Strategies For General Electric To Gain Competitive Advantages: An Essay.

Leadership style of Jack Welch

Discuss about the Strategies that General Electric should Apply to Gain the Competitive advantages over their rival Business Organizations.

The following paper is about defining and applying strategies that an organization should adapt to in trying to gain the competitive advantage over their rival business organizations. The organization that has been chosen to show the impact of the proper strategies and the motivation given by the leaders through their leadership style is the General Electric (GE). This company was established to merge up the two famous companies, namely Electric Light Company of Thomas Alva Edison and Thomas Houston Company of Charles Coffin. GE was established in the year 1892. This company became a business model by its brave leadership and management style in the beginning of the 20^th Century. The later attributes of this company came through the hands of Ralph Cordiner and Peter Drucker (Ge.com, 2017). The purpose of this duo was to turn GE into a complete management system that was capable of innovative corporate management. The strategic planning was of utmost importance in this context because it had to be linked with the financial systems under Reg Jones in the 1970s. After these proceedings, the organization was under the leadership of Jack Welch for almost two decades (Ge.com, 2017). In his hands, the entire working system of the company went through a huge change and its strategy and organizational management gained improvement. In this paper, the purpose of discussion is to explain the core competencies that are needed for an organization to expand it in the international level. The leadership style of Jack Welch and Jeffrey R. Immelt has to be compared as well in order to understand the impact of perfect leadership style on an organization.

Jack Welch had been an influential and revolutionary leader in the history of GE. He had made huge changes the entire system by his extraordinary leadership skills and approach. He had a tremendous farsightedness with which he executed his ideas and turned the management system to make innovative changes (Vaccaro et al. 2012). GE had flourished so much under his leadership and it enjoyed the best years in the corporate performance in the industry.

Jeffrey Immelt had taken over from Jack Welch as he had taken over from the leadership helm of GE in the year 2001. Just he had taken over the responsibilities; the despicable terrorist attacks on World Trade Centre on 9/11 took place (Keniston and Quinn 2013). After that incident the Enron crash had taken place that questioned the factors of good governance, business ethics and financial management in the corporate sector (Higgins 2012).

GE under Jeffrey R. Immelt

Core competencies are one of the most important elements in the business industry and it is considered as an intrinsic approach (Espinoza and Ukleja 2016). On the contrary, the business operations tool named the Porter’s five forces is considered as extrinsic approach. Organizational competitiveness is a critical thing to stay alive in the modern challenging business environment. Every organization has to develop and improve its core competencies so that they can stay strong and hold their positions in the business market (Espinoza and Ukleja 2016). Some of the important core competencies include risk taking abilities and providing guidance and directions to teams across countries and cultures. The important factors that have worked behind the success of GE in this century are their continuous efforts to improve the business environment and providing better options to provide the customers with better materials. One of the most important core competencies for GE has been customer focus (Wilson et al. 2012).

In trying to enrich the customer focus and improve the customer satisfaction process by implementing the six stigma process in the 1980s under the leadership of Jack Welch (Pyzdek and Keller 2014). The company workers had to be more effective in providing the consumers with much efficiency and they have to be more productive. The shift of focus came over as Jeff Immelt took over from Jack Welch. The main target of Immelt was the customer orientation in GE. This, he thought, would help to gain the confidence pf the customers at their disposal more and more (Korschun, Bhattacharya and Swain 2014). He used some tricks to implement that. He advised his workers to spend more time with their customers so that a bond of trust and faith could rise. He also said them to work on their various problems with seriousness and thus resulting in the value creation for them. GE’s marketing function had to be evolved properly so that more increased investments were made in this scenario. The target groups of GE had to be provided with more integrated solutions and services from their parts (Hakanen and Jaakkola 2012). They also offered customer support, customer oriented business solutions by making a strong co-ordination between across its business functions. They introduced a new style of business functioning i.e. to create opportunities for cross-business marketing campaigns so all of their business options could see these options.

