….what every manager, every business leader has to have is the attitude, a mind set of profitable growth. It is the challenge for the leader and the leadership team to reconceptualise a landscape in businesses which have low or zero growth. It’s the imagination that makes the difference.

Businesses are led by leaders. Every organisation is led by a leader. A leader and a leadership team can take a business and can do things differently from another leader and another leadership team. Therefore, the first thing is the attitude and the mindset.

So, the leadership of the company and the leadership chain is now looking at ways to grow. Here are the ways. And this is not in order: First, the overall growth of the market maybe zero, but you search for segments in the market that are growth markets because style is changing, new technology is changing. So I will give you an example in the American scene.

If you look at roughly the last five years, the total market in the automobile industry in America has not grown in any significant manner. But there are segments in it that have been very profitable and growth oriented. For example, the Lexus. The important thing is to figure out a segment which is growing and continues to grow — share out of Mercedes Benz, share out of Cadillac, share out of Lincoln, and is very profitable.

That is one of the examples. So the concept here is that you look at the landscape and you look for drivers of change of the landscape and re-segment your market. That requires skill, attitude and imagination. How is the outside world changing? If the outside world is changing, there are opportunities. If the outside world is not changing, then you have a different issue.

One of the best ways for leaders is to set themselves as an example. If the leader does it in a truthful way, others usually learn from it and many actually copy it. One of the very best in the world that did it was Sam Walton. He was at his store three days a week. He saw his competitors’ stores three days a week. And so he was in tune with what is happening to the competition and what is happening to the consumer.

Leaders need to go directly to the user, then competition, and see what is happening. Also the leader needs to see these consumers, observe these consumers, buy in complementary products.

So, as a leader, you are a highly passionate person about the consumer. Business first. If you don’t understand the customer and the consumer, you really are not a very good businessman, first of all. Every leader at the helm of a company and business unit must demonstrate this quality.

The second thing that I have organised in companies is that every month at the staff meeting a leader should spend half an hour asking his/her colleagues, what is that they are detecting new about their customers. Do it twelve times a year. You will be surprised how it changes the culture in the company.


Leading through questioning, by opening their minds. Let them have the passion to learn about customers. And of course, one must stress heavily on innovation. Let’s say, Apple’s Ipod. If the customer doesn’t buy it, it is not very good. So Apple creates the iPOD and the first moment of truth is that the customer buys it. The second moment of truth is that the customer actually uses it. Third moment of truth is that the customer does repeat his purchase. Fourth moment of truth is when the customer tells other customers about it.

Most of the consumer habits are not about the numbers, it’s about the preferences and how is it changing.

The most important thing they do is putting right people in right jobs. Nothing will overcome the deficiency if you have wrong people in key jobs. It is a huge discipline. No. 2 is that you have to be very good in follow-through. No. 3 – each of these things have milestones and there are review mechanisms for major milestones.

First is — no human-being is going to have all of this. So what you are looking for is leadership where the leader himself/herself is personally growing. The growth engine in each of us is very important. No. 2 — today leaders have to work with teams, not just solo. So they are complementary. Third, you have got to develop leaders in the sense that identify them early, at the age of 25-26-27 and give them a variety of experiences.

Move them out from one function to the other, but keep them long enough to demonstrate a track record. You will be surprised how they all grow their skills. And they realize what they don’t have and how to complement.

Does this person like to work with people? Does this person mobilise people without hierarchical power? Is this person looking at another person, and really figuring it out — what is this person’s talent and how do we use it?

I think the key point here is that some of the basics of business acumen are present in large part of population, say in India. The largest number of businessmen and business-women are street-vendors. They get no training. They understand ‘cash’. It is a four-letter word, they understand that. Their mind works on how to get ‘cash’ at the end of the day.

Caveat: Ram Charan is management consultant.
 

In the area of innovation, I would just pick that we were the early mover in the area of environmental solutions, what we call Ecoimagination. You know we started this before it was very popular, in 2004, and in a relatively short period of time our environmental technologies are above $15 billion of revenue, $16 billion this year. So, I think that was an innovation we drove across our platform, that really drives to ensure growth, some of it technical and some of it from the stand point of how we did our sales and marketing.

In the case of globalisation, more than 50% of our revenues come from outside the US today. When I became the CEO, it was roughly 42% so that’s a fairly big shift for a company of our size. I see us moving on all fronts from a global stand point. In the case of customers, we’ve embraced what we call Net Promoters’ Score in terms of how our customers view us and judge us and we believe that this very strong focus on the customer has helped us really differentiate ourselves versus the competition. It’s something that we plan to continue to drive forward with.

...six sigma remains important and we’ve kind of evolved it to embrace Toyota’s lean manufacturing at the same time and so what we’ve really tried to do is embrace really the process of change inside the company and try continuous improvement each and every day.

I think we really want to be embedded with our customers so that we become their partners. I think that a lot of people talk about that but to me unless you can find ways to make your customer more profitable, you cant live that promise and I’ve always thought that’s something GE is good at.

The Net Promoters’ Score from customers gives me at a high level a feel of what a customer is saying about GE. Then I spend about three or four days a month both in the US and around the world really for grassroots customer level exposure... (without any co executives around!)

I would say from very mundane ideas to bigger ideas, for example, and how best to position technology. So it just gives me a kind of fresh perspective on what’s going on in the market place.

I probably spend my time 30% on people, 30% on growth, 30% on operations and 10% on public things you know... investor meetings, stakeholder meetings, things like that and I try to structure my calendar accordingly.

