How GE turned a potential business threat into a brand building opportunity

How GE turned a potential business threat into a brand building opportunity

GE realised that it was operating in a world where environmental issues are right in the centre of all its key stakeholders' agendas. Rather than perceiving it as a threat, GE saw it as a potential and innovated its business in a way that was committed to clean energy.MORE CASE STUDIES ON INNOVATION: Ford | Toyota | Cemex | Toshiba-UPS | Burberry | Safaricom

Area of innovation: Brand
Year: 2005

In the early part of this century it was clear to GE, one of the world's largest diversified technology and industrial supply companies, that it was operating in a world where environmental issues are right in the centre of all its key stakeholders' agendas, including consumers, customers and governments. While other technology companies would have perceived this as a threat, GE saw potential .

In 2005, GE announced a unique initiative - 'Ecomagination'; a term emerging out of the company's corporate slogan 'Imagination at Work'. It was designed to drive business growth and profits through commitment to clean energy, as well as to build its brand image as that of an environmentally aware company.

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In addition to being an umbrella branding of GE's different product lines, Ecomagination has expanded to include increased research and development spending on creating environment friendly technology for its customers, reducing emissions and wastage, and regulating use of natural resources for its own operations with the emergence of an increasingly stringent regulatory framework on carbon dioxide emissions and other pollutants, and as firms face a world of decreasing fossil fuel resources, GE sought to become the lead provider of relevant products and services for this new reality.

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GE fell short of its aggressive Ecomagination revenue target of $25 billion by 2010, but still has some $18 billion coming from environmentally-friendly products

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In just a few years, Ecomagination has spawned everything from low-energy digital mammography machines and aircraft engines to gas turbines and nuclear plants. By 2010, GE had shown impressive progress on each of its Ecomagination targets, developing over 90 Ecomagination products, which contributed at least $18 billion in revenues. It invested around $1.5 billion in clean technology research, meeting its 2010 target a year early. It successfully reduced its own energy intensity by half and greenhouse gas emissions by over 20 per cent below the 2004 baseline. The company's water consumption has also reduced by 30 per cent from the 2006 baseline. GE has also gone down the inorganic route by acquiring relevant assets, including expertise in water purification, waste water treatment and water reuse, amongst other areas.

Sanket Akerkar, MD, Microsoft India
Sanket Akerkar, MD, Microsoft India
How to Nurture Indian Innovators

GE's 'Ecomagination' strategy is a classic case of a great company proactively responding to emerging opportunities and adapting itself to drive business return. In an era of de-stabilising climate conditions and rising competition for fossil fuels, corporate houses need to play a responsible role in creating a sustainable green environment. GE was swift to grasp the opportunity to leverage internally and externally.

Apart from the marketing leverage, GE invested ahead of the curve to adapt 'going green' as a strategy and renew business processes to align with the new world requirement. This called for a complete transformation in the way GE approached market situations and required commitment to the environment at all levels inside GE. By doing so, innovation was driven, aiding the launch of new products, improving savings by reducing waste, and strengthening the organisation's brand value to deliver a healthy return on investment.

Learning from GE's success in creating a localised framework, I am tempted to refer to the movie 3 Idiots where Aamir Khan playing Rancho presented 'local' innovations. The film highlighted innovations of little known Indians - the exercise-bicycle used to run a washing machine, or the scooter powered flour mill. We need a plan to build our innovative talent base - an environment which promotes little known innovators to build business opportunities around their innovations. I call it 'innovation on the ground'.

India is a powerhouse. We have abundant sunshine, rain and wind. We have a solid resource pool of people. We need a plan and participation from all to harness it. This cannot be the responsibility of the regulators or the government alone; corporate houses need to play a more active role as well. Enabling innovation by improving infrastructure and helping protect intellectual property would fall within the purview of the former; the latter needs to bring in the specific ideas, the investment and the will to take the innovations to market.

We need to build mechanisms to reward and promote our local talent to help build a sustainable and effective pool to drive innovation. Perhaps the major reason why most new ideas fail is that there is no plan to turn them into business realities. Corporate houses need to actively identify local talents from schools, colleges and the large base of research institutions, and provide them opportunities to scale their ideas and take them to market.

Indian companies need to localise global best practices to be successful. GE's story is particularly exciting from two perspectives. First, it created a compelling vision. Second, it had a proper action plan to build a profitable business around the same. Such initiatives can create new jobs, support local economies and increase consumption. Darwinian evolution principles are always in practice - innovate or perish.

The Ecomagination initiative has helped GE generate over $70 billion in revenues since its inception, and its success has prompted it to commit a further investment of $10 billion in related research over the next five years. It hopes Ecomagination revenue will grow at twice the rate of the company's total revenue.

As part of its commitment, GE publicly reports its progress on an annual basis. Driven by focused product development and sustained brand building efforts under its Ecomagination initiative, GE's overall brand value has grown by 17 per cent to $52 billion.