A Conversation with GE's Jeff Immelt and Beth Comstock :: Video
From Reset to Renewal: GE executives illustrate the challenges of doing business in a changing world.
ANN ARBOR, Mich. — Economic growth is shifting from the developed to the developing world, as nations with robust economic histories stare down potentially crippling debt. That reality is impacting business, innovation, and the underlying makeup of today's successful executive, said General Electric Co. Chairman Jeff Immelt during a recent conversation webcast from the Ross School's Blau Auditorium.
The Ross Leadership Initiative hosted Immelt and GE Senior VP and Chief Marketing Officer Beth Comstock Nov. 17 as part of the "GE Live" series. The two executives of one of the world’s largest companies shared their views on the globe's changing economic landscape.
"Driving growth in a sea of volatility is going to be your biggest challenge," Immelt told the audience.
He sees three major themes shaping business over the next couple of decades.
First, the developing countries – India, China, Brazil, and nations in the Middle East and Africa – are going to grow much faster than the developed regions of North America, Western Europe, and Japan. From 2010 to 2020, Immelt sees 80 percent of the growth taking place in these emerging economies. This opens a huge economic opportunity but, as Comstock noted, also creates challenges on product and business-model innovation.
Second, the developed world is facing some intractable economic problems, such as the amount of debt-to-GDP that many carry. Sooner or later, these governments are going to address that issue, and businesses need to stay on top of how those changes will affect their business. Policy, Immelt pointed out, creates both winners and losers.
Third, unemployment generally is high around the globe. The U.S., France, and China all are dealing high jobless rates.
"Jobs are really the currency of the 21st century," Immelt said.
So what is it going to take for an executive to be successful in this environment? Immelt sees a few qualities necessary for this century's business leader.
For one, executives have to be digitally literate and know how to pick winning technologies. They must be comfortable with globalization, since future growth will occur in places like Africa, Latin America, and Asia. They need to know how financial services work and how the industry is evolving. In addition, they should embrace entrepreneurship, even within a big organization.
Finally, they have to figure out a way to run an investor-driven, capitalist company but also solve social and customer problems, he said. GE aligns its innovation with solving social problems by investing in its clean energy and healthcare businesses.
"I'm a passionate believer that business and innovation can solve social problems," Immelt said, emphasizing that capitalism, not regulation, is the way to meet these issues.
While Immelt identified the opportunities, Comstock outlined some of the ways GE plans to meet them. Innovation usually brings whiz-bang products to mind. But doing business in so many different countries means that innovation also is about finding new business models or redefining strategy, she said. That's just as important as product innovation.
GE is trying to globalize while it engages in reverse innovation, she noted. Reverse innovation involves developing customized needs for a local market.
For example, GE developed an EKG machine for use in hospitals in India based on one of its existing models. The new model has been customized to use the latest technology, but has been simplified for use in rural clinics. It costs just $500 and meets the basic needs of doctors and physician assistants who perform quick screenings to determine if patients can be treated at the local clinic or should be sent to a larger hospital.
"Cost is an incredible creativity motivator," Comstock said.
Talk of globalization often generates controversy, admitted Immelt. High unemployment in the U.S. often brings protectionist talk and breeds resentment that GE and other companies are growing beyond the nation's borders.
But Immelt said one can be a globalist and still have a vision for the home country. GE is a major exporter and expects its exports to be even higher next year. While he's not going to apologize for hiring people where the company needs them, he said CEOs do have to help out domestically. Making money in a country means making money for investors and for that country.
He advised the audience not to be dismayed that many people are against globalization.
"We have to be better salespeople for it," he said.
For more information, contact:
Terry Kosdrosky, (734) 936-2502, firstname.lastname@example.org