S Jeff Immelt was strongly aware of the fact that he would be taking over the responsibilities from the maestro himself, the ‘living legend’ and ‘the best manager of the 20^th century’, he was very much cautious about his duties and leading GE to a beautiful future moving from its golden past. He could motivate his employees quite positively as he himself was filled with great energy (Lazaroiu 2015). He was a very friendly and a regular guy as he always encouraged his staff rather than putting heaves of pressure on them.  On bases of principles, he is considered as a democratic person and he always encouraged the fact of innovation process (Palacios-Marqués, Merigó and Soto-Acosta 2015). One of his best characteristics as the organizational leader was he always craved to keep good and open relations with all the investors and the stakeholders. The idea he promoted to innovate new things was ‘dreaming with customers’ and to have some ‘imagination breakthroughs’ was something he thought be essential to be a ‘growth leader’ (Chesbrough 2012). The leadership style Immelt followed gave birth to the new leadership idea of ‘imagination at work’. This leadership style proved to be an iconic one on the long run. This was thoroughly an unconventional model of theory but this could easily fit into the transformational leader model if it has to be categorized indeed. Some of the important things that this transformational leader model had a deep impact on are the human capital, global presence of GE, the entire organizational structure and the most important thing was the technology and innovation (Narula 2014). These points have to be discussed in order to look at the entire idea from a better viewpoint.

Core competencies

The human capital of GE was developed and empowered to a great extent by the leadership style of Jeffery Immelt (Campbell, Coff and Kryscynski 2012). The early culture of the organization helped it to grow a human capital development. It was well-structured as well. Immelt went forward to enhance this and inculcated some aptitudes and skills in the managers so that they can become growth managers’.  He developed the five growth traits for the development of the organization. This also became an exclusive part of the HR review, the performance management system and subsequent plans for the managers that would lead to development (Buckingham and Goodall 2015). Growth became his personal mission of its human capital. He empowered it through structure, training and direction.

Immelt made many changes within the organization to run it smoothly. Some of these were visible and some were not. The most visible change could be considered in the change of the organizational structure of GE (Guadalupe, Li and Wulf 2013). The purpose of Jeffrey Immelt was to create a more responsive organization. This led him to change some of the structural set-ups made by the Jack Welch in his reign. He gave encouragement for building cross business integration within GE. In order to so, he focused on bundling of services and products so he that he could facilitate his vision to create the growth platforms (Christensen and Raynor 2013). The divisions that GE had were reduced to smaller sectors. The different sectors had to report to Immelt. The number of these business sectors was twelve in 2002. It was reduced to seven in the year 2010.

The time was turbulent when Immelt had taken over from Welch. He had to face many difficulties as many unwanted series of events were taking place. This was aggravated by the terror attacks on 9/11 (Keniston and Quinn 2013). The entire business industry was shaken by the fall of World Trade Center. The main challenge of Immelt at this point was to secure the profitability within the organization. The innovation in the organization had led to its growth. The innovation projects that were taken were long, time-taking, risky and definitely in need of cooperation among the various business divisions. These innovation processes needed investment and attention of the target audiences. In order to achieve that, Jeffery Immelt had taken up the imagination breakthrough initiative (De Jong et al. 2013).  These things would surely lead them to a grand success. Jeffrey Immelt himself used to approve all the imagination breakthrough projects and improvised all the budget related things. The normal budget pressures could not have any severe impact on these projects. Immelt had a firm belief that technology could drive the future growth of GE. The first and one of the most important changes that were made was to revise the R&D budgets (Lin et al. 2012). The R&D centers were upgraded and product quality was enhanced for customer satisfaction. Some programs that were launched by GE were the ecomagination, product and business development program and others. These programs helped to develop more co friendly products and better business solutions.

