GE’s ten strategies for success

ROBERT GOTTLIEBSEN
Business Spectator
The KGB interview with GE’s head of global operations, John Rice, went for just over 20 minutes. In that time, Rice explained just how different running a company in the 21st century is going to be from operating a business in the 20th century. Rice also explained what governments must do in the 21st century if they want infrastructure investment and he told Australians what they should encourage their children (and grandchildren) to specialise in during their later years of study.
Although they are based on what is happening inside the global giant GE, the Rice strategies apply to companies large and small. If you are an investor, they also provide guidance as to whether you have the right CEO. So, here are Rice’s top ten strategies for the 21st century. (I am summarising. To adapt your own strategies view the full KGB interview here).
Strategy one: Customers and suppliers want to deal with people who can make decisions and they want decisions made swiftly in their time frame. In the previous century, companies like GE were run much more from the US, now, the people on the ground are given much more authority.
Strategy two: Decision-making is now much faster. Rice did not spell this out, but the days of committee meetings that never decide anything are going.
Strategy three: The old cost structures must be dismantled and the end result is businesses that operate on much lower costs and are much more productive. New technologies and systems drive much of this cost reduction. The global business community of the 21st century is going to be much more productive than the 20th century. This is one of the drivers of global sharemarkets.
Strategy four: The new digital analytical tools enable companies to gain much more meaningful information from data, which means their decisions are more information based. GE has developed a new business out of these information systems.
Strategy five: Rice says “the real global currency is not the US dollar or the euro or the RMB, it’s jobs.” Therefore, companies planning major projects around the world must understand that politicians need jobs and so worthwhile job creation must be an integral part of the tender and the way a company like GE operates. In Australia we see exactly the same phenomenon duplicated in relatively small investments in regional centres.
Strategy six: Make sure you have an efficient supply chain. In the case of GE it must be a global supply chain
Strategy seven: In today’s world companies need to be able to operate globally and be a global player in every activity. GE is exiting its consumer finance area because it can’t be a significant global player in that industry. In Australia institutions are yield hungry and discourage companies adventuring overseas to be global or Asian players. Asciano is a good example (Greedy institutions are putting dividend imputation in danger, March 13).
Strategy eight: When it comes to governance, companies are looking for clear policy decisions. They will not always agree with the decisions but once the policy is known business can set strategies. In Australia, GE wants certainty in relation to the renewable energy target.
Strategy nine: Governments will need to establish income streams for infrastructure so that they can tap the huge funds available for this type of investment. Rice did not refer to Australia, but it is an area where we are facing great difficulty with political parties divided. My belief is that instead of funding these projects behind closed doors they must be tailored for self-managed funds and individual investors so the public becomes part of the decision making and thus reducing division.
Strategy ten: For the children of the 21st century Rice’s advice is to study maths and science including computer science and data science. GE has undertaken a big increase in its software capabilities and has 12,000 software engineers around the world in several hundred locations including Australia. Finally, don’t write off manufacturing. New 3D technologies make manufacturing in countries like Australia much more economic.