The Next GE: What Becomes of the House That Jack Built?

By Allen, Michael | Chief Executive (U.S.), March 2000 | Go to article overview

The Next GE: What Becomes of the House That Jack Built?


Allen, Michael, Chief Executive (U.S.)


This month next year, the icon of late 20th century business leadership retires after 20 yearsroughly two normal CEO tenures-as General Electric's CEO. The question everybody is asking is, "Who will succeed Jack Welch?" Arguably, the more interesting question is, "What kind of company should GE become after he leaves?" CE asked four GE watchers to anticipate what the future could hold for GE in a post-Welchian world.

Succeeding Jack Welch as the next CEO of General Electric will require a host of skills, not the least of

which are the will, the skill, and the energy to craft and realize a vision that surpasses the GE of today.

Anyone contemplating the task of surpassing Jack Welch and becoming the ninth CEO in the 125-year history of the General Electric Co. must be asking, as have their predecessors: "What is the destiny of GE in the next 25 years?" A linear projection, to 2025, assuming a repeat of the company's growth trend of the last 25 years, produces a GE of awesome proportions. If this pace of performance improvement were to be repeated, the GE of 2025 would have: revenues approaching $1,000 billion and shareowner value ($3 trillion) greater than the GDP of all but two nations today and greater than the market value of the Fortune Top 40 today (excluding GE).

THE NEXT GE

Such dimensions of an enterprise seem hard to comprehend. Nevertheless, we need to go beyond this projection, based as it is on size, profitability and value. We need also to envision the fundamental business structure, managerial systems, and cultural changes that the next 25 years might require. We can safely predict that GE will change in each of these dimensions. And it will evolve in even more astounding and fundamental ways than have occurred in the past.

To envision GE's fiture requires a projection of what major external socio-economic forces, that will evolve over the next two-and-a-half decades, are most salient in framing the task of leading GE.

WHAT THE FUTURE COULD HOLD FOR GE

GE leaders will need to deal with both the opportunities and threats presented by at least seven long waves of change:

1

Platforms For Post-Industrial Growth. As Baby Boomers in developed post-industrial economies age (from 45 years to 70 years), they will continue to graduate from materialistic to self-actualization needs fueling a bulge in demand for superior physical wellbeing (health, fitness, nourishment), mental and emotional wellbeing, (elder care, therapy, lifestyle products) work and play satisfaction (work conditions, financial success, entertainment, sports, travel), and many more.

GE leaders will need to establish strong growth platforms in the businesses that will flourish in meeting the post-industrial societies' needs. For example, GE's business portfolio, while strong today, could be better developed in such fields as health therapy, biotechnology, investment management, communications, information services, and personal wellbeing. GE has beachheads into these arenas, but not central, industry-defining power positions.

2

Economic Development Engineering, Having 'electrified' America, GE's international expansion is driven by the infrastructure and trade development needs of emerging and developing economies. These economies have huge development potential over the next 25 years. For instance, in nations where GDP/capita is still below $2,000, there is a population of 3.5 billion which is projected by the U.N. to grow to over 5.0 billion by 2025. If their average GDP/capita rises from $676 today to $1,349 in 2025, the economic growth 'gap' to be filled would be $4,000 billion. This will be the new 'product' economy. Without such development, the gaps between have and have-not economies will worsen-with severe consequences that would probably include economic turmoil, escalating trade wars, and sharply heightened religious and political enmity. …

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