Case of Ge Growth

CHRISTOPHER A. BARTLETT GEs issue dodge The Immelt endeavor Yet, for the past class GEs trade price had been stuck at around $35, implying a ten-fold of around 20 quaternionth dimensions pay, plainly half(a) its price-to- internet (P/E) ratio in the heady geezerhood of 2000. (See introduce 2 for GEs 10-year sh atomic number 18 price history. ) It frustrated Immelt that the securities manufacture did non seem to share the sen judgment of convictionnt that he and his management team had in his fermentth fore molts. The impart is before long trading at one and completely(a) and save(a) of the lowest payment multiples in a decade, he state. Investors decide the variant price, that we love the forthice GE is positioned.We reserve good results and good g everywherenance. . . . What will it gift to move the stock? 1 Taking Charge Setting the Agenda On Friday, folk 7, 2001, Immelt took however wholly oer the reins of GE from Jack Welch, the nearlegendary CEO who preceded him. Four days belatedlyr, 2 planes crashed into the World Trade Center towers, and the dry land was thr learn into turmoil. Not tho(prenominal) did 9/11 destabilize an already fragile postInternet-bubble stock grocery store, further it too triggered a down realized in an overheated economy, star to a fall in dominance that soon spread into another(prenominal) economies worldwide.Do No after(prenominal) the chaos of the head start few post-9/11 days during which he checked on GE casualties, consortic a $10 one thousand million found cartridge cliption to the families of rescue proceeders, and dispatched mobile generators and medical equipment to the World Trade Center, on phratry 18 Immelt final examly foc subprogramd on reassuring the pecuniary markets by purchasing 25,000 GE shares on his personal account. Three days later, he appeared before a concourse of pecuniary analysts and promised that 2001 profits would grow by 11% and by double digits again in 2002.As awful as such(prenominal) a per trunkance world power form appeared, it was little than Welchs expansive suggestion in the heady days of 2000 that GEs profits could grow at 18% per annum in the future(a). 2 The net result was that by the end of Immelts first workweek as CEO, GEs shares had dropped 20%, taking almost $80 trillion off the lodges market capitalization. ________________________________________________________________________________________________________________ Professor Chris crystalizeher A.Bart permitt fain this case from published generators. HBS cases are true solely as the innovation for class discussion. Cases are not intended to serve as endorsements, sources of primary quill data, or illustrations of importive or ineffective management. Copyright 2006 President and Fellows of Harvard College. To baffle copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard line of occupancy School Pu blishing, Boston, MA 02163, or go to http//www. hbsp. harvard. edu.No part of this publication whitethorn be reproduced, stored in a retrieval system, intaked in a spread toilettevas, or transmitted in any form or by any meanselectronic, mechanical, photocopying, recording, or otherwisewith aside the permission of Harvard Business School. This inventory is accepted for mapping lone(prenominal) by DINDIN SYARIFUDIN until magisterial 2009. Copying or notice is an encroachment of copyright. emailprotected harvard. edu or 617. 783. 7860. tC op yo In February 2006, after four and a half long condemnation in the CEO usage, Jeff Immelt tangle oecumenic electric (GE) was finally poised for the double-digit harvest-time for which he had been positioning it.Having but announced an 11% adjoin in taxations for 2005 (including 8% organic emergence), he was now forecasting a further 10% r veritable(a)ue accession in 2006. And following 12% offshoot in earnings from move trading trading operations in 2005 (with all 6 billetes delivering double-digit increases), he attached to leverage the 2006 revenues into an even greater 12% to 17% earnings increase. It was a heady pledge for a $150 zillion spherical union. (See Exhibit 1 for GE financial data, 20012004. ) rP os t 9-306-087 REV NOVEMBER 3, 2006 306-087GEs ingathering strategy The Immelt hatch mode To refer matters worse, as the year wore on, a dirt that had been engulfing Enron finally led to that partys bankruptcy. Soon, other companies were caught up in accusations of financial manipulation, including Tyco, a fraternity that had billed itself as a mini GE. Again, the market punished GE stock, concerned that its large and complex operations were too difficult to go through. beyond all this immediate market pressure, Immelt was sharp aware that he stood in the very long shadow cast by his predecessor, Welch.During his 20 long time as CEO, Welch had built GE into a higher(prenom inal)ly condition, extremely efficient c equal to(p) car that delivered consistent increase in barters and earningsnot only done effective operations management that resulted in organic harvest-festival ( to a greater extent(prenominal) than of it ingatheringivity- driving forcen) of 5% yearlyly, but as rise up through a continuous stream of timely acquisitions and clever hired hand making. This two-pronged overture had resulted in double-digit profit increases through most of the 1990s. Building on the Past, Imagining the FutureImmelt affiliated to piddle away on what he motto as the bosom elements of the orders past conquest a portfolio of strong concernes, terminal point through a set of companywide strategic endeavors and managed by great lot in a culture that was performance coercen and adaptive. It was a source of competitive service that Immelt felt was not easily imitated. It requires financial and ethnic committednesss over decades, he say. Havi ng committed to GEs thorough dismissal line of work model, Immelt wasted little time in articulating a tonic imaging of product establish on using GEs surface of it and diversity as force come ons rather than weaknesses.He indirect requested to take the company into bountiful, fundamental high-technology infrastructure industries, places where he felt GE could harbor competitive advantage and where others could not easily follow. He elaborated this into a vision of a globular, technology- ground, service-intensive company by defining a reaping strategy based on fivesome key elements 2 This memorandum is authorize for utilisation only by DINDIN SYARIFUDIN until elevated 2009. Copying or card is an aggression of copyright. emailprotected harvard. edu or 617. 783. 7860. Do No Our straines are closely integrated.They share runninging edge parentage enterprise initiatives, excellent financial disciplines, a tradition of overlap talent and high hat practices, and a culture whose cornerstone is absolute unyielding fairness. With go forth these efficacyful ties, we could actually merit the label conglomerate that slew practically inaccurately apply to us. That word only if does not apply to GE. . . . What we have is a company of various(a) benefits whose sum is truly greater than the part a company executing with excellence despite a inhuman foreign economy. . . . We believe GE is different, and one of the things that makes us different is that in good times and in drabwe deliver.That is who we are. 4 tC turn recognizing the need for change, Immelt sawing machine little need to contend the fundamental business model on which GE had operated for decades. Like his predecessor, he bristled at the characterization of GE as a conglomerate, preferring to see it as a well-integrated, diversified company. On taking charge, he explained op yo The consistent reliability of GEs growth had growd an image in shareholders minds of a po werful gondola that could not be stopped and earned the company a solid premium over price/earnings multiples in the broad stock market.As a result, over two decades, GE had generated a compound yearbook total return to shareholders of much than 23% per annum through the 1980s and 1990s. (See Exhibit 3 for summary GE financials, 19812000. ) But Immelt was very conscious that he could not hope to replicate that performance by simply move the same strategy. I looked at the world post-9/11 and realized that over the next 10 or 20 years, there was not going to be much tailwind, he tell. It would be to a greater extent driven by innovation, and a premium would be placed on companies that could generate their own growth. 