GE: Discovery and Ecomagination

Right now, I’m reading Imagine It Forward by Beth Comstock, little by little, along with two other books. About two posts ago, I did a short post about what I learned from her regarding her short time with Jack Welch. While she never out rightly said he did things that might not have been good for the long term, she did have some choice quotes about her time with him. They were interesting and the only ones of its kind in all of my readings about GE.

Now I’m in her early years with Jeff Immelt, around 2001 to 2004. At this point, she really did like Jeff as a leader. I’m still in the early years of her recounting of her time in GE, before the Great Recession of 2008, so everything is still on the up and up at GE. During those early years with Jeff Immelt, both were trying to change the company from a walking talking financialized behemoth into an entrepreneurial and innovative trailblazer that it used to be.

“Jeff believed GE had relied too much on buying other companies to support top- and bottom-line growth. His mandate was to grow from our base of technical strength.”

Imagine It Forward, Beth Comstock, 2018, p. 68, hardcover.

So, the company started to embark on what she called “the discovery”:

“…we needed to become better explorers. We needed to engage the world as a classroom from which we could learn and extract the ideas that would create our future.”

Imagine It Forward, Beth Comstock, 2018, p. 68, hardcover.

They were way ahead of their time. This attempt was back around 2002 or 2003 when they were starting to try to build back up their innovation skills. Today, all, or at least most, companies are trying to be innovative and are asking their employees to be creative.

But I have to say, being creative and innovative really do not fit the nice efficiency model where you come up with a process, follow it, and everything becomes nirvana as hit innovations pop up, one after another, if you just follow the process. Usually, there are a lot of duds… a LOT of them…before you get a hit winner. I imagine it is kind of like drilling for oil, where you often sink in a lot of money before hitting a gusher. Thomas Edison, the founder of GE, did 1000 trials before hitting upon a working version of a light bulb – or at least that is the version of the story I remember. Creativity and innovation are not amenable to efficiency processes.

And I think creativity and innovation do not do well under a shareholder driven company because of the short termism and profit maximizing prevailing in shareholder cultures. You have to protect innovative ideas in the early stages and you have to invest in them. Shareholders are not good in investing. Yes, they invest, but only for the short term because what they really want is the immediate return on their “investment” (that’s why they have a metric called ROI – it’s so they can see which investment will give the quickest and largest return). There is no metric for long term survival/growth of the company.

The other project Beth and Jeff pursued was Ecomagination where they would explore the idea of clean energy or tools for clean energy that would not bankrupt their clients. This idea was around 2003 or 2004, way ahead of today where we have pressing concerns about climate change. They were beginning to do some thinking and talking about how to move the company toward more environmentally conscious innovations. According to her story, there was a lot of internal pushback on this concept. It’s not clear, though, if the investors were part of this pushback.

I’m reading all about this push to become more entrepreneurial and innovative and this push toward more environmentally conscious products and Ecomagination, and I’m thinking, they were ahead of their times and it seems like they were doing the right things. You would think doing those two things would lead to a rejuvenation of the company, or at least move GE away from the financialization of the business towards the real and tangible drivers of success.

And yet, by 2018, GE was delisted from the Dow. Why? What happened? Even with the quick Internet perusal of the media and business analysts, (and most lay the blame on Jeff Immelt), I’m still unclear as to what happened.

I’m missing something. Maybe as I read the rest of the book, I will see something that will be the seed of GE’s downslide.

“People don’t get out of bed to work for ‘the numbers’…for the ten percent.”

Imagine It Forward, Beth Comstock, 2018, p. 74, hardcover.