Ensuring business sustainability
GE gives clue on how to survive crisis and outlive rivals
By Kim Jae-kyoung
Sustainability is the business buzzword most frequently used by business leaders and CEOs of global companies since the 2008-2009 global financial crisis changed the landscape for global economy and finance.
The crisis threw many globally-respected players into bankruptcy. Even global heavyweights, such as Citigroup and General Motors, came near going belly up and received bailouts from the U.S. government.
After witnessing the collapse of major players, which once dominated the global market, business leaders have shifted the focus of their strategy to sustainability from rapid expansion. They are busy finding new sustainable growth engines.
There are many global companies pursuing business sustainability but only a few of them have been able to make things happen, eventually surviving for more than a century. Companies that are sustainable have something in common. They are more innovative and adaptive to changes, while showing greater commitment to attracting and retaining talent.
When it comes to business sustainability, General Electric (GE) must be taken into consideration first. GE is not only one of the first companies which were traded on the New York Stock Exchange (NYSE) but is also the only one left out of the 25 original companies listed on the NYSE in 1896.
On top of that, the history of the company suggests that it always maintains resiliency over time, meaning that its businesses have overcome shocks and crises on the back of established internal processes involving economic, social and environmental systems. They create economic value and contribute to strong communities.
The firm can be a good role model for Korean chaebol, which are seeking to find new revenue sources for sustainable growth. In Korea, Doosan Group and Dong Wha Pharmaceutical are the only local companies with histories of more than 100 years. Major Korean players, such as Samsung and Hyundai, are struggling to develop sustainable business models.
People and innovation
GE’s key success factors can be summarized by three elements — investment in people, innovation and adaptability to change, according to Laurent Rotival, president and CEO of GE Healthcare Korea.
“I think there are multiple dimensions (behind our success) — an enduring and original commitment to innovation, an exceptional commitment to people and a burning platform to change,” said Rotival, who took charge of the Seoul office in January 2011.
Referring to Jack Welch, former GE CEO who led the company from 1981 to 2001, Rotival stresses the importance of people management and communication. GE is renowned for hiring exceptional people and giving them unparalleled opportunities to build their careers.
“Jack used to say that the biggest job of the CEO is to ensure the free flow of ideas. That’s why he focused so much on people and finding the smartest people,” he said.
“When you have the smartest people and create the environment where they can actually contribute ideas all the time in a non-threatening but intellectually challenging and motivating environment, you are halfway winning the battle.”
The veteran CEO, who joined GE in 1995, said that the company has always been good in managing people and change, saying that Jack Welch was a master in that area. He offered an interesting experience with the one of the most-respected CEOs in the world, suggesting how much time leaders should allocate for their employees.
“When I was early in my career, when I first joined GE, one of the first things I heard from Jack was that he spent more than 60 percent of his time with employees. I was shocked by the fact that the chairman of one of the world’s largest company spends 60 percent of his time meeting people, thinking about people, understanding people, reviewing people, hiring people and interviewing people.”
With a broad base of talented people, innovation has become a culture at GE, meaning that they are being surrounded by smart people working together on challenging projects.
“We are a company founded by Thomas Edison. We have had an admiration and a passion for innovation throughout the whole history of the company, regardless of what we do — whether it is power generation, a light bulb, healthcare, aviation and even financial solutions. That’s the core of what we do.”
GE is in a meritocracy and it rewards the best regardless of what their seniority in the company is. In addition, the firm is trying its best to give their employees maximum access to its leadership programs and its development tools, including Six Sigma and Work-Out.
“It is critical to have a creative culture and a climate in your business where your talent can thrive. I think all of those things have created the GE culture,” he said.
Another key element that has helped GE survive for more than a century is its adaptability to change, according to Rotival, who held global general manger and CIO roles in multiple GE businesses — oil & gas, NBC, GE Energy and GE Healthcare.
The company’s origins go back to 1890 and the Edison General Electric Company, founded by Thomas Alva Edison, inventor of the incandescent electric bulb. Through the entire history, the firm has undergone endless transformation in tandem with rapidly-changing business environment.
It is now made up of several business units, including GE Commercial Finance, GE Consumer Finance, GE Healthcare, GE Industrial, GE Infrastructure, GE Aviation and NBC Universal.
“We have a complete lack of hesitation to change. We actually believe that changing what we do is actually the only way to be successful. You need to find a burning platform,” he said.
“What GE prizes itself in is that we are trained and conditioned to love change whether it is under Jack Welch and current CEO Jeffrey Immelt. We want change in our business to grow and to be successful to address the needs of our customers and the governments we work with.”
Seoul will become healthcare powerhouse
Rotival expects that Korea has the great potential to become the world’s leading powerhouse in the healthcare area, citing fast population aging and great healthcare system.
“First of all, there are lots of high-quality medical institutions in Korea. In addition, medical staff are very capable as shown by the fact that Korea competes for the first or second spot in Asia in terms of research and clinical performance,” he said.
“Korea has talented manpower and the medical facilities are highly concentrated. Seoul will be the most appropriate example. Hospitals and research facilities of superior quality, companies and suppliers are concentrated in one area and this is why there is a bigger chance of developing new solutions faster than other countries.”