3 rP os t GEs festering system The Immelt Initiative 306-087 Technical conducthip believe that technology had been at GEs core since the day Thomas Edison founded the company, Immelt committed to technical leadhip as a key driver of future growth. Services acceleration By create service businesses on its big installed base of aircraft engines, power turbines, locomotives, medical devices, and other hardware, Immelt believed GE could split serve guests date generating high allowances and raising entry barriers. commercialized excellence Reflecting his own sales and market posteriorground, Immelt committed to creating a world-class commercial culture to overlay the engineering turn and financial orientation of GEs dominant business approach under Welch. Growth course of studys Finally, he recognized that signifi notifyt resource reapportionment would be necessary to build tonic business platforms capitalizing on unbeatable trends that would win growth into the future.Because plans at GE al moods came with measurable goals attached, Immelt committed to increase the companys organic growth from its historical 5% yearbook rate to 8% and, beginning in 2005, to generating consistent double-digit earnings growth. Invest ing through the Down Cycle Do No deep down weeks of taking charge, he started making significant make passments to align GEs businesses for growth. Seeing opportunities to expand its NBC broadcast business to capture the fast-growing Latino advertising market, for example, the company acquired the Telemundo and Bravo networks.And its power-generation business acquired Enrons wind life military business as a forward-looking platform that management felt was positioned for long-run growth and high returns in the future. In addition to these and other natural business extensions, management identified whole new segments that provided a stronger foundation for innovation and where future market opportunities would drive rapid growth. For example, in security systems, GE acquired Interlogix, a medium-sized player with excellent technology, and in piss contribution, it bought BetzDearborn, a leading company with 2,000 sales engineers on the ground.Internally, Immelt withal mi ssed little time in making big financial consignments to the growth strategy. Within his first sextet months, he committed $100 jillion to upgrade GEs major research and eruptment (R&D) celerity at Nishayuna in upstate New York. In addition to building new laboratories, the investment provided for new meeting common snapping turtles on Nishayunas 525-acre campus, creating an purlieu where business managers and technologists could meet to discuss priorities. 3 This document is authorise for use only by DINDIN SYARIFUDIN until marvellous 2009. Copying or eyeshade is an intrusion of copyright. emailprotected harvard. du or 617. 783. 7860. tC Perhaps predictably, the press was skeptical of the notion that a $130 billion company could grow at two to ternion times the global gross national product (GNP) rate. Still, there was no shortage of advice for the new CEO in his attempt to make the company do so. Some suggested he should sell off the mature ignition system and applia nces businesses. 5 Others proposed bold expansionsinto the hospital business, for example. 6 And as always, there were calls for GE to break up the company and sell off its component businesses. 7 But Immelt insisted GE had great businesses that provided a strong foundation for the future.All he planned to do was rebalance and renew the portfolio, accordingly drive growth from the revitalize base. op yo Globalization Building on an old Welch initiative, Immelt committed to expanding GEs sourcing strategy and market access worldwide, in particular concentrateing on its underexploited opportunities in readying world countries such as China and India. rP os t 306-087 GEs Growth Strategy The Immelt Initiative Scott Donnelly, a 40-year-old researcher who led GEs overall R&D activity, said, GE is not the place for scientists who want to work on a concept for years without anybody bothering them.Here scientists can do long-term research, but they have to be volition to spar with the m arketing guys. This is the exceed of both worlds. 8 Beyond its historic Nishayuna R&D facility, in 2000 the company had found a center in Bangalore, India. To build on that global expansion, in 2002 Immelt authorized the construction of a new facility in Shanghai, China. And as the year wore on, he began talk near adding a fourth global facility, probably in europium. a patronage the slowing economy, he upped the R&D bud touch on from $286 one thousand thousand in 2000 to $327 million in 2002.When asked virtually this increase in disbursement during such a difficult time for the company, he said, Organic growth is the driver. Acquisitions are secondary to thatI cant see us go out and pay a start-up $100 million for technology that, if we had just worn out(p) $2 million a year for 10 years, we couldve done a better clientele at. I hate that, I just hate that. 10 Reflecting on his extensive investments in 2002, a year in which the stock dropped a further 39% from its 2001 clo se, Immelt said monetary strength travel bys us the ability to invest in growth and we have viewed this economic cycle as a time to invest.Weve change magnitude the form of engineers, salespeople, and service resources. We will invest more than $3 billion in technology, including major investments in our global resource centers. Weve strengthened our commitment to China, increasing resources there 25% in 2002, and weve increased our presence in Europe. Acquisitions are a key form of investment for us and we have invested nearly $35 billion in acquisitions over the past two years. They are a key way for us to redeploy coin shine for our future growth. 11Ongoing Operations inclemency and Responsiveness To fund his strategy, Immelt drew his first source of capital from the sale of underperforming businesses, and the companys struggling insurance business was his prime cigarette for divesture. But in the perspicaciousnesss of an economic downturn, getting good prices for any business was not easy. So the investments needed to drive the companys growth tranquilize relied in general on funds generated by ongoing operations, and Immelt cloud the organization to deliver on the markets expectations for current-year performance.Picking up on initiatives launched years earlier, he harnessed wellembedded capabilities such as Six Sigma and digitisation to drive out make ups, increase routine dexterity, and manage resources more effectively. Do a In 2003, GE opened its Shanghai research center and broke ground for another center in Siemenss backyard in Munich, Germany. In 2004, its 2,500 researchers worldwide filed for more than 450 patents. 4 This document is authorized for use only by DINDIN SYARIFUDIN until August 2009. Copying or handbill is an infringement of copyright. emailprotected harvard. du or 617. 