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GE CEO to test new management model in India

</head> <body> <p>By Scott Malone</p> <p>BOSTON (Reuters) - General Electric Co <GE.N> plans to test a new management model in India that the largest U.S. conglomerate believes will help it flourish through a long period of sluggish post-recession growth in developed markets.</p> <p>Rather than taking its high-end, high-cost equipment and finding ways to make it less expensive for developing-world customers, GE needs to focus on designing lower-cost technologies that will appeal to customers in emerging markets, Chief Executive Jeff Immelt argued in an article published on Tuesday in the Harvard Business review.</p> <p>Doing so might mean breaking away from the management approach the world's largest maker of jet engines and electricity-producing turbines has relied upon for years -- having enormous, product-focused divisions that span the globe -- in favor of smaller, country-focused teams, Immelt wrote in an article titled "How GE is Disrupting Itself."</p> <p>The shake-up is intended to boost GE's chances of success in emerging markets. The Fairfield, Connecticut-based company expects those areas to expand two to three times as fast as the United States and Europe, where it sees 1 to 3 percent growth for the next few years.</p> <p>"Success in developing countries is a prerequisite for continued vitality in developed ones," Immelt wrote in an article co-authored with Dartmouth University professors Vijay Govindarajan and Chris Trimble. "If GE doesn't come up with innovations in poor countries and take them global, new competitors from the developing world -- like Mindray, Suzlon, Goldwind and Haier -- will."</p> <p>He noted that GE's revenue in China is on track to grow by 25 percent this year -- a sharp contrast to the 15 percent drop in companywide revenue for which Wall Street is braced.</p> <p>The company plans to appoint a CEO of its Indian operations, though it has not yet named that person, according to spokeswoman Lisa Lanspery.</p> <p>HEALTH CARE MODEL</p> <p>The Indian model will be a broader test of an approach the company's health care arm used in China, where it developed a $15,000 laptop-based ultrasound machine that sells for a fraction of the $100,000-plus of the appliance-sized units it sells to U.S. hospitals.</p> <p>"With far smaller per-capita incomes, developing countries are more than happy with high-tech solutions that deliver decent performance at an ultra-low cost -- a 50 percent solution at a 15 percent price," Immelt wrote.</p> <p>The reasoning is that local executives will have a better chance of finding niches in local markets and filling them than would engineers sitting at the company's main research center in Niskayuna, New York.</p> <p>Govindarajan, who also serves as GE's chief innovation consultant, said the shift from a global management model to a national one is not without risk.</p> <p>"It is a risky move, but this is the way I would put it: If you don't do it, it is a lot more risky," Govindarajan said in an interview. "Then what happens is a local competitor in India will create those products, those radical solutions ... Then they will come after GE in their home market."</p> <p>GE, for instance, found an unexpected market for its portable ultrasound machines in U.S. ambulance crews.</p> <p>Govindarajan also noted that the company would likely need to set up country-specific autonomous management chains only in a handful of fast-growing economies, not in every nation where it does business.</p> <p>"Right now this approach is needed only selectively in strategic markets," Govindarajan said. "It is really half a dozen or less countries. Those are where, for the next 25 years, the big opportunities are."</p> <p>(Reporting by Scott Malone, editing by Gerald E. McCormick)</p> </body> </html> </div><!-- end article-body --> </div><!-- end aticle-body-wrapper --> <aside> <ul class="social-share-btns clearfix"> <li><g:plusone size="medium" href="http://wsau.com/news/articles/2009/sep/22/ge-ceo-to-test-new-management-model-in-india/"></g:plusone></li> <li><div id="fb-root"></div><script src="http://connect.facebook.net/en_US/all.js#appId=112315878855956&xfbml=1"></script><fb:like href="http://wsau.com/news/articles/2009/sep/22/ge-ceo-to-test-new-management-model-in-india/" action="recommend" send="true" layout="button_count" width="150" show_faces="false" font=""></fb:like></li> <li><a href="http://twitter.com/share" class="twitter-share-button" data-url="http://wsau.com/news/articles/2009/sep/22/ge-ceo-to-test-new-management-model-in-india/" data-text="GE CEO to test new management model in India" data-count="horizontal">Tweet</a><script type="text/javascript" src="http://platform.twitter.com/widgets.js"></script></li> </ul><!-- end 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