How GE is disrupting itself

How GE is disrupting itself
1. What are the unique challenges faced by GE in India and China?
GE’s biggest challenge: changing the mind-set of managers who’ve spent their careers excelling at glocalization. Even the exemplars have a rich country bias. In a recent conversation with Jeff, one such manager – the head of a major business that’s doing well in India and China – still seemed preoccupied with problems beyond his control in the U.S. “I don’t even want to talk to you about your growth plans for the U.S.,” Jeff responded. “You’ve got to triple the size of your Indian business in the next three years. You’ve got to put more resources, more people, and more products in there, so you’re deep in that market and not just skimming the very top. Let’s figure out how to do it.” That’s how senior managers have to think.
The problem is that there are deep conflicts between glocalization and reverse innovation.
By 2000, with the help of a joint venture partner in China, GE saw the problem: In wealthy countries performance mattered most, followed by features; in China price mattered most, followed by portability and ease of use. The priorities weren’t the same because the health-care infrastructure of China was so different from that of rich countries. More than 90% of China’s population relied (and still relies) on poorly funded, low-tech hospitals or basic clinics in rural villages.

2. Why GE must disrupt itself and re-design a new strategy in India?
To tap opportunities in emerging markets and pioneer value segments in wealthy countries, companies must learn reverse innovation: developing products in countries like China and India and then distributing them globally.
If GE’s businesses are to survive and prosper in the next decade, they must become as adept at reverse innovation as they are at glocalization. Success in developing countries is a prerequisite for continued vitality in developed ones.
Once products have proven themselves in emerging markets, they must be taken global, which may involve pioneering radically new applications, establishing lower price points, and even using the innovations to cannibalize higher-margin products in rich countries. If GE doesn’t master reverse innovation, the emerging giants could destroy the company.
Emerging economies will largely evolve in the same way that wealthy economies did. The reality is, developing countries aren’t following the same path and could actually jump ahead of developed countries because of their greater willingness to adopt breakthrough innovations. With far smaller per capita incomes, developing countries are more than happy with high-tech solutions that deliver decent performance at an ultralow cost. Because of their huge populations, sustainability problems are especially urgent for countries like China and India. they’re likely to tackle many environmental issues years or even decades before the developed world.
Given the tremendous gulfs between rich countries and poor ones in income, infrastructure, and sustainability needs, reverse innovation must be zero based. These wide differences cannot be spanned by adapting global products.

3. If you were country manager of GE India, what should you do?
GE had to develop a product that would cost less, but would still be profitable. That means, take full advantage of opportunities that globalization had ignored in heavily populated places like India, where it could grow two to three times faster there.
Focus on Oil and Gas Industry in a Different Way
Compliment current presence in the oil and gas industry by investing in and/or acquiring companies that have complementary products that offset current environmental concerns about the oil and gas industry (i.e. companies that produce technologies that clean-up spills, recycle waste, and contribute to other environmental safeties)
Focus on Power and Water in India
There are great emerging water investment opportunities in the country. India’s growing population and economy (increasing urbanization, changing lifestyles, and economic growth) has resulted in a decline in the per capita availability of water in India each year, which makes India a severely water stressed country.
Increase Commitment to Industry Focused R&D
Instead of investing the majority of R&D on creating diversified products, GE should open two more industry-focused centers and/or convert the Bangalore, India Research Center (which is currently an integrated multi-disciplinary research center) into a Power and Water-focused center.
Pursue LED Lighting Opportunities in the Global Market
LED lighting is currently 18% of overall lighting market. That figures is expected to increase to 70% of the global lighting market by 2020
Better Manage GE’s Firm Complexity
Innovative Talent Management: Enforce “black-out” time periods in critical global business units throughout the year. Research has proven that a break such as this one will dramatically increase creativity, productivity, and engagement among talent.
Don’t Get Too Big
Continue Strategy Around Infrastructure Opportunities
Keep Cash on Hand
Enforce Innovative Talent Management Practices
Better Leverage Non-R&D Employees Through Incentives
Educate Consumers Around New Products

4. What are the clashes of two models for GE?
The problem is that there are deep conflicts between glocalization and reverse innovation GE focused mainly on products for wealthy countries. While this approach has enormous advantages, it makes reverse innovation impossible.
And the company can’t simply replace the first with the second, because glocalization will continue to dominate strategy for the foreseeable future. The two models need to do more than coexist; they need to cooperate. This is a heck of a lot easier said than done since the centralized, product-focused structures and practices that have made multinationals so successful at glocalization actually get in the way of reverse innovation, which requires a decentralized, local-market focus.
Even if you gained support from each of these executives and got the proposal off the ground, you’d still have to compete for capital year after year against more certain projects with shorter-term payoffs. Meanwhile, of course, you’d still have to worry about making your quarterly numbers for your day job. It was little wonder that successful efforts to develop radically new products for poor countries were extremely rare.