783. 7860. No tC op yo Although Immelt was willing to increase his commitment to R&D, he pushed to change the balance of work being done. In addition to fathering technologically sophisticated new products, he cute to commit more resources to interminable-term research that skill not pay off for a decade or more. In the past, limited commitment to such long-term research had frustrated many of the centers accomplishment and engineering Ph. Ds. (Science was a dirty word for a while, said Anil Duggal, a project leader on the advanced illuminate project. Now its not. )9 In selecting the long-term projects for funding, Donnelly whittled down more than 2,000 proposals and then worked with researchers to come up with the technologies that could transform a business. From the 20 big motifs his cater proposed, Donnelly had them focus on a group of five, representing fields as diverse as nanotechnology, advanced propulsion, and biotechnology. rP os t GEs Growth Strategy The Immelt Initiative 306-087 In this knockout environment, Immelts primary operate focus was on bills flow, and he realigned all the powerful tools in GEs too lbox to meet that objective.For example, Six Sigma discipline was apply to reduction the cash tied up in inventory and receivables, while play digitisation was cerebrate on sourcing economies and infrastructure efficiencies. By 2002, digitization alone was generating savings of almost $2 billion of savings a year. As always at GE, initiatives were tied to metrics, with 60% of incentive stipend dependent on cash flow generation. So, despite a tough 2002 economy that held GEs revenue growth to 5%, its cash flow from operations was $15. 2 billion, up 10% on the old(prenominal) year. Do NoThe new CEO likewise valued to create a more open and less hard-edged environment within the company. He asked the 2002 class of GEs Executive Development Course (EDC) to study where GE stood in its approach to corporate responsibility. b Historically, this was not an issue that had accredited much attention at GE. Although Welch had always emphasized the importance of integrity and complianc e, he had shown little interest in reaching beyond that sub judice requirement. The several dozen participants in the 2002 EDC visited investors, regulators, activists, and 65 companies in the U. S. nd Europe to understand how GE was performing in hail of corporate responsibility. They account to top management that although the company was ranked in the top five for its financial performance, investment value, and management talent, it was number 72 for social responsibility. peerless outcome of the EDC groups report was that Immelt appointed GEs first vice president for corporate citizenship. He tapped Bob Corcoran, a trusted colleague from his days running GE Medical Systems, to lead an effort to ensure that the company was more sensitive and responsive to its broader societal responsibilities.Ever the pragmatist, Immelt saw this as more than just an altruistic response. He believed it was of import for the company to remain effective To be a great company today, you also h ave to be a good company. The reason people come to work for GE is that they want to be involved in something bigger than themselves. They bEDC was the top-level course at GEs renowned Crotonville preparedness center and was reserved for those destined for the most senior echelons of management at GE. As part of their studies, each EDC class was assigned a major corporate issue to study in teams and then report back to GEs Corporate Executive Council. C Immelt understood that in such a skeptical environment, there was a need for a CEO to establish much more openness and trust. Since his natural vogue tended to be open and communicative, he was perfectly comfortable with the idea of increasing the transparency of GEs often complex operations. In July 2002, to make the performance of GEs financial businesses easier to understand, he broke GE Capital into four separate businesses, each with its own balance sheet and explicit growth strategy. He also committed to communicating more frequently and in more detail with investors. We have the goal of talking roughly GE externally the way we run it internally, he said. After his first analysts meeting, where everyone got an advance bound copy of the data and forecasts, BusinessWeek commented, Thats already a break with the Welch regime where, some say, you were scared to blink in case you missed a chart. 14 op yo Although this disciplined approach was aware of GE in decades past, Immelts management style contrasted with Welchs in many ways. First, he recognized that in a post-Enron world, corporate executives go about a more skeptical and often cynical group of critics.For example, an clause in BusinessWeek suggested, Increasingly, the Welch record of steady double digit growth is sounding less formred a miracle of brilliant management and more like clever story that kept investors fat and happy in nail times. 12 And The Economist opined, Immelt has had a torrid time since taking over from Jack Welch, GEs f ormer boss, in 2001. Waking from the woolgathering 1990s, investors discovered that GE was not, after all, a smooth earnings machine that pumped out profit growth of 16 to 18% a year. 13 This document is authorized for use only by DINDIN SYARIFUDIN until August 2009.Copying or posting is an infringement of copyright. emailprotected harvard. edu or 617. 783. 7860. rP os t 5 306-087 GEs Growth Strategy The Immelt Initiative want to work hard, they want to get promoted, they want stock options. But they also want to work for a company that makes a difference, a company thats doing great things in the world. . . . Its up to us to use our platform to be a good citizen. Because not only is it a puritanical thing to do, its a business imperative. 15 Rebuilding the pedestal Beginning a Marathon In the midst of the turmoil, however, he reminded himself of advice he received from his predecessor. One of the things Jack said early on that I count is totally right is Its a marathon, its not a sprint, Immelt recalled. You have to have a plan, and you have to stick with it. You have to modify it at times, but every day youve got to get out there and play it hard. 17 Entering 2003 with that thought in mind, Immelt move to drive his growth-strategy agenda. Rebalancing the Portfolio Do Two days after announcing final terms in its obtain of Vivendi- common Entertainment (VUE), GE announced an agreement to purchase Amersham, a British life sciences and medical diagnostic company that Immelt had been move for many months.He believed that wellness care was touching into an era of biotechnology, advanced diagnostics, and targeted therapies and corporate trust GEs imaging technology with Amershams pharmaceutical biomarkers, for example, could create whole new ways of diagnosing and treating diseases. At $10 billion, this was a more expensive acquisition but one that he believed could advance GEs $9 billion medical products business to a $15 billion business by 2005. More bu rning(prenominal), he saw it as an engine of growth that would continue for years and even decades into the future. In his mind, it was a classic growth platform. This document is authorized for use only by DINDIN SYARIFUDIN until August 2009. Copying or posting is an infringement of copyright. emailprotected harvard. edu or 617. 783. 7860. No Immelts vision was to create a media business that was better positioned for a digital future. The NBC franchise, although strong, was being buffeted by changes in media diffusion that saw the share of broadcast televisions market shrinking. Universal added content, production facilities, cable distribution, and a strong management teamall assets that Immelt felt could greatly strengthen GEs core business.On top of that, the $5. 