- Changes in Organizational Culture influence structure and practices, groups and social processes, collective attitudes and behavior and organizational outcomes in that order with changes in one tier causing changes to the next tier. Immelt’s changed the organizational structure and practices of General Electric (GE) by creating reforms in the corporation’s reward systems and organizational design. He changed the reward system by tying the salary and bonuses of the executives to their performance, putting a reward on growth they put in compared to new deals they have struck. His hiring of new blood for GE is also a change to the old process of promoting from within (Kreitner & Kinicki, 2007).
The organizational design of Immelt’s GE led to changes in the way communications is handled in the GE board room. Regular meetings became established. The dynamics of the top levels of GE management has also changed with the pressure from Immelt for his managers to produce “Imagination Breakthroughs”. These “breakthroughs” of his people are then picked apart by his peers as well as Immelt himself. Additionally, David R. Nissen has said it himself, he has described the new meetings as collegian and more experimental than previous and other GE meetings (Kreitner & Kinicki, 2007).
The pressure to innovate and become visionaries is what changed in GE’s behavior. Instead of being perfectionists who are consistently trying to improve efficiency and lower costs, the new GE of Immelt are visionaries who are constantly looking for new oceans to explore. Their new motivation is expansion through innovation. The pressure is for them to improve their business model, not just their operations (except for improving customer satisfaction where Immelt has also placed a premium). Innovate or die is the new motto for GE, a motivation that both excites but also troubles some of the employees (Kreitner & Kinicki, 2007).
As a result, GE has transformed in what people have acknowledged as “The Immelt Era”. Since his takeover, GE has exited several businesses like insurance, business outsourcing and industrial diamonds while entering the fields of Hispanic television, movies, homeland security and home mortgages. Immelt’s growth through expansion and innovation seems to have worked for GE. Immelt has also achieved his ambitious goals of 10 percent annual profit growth. A feat that is more impressive given GE’s sheer size (Kranhold, 2006).
- GE before Immelt could be characterized as a “hard-driving, process-oriented” corporation. Based on Table 3-1, pre-Immelt GE could be classified as a mix of a passive-defensive with a Conventional normative belief and that of an aggressive-defensive culture with a perfectionist streak. The emphasis on improving efficiency, cost-cutting and deal making point to the aggressive-defensive culture of the company. Mistakes are avoided, and a no-nonsense attitude towards the needed goals are what makes the old GE a perfectionist culture. On the other hand, the emphasis on established processes and rules paint a conventional picture for GE (Kreitner & Kinicki, 2007). This is not surprising considering the age, size and breadth of current GE operations.
- A major observable artifact to the shift that Immelt has brought to GE would be the influx of new faces he has brought into the company. This is especially true for a company like GE that has traditionally promoted from within. Moreover, the background of the people that Immelt is hiring – marketing and sales people – are quite different from the traditional make up of the GE workforce of managers, executives and engineers. The stringent reward system for GE executives is also a solid artifact of the changes that Immelt is making at GE. Another tangible thing that has changed in GE is the requirement of “Imagination Breakthrough” proposals. Wherein the executives of GE were not required to think of new breakthroughs before, now it is a written necessity for their jobs (Kreitner & Kinicki, 2007). Lastly another artifact is Immelt’s use of the word playbook, referring to activities he views as not belonging to the new GE as “belonging to the old playbook” (Guerrera, 2006).
The basic assumption that Immelt is operating on is that GE has become slow. It has lost the speed or agility needed to grow spectacularly. To achieve the goals of Immelt’s GE, GE has to start taking risks in new markets, new products, new ways of doing business. GE has to start doing things differently if it is to transition gracefully into its next 131 years. Thus innovation is Immelt’s elixir for GE. Innovation in products, innovation in markets, and most importantly innovation in its people.
