General Electric is a company whose history reaches back to the
dawn of the 'electricity age'. David Bicknell reports on how they
are now seeing business in a new light
So, you reckon your company gets the Internet? Have you got 20
year olds mentoring your top managers on the Net? How about
providing 40 hours of Internet training for every single one of
your employees? And how many of your employees have re-engineered
their jobs to take advantage of the Web?
Don't be too alarmed if your organisation cannot put it's hand
up to any of the above. There aren't too many companies that can
walk the walk of e-business, and prove that they have re-engineered
the company around it.
One of the the world's leading exponents of business-to-business
e-commerce is relatively unknown in the UK, although it has been
around since 1879 and its products are used in almost every living
room.
General Electric is the company, and unlike others that have
been successful in adopting e-business - for example technology
giants Dell and Cisco - it stands out because it really is an old
bricks-and-mortar company, whose business includes light and heavy
manufacturing and transportation.
In the space of a year and a half, since adopting "e-business"
as one of its corporate mantras in January 1999, GE has ensured
that every employee "gets" the Internet.
"We have a culture in GE that ties us together," says Craig
Arnold, president and chairman of GE Lighting in Kingston, Surrey.
"E-Business is changing the lives of every employee within the
organisation, and the way we fundamentally run the company."
GE actually strarted working on E-Business before 1997, when
divisions such as GE Plastics had already begun moving a number of
their transactions with small and medium-sized businesses
online.
Other pieces of the company then started doing various things
until the company's legendary chief executive Jack Welch adopted
e-business as one of its key goals.
"In the early days it was all about participating and
experimenting, taking a look around the corporation and forming an
idea of best. Try a few things here and there and see what works,
and ultimately it crystallises into an approach that you can then
implement across the company," adds Arnold, who also heads up GE's
European E-Business Council, a sort of brains trust of best
practice from around the corporation.
Despite this approach, gradual is not a description Arnold would
apply to GE's e-business activities.
"Learning and making mistakes is a fair way of describing it,
but we have not been gradual - that word doesn't really exist in
the GE vocabulary. It's about being as fast and pervasive as you
can."
GE's complete adoption of this e-business culture is what is
responsible for the company's rapid progress. Staff don't have to
think about how e-business will change their job, they just do
it.
Arnold admits that for any large corporation, the adoption rate
will vary by function, by business and by individual. Some get it,
some don't. "The real challenge at the beginning was not so much
people intellectually not accepting it, but asking themselves,
'What does it mean for me and my job?'"
Getting that buy-in from staff has involved a number of
mentoring and education ventures, from the most senior down to the
most junior. According to Arnold, for people to really understand
the way the Net can impact their lives, first of all they have to
understand the technology. Staff training may include an exercise
where they have to find ten types of Web site, for example a site
selling old Nike sports shoes. The winner gets an award, such as
dinner for two.
"You have to get in there and understand the Web, play around
with it. Everyone has to go through 40 hours of Web training. That
follows on from the reverse-mentoring of the most senior leaders.
Now, today, we've even started mentoring our customers.
"On top of the training, we've set very aggressive goals around
really working smarter, more efficiently, and taking significant
costs - between 30%-50 % - out of the organisation by leveraging
this new technology. You look at the processes within the
organisation today, and assign people as champions and functional
leaders for these things, and say, Why can't this particular thing
be digitised? What prevents you from taking this transaction and
leveraging the Web, do it on the Internet?"
According to Arnold, when you've done something the same way for
a number of years within a large corporation, it's tough to switch
overnight and rethink the way you do things. It means starting with
some early wins and building the momentum that ultimately takes
over the company. As for GE's customers, Arnold says that although
they all recognise that they have to do something, there is a
variation around acceptance of e-business.
"In general, we are ahead of our customers in this, so we think
we have significant value that we can bring to the table. For those
that want to play in this space, we talk about a matrix of customer
sophistication from low to high, and the value that we can bring.
We bring the most value to those that aren't really sophisticated,
because we can bring them a turnkey solution.
"But if you're a big customer like a B&Q, maybe we'll just
bring content that sits on your Web site, and we deliver the
content for the lighting category. But if you're a smaller or
medium-size customer, and you know that this Web thing is out there
and is enormously complex and frightening, then we can bring a
turnkey solution. Turn it over to us and we'll manage it for you.
We'll develop the content, we'll do the hosting, and we'll
basically give you a one-stop-shop for Web-enabling your
business."
Many companies struggle to create the right teams to implement
online projects.
GE Lighting's IT Director, Sid Deloatch, says that GE wants a
mix of IT and "business" people who understand each other's roles.
"We want IT people that are business savvy, and business people who
are IT savvy.
"We're seeing a blending of skillsets between the IT and
business teams that's helping to make these teams so successful. We
work from an e-business "cookbook" - an online process that defines
the process in which we want to develop projects.
"It's a template-driven approach - point-and-click - and we find
ways to deliver in days rather than months. We prototype in hours,
deliver in days."
Delotach cites an example where GE Lighting put up an employees
online store in seven days, enabling staff to order lightbulbs from
its distribution centre and receive delivery in 24 to 48 hours,
right to their doorstep.
The key difference, he suggests, is in the mindset and the tool
selection.
"In the Cobol days, things had to be centred around those that
had the skillsets. Now, what you're able to do is bring in
excellent, process-focused project management people, and you
couple that with new toolsets, such as Lotus Domino and Java.
Because of the nature of the tools - they are a lot easier to use,
the cycle time for learning them is shorter and the number of
people learning them is much bigger - you have these Net savvy
individuals who can define the front end and also test it."
