GE's formula for success

By: 
January 23, 1995

Among America's manufacturing giants, few can match General Electric's
record of achievement. Most of its 12 business units enjoy double-digit earnings
growth. Productivity is nearly triple what it was in the early 1980s, and GE is
attacking overseas markets aggressively, with 40% of its sales outside the U.S.

How does GE do it? Chairman Jack Welch says the most important factor is "boundaryless behavior"-removing the walls and layers both within the company and between GE and the outside world. Discarding "not invented here" thinking, GE borrows product introduction techniques from Canon, component sourcing ideas from Toyota, quality concepts from Motorola, and advice on Asian markets from IBM. GE engineers seek input from suppliers and customers on product development, and concurrent engineering is the norm. Moreover, GE divisions cooperate on everything from core technology and manufacturing to compensation and personnel evaluation.

In short, the company invites ideas from every level. Says Welch: "The kind of people we need are those unwilling to put in their time in the bowels of the bureaucracy before they get a chance to make decisions, try something, and be rewarded in their souls as well as their wallets."

A more open atmosphere, in turn, allows the company to move much faster than it once did. Instead of "moon shot" development programs that took years to materialize, GE now emphasizes speed. The Appliance division turns out a new product every 90 days, and the new GE90 aircraft engine was designed and built in half the normal time. What's more, GE's future growth hinges not on incremental progress but on seemingly impossible goals that "stretch" people and stimulate creative solutions. Example: The company wants to introduce more new products in 1994-1995 than it did in the previous decade.

If a company with 220,000 employees can institute such dramatic change, any company can.

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