After virtually ignoring the Internet for several years, the giant awakened in early 1999. At a meeting of the company’s top 500 managers, CEO Jack Welch mandated that each division form independent teams to “Destroy Your Business:” identify an existing online competitor or dream up a hypothetical one that could steal market share from GE, and then devise countermeasures. What did they find? “It turned out there wasn’t much other than Web sites. The business models weren’t good, and the fact is people still need to go to an aircraft engine manufacturer to buy an aircraft engine. But the tools some of these companies were using were tremendous, and we believed they could have a big impact on our productivity.” The “Destroy Your Business” efforts swiftly turned into “Grow Your Business,” and e-Business became the fourth and final company-wide initiative of Welch’s tenure as CEO.
The following caselets describe how four different GE businesses are adopting e-Business tools and principles. As you read them, think about how the activities fit into the “Sell-side, Buy-side, Inside” framework we have been using in class—a framework that is precisely how GE is approaching e-Business.
This $7.8B division manufactures and sells high-performance engineered plastics to a global customer base primarily consisting of other manufacturers. The plastics business is highly commoditized and tightly competitive, dominated by a few huge global players.
GE Plastics was one of the first GE businesses to sell its products online, starting in mid-1997 through its captive distribution company Polymerland (no, the name is not a joke—check out www.polymerland.com). “We saw the Net as a big curiosity,” says Polymerland’s president Peter Foss. “None of us really know what was going to happen.” In 1999 Polymerland.com began to face challenges from aggregators like PlasticsNet, and weighed joining one of several such B2B exchanges to remain competitive.
Instead they went in another direction, that of using the Web to improve their customers’ purchasing experiences: getting timely information about products they needed, the status of an order, or even customized services. An example of the latter is online wizards that allows customers’ product design engineers to select materials and colors for plastic pellets, mold a digital representation of a custom-designed part, and get cost estimates for materials. A critical part of the online functionality is the ability to verify specifications on the resins being purchased, a process that used to typically take several phone calls and was prone to error. Says GE Plastics General Manager for E-commerce Gary Podesta, “In the end, we’re doing design assistance. It’s a value-added service…for us to be able to touch thousands of customers online rather than hundreds of customers [with the field sales force] is a big win for us.” Similar wizards are now in use at each of GE’s manufacturing businesses.
Online sales at Polymerland have grown from $60,000 a week at the site’s inception, to $7MM a week in 2000, to a projected $1.5B in 2001. Moreover, by linking the ordering systems with production and delivery, call center volume has decreased by over 20% and on-time deliveries by 50%. Says Podesta, “you must have a world-class fulfillment capability to operate successfully on the Internet. You will lose customers on the Web if they get a late shipment.”
GE Medical Systems
This $7.9B division manufactures and distributes medical imaging equipment (e.g. magnetic resonance (MR) and computerized tomography (CT) scanners and X-ray machines) and related services, such as equipment monitoring and repair. Its customers include hospitals and other medical facilities worldwide; its competitors are primarily other global giants such as Toshiba and Siemens. Previously headed by GE’s new CEO, Jeffrey Immelt, Medical Systems has a reputation within GE as...