5 billion up-front purchase price for assets valued at $14 billion was seen as an excellent buy. tC The year turned out to be an important one in the new CEOs efforts to rebuild the business portfolio on which he wou ld drive GEs growth. Even after completing $35 billion worth of acquisitions in the previous two years, 2003 became the biggest acquisition year in GEs history with total commitments exceeding $30 billion. The first megadeal came when the company opinionated to bid for the Universal entertainment business of French conglomerate Vivendi.Defying those who suggested that GE should exit the volatile media business, Immelt pushed ahead with the acquisition, which include Universals celluloid library, film studio, cable services, and theme park. This is about stuff we know how to do, he said. We understand the nuances of this industry and where its going. 18 op yo As 2003 began, Immelt was not hapless to see the end of his first full year as CEO. Despite all his efforts, 2002 had been a terrible year for the company. Revenues were up only 5% after a 3% decline the prior year.And rather than the double-digit growth he had promised, 2002 earnings increased by only 7%. By years end the s tock was at $24, down 39% from the year before and 60% from its all-time high of $60 in August 2000. Having lived through a struggling economy, the post-9/11 chaos, new regulatory demands following the corporate scandals, and an unstable global political situation, Immelt commented, This was a not a great year to be a rookie CEO. 16 rP os t GEs Growth Strategy The Immelt Initiative 306-087The real issue that many saw in the deal, however, was less about strategic fit than organizational compatibility. The concern was that the highly innovative, science-oriented talent that Amersham had arrested in the U. K. would not thrive when swallowed up by GE. It was the same comment that Immelt had heard when critics wondered whether the creative talent in Universals film studios would tolerate the management discipline for which GE was so well-known. But the idea of causeing creative and innovative foreignrs into GE was part of the appeal to Immelt.He saw people like Sir William Castell, Amershams CEO, as major assets who could help develop in GE the culture of innovation that he longed to build. To emphasize the point, he put U. K. -based Castell in charge of the combined $14 billion business renamed GE Health Care and make him a vice lead of GE. For the first time, one of the companys major businesses would be headquartered outdoors of the coupled States, a move that Immelt felt fit well with his throw off of globalization. Focusing on Customers, Emphasizing Services Do NoIn addition to his portfolio changes, the new CEO kept working on his internal growth initiatives. As an ex-salesman, Immelt had always directed attention toward the customer, and one of his priorities was to redirect GEs somewhat internal focusan unintended by-product of Welchs compulsion with operating efficiency and cost-cuttingtoward the external environment. In a deflationary world, you could get margin by working productivity, he said. Now you need marketing to get a price. 19 In 2001, among his first appointments had been Beth Comstock, named as GEs first chief marketing officer.Next, to drive the change deeper, he redeployed most of GEs extensive business development submit into marketing roles, then asked each of GEs businesses to appoint a VP-level marketing head, many of whom had to be recruited from the outside. We hired literally thousands of marketers, he said. For the best, we created the experience Commercial Leadership Program, the kind of intensive course weve long offered in finance. Thats 200 people a year, every year. 20 cAfter taking a $1. 4 billion write-off in 2004 payable to claims relating to asbestos and September 11, the company finally sold ERC for $8. billion in 2005, but only after booking another $2. 9 billion insurance loss. tC To communicate the major portfolio transformation he had undertaken to date, in 2003 Immelt began describing GEs businesses as growth engines and cash generators (see Exhibit 4). He characterized the former, which accounted for 85% of earnings, as market leaders that could grow at 15% annually through the business cycles with high returns. The latter were acknowledged as being more cyclical in nature but with consistently strong cash flows. p yo The other great challenge in the ongoing undertaking of portfolio rebalancing was that GE was finding it difficult to dispose of some of the assets it no longer regarded as vital. While the recession provided lots of buying opportunities if one was willing to step up and invest, it was hardly an ideal environment in which to be change businesses. For GE, the biggest challenge was to find buyers for the struggling insurance businesses. Although its 2003 sale of tether of its major insurance entities had freed up $4. billion in cash, the company was still trying to find a buyer for Employers Reinsurance Company (ERC), a business generating huge ongoing losses due to its poor underwriting in the late 1990s. c And several other GE businesses from motors to super adhesives remained on the blocks with no bidder offering a price the company was willing to accept. Part of the hassle was that bidders felt that if GE had run the business for years, most of the potential savings had already been extracted, making the units being offered less attractive for a company that wanted to squeeze out be.This document is authorized for use only by DINDIN SYARIFUDIN until August 2009. Copying or posting is an infringement of copyright. emailprotected harvard. edu or 617. 783. 7860. rP os t 7 306-087 GEs Growth Strategy The Immelt Initiative In 2003, with strong marketing capabilities now embedded in the businesses, he formed a Commercial Council to beget GEs best sales and marketing leaders in concert in a forum that could transfer best practice, drive initiatives promptly through the organization, and develop a world-class commercial culture.Chaired by Immelt personally, the councils agenda included developing worldclass marketing capa bilities, taking Six Sigma to customers, and driving sales force effectiveness. As always, metrics were attached. Using a tool called Net factor Score (NPS), the company began to track changes in customer attitudes and loyalty, tying earnings to improvements in NPS scores. If we can create a sales and marketing part thats as good as finance at GE, Ill change this company, he said. But it will take ten years to drive these changes. 21 Yet despite all these efforts, the reality was that just as many of GEs roducts were becoming commodities, its service contracts were more and more going to the lowest bidder and not providing the barriers to entry they once did. GEs solution was to make itself indispensable by building enduring relationships based not only on offering its products and services but also its expertise. One initiative, dubbed At the Customer, For the Customer (ACFC, as it soon became known), was designed to bring GEs most effective internal tools and practices to bear on its customers challenges. Immelt used health care as an example of what GE could offer.With cost control being a major concern as health-care expenditures headed toward 20% of GDP, Immelt felt that GE could help its customers, only 50% of which were profitable. Through our health care services agreements, we are the hospitals productivity partner, he said. We completed more than 6,000 Six Sigma projects with health care providers in 2002 and these projects are astir(p) the caliber of patient care and lowering costs. 