Adaptability, Realistic Expectations- key to GE success.

Two of the reasons that GE has had a successful 126 years is because the leaders were adaptable, set and met realistic expectations. It is highly promising to see the Immelt team continue this successful leadership approach.

It is clear that the company must reduce its dependence on Financial services and its complexity. GO BIG has not worked and focus and selectivity must become the new theme.

Bill Rothschild, author of the insightful,comprehensive, objective 126 year history of GE, THE SECRET TO GE's SUCCESS...a global bestseller.

Selling Your Name for a short term gain???

Unlike his predecessors, Jack Welch was willing to sell GE' pride position, its name, lovingly called the MONOGRAM. The reason that Jack's predecessors were unwilling to sell the Monogram when they sold a business was that they believed that if the acquiring company didn't provide quality products and services it would reflect on the entire company. This was one of the reasons that Reg Jones was not able to sell the maturing housewares businesses (toaster, coffee makers etc) and the very unprofitable Television business.

Welch was willing to take the chance and so he sold the Monogram, for a five year period to get rid of Housewares and for an unlimited period to divest television.

Today it appears that Immelt and his team are willing to actively market the brand name. They have created a new joint venture with a Taiwan company to sell GE BRANDED High Definition/ Interactive Televisions, for a forty nine stake in the new company.

Other companies have done the same, but I am still a firm believer that when a company invests over 100 years in building a strong brand, it should not be used for a "quick/ opportunistic" deal.

Bill Rothschild, author of the most comprehensive, objective history of a truly remarkable company, designed to help the reader learn from both the company's successes and failures...THE SECRET TO GE's SUCCESS, now in six languages and a global best seller.

GE's historical strengths....

Over the past few months I have highlighted many of the reasons that GE is having problems and why its stock is moving in the wrong direction.

But I totally agree with Jeff Immelt that GE is a strong, well managed, strategic company and should be more highly respected and valued.

GE has faced major problems before and has been able to adapt and even make the company stronger.

• It started with GE's ability to survive the GREAT DEPRESSION. The Swope/ Young team was able to survive during the Great Depression, even though the company revenues dropped 75%. One of the human resource innovations was the LAMP business allowed workers to volunteer to work four days a week, with four days of pay to prevent 25% of the workers from losing their jobs.


• In the 1950's, the GREAT ELECTRICAL CONSPIRACY, which was a major price fixing scandal, shocked the company to its core and even changed its succession plan, but it was able to move beyond and the company became stronger.


• In the 1960's Borch embarked on a number of misguided ventures, most of which failed and caused the decline of its stock, but Borch took action and installed the strategic management system which saved the company.

One of the criticism, I have received about my book THE SECRET TO GE's SUCCESS, has been that I am too supportive of GE.

It is true I strongly believe that GE's leadership has been able to ADAPT to change and, though I have challenged the Immelt GO BIG/ GO GLOBAL strategies, I am still a GE fan, I believe that Immelt and his team will do the same and succeed.

(However, this will be even more difficult since the company is now so big and complex, but if Jeff and his team, learn from the past and uses GE's enormous, deep leadership, technological, innovative and marketing skills, GE will win and the GE investors, as well as all stakeholders will reap the rewards).

Bill Rothschild, author of the most objective, comprehensive view of GE's successes and failures and the lessons we can learn from them, THE SECRET TO GE's SUCCESS...now a global best seller in six languages, including Simplified Chinese.

GE's Second Home Country...CHINA

I recently wrote an article in the June 2008 edition of Chief Executive Magazine, entitled: "Whose going the wrong way!" in which I compared the Chinese strategies of Korean, Japanese and Taiwanese companies and US companies. The former are dis investing in China, while US companies, especially GE, are making it their prime target and investing heavily.

The article demonstrates that focusing to heavily on China may be unattractive.


I am glad that I am not in GE management today, since it appears that GE plans to do exactly what I think is not the right strategy. When I was GE Corporate Strategist in 1981, I was a strong proponent of GE's investing in China, but my opinion has changed. Unfortunately, GE waited too long and now in trying to make up for lost time.

