Ge Digital Revolution: Redefining E in Ge

MGT 9600 – PMWA

11/1/17

Nay Zar Hla Tin

Case title: “GE Digital Revolution: Redefining E in GE”

Segment 1: Critical Issue

After careful analysis of the case, the critical issue emerges as the lack of strategic direction/focus of GE’s e-business teams.

Just over 2 years after the launch of e-business initiative as part of the newest strategic plan, GE has rapidly added and adopted 3 major components or focus areas, e-buy, e-sell and e-make, to its initiatives. It was mentioned in the case that CEO Jack Welch had demanded transformational shift in GE’s customer relationships and selling approach by pushing web-based selling (e-sell) approach in 1999. When internet based sales were not yielding results a year later, the management began emphasizing on purchasing online (e-buy) to save cost. Once again, finding out that on-line purchasing were not saving cost as much as the company initially expected, the focus were then shifted towards improving internal productivity through the digitization of processes (e-make). It seems as though shift in strategic direction in e-business occurs, when the outcome of a component is unsatisfactory, towards a development of a different component without evaluating as to why the results of an initial component are unsatisfactory.

Because of high anticipation and optimism portrayed by the CEO of GE, Jack Welch, regarding the launch of GE e-business initiative, there were many spectators trying to understand the implication and impact of the initiatives on the company’s strategy. However, the expectations did not come through. Online sales only represented 5% of GE total sales—far short of the 30% potential, only 25% of deals with suppliers online significantly less than the 100% of Web-based purchases it had targeted, and over $1 billion productivity savings from digitization process is significantly less than $10 billion savings projected.

Facts mentioned in the case indicate that e-business team was going into too many directions without understanding the underlying impact of each direction on e-business success which makes them unable to monetize e-business. In GE plastic, they developed “Ask Edison tool”, created virtual online community for plastic industry, established e-auction, created “field growth leaders”, and developed Wizards. However, there is no clear indication of the order of relative of importance of each development and its relative contribution towards e-business success.  

There is a problem of applicability and transferability of e-business practices across business units. In the case, it was mentioned that the objective of e-make is to increase efficiency in back room activities. However, Gerry Podesta stated when it comes to opportunities for plastics in terms of digitization of processes it would be different from those in GE’s financial services businesses because their business is front-room focused unlike financial service businesses.

According to the case, GE e-business teams does not seem to have proper and systemic reporting and tracking, and feedback procedure in place to keep track of the details of their progress which can be accessible to be reviewed by top management and their own business unit. It is detailed in the case that Jack Welch would call over the phone to ask the appointed e-business leaders to ensure there was sufficient urgency their actions, how much they are selling and what more they could be doing .

Last but not least, the case described the e-business teams concerned over where   e-business is heading towards. There is a growing realization in the company that although building great websites was important but it won’t increase the sales or save cost as much. Podesta made a comment on it by saying it makes the team nervous about their role, their future and have impact on their motivation.

Segment 2: Recommended Strategy

In order to address the critical issue in this case, I propose a consistent strategy articulated in three major components. I will use GE plastic business unit as a focal point and a model for developing the recommended strategy since its functions and practices were extensively covered in the case.

First, GE Plastics should assign a team to each focus area of e-business (e-sell, e-buy and e-make) and the team will focus on redesigning work procedures, development of new methods, reimplementation of old methods in order  to increase performance, attain tangible goals and milestones of each focus area. The change will allow each team to go forward to a specific direction and will allow them to have a defined task or problem, supporting information and resources at hand, and an appropriate block of uninterrupted time, and without much disruption.

Secondly, GE should focus on developing systematic tracking, reporting and review procedures to monitor the trajectory of ongoing developments in each focus areas.  In this case, each development in focus area will be treated as projects. Systemic reporting of progress and performance measurement during a project is critical to know how things are going so that early warning signs of problems achieving the project objectives can be detected. In addition, information and data stored in the reports can be used to improve the planning and performance of future projects.