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Friday, 30 May 2014 14:54

GE’s Innovation Capabilities Featured

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 GE’s Innovation Capabilities


General Electric (GE) is an American multinational company (General Electric, 2013). It is a conglomerate whose core businesses include manufacturing of consumer and industrial appliances, capital finance, technology infrastructure, and energy. The firm is ranked as the 26th largest company in the United States by the Fortune 500 (General Electric, 2013). The success of GE is largely driven by technology. Technology is an essential resource for GE. The firm has used this resource to drive innovation and achieve a competitive edge.  Technology has enabled GE to create a platform that invites innovative ideas, and that fosters the creation of new products, markets, services and new customers.


 Technology and Innovation

GE has managed to leverage technology in order to enhance innovation and create a competitive advantage. The company has committed resources towards developing technology in areas such as aero-thermal and mechanical systems, manufacturing and material technologies, chemical engineering, and diagnostic and biomedical technologies.  The establishment of the Brazil Technology Center is evidence of GE’s commitment towards investing in technology in create a competitive edge. The Brazil Technology Center is GE’s fifth research and development facility. The center is expected to accommodate 24,000 square meters of testing and laboratory space (Porodi, 2013). The center has over 60 people, mostly engineers and scientists. GE invested R $ 500 million in the center in order to increase the pace of innovation.


 How GE has used Technology Resources to Gain Competitive Advantage

General electric has used it technology resources in order to foster research and development activities. Research and development are a key pillar of GE innovation capabilities. The Brazil Technology Center and the other four centers were specifically built in order to drive research and development activities. Research and development have enabled GE to delivering the right products to consumers. Research and development activities have enabled the organization to identify critical needs of the customers and design products that address these needs. For instance, the GE’s GeoSpring hybrid electric water heater was designed to address consumer’s desire to conserve the environment and save money (Moorman, 2013).


General electric has also used technology to foster collaboration between GE and its partners. Collaboration is also critical driver of GE’s innovation capability and a key source of competitive advantage. GE innovativeness has been fostered by the company’s willingness to work with entrepreneurs. One approach that GE has used to foster collaboration with entrepreneur is through organizing contests such the Ecomagination Challenge. This collaboration enables GE to cast a wide net in order to attract new and diverse business ideas. The Brazil Technology Center extends GE’s opportunity for collaboration. The Brazil Technology center has also been established to foster collaboration. GE’s collaboration effort is also extended to its customers.


Access GE is one of the technological solutions that GE has developed in order to improve interaction between GE and its customers. Access GE is a web-based portal that enables customers to access the GE’s team for technical and other forms of assistance. The Experienced commercial leadership is another strategy that GE has used to foster collaboration and innovation. This is two- year post-MBA program that seeks to develop future leaders and change the company’s traditional views about product development.  The graduates introduce new perspectives and unique talent into the organization. Embracing diverse view points is an essential driver of innovation.Technology resources have also enabled GE to develop new markets (Moorman, 2013). Many technology companies concentrate on delivering their products on developed markets.


Many of these products are designed to work in these developed markets, and are not compatible with the environment within the developing countries. GE has achieved success by leveraging technology to modify products in order to make them suitable for developing markets. For instance, GE was able to use technological innovation to establish a connection between MRI machines and wind turbines (Moorman, 2013). This innovation has enabled the company to supply MRI machines to areas that do not have conventional sources. It has also enabled the company to reduce the cost associated with operating the MRI machines.GE has also leverage of technology to create an efficient supply chain. The supply chain refers to the channel followed before the product is delivered to the final consumers (Dong, Xu, Zhu, 2009).


It entails purchasing of raw materials from suppliers, logistics, production, storage, and distribution. The supply chain has a significant impact on the overall aspects of the organization. This is because this chain affects critical functions of the organization and has an impact on the value that customers are able to receive. GE has managed to integrate its supply chain and create mutually beneficial relationships with suppliers (Moorman, 2013). GE is also able to use information technology to coordinate all processes along the supply chain including procurement and downstream sales and customer service. Technology has enable GE to share information with its suppliers, as well as, customers thus enhancing the process of value addition.


 Evidence of Distinctive Competency in Area of Innovation

Distinctive competency refers abilities that an organization possesses which are difficult for other organization to copy (Collis & Montgomery, 2008). Distinctive capabilities give a firm an edge over competing firms. They are the sources of competitive advantage within companies. Evidence of distinctive competency can be derived by assessing the performance of an organization against its competitors.GE has gained a strong position in the technology market. In 2012, the company’s made an operating profit of $ 22.9 billion (General Electric, 2013).


This figure represented an 11% growth in profits from the previous year. The company was able to record this performance despite its key markets, United States and Europe, having economic challenges. The company has managed to position itself in this challenging economic environment. The company was also able to post returns of over $ 12.4 billion to investors through dividends and stock buy-back. This amount represented dividend growth of 21% (General Electric, 2013). Since the year 2000, the company has paid a total of $ 106 billion as dividends. This figure is only second to dividends paid by Shell during the same period.The company has also managed to build deep relationship with customers. GE revenues have increased from $ 21 billion to $ 43 billion in the last 10 years (General Electric, 2013).


About 75% of these revenues are generated through the sale of services. The demand for GE services has increased due to the company’s ability to establish mutually beneficial relationships with its customers. The company has adopted solutions-oriented selling model in order to enhance its capacity to deliver products that match the customer’s needs.GE has also recorded remarkable growth of its business in past years. In 2002, the company acquired Enron Wind Corporation asset entrenching its control in this wind power market (Moorman, 2013). This is evidence of the distinctive capabilities that GE has managed to establish within this market.


The company plans to invest $60 trillion in infrastructure by the year 2030 in order to support the growing demand for its product (General Electric, 2013). Currently, a third of GE’s revenues are obtained from businesses that were not part of the company 10 years ago. The company has ventured into new businesses such as Gas and Oil, as well as, life sciences. This growth provides evidence of GE ability to develop distinctive capabilities. GE is still the leading company in advanced manufacturing. The company is also making big strides in areas such as software development, oil and gas, and power and water businesses.  


 Conclusion

Organizations have different resources. These resources can be classified into tangible, intangible and human resources. The Resource Based View Model has introduced a new approach where organization used resources to develop competitive advantage. According to this model, resources can enable an organization to develop distinctive capabilities, overcome weaknesses and threats, as well as, take advantage of opportunities. One of the key resources for GE is technology. This resource has enabled the organization to develop distinctive capabilities such as innovation, ability to deliver a variety of products, ability to develop new markets, and efficiency.  


   Reference

Collis D. & Montgomery C. (2008). Competing on Resources. November 8, 2013. http://hbr.org/2008/07/competing-on-resources/ar/1

Dong S. Xu S. & Zhu K. (2009). Information Technology in Supply Chains. Information Systems Research. 20 (1): 18- 32

General Electric (2013). GE 2012 Annual Report. November 8, 2013. http://www.ge.com/ar2012/#!report=home

Moorman C. (2013). GE’s Organizational Platform for Innovation. November 8, 2013. http://www.forbes.com/sites/christinemoorman/2013/01/29/marketing-in-a-technology-company-ges-organizational-platform-for-innovation/

Moorman C. (2013). Payoffs from GE’s Innovation. November 8, 2013. http://www.forbes.com/sites/christinemoorman/2013/01/31/payoffs-from-ges-innovation-platform/

 Porodi B. (2013). Brazil Technology Center: Speeding the Pace of Innovation. November 8, 2013. http://ge.geglobalresearch.com/blog/brazil-technology-center-speeding-the-pace-of-innovation/


 

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