The new values that Immelt is pushing for is risk taking and creativity (Kranhold, 2006). This is a break from the previous values of being “hard driving” and “process oriented”. Immelt wants the people of GE to become visionaries (Kreitner & Kinicki, 2007). Instead of being passive and increasing revenue in spurts through deals and cutting costs, it seems that Immelt wants the GE workforce to value expansion. All of this comes at a price:risk. Risk appears to be a new value for GE. Immelt wants GE to not only view risk as a normal part of operation but too embrace risk taking as a tenet of GE philosophy – a huge change from the procedural GE of Jack Welch (Kranhold, 2006).
4.If we could describe what Immelt is asking from the GE workforce in one word, that word would be vigor. GE is a huge and established corporation and like most corporations of its size and stature, GE has become sluggish and repetitive. Risk taking attitude is low and new frontiers are reached by creative deal making and leverage of existing resources compared to expansion into new products or markets. At GE’s current attitude, it is not going to revolutionize any markets soon. It seems that Immelt wants to change this. His new directives, new markets, new products, getting a bigger share of the pie is uncharacteristic of a large established company. From what Immelt is doing, he seems to be trying to turn back time – even though GE is a 131 year old conglomerate it seems that Immelt wants his people to act as if they are working for a 3 month old startup.
Startups are characterized by the behavior Immelt wants. New markets, salaries tied to performance, emphasis on new “game-changing” products, influx of new people are all trademarks of a startup experience. However, the most defining characteristic of a startup would probably its emphasis on risk taking that is bordering on gambling. Startups are do-or-die operations, either your product is successful or you fade into obscurity in three months (when your limited capital runs out). While the rate of failure for startups, successful startups often post astronomical returns in a short amount of time, the primary example being the dot-com boom and the mountains from molehill companies that survived the crash. Immelt wants GE to behave like a startup. A startup that has the benefit of being backed by the world’s 2nd largest corporation.
- The use of the playbook reference is one the most obvious ways that Immelt is embedding a new culture into GE (Gurrera, 2006). This tells his subordinates that they are done with the “old playbook” and that he as CEO is bringing in his own “playbook”. This is necessitated by the changing playing field for GE. Globalization is becoming more prevalent, there is increasing competition from Asia and the US is still shifting from a manufacturing to a service oriented economy. The game is changing and Immelt needs to coach his team in order to still come out on top.
Another way that he is embedding culture is in the activities and processes that the top tier executives partake. Innovation is now required, even scheduled, of his top brass and they are called upon to pick apart new avenues for expansion brought up by their peers. Additionally, to show that the whole activity is not just a thought experiment, Immelt has given the “Innovation Breakthroughs” financial backing (Kreitner & Kinicki, 2007).
Immelt has also embraced risk as a new facet to GE operations. To encourage risk taking within the GE organization, Immelt has reduced the pressure to succeed on his most enterprising executives. Under his leadership, GE employees need not fear for their jobs should their risk taking activities turn out for the worse (Kranhold, 2006). This relaxed and comforting attitude helps Immelt promote and embed the value of risk taking within his organization.
He is also promoting the value of expansion into new markets by hiring a lot of new blood into GE (Kranhold, 2006). More importantly, this new blood contains a lot of marketing people, a forte that is lacking in the annals of GE top management (Kreitner & Kinicki, 2007). Immelt wants GE to value marketing and sales and to do so he is slowly filling up his company with marketers and salesmen.
Another possible way to promote the value of innovation is by committing a substantial amount of GE resources into outside innovators. This may be in the form of funding research, hiring more engineers or even by acquiring new startups with innovative products, showing the financial commitment that GE has with regards to innovation.
Guerrera, F. (2006, November 6). The Man Behind GE’s quiet revolution. Financial Times. Retrieved November 8, 2006 from http://www.genewscenter.com/Content/Detail.asp?ReleaseID=2230&NewsAreaID=23&MenuSearchCategoryID=
Kranhold, K. (2006, September 11). 2. The Immelt era, five years old, transforms GE . The Wall Street Journal. Retrieved November 8, 2006 from http://www.genewscenter.com/Content/Detail.asp?ReleaseID=2226&NewsAreaID=23&MenuSearchCategoryID=
Kreitner, R., & Kinicki, A. (2007). Organizational Behavior 7th ed..New York: McGraw-Hill.