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GENERAL ELECTRIC COMPANY CASE STUDY
ARTICLE · MARCH 2014
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Dr. Osako Marie Ngoie (Djemo)
Argosy University, Chicago, United States
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Running head: GENERAL ELECTRIC COMPANY
General Electric Company Case Study
Osako Marie Ngoie (Djemo)
Argosy University – Chicago
DBA Program
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GENERAL ELECTRIC COMPANY 2
Table of Contents
Abstract …………………………………………………………………………………………4
Introduction ……………………………………………………………………………………. 5
Background of GE Company ………………………………………………………………….. 6
Literature Review…………..………………………………………………………………. … 7
The Characteristics of Innovation and Change in GE Organization ………………………….. 8
GE Challenges and Commitments ……………………………………………………………. 9
SWOT Analysis of GE …………………………………………………………………….......10
Analysis and Evaluation ………………………………………………………… 11
Structure Idea Management (SIM) and the System of GE Company ……………………….. 12
The diffusion innovation theory ……………………………………………………………... 13
The diffusion innovation process ………………………………………………… 14
Inter and Intra-Networking Effects on organizations ………………………………………… 15
GE core aspect of leadership …………………………………………………………………. 16
Executive Leaders ………………………………………………………………… 16
Board of Directors…………………………………………………………………...16
Effects of Leadership Ethics ………………………………………………………………….. 17
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Abstract
This paper discusses different characteristics of innovation and change within General Electric
(GE) Company. Corporations are highly challenged in the business environment by the
competitors and the customer’s satisfaction. The advanced pace in technology and the
globalization aspect have allowed many corporations as well as individuals to use their
creativity abilities and leadership skills to innovate new products and services, also new ways of
perceiving and presenting things. The change in people’s needs and socio-environmental
expectations has led GE Company to work through imagination by turning challenges into
opportunities and weaknesses into strengths. Innovation is the game to play in order to remain
successful and sustainable in the current global marketplace for all industries.
Keywords: Leading Innovation, Change, and General Electric Company,
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Introduction
The globalization and the competition on the marketplace have led many organizations
to improve their products and services through innovation. Creativity plays a leadership role for
a successful innovation. However, does every new or creative idea lead to innovation? Should
the company credit the success of innovation to individuals (personnel) with new ideas working
toward innovating new products and services? Or should the company credit the leadership
momentum of innovative skill? Why some of the companies are successfully innovative while
others fail to implement their new ideas in order to produce innovative results? Do the diffusion
of innovations and innovation process play a grand role for the organizations success?
In this paper, General Electric (GE) Company is considered to be a case study to answer
these questions. GE is one of the highly innovative companies in the world. GE works on
toughest challenges to transform imagination trough creativity into innovations. They find
solutions for energy, health and home, transportation and finance. This company differentiates
itself by building, powering, moving and curing the world. GE ensures that they invest in their
leadership, personnel, and work environment to support the creativity and innovation.
The organization of this paper includes the Background of GE company, Literature
review, The characteristics of innovation and change in GE organization, The GE Challenges
and Solution Commitments, The SWOT Analysis of GE, SIM and the System of GE, The
diffusion innovation theory,
Corning’s Five-Stage Stage-Gate Innovation Process,
Application
of the Innovation Process, Inter and Intra-networking effects on organizations, The role of
Leadership, Role of Ethics and Responsibility, Principles and practices for implementing
innovation at GE, Research Summary, and Conclusion.
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Background of GE Company
From the earliest days, GE Company has used the tools of research, combined with a
little inspiration, to create the world of tomorrow. The legacy of GE’s originality offers a rich
history based on the following question: “Why predict the future when you can create it?” For
over 130 years, GE has continued to innovate what has yet to be imagined.
Thomas Alva Edison opened a laboratory in Menlo Park, New Jersey in 1876 where he
was able to explore the possibilities of generator and other electrical devices that he had seen in
the Exposition. From that laboratory, Edison came up with the greatest invention of the age - a
successful radiant electric lamp. Edison brought his various businesses together in 1890 and
established the Edison General Electric Company.
