How Innovative Is GE Really?

Posted by: Bruce Nussbaum on May 15, 2008

General Electric is selling its appliance division and the decision brings up a host of questions about whether or not the company is truly innovative or merely mouthing the words, as so many big companies do these days. I don’t have the answer yet but I am troubled by the sale of the GE brand of appliances for several reasons.

First, the appliance division is pretty good at design and innovation. Whirlpool is the leader, with Chuck Jones heading its design/innovation efforts, but GE’s appliance division knows all the
tools and methods of consumer research and creating a good experience for its customers. My sense is that GE HealthCare is the best at design and innovation in the GE family, but the appliance people know what they are doing—and could probably teach other operations at GE

how to understand the cultures of their customers and ways to meet their needs.

So I am sorry to see it go. One argument is that appliances is now a commodity business that the Asians can be cheaper and better. I don't think so. The old white-goods idea of one-color, one price (cheap) is a commodity business, but Whirlpool is showing that innovation and design for their front-loading washing machines can product products that people really want and are willing to pay bigger bucks to have.

The amazing growth of a new middle class in China and India is also an event of enormous opportunity that GE appliances could have taken advantage of. I believe that most of its sales were within the US, a big mistake that could easily have been corrected. If GE appliances had gone deep in Asia, it could have generated much bigger profits.

My bigger worry about GE is that it is not really transforming itself from a cost and efficiency and numbers based culture into a creative, innovative organization. The theme of ecoimagination appeared to be about innovation when it started but is really about going green. That's great and transforming the companies portfolio of business is a kind of business model innovation. Good. But its not the kind of culture change that we see being implemented at P&G under A.G. Lafley. There dozens and dozens of workshops on design thinking are changing values and behaviors. Nothing like that is happening at GE. Why?

Reader Comments

marvin

May 15, 2008 7:13 PM

DO THIS MEAN LAFAYETTE GEORGIA PLANT

GoingLikeSixty

May 15, 2008 8:12 PM

Innovative? Oh hell no.
Here's one right off the top of my head: barcode scanner built into fridge that will record day/date of item put in fridge with display of what's on hand.

Then I wouldn't get yelled at for standing with the fridge door open looking for something that isn't there.

There's your innovation for today, GE.

john

May 15, 2008 9:52 PM

GE is not very good at staying with businesses like appliances and plastics.

Its a company run by Finance types who are only interested in the short term and throttle anyone with inovation and initiative. The stock is a dog.

Crawford

May 16, 2008 1:45 AM

Huh? What? If I'm GE, I see this as a matter of resource allocation. We could continue to invest resources (time and attention being two big ones) in figuring out how to get a bagel to toast evenly on both sides, or maybe squeeze a bit more efficiency out of a dryer. Or, we could double up on efforts turning out even more workable, marketable alternative energy solutions. Or maybe put some of the money that went into blenders and lint traps into new, super-efficient jet engine design that might allow Jeff Jarvis to sit in a full-sized coach seat again without dropping the F-bomb every third sentence.

Or, and this is a big one, water. Water. More water. We need big innovations in water and irrigation.

There are lots of companies that can innovate in the appliance space. Not many have the resource to innovate in the larger, global spaces like dwindling resource replenishment, alt energy, infrastructure. Boring stuff like that.

It's not just green. It's sustainability. My 2 cents.

Donald Victory

May 16, 2008 2:43 AM

GE needs to fire at least 90% of all middle managers, and 90% of all Black Belts. Neither of these groups are capable of generating anything innovative, and only cost the company by doing nothing, selling nothing, inspiring no one, but collecting their big salaries.
While GE attempts to grow by entering this ecoimagination phase by buying up so-called green companies, they now have the mentality of a Baby Huey (big but very dumb). I just hope JI opens his eyes soon, or JW is bound to return, especially when the stock goes back below 30.

Brian

May 16, 2008 2:50 AM

Innovation has always been at the forefront of GE. Although over the years innovation has been carefully implemented so as not to produce products that have useless features. There have been more great things happening on the inside at GE Appliances that people out of the inner loop have no idea about. Trust me, after 30 years with the company I have seen more things come down the line that have sent the competition scrambling. And, you will never find a company that is more interested in consumer satisfaction.

The Dude

May 16, 2008 3:34 AM

Innovation is in their infrastructure business. They dominate in turbines, whether its coal, nuclear, natural gas, or wind. Trains, aircraft engines, nuclear reactors...this is GE's bread and butter. Whats the point in innovating in appliances, when you just get undercut by some factor in Vietnam???

You will only see great American innovation in high technology areas.

Mr. White Goods

May 16, 2008 3:57 AM

Please do not overlook that the retail market in white goods in the US has completely shifted. There are very few major players left. Most are regionals or super-regionals. No one with the clientele to really pump the high-end buyer.
Why? Because of ever-shrinking margins,which were nevr that strong to begin with. Although certain parts of the country saw rapid growth in high line appliances (Viking, Sub-Zero)due to surging in the local housing markets, many areas are left behind. Who is capable of moving the product? There is no commissioned sales force left in Big Box retail that I know of. You simply cannot sell high end appliances without trained personnel
GE sees the writing on the wall. Housing is tanked, their high margin Monogram line we all see every week on 'Top Chef' sees no real growth. What are we left with? An old economy workforce struggling to compete with decidedly unsexy $400 UltraBrightWhite washing machines. Have you looked at a Samsung or LG washer lately? I hear what you are saying about Whirlpool commitment to design, but the writing is on the wall for middling quality US made appliances. Look under the hood of one of them and you will see what I am talking about.

Paula Thornton

May 16, 2008 3:57 PM

What many of the manufacturers are missing is the optimal role they can play in a long-tail economy: facilitator of manufacturing/marketing. When you expand the base of your insights to the global reach of all minds, these companies can truly leverage their understanding of the process and markets to serve as a filter/synthesizer of new products. They become a cloud for products/services.

Vanessa

May 17, 2008 7:22 AM

I have owned GE stock since the early 80's. It was good then. around 1998 it went to $60 and hasn't been any good since as far as personal profit. And now since december 2007 no dividends. Should I sell and invest elsewhere or are they getting ready to start making me a profit

Infocruser

May 19, 2008 11:23 PM

How can you be considered innovative when you think of research as just another expense? All power in GE is in Finance & HR, hardly functions that care about customers or innovation. Their culture will not allow inspiration - cost out always wins over creativity; speed always trumps quality; safe crushes risk; internal is more important than external.
The fact that people think GE is inovative is the best testimony there is to the value of spending millions on "Imagination at Work" ads.
Now name all the new, innovative products GE has created in the last say 10 years (not just new names for old stuff, true innovation). Can you name even one??
GE is just a conglomerate that buys potential, sucks the profit out and sells off the assets before it is too late.
If you were innvoative you would not sell off Plastics, you would use it to drive innovation.
If you were innovative you could figure out how to run a business like Rail Services at a time when rail is becoming a more attractive shipping alternative.
I believe it is just a matter of time before they sell lighting, as in Thomas Edison, where they haven't innovated in decades.
Innovation is a culture. At GE it is merely a slogan.

Gary van Deursen

May 20, 2008 3:20 PM

John...the future of GE major appliances would not have been saved by selling them in China. They will end up there regardless. Just look at their innovative small appliance division. It was sold to Black & Decker who brought some good design and minor innovation to it...it then was sold to Applica, a little company in Florida, who brought even less design and innovation to it. Now it is all designed with no innovation...in China.

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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