There were several trade-offs for GE to implement the shift in strategic focuses. To achieve organic growth, GE needed to increase output and sales based on customer needs, which was unlikely for GE to achieve in a short time. GE’s profit inflow would slow down in early years as a trade-off for sustainable profit in the future. Previously GE had many projects induced by merger and acquisition activities. They needed to decrease projects and more focus on long-term investment in order to achieve organic growth.
GE was also required to operate more efficiently to cover the high cost of long term investment. Not only built research centers in several locations around the world, GE also increased their research & development budget by 14%. GE started to do their R&D processes by themselves, instead of merger and acquisition. As it took longer time to develop products, GE’s profit could not be gained in a short term.
In order to become more technology and marketing driven, one of Immelt’s goal was to encourage employees to be more risk taking. Grant (1996) refers routine as interface pattern between individuals to build specific knowledge and transfer it to the organization. GE changed its previous routines and slowed down the job rotation. GE recruited external marketing leaders that demanded more employment budget. Multi-disciplinary divisions were created as GE aimed to be more customer-oriented, resulting in increase of training budget.
Becoming more global was also one of Immelt’s strategic focuses. To achieve that, GE gave priority to long-term investment that required new resources. Lastly, as GE wanted to become more socially and environmentally responsible, they needed more capital and resources. As GE could become the pioneer in eco-friendly production, the cost of production was more expensive.
GE might face various risks as they shifted their strategic focuses. During Welch’s period, the average growth per annum remained around 23%, while after Immelt became the CEO, it decreased to only 7%. On the other hand, the share price of GE decreased quite significantly. Furthermore, several GE’s Evo projects might fail and GE would lose lot of money if their projects are not successful.
Weick and Quinn (1999) suggest that the leader of the organization should take an account in monitoring how company implement organizational structure changes and new...