GE Watchers UPDATE (1)

A continuing part of my website http://www.strategyleader.com/ and this blog is to discuss what GE is doing today and how it relates to their past successes and failures, as described in my book: The Secret to GE's Success. I plan to discuss leadership, adaptability, talent, influencing and networks LATIN, which I have concluded summarizes the keys to any organizations success.

Leadership- GE's senior management continue to tell the world that their strategy is working and that they should invest. Unfortunately the stock has not responded and there appears to be continuing concerns about whether "GO BIG/ GO GLOBAL" is working.

Adaptability-
"The February 25, 2008 issue of FORBES has an article: "Cranking Up the Volume- one reason medical costs are getting out of control: GE employs too many good salesmen".

The article describes how GE encouraged its customers to invest in more, highly sophisticated, capital intensive and expensive MRIs and other diagnostic equipment and prescribe that patients use the equipment frequently. Unfortunately the INSURANCE companies and Medicare are challenging the need for doing these tests as often.

One of the customers: summarized the situation " we really do face a crisis". GE has been forced to reduce prices, provide more services and as a result GE's Healthcare's profits dipped 4% in 2007. Immelt, who led this business and used its success as a means of gaining his current CEO position, described 2008 as a "turnaround year". It is clear that Healthcare which was one of GE's "stars" is not climbing to new heights and in fact may be a "falling star".

GE Money MOVING to London... The February 8, 2008 edition of the Financial Times reported that GE MONEY'S Consumer finance division is moving its headquarters from Connecticut to London.

The current president of the business unit, David Nissen, who has 27 years of GE service and has led the business unit for 15 years will retire early. He is only 56. It was pointed out that the move to London makes sense since three-quarters of the profits come from overseas.

This unit took a $1 billion hit because of its sub-prime gambles and is in the process of selling off all or part of its credit card business. GE continues to BET ON THE GLOBAL opportunities and increasingly is becoming less of US company.... I think the real issue is whether this business unit will ever regain its luster and profitability or should be a candidate for divestiture.

Talent- There is a class action suit being filed by women who claim they were discriminated against. This is ironic since Immelt is a member of Catalyst, a women's advocacy group and has significantly increased the number of women in key management positions.

Overall, Immelt and his team continue to believe that they are on the right track and it is just a matter of time before it will yield positive results for its key stakeholders, especially stockholders.... stay tuned as the story unfolds...

Bill Rothschild, Author of "The Secret to GE's Success" (which describes the key elements required for any organization to succeed).