The leadership style of Jeffrey Immelt

The global market was as always competitive and the target for all the organizations was to capture the emerging markets. Immelt took GE to a certain level that they were at the position to compete with the fast emerging global markets. The great market success came for GE in the Beijing 2008 Olympic Games from a coordinated approach across many business sectors (Bodet and Lacassagne 2012). GE had developed a marketing strategy named ‘company to country’ that helped in the penetration of the local markets by the financial joint ventures that could work with the governments to meet the local markets needs for improvement in the infrastructure. An example can be given about the Abu Dhabi Mubadala partnership and Nigerian investments (Cugurullo 2013). The internationalization strategy was designed to develop the products and services that could help the local market needs. These features were considered to be the simpler, less expensive and de-featured versions of the emerging international markets. The demographics that GE had targeted were the aged people and supplied them the products of health care. They also began to address at the global and natural challenges like the global warming and scarcity of water (Dai 2013). These problems were to be solved by the use of technology and innovation.

The strategy proposition of the GE can be evaluated by explaining the micro analysis of the business environment through the SWOT analysis (Grant 2016).

Strengths

• GE is a global brand that has a wide recognition all over.
• It is a valuable brand to many of its customers (Grant 2016).
• They provide and supply quality products to their products.
• They have developed ecomagination program that is very effective in strategic innovation process.
• They provide opportunities for training that leads to the development of its workers.
• The leadership pipeline of GE is very strong and the role of the growth managers is handled very sincerely (Grant 2016).
• They are a trusted brand and always given advantage in the competitiveness.
• They take the contracts from the government that adds to their reputation.   

Weaknesses

• GE is too much diversified in the same sectors.
• Their revenue growths are very low.
• The working culture they follow is the ‘working in silos’. They have very little scope of working in the cross-functional working environment (Turkulainen and Ketokivi 2012).
• The role of the head office of GE works more as an overseer and interrogator for their works rather than a partner and coordinator.
• They have an internal competition between their different business units. They have many divisions which compete between themselves.
• Most of the managers are experts within their own sphere of knowledge only. They have very little knowledge of the entire working space.

Opportunities

• They have a huge opportunity to globalize in their domain.
• The fact of internationalization can really expand their business market.
• Some factors that can really improve their business dealings are the mergers, joint ventures and the acquisitions.
• They can produce environmental friendly products and services.
• They are keen on technical innovation that could lead to their success.
• Their company to country program will be able to enhance the coordination between employees and customers (Strohmeier 2013).
• Their cross functional marketing and product selling can increase their market value multiple times.

Threats

• The size of the company is very huge so that it is difficult to maintain it.
• The adversities to their expansion program are rapid expansion and the ‘bubble burst’ syndrome (Prakash 2016).
• They have a lack of agility that can affect its business reputation.
• USA and international regulations of business can have a negative effect on GE capital.
• They face a lot of difficulties when they try to implement the ‘simplicity’ across its functions.

Jack Welch had presented GE with a remarkable growth of profits and stock market valuation in the last century. This success was against a backdrop of an economy that was gushed by optimism, confidence and growth. Immelt succeeded to the thrown of Welch and discovered that there was a huge gap in the economic balance in the organization resulting from the downturn of the 1990s and the exuberance of the same time. The results of this extraordinary downfall of the business were the business industries had entirely collapsed, the poor business models were roughly exposed to the world and large companies were almost bankrupt and the corporate credibility was no more beyond question.

After taking over, Immelt had initially thought that the diversified portfolio would be able to provide GE stability in the economic part. It was thought that during the financial crisis, the contagion had become the main norm of the business perspectives. The problem is that if any business is affected by the economic factors, other businesses will be affected as well.  Whenever, Immelt had always tried to tell them and put emphasis on the fact that his job was not to control the stock market price. Instead, as the CEO of General Electric, he was supposed to manage the company from all the aspects. He had believed that the only way GE can be run in a proper way is to increase its performance and the stock would be driven permanently.

