General Electric (GE) was founded right after the American civil war at the early stage of the industrial revolution. Today, with around 300,000 employees working worldwide in a dozen markets, from home appliances to energy and aircraft engines, GE is still a force to be reckoned with. Think of it as a Google that would have emerged from the birth of electricity, not the internet. But since 2008, GE's market leadership has steadily declined, making it the worst stock on the Dow Jones index. This decline devolved abruptly in 2016 with the retirement of its CEO, Jeffrey IMMELT, a market cap divided by two while the stock market was up 41%, and a cascade of divestments (some of them to the Chinese HAIER — a sign of times). Since then, while GE jet engines, medical scanners, and power plants are still state of the art, the company went into a spiraling free fall.
What will be interesting to us in the middle of all this is that GE did all the right things regarding innovation. Or at least all the things that innovation gurus recommended as the best practices.
Jeffrey IMMELT had an epiphany six years ago during this turmoil. A clear strategic vision to reboot this falling giant. One that is shared by many CEOs right now but without the opportunity to do it at scale:
«Let's put back the customer at the center of the business. »
« By acting more like a startup. »
The way to reboot profits globally would come from « lean startup » principles. Since 2015 this has been the Harvard Business Review-grade solution to understand digital, regain competitiveness, and survive the next century.
« Starting in 2009, over the course of several years I visited our controls and analytics labs and spent time in Silicon Valley. As the CEO of GE, I could get the best people in a field to talk to me about what was going on. I always capitalized on that. I met with tech leaders including Jeff Bezos, of Amazon; Paul Otellini, of Intel; Marc Benioff, of Salesforce; and Steve Ballmer (and later, Satya Nadella), of Microsoft, and had dinners with venture capitalists. I listened to them describe where they were going and how they went from strength to strength. I also read a lot. The two things that influenced me the most were Marc Andreessen’s 2011 Wall Street Journal article, “Why Software Is Eating the World,” and The Lean Startup—Eric Ries’s book, which I literally read in a day. » Jeffrey R. IMMELT in HBR, Sept. 2017
Does it ring a bell in your own company?
Or, and don't get confused if in your company you're saying « design thinking » or « open innovation,» these are all variations of this epiphany.
The real difference is that your board makes a show of it and won't allow you to do it at scale. Past a few workshops where executives aggressively use post-its, and new business models are invented on the fly; no one intends to do lean, design thinking, or whatever. Worst case scenario, you build a flagship innovation center and have a few weeks of press releases. Then it's back to business as usual.
With nothing much to lose and still a lot of cash and assets, General Electric decided to go full steam and be serious about it. The press, financial analysts, and keynote speakers loved it. Was the motto « Lean startup? If GE can do it, you sure can! »
And as history just explained to us, this was an industrial failure.
Let's try to understand why…