Lakhasly

Back in 2004, GE’s top-management team was going
through its annual strategic planning review when the
management team came to a sudden realization: six of
the company’s core businesses were deeply involved
in environmental and energy-related projects. The appliance business was exploring energy conservation.
The plastics business was working on the replacement
of PCBs, once widely used in industrial compounds,
which had been found to have negative consequences
for human health and the environment. The energy
business was looking into alternatives to fossil fuels,
including wind, solar, and nuclear power. Other businesses were looking at ways to reduce emissions and
use energy more efficiently. What was particularly
striking was that GE had initiated almost all of these
projects in response to requests from its customers.
When these common issues surfaced across different lines of business, the group members realized
that something deeper was going on that they needed
to understand. They initiated a data-gathering effort.
They made an effort to educate themselves on the science behind energy and environmental issues, including greenhouse gas emissions. As CEO Jeff Immelt later explained, “We went through a process of really
understanding and coming to our own points of view
on the science.” Immelt himself became convinced
that climate change was a technical fact. GE executives engaged in “dreaming sessions” with customers in energy and heavy-industry companies to try to
understand their concerns and desires. What emerged
was a wish list from customers that included cleaner
ways to burn coal, more efficient wastewater treatment
plants, better hydrogen fuel cells, and so on. At the
same time, GE talked to government officials and regulators to try and get a sense for where public policy
might be going.
This external review led to the conclusion that
energy prices would likely increase going forward,
driven by rising energy consumption in developing nations and creating demand for energy-efficient
products. The team also saw tighter environmental
controls, including caps on greenhouse gas emissions,
as all but inevitable. At the same time, team members
looked inside GE. Although the company had already
been working on numerous energy-efficiency and
environmental projects, the team realized there were some gaps in technological capabilities, and there was
a lack of overarching strategy.