Winning - Jack Welch [61]
We were wrong.
Pratt & Whitney, with only $200 million in development, did get 90,000 pounds of thrust out of their existing engines. Because their costs were less, we had to sell the GE90 at lower prices than we planned. We had underestimated the competition because we thought we had all the technical answers.
This story had a lucky ending. Several years later, Boeing developed a long-range version of the 777. It required 115,000 pounds of thrust, which the GE90 could meet since it was a new design and could be expanded. We ended up being chosen by Boeing as their sole source, but because of our early miscalculation, we suffered through a few painful, less profitable years.
Getting the right strategy means you have to assume your competitors are damn good, or at the very least as good as you are, and that they are moving just as fast or faster.
When it comes to peering into the future, you just can’t be paranoid enough.
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SLIDE FIVE
What’s Your Winning Move?
What can you do to change the playing field—is it an acquisition, a new product, globalization?
What can you do to make customers stick to you more than ever before and more than to anyone else?
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This is the moment to leap from analysis to action. You decide to launch the new product, make the acquisition, double the sales force, or invest in major new capacity. In reality, this is when Walt Robb and his team made the decision to allocate major resources to the Continuum Series, the strategic move that would keep GE’s medical customers “sticky” for decades.
By the time you’ve finished this set of questions, the effectiveness of your strategy should be pretty clear. Your big aha is winning, or it needs to change. Even if you didn’t have a strategy before, this process should help you get one.
But either way, you’ve only just begun.
THE RIGHT PEOPLE
Here’s a familiar scene. Managers meet for months on end in intensive sessions about the company’s competitive situation and direction. Committees and subcommittees are formed. Surveys are conducted. Sometimes consultants are brought in. And then, at last and with tons of fanfare, the company’s leaders announce a new strategy.
Which just sits there.
Any strategy, no matter how smart, is dead on arrival unless a company brings it to life with people—the right people.
Forget speeches. They’re just hot air. The organization knows who’s important. Only if those important people are assigned to lead a new strategy will it take off.
Consider what happened in Power Systems when our push toward product services first got announced. Immediately, all the engineers wanted to know what the heck was going on. After all, they had joined GE because they wanted to build the biggest, highest-powered, most environmentally sensitive turbines. Suddenly, they were being told that the people who serviced their “masterpieces” were going to be the stars of the show.
Didn’t service people, they thought, carry oilcans?
Although the engineers heard the speeches, they didn’t take them seriously, which was easy enough, since services were buried in the existing organization.
What did we do? We eventually took Ric Artigas, a PhD and the engineering leader in Locomotives, and put him in charge of a new and separate P & L devoted to Power Systems’ services business. It was a real signal—Ric was a well-respected player. With his new stature, he had no trouble recruiting the best engineers in Power Systems, who were needed to design sophisticated software packages for turbine upgrades.
The services strategy was under way. In 2005, Ric’s operating profit of close to $2.5 billion will be about equal to revenues when he took over in 1997.
Getting strategy right also means matching people with jobs—a match that often depends on where a business is on the commodity continuum.
It goes without saying that you cannot