Awkwardly, The Thomson-Houston Company emerged during that same period as a
dominant electrical innovation company led by Charles A. Coffin and became the Edison
General Electric Company’s competitor. Coffin is a former shoe manufacturer from Lynn,
Massachusetts. Both business expanded and realized that either company could not produce
complete electrical installations relying solely on their own patents and technologies. Therefore,
the two companies decided to combine their business in 1892. They called the new organization
General Electric (GE) Company.
Many of the Edison's early business contributions are still part of GE today. Some of
these contributions include lighting, transportation, industrial products, power transmission, and
medical equipment. Earlier of 1890s, GE produced its first appliances electric fans at the Ft.
Wayne electric works while a full line of heating and cooking devices were settled in 1907. The
U.S. government started to search for a company that could develop the first airplane engine
"booster" for the inexperienced U.S. aviation industry in 1976 and identified GE Aircraft
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Engines that was established since 1987. Edison's experiments with plastic threads for light
bulbs in 1893 led to the first GE Plastics department, created in 1930.
Literature Review
Some people may argue that individuals with creativity ideas are more important for an
innovative company, but others will argue that the leadership plays a very important role for an
innovative company. Both views may be considered true at certain extends. However, the
perspective of supporting the leaders seems to be more relevant as the organizations have to
invest in their leaders to ensure that they do develop their own innovative thinking capabilities
and also have the ability to develop their employees’ and teams’ innovative-creativity skills.
Rowe and Nejad (2009) stipulate that most of the leaders’ strategies consider human capital as
an important factor in innovation and the creation of core competencies, and they expend
considerable effort sustaining the health of this resource (human capital). Therefore, the core
aspects of leadership are important to leading innovation and change within an organization.
Hobcraft and Phillips (2012) provide the abilities of leaders to support their importance
in leading innovation and changes within an organization. Leaders are able to link innovation to
strategies; they create focus, engagement and passion for innovation; they direct funds and
resources to good innovation programs; they speed good ideas to market as new business
models, products and services; and they ensure defined innovation processes in order to produce
sustainable innovations. Leaders play a vital role in the success or failure of innovation.
Innovation can be misunderstood and not explicit enough. Therefore, leaders have the duty to
clarify the role of each participant for accountability purposes. Also, leaders have to make sure
that the company has built an accurate innovative culture through organizational culture.
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GE is one of the world’s largest innovative Companies. GE believes that imagination
equals innovation. The company is determined to solve the world’s biggest problems by putting
their collective imagination to work for a better future. The chairman and CEO of GE, Jeff
Immelt, agree that building strong leaders is a strategic imperative. When times are easy,
leadership can be taken for granted but when the world is turbulent, great leaders are
appreciated. GE culture is among its innovations. GE leaders have built the company’s
innovative culture by providing a place for creating and bringing big ideas to life. GE culture is
the unifying force for its many business units around the world.
The Characteristics of Innovation and Change in GE Organization
In today world of competition, companies are forced to meet the dynamic change of the
economy, customers’ satisfaction, socio-environmental requirements, etc. Companies have to
adjust to new competitions and new ways of doing business. Therefore, innovation is a must in
order to sustain and remain successful. Having a change management control process in place
ahead of time may reduce the cost of hindrances to leading innovation and changes.
The growth of a company is a process. GE Company needed to get out of the basement
in order to grow and be innovation driven. This describes a necessary practice for implementing
innovative processes for GE Company. GE is a great company, very innovative with big vision.
Despite all the threats and weaknesses that can slow the company’s performance and efficiency,
the strengths and opportunities build the company and allow it to survive through tough moment
in business. The “GE advantage” policy allows the company to achieve the competition
advantage and enhance the customer values. GE understands the importance of the employees’
system of innovation while ensuring a great leadership in order to be and remain successful and
competitive in the current marketplace.
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The SWOT Analysis of GE
Strengths Weaknesses
Global recognition
Global strength and competitiveness
Diversified business portfolio and line
of operation
Strong research & development
(R&D)
Order backlog guarantees business
flow in the future
Excellent management & Strong
culture in terms of people, systems,
technology and measures
Environmental initiatives
Economic Leader
Under-performing energy sector
Bets on financial markets have proven
unsuccessful with economic turmoil
Weak revenue growth of industrial
segment
Underperforming in Asian markets
Leveraged
Generates more than half of its profits
from GE capital services, hard hit by
the economic downturn of 2008.
