Gratitude to Jeffrey Immelt, Chief Executive Officer of GE. And, a bigger expression of appreciation to Steve Lohr, New York Times writer, for your astute article about GE. Thank you for validating what business leaders have suspected for years: Making stuff isn't just a nice-to-have for business these days -- it's a must-have for many one-time manufacturing leaders and entrepreneurs hoping to bring innovative products to consumers.
The gains companies like GE can reap from a return to physical products might be slow in coming but stand to position the company in a more secure position for long-term profits. Although GE's recent offerings in the financial services arena established a rhythm of expectations for quick returns, the change to products is one that needs to happen. Short-term profits might disappoint and these days of investment will force manufacturing companies to bend their knees a bit. But I'll bet those bent knees of preparation will eventually allow companies like GE to jump farther.
According to Steve Lohr, GE is dead serious about making stuff right now. They have put their blinders on and stopped looking back, with a steely-eyed commitment to making the making of stuff work. Their wake up call began years ago when they witnessed soft spots in the profitability projections from the GE Capital style of spinning straw into gold. Immelt and his team planted new seeds with initiatives like "Ecomagination", aimed at responding to promising market trends like demand for energy efficiency. They recognized large manufacturing opportunities where GE's core manufacturing expertise, which hadn't been reengineered in awhile, could meet emerging consumer demand in next-generation products like jet engines, power turbines, nuclear plants, water-treatment systems, solar panels and medical imaging equipment.
Today, GE is betting its future on its ability to tap into its own DNA, and discover what this emerging world of manufacturing will require of its company.
Lessons for Every Business in the Next-Generation Making of Stuff
What lessons can every business leader extract from Jeffrey Immelt's dogged re-pursuit of making stuff?
First, business leaders have to get over the lack of sexiness manufacturing has seen over the past couple of decades. The dizzying whirlwind of higher-than-usual returns in the worlds of hedge funds and other Wall Street instruments dampened our enthusiasm for the meat and potatoes of manufacturing.
But, looking to the Model T era to craft a next-wave manufacturing strategy won't give us the inspiration we need--early 20th century era assembly lines and time and motion studies won't get us where we need to be. They certainly weren't sexy, and those were different times. Today's market leadership requires Olympic-paced sprints through new territory, with new rules of thumb for leading the pack:
1. Cross-Industry Immersion Can Accelerate Learning for New Manufacturing. Learning the rules of next-generation manufacturing requires cross-industry immersion. Jeffrey Immelt sends his teams to West Point to learn the lessons of "adaptability and resiliency" and to Google's headquarters to understand the "constant entrepreneurship."
Which industries outside your own share some part of your DNA (like an "engineering edge") and what can you do to have your teams absorb the brilliance of another company's success?
2. Trend Spotting Is a New Tool For Competitive Advantage. Consumer responsiveness and trend spotting are must-haves in today's world of manufacturing. GE observed consumer preferences first, and were inspired to commit to an entirely new direction for their next-generation "heavyweight products that take patience and piles of cash to develop, weigh tons and last for years," many inspired by the new ethos of alternative energy (for example, fuel-efficient jet engines).
The pace of adaptation has accelerated. How can you spot relevant trends for your industry and instill a sense of agility into your processes so that you can turn on a dime, as soon as consumer needs shift?
3. New Manufacturing Requires New Leadership Skills. It's time for traditional, top-down organizational charts to hit the shredder. Talented teams at GE lead this new manufacturing initiative with a "bottom-up approach that shuns hierarchy." You can't apply GE's new rules for management in a top-down org chart; the talent picture needs to widen along with these new leaders' attributes.
So, hats off to GE for investing in a brave approach to a long-term investment in the old standard of American business. And, let us all be inspired to rethink our view of making stuff: How can our companies tap into consumer trends, insert creative engineering thinking, and make stuff--the new-fashioned way?