According to Charlie Coode, who is GE's e-commerce operations
leader, the business-IT hybrid teams are "100% dedicated to the
execution of their projects, and are measured and focused upon
it.
"Before, you had a marketing department where one of their many
responsibilities was to deliver a Web site, and it got lost within
a lot of "noise" in the workplace."
GE's business-to-business e-commerce activities are broken down
into three areas: Buy, Make, and Sell.
Buy refers to electronic procurement. Make means using the Net
to cut workflow costs, while Sell is all about giving more
information on GE's products - in this case, GE Lighting and its
light, bulbs, lamps solutions - for the customer's benefit, perhaps
through GE's customers such as B&Q.
Digitising GE's buying
GE's goal is to Web-enable the entire purchasing cycle, with
suppliers being able to track purchase orders, submit shipment
notices and invoices and check account balances, all over the Web.
That gives suppliers "self-service" while GE in turn can track
supplier performance. Both GE and its suppliers have the ability
to
- drill down on supplier deliveries and quality
- automate penalties for poor perfomance
- send proactive notifications for delayed material,
and
- get a detailed variance analysis
GE's partner for its electronic procurement activities is Oracle
- the system is currently in development and will be rolled out in
the fourth quarter - using its e-procurement systems to manage the
"sourcing to ordering" purchasing cycle, and "get visibility across
the whole organisation of 100% of what we buy".
GE hopes to generate savings of almost $2m by getting control of
the buying side, while digitising many activities today now done
manually. The system is already up and running in five other GE
businesses including plastics and aircraft, enabling the company to
collectively drive efficiencies across the organisation.
"We have the ability to see a practice or something that's going
on within an aircraft engine business and say, "This is great - let
me get this idea and implement it in my business. Then we can move
faster up the learning curve. This is the power of GE - we can
learn from other GE businesses' mistakes too," says Arnold.
Arnold adds that the new system offers the promise of a
completely different relationship with suppliers.
"Now, not only do we have visibility into supplier performance,
enabling us to track and measure, suppliers also have access to the
same information. We are giving our suppliers the ability to come
into our system to look into their own performance in terms of
on-time delivery, and we now have the ability to put automatic
penalties in to suppliers if they create issues in our factory by
missing a delivery."
That does not mean, however, that all suppliers are necessarily
ready. "We'll help them get to the Internet, and we'll be patient
with them but they are all going to have to get there eventually,
because this is the way we are going to do business. We learned in
the early days that the way you drive this initiative is that you
really have to kill the parallel path. If you leave the old way of
doing it there, and you have the new way, you never kill the old
process."
Digitising what GE makes
GE plans to use the power of the Internet to digitise all of its
internal business processes, from pricing and packaging through to
human resources. GE's view of human resources, for example, is that
most of what the department does is pass information around about
benefits, so why can't you take that information and post it on the
Internet?
"The mindset that we're trying to develop throughout the
organisation is, if there is work being done by people today, why
can't you digitise it and deliver greater value for a fraction of
the cost," says Arnold.
According to Deloatch, packaging is a good example of the
savings that can be made. "We used to have a very cumbersome
packaging function for all of our lighting products. We used
outside agencies, but each step along the way had to be approved -
finance, product management, manufacturing - all very paper-based
processes. We put that on a Lotus workflow package, and literally
it was about ten days in development. Now you have a workflow
process that is electronic, driven through e-mail. You can track
it, and all of the work itself is stored on the Lotus Domino
toolset. All of that has been driven electronically, making
$350,000 annual savings for about ten days of work all through
functional resources."
Another key area is GE's Customer Web Centre, a development
designed to ensure that GE gets all the knowledge it needs from its
many interactions with its customers. With up to nine separate
locations talking to customers, such as operations, pricing and
customer service, there is a risk of a "disconnected" customer
experience suggesting GE departments do not talk to each other.
To avoid that, GE has set out to harness the knowledge of all
departments for their customers, concluding that customer needs are
the "pulse" of the organisation, though for once in GE's e-business
developments, it admits to being only at stage one.
Digitising what GE sells
GELighting.com is GE Lighting's initiative to attract "eyeballs"
for the industry sectors that it serves. It offers unrestricted
access to a range of users, including:
- commercial and industrial users
"We really try and set this site up to target today's specific
audiences, and their specific needs," says Arnold. "We have
lighting for the home, lighting for businesses, we sell through
OEMs, we have some information about the Lighting Institute, and
also some catalogues. There are also wizards to help you find the
right lighting solution- incandescent, halogen, fluorescent - for
your individual needs."
Different GE customers will have different needs. A highly
sophisticated customer like B&Q will host its own Web site, but
filter in GE's content. A smaller company will promote GE's Web
page.
GE is also considering putting kiosks into retail shops so that
people can play around in the shop with different lighting
solutions. It is also thinking of putting GE.com on the light bulbs
themselves.
GE Facts and Figures
- Founded: 1878 by Thomas Edison, who set up Edison Light
Company. Merger with Thomson Houston Company in 1892 created
GE.
- Business: technology and manufacturing including - aviation,
financial services, lighting, medical systems, plastics, industrial
systems, and transportation.
- GE operates in over 100 countries and employs nearly 340,000
people worldwide, including 197,000 in the United States. "Jack"
Welch has been Chairman and Chief Executive of GE since
1981.
- Market capitalisation $523.7bn
- Named America's Most Admired Company - Fortune (1998, 1999,
2000)