Threat to flexibility
Opportunities Treats
Development of infrastructure
Aviation industry growth
Increasing global exploration and
production
Servicing and regeneration of
commercial airplanes around the
world customer services initiative
Rise of competition
Information security
Senior management - weak
performance by GE has put doubts on
Jeff Immelt's ability to be the next
Jack Welch
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Mergers and acquisitions
Research and development
Rising commodity prices
Exposure to financial markets and
crisis
World economic slowdown in the
US and Eurozone, two of the most
important markets for GE
Media depictions
Analysis and Evaluation
The number of strengths in the above table indicates that GE Company is growing and
enhancing its profitability. Its global recognition, strengths strategies and competitiveness allow
GE to be in a favorable position as compared to its competitors, in the same sector. The use of
business units for management presents an effective way to manage the sprawling company.
This situation not only reduces the possibility of overpowering senior management with work
but likewise promotes productivity based on accountability expected from the business unit
managers. The company undertakes multi-activities which highly contribute to effectiveness.
This is enhanced by the mergers and acquisitions that have diversified the company's product
range and in turn leading to improvement on profits incurred.
GE strengths and opportunities have a lot of constraints. Countless threats and
weaknesses have creep up the performance of the company at some extend by presenting
r estrictions on the company's management. Some of the threat elements to the company’s
survival include high levels of competition, financial crises and risk of information loss.
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Weaknesses within the company including the poor productivity of the energy sector and
flexibility threat could impact negatively on the company.
In order to reduce the impact of threats and weaknesses, the company could use the
strengths and opportunities to alleviate them. The efficient management can also be used to
prevent loss of data through implementing proper control measures and to avoid losses which
could exemplify the situation caused by the financial crisis. And now, GE has a new theory that
is changing the way of doing their business called “GE Advantage” where GE is pride on
driving consistency, operational excellence, and enhanced customer value. For this reason, the
company is placing some big bets on 40 high impact projects that will help increase its speed to
market, improve the quality of its products and services, significantly reduce costs, and drive
competitive advantage for its customers and the company.
Structure Idea Management (SIM) and the System of GE Company
Structured Idea Management (SIM) can be defined as a structured process of effectively
collecting, evaluating and managing ideas from employees and any other stakeholder in order to
turn best ideas into innovation. In other words, SIM is a process where creativity and structure
are pooled to find efficiently optimal innovative solutions. SIM empowers companies to
continuously innovate, grow and remain competitive.
The Structured Idea Management Process
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professor of rural sociology, Everett Rogers, in his book “Diffusion of innovations”. According
to professor Rogers, the diffusion is the process by which an innovation is communicated
through certain frequencies over time among the members of a social system.
The diffusion innovation process
It appears that many organizations are predominantly interested in the diffusion process.
This is explained by the fact that the diffusion innovation theory defines the success and failure
of any new products introduced in the market. The diffusion innovation process is related to the
decision making process. Therefore, it’s absolutely rational for an organization to understand
the theory of diffusion innovation and its process in order to be able to manage and extend the
range of the new products or services.
The process of diffusion innovation goes through five stages (Rogers, 1962): awareness,
interest, evaluation, trial, and adoption. Rogers mentioned that the diffusion process was first
identified by Ryan and Gross in 1943. In the later editions, Rogers changed the terminology of
the five stages of diffusion process into: knowledge, persuasion, decision, implementation, and
confirmation. Nonetheless, the descriptions of stages remained similar trough editions.
The graphical presentation of the process
1. Five Stage innovation process
Source: Rogers (1962)
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2. Logistic function innovation process, “S curve”
Source: Rogers (1962)
Comment: This graphic demonstrates consecutive groups of consumers adopting the
new technology (blue curve) and its market share (yellow curve) which will ultimately reach the
satiety level. In mathematics the “S curve” is known as the logistic function.