This article shows how committed GE is. I have major concerns about this focus. Take a look at what GE is doing:

GE to launch 5 regional headquarters in China
http://www.chinaview.cn/index.htm 2008-09-15 20:51:35

Print
SHANGHAI, Sept. 15 (Xinhua) -- General Electric Co. will soon set up five new regional headquarters in China to further tap a huge market that boasts huge business potential.
The U.S. giant now operates two regional headquarters in Shanghai and Beijing. The new locations will be in Shenyang, Wuhan, Chengdu, Xi'an and Guangzhou -- provincial capitals in the country's northeast, central, southwest, northwest and south, according to Chen Xiangli, president of China Technology Center under GE.
The move is in line with its new strategy of making China the multinationals second home country, Chen told a GE-sponsored technology conference in Shanghai.
"China is not only a market, but also a significant research and development base and a fundamental foothold for GE's future development," he said, stressing the company would rely on its business growth in the country in future.
"GE has been following the American and European markets over the past century, but China will turn into a priority in future," said Wang Xiaozhong, the center's public relations chief inspector.
The new headquarters would help existing functional departments in different regions to further explore the market and develop more China-oriented products, Wang added.
Since last year, GE has invested 55 million U.S. dollars to the center on the research and development of new products for China, with a focus on clean energy, water treatment and new materials, among others.
The center now boasts more than 60 advanced labs and employs some 1,400 people.
GE's China sales volume accounted for about 2.54 percent of its global turnover of 173 billion U.S. dollars last year.
Chen believed the company had great growth potential in China and the country would no longer remain at the end of the international sales chain dominated by the European and U.S. markets.

Bill Rothschild, author of the most comprehensive, objective GE strategic history "THE SECRET TO GE's SUCCESS"... now in Chinese and five other languages.

What happened to GE's accounting and financial management strengths?

In my latest book: THE SECRET TO GE's SUCCESS, I conclude that one of the GE's strengths has been its financial management and accounting systems.

I joined GE as a member of the Business Training Course (now called Financial Management Program) and learned to admire the talent of the financial organization. It was clear that when GE reported its earnings there was 99% confidence level.

During the Welch era, there was concerted effort to reduce the power of the financial organization, because it was felt that it inhibited creativity and entrepreneurial flexibility.

It is clear that over the last thirty years that GE's accounting and financial auditors have not be able to assure investors and government officials that GE's financial statements and practices meet the historical standards of the past.

There are several very disturbing situations that illustrate this reality.

First was the surprise of GE's missing its expected results in the first quarter of 2008. It was clear that everyone, even the CEO, was surprised that about the miss. This caused GE stock to fall from 42 to 25 and it still hasn't recovered. The investment analysts and companies have moved the company into a hold mode.

Second, the company has had to restate its annual statements several times over the past few years and lower its reported earnings.

Third the SEC announced it was issuing a Wells Notice and taking civil actions and there are several stockholder suits.

It is difficult for me to imagine that GE would find itself in this position and it has clearly impacted the company's credibility and reduced shareholder value. It is clear that the reduction of the internal auditing, the inability to spot external and internal changes that can impact the top and bottom lines and the shear size, complexity, continuing "deal making" and global expansion are all causes of these problems.

The question is whether current financial leaders are ready, willing and capable to do what it takes to restore the confidence of all key stakeholders, especially the investment community and government agencies.

Bill Rothschild, author of THE SECRET TO GE's SUCCESS (now in six languages) and GEWatcher blog found on (http://www.strategyleader.com/)

So what is happening STRATEGICALLY at GE!!!

It is clear that the vision of GO BIG, GO GLOBAL and MAKE DEALS, continues at GE.

Since the Olympics, GE has not done much, but this is probably because everyone is on vacation and unwinding from the CHINESE show. GE selected Shanghai as its headquarters and a major Chinese technical center.

Immelt has become a Dartmouth trustee, which is one of his loves. He had hosted the visit of John McCain in Erie, which was one of the locations that Ronald Reagan used to display his loyalty to innovation and American industry.

However, there are several Governmental actions that are disturbing. The most recent was the SEC's concern about GE's book keeping and a CIVIL suit.

Overall, it is clear that the GE/ Immelt team are convinced they are on the right track and will continue the same philosophy and strategy...but the stock market has not bought in and the stock is doing nothing.

As we promised we will continue to be the Strategic GEWatcher and objectively and strategically assess their moves.

Bill Rothschild, author of the SECRET TO GE's SUCCESS (The only book that provides the historical strategic insights to understand the company and the probability of its strategic success. Now in SIX languages.)
Learn more by visiting http://www.strategyleader.com/