….ee actually have a kind of war room when we track 50 or 100 companies...or couple of 100 companies at all times that would just be relevant to us.... Infrequently they are not big companies, may be small companies that we see a strategic fit with. We always know what our strategy is, I’d say we are 100% strategy driven.. you know we would never do something to just do, it has to fit strategy. Financially typically we look for a 15% cash on cash return by the fifth year. ……….so by the fifth year we’d like to have the sense that the ongoing cash flow rate of return has reached 15%. If we did a billion-dollar deal, by the fifth year you are actually generating between $150 and $200 million free cash flow from that deal. That’s just a number we use. We’d like to target deals between $200 million to $2 billion. So we try to match those financial criteria with our strategic criteria when we go for the deal.

Every year we go back and review what we learnt about integration, what we could have done better. I would say typically what makes mergers not succeed are more soft issues, the social issues rather than the hard issues. We are very adaptive. We have a system for consolidating Manufacturing system, Financial systems, Information systems. We are good at all that stuff.

We have milestones. So we got a kind of 90-day plan, 100-day plan and so what I would say is that we try to have most of our cost synergies probably take place in three years, the first year being 50% of them. The growth synergies might again be over three years. We find growth synergies are much more difficult to track, to anticipate, than cost synergies.

We have a tough-minded strategic review of our businesses, when we come to the conclusion that if it is going to be some kind of secular change or that someone could run a business better than we could, it is time for us to divest a business. You know usually when a business goes through a secular change and it can no longer meet our financial goals. Sometimes there are businesses that can meet our financial goals but where we think somebody would be a better steward than us. Last year, we sold our plastic business and it was clear to us that unless you’re backward integrated in chemicals business, you can’t be a good owner of it, even though we were financially doing ok. We felt we were just not the best owner of the business and we decided to divest it off.

The first thing I would say for decades the company basically has always been a conglomerate. We run it that way, we have central research, central training, we’ve got our own management education centre, we run a common capital allocation process, we drive a common culture. We spend a lot of time and effort on the oneness of the company, to bring things together. One of the things that differentiates GE from a lot of other mega companies is from the day you walk into the door to the day you retire we want it to feel as really one company. I think that’s been a quarter of our strength.

Second thing I would say for investors. Conglomerates and big companies go in and out of style but the ability to have diversified earnings power through the cycles, makes us grow earnings in a steady fashion equal to or greater than SNP 500. So automatically it comes down to a financial case, for why the company exists and that can only be through our performance.

I think some of the great business stories right now are coming out of India, especially some of the new business models. One of the things investors write here is that if you went to India you saw some of the most exciting companies being formed today. They are all conglomerates fundamentally and they are creating tremendous shareholder value. I find that is very persuasive with our investors to say that there is nothing wrong with this business model.

I’d clearly say where we are today, in the 6 core businesses that we are in, we feel we’ve got a real competitive advantage.
…..when I look at energy, health care, transportation, some of our infrastructure businesses, the entertainment business, the financial services business, we have got good position in huge industries that have a lots of room for growth. So I just don’t think we need to do substantial portfolio restructuring in the next five years. We’d do small things but nothing huge to be successful.



If I would pick just one trait, it would be the ability to learn, I think people that have hunger for improving themselves, curiosity, and knowledge gathering. That is an absolute critical aspect for what makes people successful in GE. So, that’s a common attribute and then after that it’s decisiveness, it’s external focus and, working with others. I mean there is a whole series of things to go after that, but one common trait of all the successful people in the company is that they are good learners and they have real dedication to self improvement.

Everybody who works directly with me, I spend a lot of time with them, but then I try to reach down into the organisation, to people that I think have particular promise. Typically, what I can do at my level is give them a kind of new answer of leadership, how to make good strategic decisions, how to get the best out of their people. I think when you’re the CEO of the company you’ve still gotta roll up your shirt sleeves and go individually towards people, try to may be give them, your unique perspectives that can help them. I think that you gotta keep your hand in coaching no matter how high you get in an organisation because it makes you better at how to manage, in terms of totality of the company.

The two biggest themes in the world. I think one is — what’s the next evolution of globalisation? It’s particularly going to be fascinating. My view is that one of the most interesting trends is going to be business models that get developed or kind of get created in the emerging markets in places like India or China or Russia. I think that’s going to be an interesting theme. And then there is always the technology. It depends what industry you’re in ... but I think the pace of technology will continue to change and create discontinuities as time goes on and I think that’s something every company and industry will have to stay on top of.

You might find in the area of, lets say, a water desalination or something like that. Or even let’s take the Tata’s $2,500 car. It’s developed for the emerging world but may be some of those technologies end up in the US or Europe. So those emerging market business, or what I call business models, I think will end up driving huge efficiency and may be change technologies...you know, vis-a-vis, what happens in the developed world.

I think both in terms of the fact that we are a big infrastructure company. So till India continues to invest in infrastructure, that would be a very big deal. I also think, just technically, I think, whether it is AV Birla, or whether it is Reliance or Wipro, the business models that you are working on, I think it is going to have a great applicability. In terms of not just how we win in India but also how we win in rest of the world. So India is definitely going to be a core location as we go forward. I think it’s really a great time for India, I really do believe that.

I love business, I love people, I love learning. If you love learning, if you are curious about business, you love people. You know I got the best job in the world, it’s like when you run GE, you have the chance to see so many different things happen and I just feel very fortunate to have that opportunity.