The current set of changes playing out at GE India point to a new inflection point. What is it about India that excites you as the CEO of a Fortune 500 multinational?
I have been travelling to India regularly since the early Nineties and have viewed with admiration the developments that have taken place in the country. In the early days, GE invested in India ahead of expected growth in consumer demand that did not materialise in the manner many expected. So we needed to identify other opportunities – especially those that drew on India’s highly educated work force. Today, we are well established in the next stage of our development in India with over 12,000 employees and longstanding partnerships with leading Indian companies. Emerging markets are leading the way in terms of global GDP growth, and India holds tremendous promise over the next few years.
What does that mean for GE? Our strategy for winning with India includes integrated, localised operations that provide for indigenous decision-making authority on product offerings, the ability to draw on company-wide resources, an organisational framework that facilitates product innovation in India that can be sold globally — what we call “reverse innovation” — and the flexibility to form partnerships and joint ventures with local Indian entities.
GE has announced a series of big changes for India. Why was this important and how do you see it enabling GE India’s growth? What were some of the key attributes that you were looking for while zeroing in on the India CEO?
Shifting power to where the growth is and putting more resources, more people and more products in-country and integrating all elements of the GE product and services pipeline makes good business sense. This new “One GE in India” approach will speed progress. It was absolutely necessary that the leader of this new organisation had an outstanding track record in the company, deep operational expertise and an inclusive approach toward employees, partners and customers. John Flannery is that leader. How differently does GE view emerging economies today, especially in the new “reset world” where its own business portfolio is undergoing a change? How does this change manifest in the HQ thinking/expectations from the international business?
India is essential. For GE, winning with India requires a new business model, one in which we are “local” in every sense of the word. That means migrating P&L responsibility and major business functions (like R&D, manufacturing and marketing) from a centralised headquarters to an experienced in-country team that is closest to the action and uniquely in touch with local customers and capabilities. We have established this in India already. With an integrated team, we can develop products and services designed specifically to meet local needs and, potentially, for export to other markets. Over the last decade or so, GE’s India story has been a mixed bag. How would you assess GE’s performance in India so far?
GE has been at home in India for over 17 years [after setting up a full-fledged subsidiary] and we will partner with India for decades to come. While we have established a significant presence, we have not grown at the same rate as we have in other developing markets. The new organisational structure will enable us to redouble our focus on India. What are some of the challenges you envisage in pursuing reverse innovation inside a MNC that has been headquarters-driven? How was the transition plan for India received internally at the headquarters?
Since we’ve changed the model in India to align with the market more directly, there’s great excitement. It gives us entirely new opportunities to develop more products at more price points. This will help open up access to large, underserved markets in India, China, Brazil and Africa while also fueling innovation that open a door into new markets in the more developed regions of the world. Take the Mac 800, a diagnostic cardiology product designed and developed in China, for China — but now being used by cardiologists in the US. Or the Mac 400, originally developed here in India, for India, 6,000 units have already been sold across Europe, Brazil and South Asia, outselling its predecessor, Mac 1200/Mac5500 by ten times over. . What are some of the changes being brought about at the headquarters to enable better understanding of different markets like India?
Globalisation has been a key GE focus for many years. In the last five years, we have grown our revenues outside the US from 45 percent of total company revenues to over 53 percent. We expect this growth rate to reach 60 percent within the next few years – and India will be a centerpiece partner in this. We will continue to move our people and resources closer to our customers, wherever they are in the world. The establishment of a new business model in India is an important step in this process and I am eager to see it take off.
(This story appears in the 18 December, 2009 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)