Corning’s Five-Stage Stage-Gate Innovation Process
Marketplace competition and customer’s satisfaction have challenged organizations to
emphasize on products innovation. The Corning’s five-stage stage-gate process provides a way
of developing profitable new products. With this process, the project management teams are
able to move through the production system more proficiently. The Five-Stage Stage-Gate
process was created by Dr. Robert G. Cooper and Dr. Scott J. Edgett.
The development of Corning’s Five-Stage Stage-Gate process is accepted and adopted
as a project management technique for managing innovation and developing new products. This
adoption has been endorsed after a careful study of how successful project teams work toward
developing winning new products. The model of stage-gate optimizes the efficiency of a new
product development process and allows the management to detect and kill poor projects at a
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very early stage. Therefore, the management of the model is focused on potentially winning
projects.
Corning’s Five-Stage Stage-Gate Process model
Source: Dr. Robert Cooper and Dr. Scott Edgett
According to Cooper and Scott (1996), the corning’s Five-Stage Stage-Gate System is
defined as a conceptual and operational road map for moving a new-product project from idea
to launch. This process allows management and verification of the products’ development from
one stage to the other. The Stage-Gate Product Innovation system has been referred to as the
single most important discovery in product innovation
The Stages of the process
Each stage in the process is a decision point that leads to a Go/kill or prioritization decision
point. The structure of each stage is similar to the chart below:
Source: Dr. Robert Cooper and Dr. Scott Edgett
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The Gates of the process
The Gates in the process are decision points where non well-performed projects are discarded
and resources are allocated to the best projects. The Gates systems deal with three quality
issues: quality of execution; business rationale; and the quality of the action plan. The structure
of each gate process is similar to the Chart below:
Source: Dr. Robert Cooper and Dr. Scott Edgett
Cooper and Scott (1996) established some benefits of using the Stage-Gate system:
Accelerates speed-to-market
Increases likelihood of product success
Introduces discipline into an ordinarily chaotic process
Reduces re-work and other forms of waste
Improves focus via gates where poor projects are killed
Achieves efficient and effective allocation of scarce resources
Ensures a complete process – no critical steps are omitted
Application of the Innovation process
Leadership
Leadership innovative skill is very important to any stage-gate process. There are multiple
levels of approval in a stage-gate process to keep a new product in development. This allows for
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The organizational learning processes
The corning’s Five-Stage stage gate process is a well-established process system that has been
adopted by many innovative industries to develop and produce new products. However, every
organization can adapt this process to meet its mission and its goals. The review process after
every set of results should empower the organization by working toward correcting their
mistakes and improve the future outcome process. This review phase can be identified as a
learning process. The more the organization reviews the processed innovation results the more it
improves its future outcome.
Inter and Intra-Networking Effects on Organizations
The need for innovation is often refer to as a foremost reason for the development of
network forms of organizations. Obviously, Networks work to the advantage of the innovation
spread. According to Robertson, Scarborough, and Swan (2002), Innovation is considered to be
an iterative, recursive and episodic process surrounding the design and development, diffusion
and implementation of new ideas for the adopting organization.
The inter-networking diffusion can be understood as the spread of a new idea or any
innovation from one person or organization to the other until it reaches a critical mass within the
network, a point at which the diffusion is self-sustaining and speedily disperses throughout.
While the intra-networking diffusion understanding relies on how an innovation or a new idea
diffuses within an organization of adoption. The intra-networking diffusion tries to establish the
understanding of how the innovation, once adopted, is integrated into the network of the
adopted organization through innovation use.
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Considering the above understanding, both inter and intra-networking effects of
diffusion innovation on organization are critical for the diffusion process. These inter and intra-
networking diffusion innovation complements each other and completes the diffusion of
innovative process.
Role of Leadership at GE
GE's Chairman and CEO, Jeff Immelt, has worked very hard since he started his tenure
in 2001 to transform GE into a leader in essential themes tied to world development, such as
emerging markets, environmental solutions, demographics and digital connections. Mr. Immelt
also laid the vision for GE's ambitious “ecomagination” initiative and has been named one of
the "World's Best CEOs" three times by Barron's.
Executive Leaders
The men and women who are driving GE's many businesses are highly considered as the
top leaders in their industries. They are the new generation of leaders and each is leading their
respective organizations to become closer to their customers, while finding new operational
efficiencies and ways to work toward a distinguished future.