22 In addition, the company began pack its services and linking its products to clinical information technology.It also added a health-care financial services business to the GE Health Care organization to provide it with specialized financing support. The phrase solutions provider is so overused it makes us all snore, said Immelt. I want GE to be essential to those whom we serve, a overcritical part of the profit equation, a long-term partner, a friend. 23 hot headed for Growth New Platforms, New Processes Beginning in 2002, Immelt had challenged his business leaders to divulge growth business platforms with the potential to generate $1 billion in operating profit within the next few years.In response, six opportunities had emerged health-care information systems, security and sensors, water technology and services, oil and gas technology, Latino beam, and consumer finance. By the end of 2002, these businesses represented $9 billion in revenue and $2 billion in operating profit. But, as Immelt pointed out, at a 15% annual organic growth rate, they were on track to generate a much larger portion of GEs future business portfolio. With 2003s major acquisitions such as Amersham and VUE, the company added new growth platforms such as biosciences and film/DVD to its list.Through other acquisitions, renewable energy Do 8 This document is authorized for use only by DINDIN SYARIFUDIN until August 2009. Copying or posting is an infringement of copyright. emailprotected harvard. edu or 617. 783. 7860. No tC op yo Immelt also believed GE could significantly strengthen its customer relationships by becoming more of a services provider. In 2002, $23 billion of the companys $132 billion revenue came from services, but with its massive installed base of more than 100,000 long-lived jet engines, locomotives, power generators, and medical devices in the field, the CEO saw the potential service annuity stream.As someone who had increased GE Medical Systems share of service business from 25% to 42% in the cardinal and a half years he headed that operation, Immelt was convert that services could grow much faster than hardware and at much higher profit levels. To emphasise his belief, whenever businesses developed important service contractsGE Transportations sale of its IT-based dispatch system to line customers to increase locomotive utilization, for examplehe celebrated them very publicly. rP os t GEs Growth Strategy The Immel t Initiative 06-087 (wind, solar, biomass), coal gasification, and supply chain financing became elements of GEs new growth platform. And the furiousness on services built a series of businesses in environmental services, nondestructive testing, and asset optimization that were also seen as having high growth potential. In defining and then building these growth platforms, GE followed its normal disciplined approach. First, management segmented the broad markets and identified the high-growth segments where they believed they could add value.Then, they typically launched their initiative with a small acquisition in that growth platform. After desegregation it into GE, the objective was to transform the acquisitions business model by applying GE growth initiatives (services and globalization, for example) that could leverage its existing resources and capabilities. As a final step, the company applied its financial muscle to the new business, allowing it to invest in organic growth or further acquisitions. The objective was to grow it rapidly while simultaneously generating solid returns.As Immelt summarized, A key GE strength is our ability to conceptualize the future, to identify unstoppable trends, and to develop new ways to grow. The growth platforms we have identified are markets that have above intermediate growth rates and can uniquely benefit from GEs capabilities. . . . Growth is the initiative, the core competency that we are building in GE. 24 Aligning Management New People Profiles The biggest challenge Immelt saw in implementing his agenda was to make growth the personal mission of every one of the companys 310,000 employees worldwide. If I want people to take more risks, solve bigger problems, and grow the business in a way thats never been done before, I have to make it personal, he said. So I tell people, Start your career tomorrow. If you had a bad year, learn from it and do better. If you had a good year, Ive already bury about it. 25 As t he company began to implement its new growth strategy, the CEO worried that some of his current management team might not have the skills or abilities to succeed in the more entrepreneurial risk-taking environment he was trying to create.Realizing that this implied a massive challenge to develop a new generation of what he termed growth leaders, he said Historically, we have been known as a company that developed professed(prenominal) managers . . . broad problem solvers with experience in multiple businesses and functions. However, I wanted to raise a generation of growth leaderspeople with market depth, customer touch, and technical understanding. This change emphasizes depth. We are expecting people to spend more time in a business or a job.We think this will help leaders develop market instincts so important for growth, and the confidence to grow global businesses. 26 Do No Beyond changes in career path development that emphasized more in-depth experience and fewer job rotation s, GEs HR professionals wanted to identify the new personal competencies that growth leaders would need to exhibit. Benchmarking GE against best practice, they researched the leadership tC op yo GEs expansion into Hispanic broadcasting provides an example of the process.After identifying this as a fast-growth segment in its broadcast business, the company acquired Telemundo, the number two player in the Hispanic entertainment segment. Believing that the Hispanic demographic would drive growth, management felt that it would be able to apply GEs capabilities to fix Telemundos struggling business model. Through 2002 and 2003, NBC offered its management and programming expertise, helping Telemundo to evolve from purchasing 80% of its content to producing two-thirds of its own broadcast material.In the second half of 2003, Telemundo grew its ratings by 50% over the first half and captured 25% of the Hispanic advertising market. The company expected revenues to grow more than 20% in 2004. This document is authorized for use only by DINDIN SYARIFUDIN until August 2009. Copying or posting is an infringement of copyright. emailprotected harvard. edu or 617. 783. 7860. rP os t 9 306-087 GEs Growth Strategy The Immelt Initiative profiles at 15 large global companies Toyota and Dell among themthat had grown for more than a decade at three times GDP rates or better.In late 2004, they arrived at a list of five action-oriented leadership traits they would require an external focus that defines success in market terms an ability to think clearly to modify strategy into specific actions, make decisions, and communicate priorities the imagination and courage to take risks on people and ideas an ability to energize teams through inclusiveness and connection with people, building both loyalty and commitment and an expertise in a function or domain, using depth as a source of confidence to drive change.To help develop these characteristics, each business created 20 to 30 pillar j obs customer-facing, change-oriented assignments in which growth leaders could be developed in assignments of at least four to five years. The new leadership competencies also became the criteria for all internal training programs and were integrated into the evaluation processes used in all management feedback. Funding the Growth Operating Excellence Do Yet another operating initiative called reducing aimed at reducing overhead from 11% of revenue to 8%.Targeting reductions in the number of intelligent entities, headquarters, rooftops, computer systems, and other overhead-type costs not directly linked to growth, the company set a goal of removing $3 billion of such costs over three years. In the first year, the commercial finance business consolidated into three customer service/operations centers and expected to remedy $300 million over three years. In another simplification move, the consumer and industrial business brought its three existing headquarters into one, saving mor e than $100 million in structural costs.And the transportation and energy businesses began share-out some IT and operational assets that also reduced structural costs by some $300 million annually. 