation theory
The diffusion innovation is a theory that tries to explain how, why, and at what rate new
ideas and technology spread through cultures. This theory has been promoted in 1962 by a
How Companies are Reinventing Their Idea-to-Launch Methodologies
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