Human Capital

Immelt had identified all the potential challenges in the business environment and he had thought that he had to identify the potential resources that could profit GE in a large way. Some strategies that Immelt had taken were he created value cost reduction, eliminated all the underperforming assets and exploited all the opportunities offered for the financial services.

The GE equation of 2012 shows the things that GE wanted to do. They believed in the equation that:-

They look at what the world needs {A belief in a better way+ A relentless drive to invent and build things that matter} = A world that works matter.

            There are some factors that are responsible for the probable growth of GE. These factors can be listed as below:-

• They should invest in software and analytics. The future of the business is doing through the internet and the efficiencies have to be increased. The cost margins of business should be increased (Highsmith 2013).
• GE should capitalize on bettering infrastructure markets in countries like Africa, Latin America and the Middle East.
• GE should invest in and grow energy management (Pipattanasomporn, Kuzlu and Rahman 2012).
• The size of the GE capital should be increased. They should look to invest in their infrastructure more. The resources from financial services should be reallocated.

It is, therefore, very essential to develop the infrastructure of the company and the factor of increased financial performance and return on investment (ROI) factors have to be illustrated properly.

• GE should grow dividends and allocate capital on thinking many times (Ingram 2016).
• The Share Buyback program should be re-introduced in order to buy the shares in critical times.
• They should maximize their capitals on oil, gas and aviation sectors.
• They should focus on being the leading lender to middle market clients.

The strategies have to be put into action for better results. The academic model named Balanced Scorecard invented by Kaplan has to be used in this regard for implementing the strategies (Kaplan 2012). According to this balanced scorecard, the scorecard is perfectly balanced when there is right measure between the short and long term goals, tangible and intangible metrics being balanced as well. A modern age company like GE must focus on different aspects like customer focus, suppliers, processes, technology and innovation and their target audience. The vertical scorecard has the people, financial aspects, learning metrics and internal processes. There should be a balance between strategic and diagnostic measures and the interests of the stakeholders (Ehrenfreund, Race and Labdon 2013). The other metric is the horizontal scorecard where the elements are the suppliers, leaders, investors, customers and employees. They are the key elements which have to be put into proper action through the key performance indicators (KPI). These indicators must have lagging measures (current performance) and the lead measures (long term value). All the things in the balanced scorecard include financial metrics, process improvement, total quality management and other things (Conti 2012). The aspects of service delivery, customer retention, customer satisfaction and strategic innovation must all be linked with the financial metrics and all of these strategic innovations, GE will definitely survive in the competitive structure and claim success in implementation and evaluation.

Jack Welch

• Jack Welch was more of an autocratic and task oriented leader (Rast, Hogg and Giessner 2013).
• His orientation was on efficiency and he was an iconic leader.
• He used to work within certain parameters.
• He focused on productivity and internal communication.
• He was a great manager and business driver.

Jeffrey Immelt

• Immelt was much more people oriented and a democratic leader (Bhatti et al. 2012).
• He focused on innovation more.
• He focused on R&D technology.
• He used to build good communicative relationships with the employees (Bhatti et al. 2012).
• He was a change manager.
• He was transformational and focused on marketing.
• He was a risk taking leader and a ‘regular guy’ as well.

Conclusion

This paper can be concluded by saying that GE has been one of the pioneer organization in driving strategies for innovation in the modern competitive industry. The aspect of VUCA business environment that says that businesses in modern days are volatile, uncertain, complex and ambiguous are an indicator of effectiveness of taking risks in the business proceedings. The leaders have to be exceptionally dedicated and be able to take risks in the competitive market. This is why Jeff Immelt had to bring down the ‘silos’ structure that helped to sustain development. He changed the business relationship between the GE headquarters and the business partners. Thus it can be said that the leadership style of Jeff Immelt is best suited in this modern business environment. His R&D innovation strategy, integrated business solutions and other things have helped GE to move forward in order to achieve organizational sustainability.

Organizational Structure

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