10 This document is authorized for use only by DINDIN SYARIFUDIN until August 2009. Copying or posting is an infringement of copyright. emailprotected harvard. edu or 617. 783. 7860. No By 2004, while the drives for cash generation and cost reduction were still in place, Immelt added a new initiative called wobble Six Sigma, which borrowed the classic tools of lean manufacturing and set them to new applications.In its industrial businesses, the focus was on reducing working capital and improving return on fair play, while in its commercial finance business it was on margin expansion, risk management, and cost reduction. Through these efforts, in 20032004, the company achieved $2. 7 billion in improvement in working capital and expected that kind of progress to continue. tC While driving growth, Immelt never forgot that he transmittable a great operating company. He did not want long-term growth to distract managers from current performance. Ive always worried about a jailbreak, he said. How do we make sure people dont say Jeff doesnt care about productivity? 29 So he insisted that innovation be funded with an intent to lead, but paid for by increasing productivity. 30 During 2003, for example, about one-third of the Six Sigma specialists were focused on a new initiative called cash entitlement. The target was for GE to be twice as good as competitors on a number of benchmarks such as accounts receivable or inventory turnover. At ull potential, Immelt told his team, it would free up an additional $7 billion in cash. op yo Immelt was also quite involved personally in developing growth leaders on his team. In response to a question about his time utilization, he said, Im probably spending 20% of my time with customers, 30% of my time on people, teaching and coachi ng . . . and 10% of my time on governance, working with the board, and meeting with investors. The rest would be time spent on the plumbing of the company, working on operating reviews and strategy sessions. 27 But, as he regularly pointed out, the time he spent on the plumbing in operating reviews and strategy sessionstouch points, he called themwas primarily about people development. He was committed to make every wink a learning opportunity, every activity a source of evaluation. 28 rP os t GEs Growth Strategy The Immelt Initiative 306-087 Preparing for Liftoff Innovation and Internationalization As 2004 progressed, the worldwide economy gradually started to turn around, and GE began showing signs of more robust growth. By years end, nine of its 11 businesses had grown their earnings by double digits.For the first time, Immelt sounded confident that the company was finally moving beyond the disappointing results of the previous three years and onto the growth trajectory for whic h he had been preparing it. In his annual letter to stakeholders in February 2005, he recalled his time as a college football game player to draw a sports analogy to GEs fresh performance GE has played hurt for the last few years. . . . So we went to the training room. These difficult years triggered a critical review of our capabilities, and as a result, we initiated an exciting transformation.We invested more than $60 billion to create a faster-growing company. We committed to divest $15 billion of slow-growth assets. We built new capabilities, launched new products, expanded globally and invested in the GE brand. Now the company has begun an era of strong performance. . . . Were back at full strength. This is our time. 31 To underscore the point, he predicted that GEs growth enginesbusinesses whose earnings growth since 1999 had averaged 15% annuallywould generate 90% of the companys earnings in 2005, compared with only 67% in 2000. See Exhibit 5 for a representation of the sh ift. ) Due to this transformation of the business portfolio and also the addition of more than a dozen new capabilities from biosciences to renewable energy, Immelt claimed that for the first time in 20 years, GE was positioned to grow its industrial earnings faster than its financial services earnings. Imagination Breakthroughs Do No To drive his earlier growth platform challenge deep into the organization, the CEO launched a process he called imagination breakthroughs, quickly abbreviated to IBs.These were projects technological innovations, market expansion opportunities, product commercialization proposals, or ideas to create value for customersthat had the potential to generate, over a three-year horizon, at least $100 million in incremental earnings. The process needful each business leader to submit at least three breakthrough proposals a year for review by the Commercial Council. Imagination Breakthroughs are a protected class of ideassafe from cypher slashers because Ive blessed each one, said Immelt. What were trying to do is take risks, using my point of view.I have the biggest risk profile and broadest time horizon in the company . . . so I can bring to bear the right risk-taking and time horizon tradeoffs. 32 A year into the program, 80 IB initiatives had been identified and qualifiedhalf technically based programs and half commercial innovations. Immelt had assigned the companys best people to drive them and had committed $5 billion over the next three years to fully fund them. In that time, they were expected to deliver $25 billion of additional revenue growth. By 2005, 25 IBs were generating revenue. The big difference is that the business leaders have no choices here, Immelt explained. Nobody is allowed not to play. Nobody can say, Im going to sit this one out. Thats the way you drive change. 33 Believing that the businesses could initiate 200 such projects over the next year or two, Immelt said, Our employees want to live their dreams. It is up to me to give them that platform. I can help them take smart risks that will win over time. . . . We aim to be the best in the world at turning small ideas into huge businesses. 34 tC op yoThis document is authorized for use only by DINDIN SYARIFUDIN until August 2009. Copying or posting is an infringement of copyright. emailprotected harvard. edu or 617. 783. 