The Issue: Immelt's Unpopular Idea

An environmental push has helped reduce GE's emissions and raise revenue. But when CEO Jeffrey Immelt proposed "ecomagination" in 2004, top executives resisted

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When it comes time for a business leader to make a tough judgment call, it's helpful to have the consensus support of aides and top managers—but it's not essential. As Jeffrey Immelt learned just three years into his tenure as chief executive of General Electric (GE), sometimes the boss has to make unpopular decisions and expect his team to get in line.

During an annual strategic review meeting in 2004, the CEO was surprised to learn how many business units of GE were pursuing environmental initiatives independent of one another. GE Energy had just acquired AstroPower, the largest American-owned maker of solar panels. The previous year, it picked up a wind turbine business from Enron. GE Water & Process Technologies was formulating plans for the largest water desalination plant on the African continent. GE factories overseas were dealing with new regulations on carbon dioxide emissions. And nearer to the company's Manhattan offices, GE dollars were working to rid the Hudson River of pollutants it dumped there decades ago.

It occurred to Immelt that all of these initiatives could be rolled up into a program of green practices and technologies and pushed more aggressively. They also could be made more effective if they had a common platform for communicating with one another, setting goals and measuring performance against one another, and presenting a more unified marketing message to customers.

An Eco-Scorecard

So he set to work building out this notion into a detailed plan he could sell to his team. He spoke with the chief executives at 30 of the largest utility companies in the country, some of GE's most important customers. He created an in-house team to study greenhouse legislation and conduct customer surveys.

And he enlisted New York-based environmental consultant GreenOrder to help create and audit green scorecards—a checklist for measuring the environmental impact of new products developed in the company. "We're a numbers-oriented company, so we wanted to have real metrics," Immelt says. He set both long-term goals for the company—growing its spending on clean tech R&D to $1.5 billion in 2010, reducing its absolute greenhouse gas emissions by 1% before 2012, and generating $20 billion in revenue from green products—as well as short-term targets. If and when his plan took effect, GreenOrder would also act as a third-party auditor of the scorecard.

The campaign still needed one final touch: a marketable name. In ecomagination, Immelt found a brand identity that emphasized new products and services, and a new, innovative direction for the company.

Follow the Leader

In December, 2004, Immelt put his plan to a vote with the top 35 executives in the company. The result: The strategy was shot down dead. "They resoundingly voted no," he recalls. "They said, 'This is stupid.'" Only five or six people in the room went with Immelt on the idea; the rest argued ecomagination would cost too much or that it would be undermined by GE's many Superfund sites and other environmental issues that weren't so easy to fix. "I think some people thought it was too soft. GE's an edgy company; this is a little bit of a soft initiative," he says.

But where Immelt's salesmanship fell flat, his pedigree in hard-nosed GE management won the day. He overrode the decision of his executive committee and told them to prepare for the 2005 launch of ecomagination. This was where the company was going, and his team had to trust him.

"There's about five times a year with that group that I say, 'Hey guys, here's where we're going, get in line.' If you did it six times, they would leave. And if you did it three times, there'd be anarchy," Immelt says.

Immelt believes Jack Welch, his predecessor at GE, had to make a similar decision after receiving little executive support for Six Sigma, an efficiency program the company has relied on since the 1990s.

"We've got a good team that knows when to lead, and they also know when to follow, and that's a real trick," Immelt says.

Since that fateful meeting, his decision to go forward with ecomagination despite his team's objections has paid off. According to GreenOrder, GE is on track to reach its long-term environmental goals. Thanks in part to the marketing of ecomagination initiatives, the value of the GE brand has grown 16.9%, to $51.6 billion, according to brand consultancy Interbrand. And Immelt estimates shareholders have benefited about 5¢ to 10¢ per share as of 2008.

By Douglas MacMillan