Board of Directors
GE's Board of Directors provide comprehensive oversight of the major strategic issues
of the company while ensuring that the company serves the interests of shareowners and other
key stakeholders with the highest standards of integrity and compliance. However, critics and
wise counselors are among some social issues that are raised most of the time to ensure that the
company is serving equally.
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Role of Ethics and Responsibility
Leaders are called to set an example for its followers. They play a responsible role
within the organization. Leaders are considered to be role model for the employees, or their
team members; therefore they can have tremendous impact on their life, behavior, moral,
productivity, efficiency, etc. Leaders demonstrate ethical behaviors when they are doing what is
morally right, just, and good, and when they help to elevate followers’ moral awareness and
moral self-actualization. According to Zhu (Spring 2008), ethical leadership encompasses more
than the fostering of ethical behaviors.
Ethical leadership can have positive or negative effects on organizational performance.
Innovative organizational processes are supported and enhanced by leadership ethics and values
because it fosters the development of one of the most crucial success elements; trust. An
innovative organization engages everyone throughout the organization in the task of developing
and implementing new ways to reach the organization's goals. The leadership can affect
ethically or unethically the organizational innovation and change.
For instance, corruption among leaders within the organization of innovation and change
must not be tolerated as it will spoil the workplace and diminish their responsibilities. This
behavior will spread in the organization and affect the trust and collaboration. Meanwhile, the
leadership awareness is a positive attitude that will encourage every worker and stimulate
everyone to do they share of work. The leader’s awareness will affect positively the
performance of the organization innovation and change. Ethics and responsible behaviors are
required for qualified leaders and personnel.
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Research Summary
GE is a great company, very innovative with big vision. GE works on things that matter
with a philosophy of “May the person with the best idea wins”. GE Company understands the
importance of using the brain of the workers. GE knows how to reward and celebrate people
who live at the “value” and standard of the company.The company takes on the toughest
challenges to build better people and better technologies. The company wants to make sure that
they find solutions in energy, health and home, transportation and finance. GE is building,
powering, and moving the world. This company does not just imagine these things but works to
make it happen.
Despite all the treats and weaknesses that can slow the company’s performance and
efficiency, the strengths and opportunities build the company and allow it to survive through
tough moment in business. The “GE advantage” policy allows the company to achieve the
competition advantage and enhance the customer values. GE understands the importance of the
employees’ system of innovation while ensuring a great leadership in order to be and remain
successful and competitive in the current marketplace.
GE also understands that for its employees to flourish their performance, they have to be
placed in a sound work environment. That is why GE is committed to strengthens and use any
opportunity their get to support its leadership culture through systems and policies that foster
open communication, maintain employee and partner privacy. The company fights hard to
reduce its weaknesses and threats while assuring employee health and safety, and reduce the
cost of products to meet customer’s satisfaction.
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Conclusion
In this paper, GE company was used as a case study on organizational Innovation and
change. Different characteristics of innovation and change have been discussed within GE
Company. The competition on the actual marketplace in the world has challenged GE company
to come up with new ideas and innovative ways of developing and producing its products and
services. Dr. Cooper and Edgett have solved the competition argument by producing an
innovative system called corning’s five-stage stage-gate process. This innovative process has
allowed companies, such as GE, to reinvent their ideas and launch new products and services. It
is more effective, efficient, faster process that improves the product innovation results. Leaders
and individuals within organization have to work in network collaborations in order to meet the
goals of their organizations, stand out the competition with innovative products and solve any
financial or sustainability challenges that the organization comes across. The inter and intra-
networking effects are critical for GE diffusion innovation process. That’s why the SIM has
been very well integrated in GE Company, this has allowed the company to become one of the
most innovative, profitable, and admired companies on earth. The SIM can also be used to
resolve resistance to change by communication and management.
Thus, while the current discussion addresses key features of organizational innovation
and change that determine the success and sustainability of GE, more research is necessary to
understand and help GE Company remain competitive in this hungry world of creativity and
innovation. Innovation is the game to play in order to remain successful and sustainable in the
current global marketplace for all industries.
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