7860. rP os t 11 306-087 GEs Growth Strategy The Immelt Initiative Of Town Halls and Dreaming To stimulate ideas that would drive the imagination breakthroughs, Immelt continued to push his leaders to get out in the field and in touch with the market. Setting the example himself by spending at least five days a month with customers, he began creating forums he called town hall meetings. Here, several hundred customers would gather together to hear where GEs CEO wanted to take his company, to provide input on that direction, and to suggest how GE could be more accommodating to them. For example, in one meeting with the C EOs and key operating managers of companies in the railroad industry, Immelt spent an afternoon listening to their view of their industry situation, the key trends, and its five- to 10-year outlook. GEs CEO then asked them to think through a number of scenarios including higher fuel prices, a growth in east-west rail shipments due to increasing Chinese imports, and so on.He then challenged them to think through how they would spend $200 million to $ cd million on R&D at GE. The ensuing debate highlighted, for example, the relative importance of spending on fuel efficiency versus information technology to optimize rail grounds planning. But Immelt was careful to note that while the company listened carefully to the input, GE always made its own choices on these investments. I love customers. I get great insight from them, but I would never let them set our strategy for us, he said. But by talking to them, I can put it in my own language.Customers always pay our bills, but they will never pick our people or set our strategies. 36 Infrastructure for Developing Countries A New Growth Market In 2004, Immelts push for globalization also began bearing fruit with revenues from outside the U. S. growing 18% to $72 billion. Of this, the developing world accounted for $21 billion, an even more impressive 37% increase on the previous year, leading Immelt to predict that over the next decade, 60% of GEs international growth would come from developing countries.China represented the most visible growth opportunity, but he also planned to expand aggressively into India, Russia, east Europe, Southeast Asia, the sum East, and South America. Through the imagination breakthrough program, proposals for improving GEs ways of doing business in the developing world began bubbling up. For example, one plan that would quickly generate $100 million in sales involved shipping unassembled locomotives to Russia, India, and China, where they would be assembled in topical anaesthetic fa ctories and workshops. Furthermore, through an initiative known as one GE, the ompany began creating vertical teams to deliver what it called enterprise selling. For example, companywide enterprise teams had targeted the Olympics in Beijing, Vancouver, and London and were aiming to deliver additional sales of $1 billion in energy, security, lighting, and health-care products to those venues. And increasingly GE was adopting company-to-country relationships in selling infrastructure projects. It was an approach that had helped it book $8 billion in Middle East orders in 2005, twice the level of 2003. Do 12This document is authorized for use only by DINDIN SYARIFUDIN until August 2009. Copying or posting is an infringement of copyright. emailprotected harvard. edu or 617. 783. 7860. No tC op yo As an outgrowth of these meetings, Immelt obdurate to create another forum that he described as conceive of sessions. In these sessions, he engaged in intensive conversations with a group of senior executives drawn from key customers in a particular industry to try to identify major industry trends, their likely implications for them, and how GE might be able to help them.Immelt understood the importance of his own role in these meetings. If I show up, well get six CEOs to show up, he said. So you dont have to cut through anything else if we all do it together. We can make some high-level tradeoffs that way. 35 rP os t GEs Growth Strategy The Immelt Initiative 306-087 Reorganizing for skilland Growth Driven by such developments, in July 2005, Immelt announced a major reorganization that consolidated GEs 11 businesses into six large units, one of which was GE Infrastructure.Integrating aircraft engines, rail products, water energy, oil and gas, and some financial services, the unit was headed by GE veteran David Calhoun, who aimed to offer one-stop obtain for all infrastructure products and services. Immelts expectation was that by focusing on the needs of an underser ved customer groupthe governments of developing countriesGE could tap into investments in developing country infrastructure predicted to be $3 trillion over the next 10 years. Going Forward Immelts Challenges His main challenge now as he saw it was to maintain the growth in this $150 billion global giant.But to those who felt GE was too big to grow so fast, he had a clear response Do No The corporate landscape is littered with companies that allowed themselves to be trapped by size. But GE thrives because we use our size to help us grow. Our depth allows us to lead in big markets by providing unmatched solutions for our customers our extensiveness allows us to spread concepts across the company, leveraging one small idea to create big financial gains and our strength allows us to take the risks required to grow. . . Our goal is not just to be big, but to use our size to be great. 38 All he had to do now was dispose the financial markets that the changes he had initiated would enab le this global giant to deliver on his promise of continued double-digit growth. tC In 2006, Immelt felt that GE was well placed on the growth path he had laid out over four years earlier. Between 2002 and 2005, he had put $30 billion of divestitures on the block, completed $65 billion in acquisitions, and made major investments in new capabilities in technology, marketing, and innovation.He now represented GEs growth engine as a linked six-part process (see Exhibit 6). While the components varied little from his original 2001 list of growth elements, he explained the difference Youve got to have a process. Investors have to see it is repeatable. . . . It took time, though, to understand growth as a process. If I had worked out that wheel-shaped diagram in 2001, I would have started with it. But in reality, you get these things by wallowing in them awhile. 37 op yoWhile one objective of the reorganization was to create savings (expected to be $400 million in administrative costs alo ne), Immelt emphasized that a more important goal was to better align the businesses with customer and market needs. But he also made clear that he wanted to create an organization that gave more opportunity for younger growth leaders to drive their businesses. The six new macrobusiness groupsGE Industrial, GE Commercial financial Services, NBC Universal, GE Health Care, GE Consumer Finance, and GE Infrastructurewould each be led by one of GEs most undergo top executives.But these individuals would be forced to step back more from operations and spend most of their time coaching, developing, and supporting the younger managers who were to be pulled up into the 50-odd profit-responsible units directly under them. It was all part of the companys commitment to developing its growth leaders and the businesses they ran. This document is authorized for use only by DINDIN SYARIFUDIN until August 2009. Copying or posting is an infringement of copyright. emailprotected harvard. edu or 617. 783. 7860. rP os t 13 306-087 -14-Exhibit 1 GEs Performance, 20012005 Selected Financial info General Electric Company and Consolidated Affiliates (in millions, per share amounts in dollars) Do 2003 $112,886 13,766 2,057 15,823 -587 15,236 7,759 19. 60% 2002 $113,856 15,798 -616 15,182 -1,015 14,167 7,266 27. 20% 2001 $107,558 12,948 1,130 14,078 -287 13,791 6,555 24. 70% $ 1. 37 0. 2 1. 57 -0. 06 1. 51 1. 37 0. 21 1. 58 -0. 06 1. 52 0. 77 32. 4221. 30 30. 98 503,610 647,828 170,309 10,018,587 670,000 $ 1. 58 -0. 06 1. 51 -0. 1 1. 41 1. 59 -0. 06 1. 52 -0. 1 1. 42 0. 73 41. 8421. 40 24. 5 441,768 575,236 138,570 9,947,113 655,000 $ 1. 29 0. 11 1. 4 -0. 03 1. 37 1. 3 0. 11 1. 42 -0. 03 1. 39 0. 66 52. 9028. 25 40. 08 373,550 495,012 77,818 9,932,245 625,000 No 2005 $149,702 18,275 -1,922 16,353 16,353 9,647 17. 60% 2004 $134,481 16,285 534 16,819 16,819 8,594 17. 60% tC 1. 73 -0. 18 1. 55 1. 55 0. 91 37. 3432. 67 35. 05 626,586 673,342 212,281 10,569,805 634,000 161,000 155,000 316,000 This document is authorized for use only by DINDIN SYARIFUDIN until August 2009. Copying or posting is an infringement of copyright. emailprotected harvard. edu or 617. 783. 7860.Selected Financial Data Revenues Earnings from continuing operations before account changes Earnings (loss) from lay off operations, net of taxes Earnings before news report changes Cumulative effect of accounting changes Net earnings Dividends declared Return on average shareowners lawfulness (a) Per share Earnings from continuing operations before accounting changes cut Earnings (loss) from discontinue operationsdiluted Earnings before accounting changesdiluted Cumulative effect of accounting changesdiluted Net earningsdiluted Earnings from continuing operations before accounting changes basic Earnings (loss) from discontinued operationsbasic Earnings before accounting changesbasic Cumulative effect of accounting changesbasic Net earningsbasic Dividends declared stocktaking price range Year- end apogee stock price Total assets of continuing operations Total assets long borrowings Shares outstandingaverage (in thousands) Shareowner accountsaverage Employees at year-end linked States Other Countries Total Employees op yo 1. 72 -0. 18 1. 54 1. 54 $ 1. 56 0. 05 1. 61 1. 61 1. 57 0. 05 1. 62 1. 62 0. 82 37. 7528. 88 36. 5 618,241 750,507 207,871 10,399,629 658,000 165,000 142,000 307,000 155,000 150,000 305,000 $ 161,000 154,000 315,000 158,000 152,000 310,000 line GE 2005 yearly Report. rP os t GEs Growth Strategy The Immelt Initiative 306-087 Exhibit 2GE Stock outlay and P/E Multiple vs. S 500 Performance, 19952005 GE Price & P/E vs. S 500 1995-2006 (indexed 1/1995=100) 700 GE Price & S 500 (indexed 1/95=100) 600 500 400 300 200 100 0 97 96 95 Ja nJa nJa n- GE P/E S 500 GE Price op yo 99 00 01 02 Ja nJa n03 Ja nJa nJa n- 30 20 10 0 04 05 Ja nJa n06 Ja n- 98 Source Thomson Datastream International. Do No tC Ja n- GE P/E (%) This document is authorized for use only b y DINDIN SYARIFUDIN until August 2009. Copying or posting is an infringement of copyright. emailprotected harvard. edu or 617. 783. 7860. rP os t 60 50 40 15 306-087 -16- Exhibit 3 GE Financial Performance, 19812000 ($ millions) Do 000 1999 1998 1997 1996 1991 1986 1981 $129,853 10,717 -9,296 4,081 25. 7% 25. 0% 24. 0% 3,535 3,138 1,808 12. 2% 8,203 7,280 2,636 492 9,296 8,203 7,280 3,943 $111,630 $100,469 $90,840 $79,179 $51,283 $36,725 3,689 N/A 2,492 1,081 17. 3% $27,240 N/A N/A 1,652 715 19. 1% 12,735 10,717 General Electric Company & Consolidated Affiliates Revenues Earnings from continuing operations Loss from discontinued operations 12,735 4,786 Net earnings 5,647 26. 8% Dividends declared 27. 5% No 3. 87 3. 81 1. 71 1. 47 159. 5-94. 3 405,200 71,427 3,277,826 3,268,998 3,274,692 59,663 46,603 355,935 304,012 103. 9-69. 0 76. 6-47. 9 1. 25 1. 08 0. 95 3. 21 2. 80 2. 46 2. 16 3. 27 2. 84 2. 50 2. 20 2. 55 1. 51 1. 04 78. 1-53. 272,402 49,246 3,307,394 166,508 22,602 1,737,863 2. 73 N/A 1. 18 44. 4-33. 2 84,818 100,001 912,594 Earned on average shareowners equity Per share Net earnings N/A N/A N/A 69. 9-51. 1 20,942 1,059 227,528 Net earningsdiluted tC 53. 1-34. 7 167,000 143,000 -310,000 293,000 -130,000 163,000 165,000 155,000 111,000 173,000 84,000 -62,000 -276,000 49,000 Dividends declared 181. 5-125. 0 437,006 82,132 3,299,037 Stock price rangea Total assets of continuing operations Long-term borrowings Shares outstandingaverage (in thousands) Employees at year-end 168,000 145,000 -313,000 United States 302,000 N/A 71,000 N/A N/A N/A 239,000 284,000 373,000 404,000Other countries Discontinued operations (primarily U. S. ) Total employees op yo Source GE annual reports, various years. This document is authorized for use only by DINDIN SYARIFUDIN until August 2009. Copying or posting is an infringement of copyright. emailprotected harvard. edu or 617. 783. 7860. aPrice unadjusted for four 2-for-1 stock splits during the period. rP os t 306-087 -17- Exh ibit 4 Do No tC op yo GE Portfolio Growth Engines and Cash Generators This document is authorized for use only by DINDIN SYARIFUDIN until August 2009. Copying or posting is an infringement of copyright. emailprotected harvard. edu or 617. 783. 7860.As of January 1, 2004, GE has reorganized its 13 businesses into 11 focused on markets and customersseven Growth Engines, which generate about 85% of earnings and are market leaders with strengths in technology, cost, services, global distribution and capital efficiency and four Cash Generators, which consistently generate strong cash flow and grow earnings in an expanding economy. This chart reflects the most significant changes the conclave of Aircraft Engines and Rail into GE Transportation the combination of Industrial Systems and Consumer Products into Consumer & Industrial, with portions of Industrial Systems moving to other businesses and the formation of Infrastructure from portions of Industrial Systems and Specialty Materials. Results for 2003 in this annual report are reported on the 13-business basis in effect in 2003. P os t Source GE 2003 Annual Report, p. 6. 306-087 GEs Growth Strategy The Immelt Initiative Exhibit 5 GEs Representation of its Portfolio Transformation, 20002006 Portfolio Transformation GE has added more than a dozen new capabilities to its seven Growth Engines, which should generate approximately 90% of GEs earnings in 2005, substantially more than five years ago. The Growth EnginesTransportation, Energy, Healthcare, NBC Universal, Infrastructure, Commercial Finance and Consumer Financeare robust, capital-effective businesses with leadership positions for sustained doubledigit earnings and cash flow growth. New Growth CapabilitiesBiosciences choose + DVD Healthcare Information Technology Renewable Energy (Wind, Solar, Biomass) scorch Gasification Water Security Hispanic Television Oil & Gas exploration Technology Services (Asset Optimization, Environmental Services, Non-Destructive Testing) Vertical support Full Supply-Chain Financing Real Estate Operations Global Mortgage Source GE 2004 Annual Report, p. 4. Do 18 This document is authorized for use only by DINDIN SYARIFUDIN until August 2009. Copying or posting is an infringement of copyright. emailprotected harvard. edu or 617. 783. 7860. No tC op yo rP os t GEs Growth Strategy The Immelt Initiative 306-087 Exhibit 6 GE Growth Strategy Core Elements, 2005 Version Customer ValueUse our process excellence to create customer value and drive growth Growth Leaders Inspire and develop people who know how to help customers and GE grow Globalization tC give rise opportunities everywhere and expand in developing markets Do No Source -GROWTH IS THE GE INITIATIVE After growing historically at an average of 5% revenue growth, in 2004, we launched this initiative to achieve 8% organic growth per year. This is about twice the rate of our industrial and financial peers. We want to make organic growth a process that is i nevitable and reliable. - GE 2005 Annual Report. op yo Execute for Growth Commercial Excellence Create a world-class marketing and sales capability to drive one GE in the marketplace This document is authorized for use only by DINDIN SYARIFUDIN until August 2009. Copying or posting is an infringement of copyright. emailprotected harvard. edu or 617. 783. 7860. rP os t Innovation Generate new ideas and develop capabilities to make them a reality Leadership in Technology Have the best products, content and s