Lessons from GE

 It was just a few years ago that GE was extolled as one of the greatest firms that survived multiple decades/centuries to remain in the index while many withered away.

And today we see GE on a precipitous decline and booted out from the index. As always, failures offer greater lessons than successes. So what can we learn?

If I attempt to distil it down to one simple lesson — it is the failure of the 3 Horizon play. The 3 horizons that any firm is supposed to manage well are the Current, Adjacent and Disruptive.

Not too long ago, GE was given a discount by the stockmarket called ‘Conglomerate discount’. It was too varied and broad that the stock market thought it did not enough focus and excellence in specific areas and hence discounted the stock price. This is the Adjacent.

The problems of the current are too obvious. Poor capital decisions, window dressing of the business numbers with creative accounting from finance business, stagnant market segments, Ostrich mentality, rubber stamp board members….

On disruptive, while there were many initiatives such as GE Digital leveraging Internet of Things etc, they were too small to offset the declines in the first two horizons.

In Summary, failing to manage all the three horizons !

What is wrong with Digital?

Everyone from stock markets, venture capitalists, enterpreneurs,students are so enamored by Digital that it has almost become sacrilegious to say anything against it.

Taking inspiration from John Mayer’s song ‘Say’

“Knowing you’d be better off instead,
If you could only

Say what you need to say….

You’d better know that in the end
Its better to say too much
than never to say what you need to say !”

So here it goes.

1. Digital is not cheap : Inspite of media touting about crashing hardware costs, everything on cloud etc etc, Digital is not cheap. The skills are in short supply , grounded engineers who are multi dimensional and focused on solving business problems are fewer , marketing against the noise takes lot of money and the competition is from every nook and corner of the world.
2. Digital , for its own sake? : Its easy to get occupied with Digital and lose sight of the business impacts, ROI, cost vs return, opportunity costs, bandwidth, alternatives to digital etc. Are you doing Digital for the sake of digital / because of peers, fear of losing out OR do you really have a ‘well thought out strategy’ with fallback options/exit routes and Plan B/C/…. ?
3. Everyone is not FANG ( Facebook, Apple,Netflix,Google) : Temptation to imitate the unicorns of silicon valley is not small but everyone is not FANG. Blind imitation will only lead to disaster.
4. Funding Traps : Every round of funding comes with more dilution, more stringent terms, more loss of control and more unrealistic demands. If you feel like you are riding a tiger, you are probably right. As someone famously said “Venture Capitalists are like hitchhikers with credit cards. They get in your car, and as long as you take them where they want to go, they will help pay for the gas. But if you get lost or wander off the road you promised you were going down, they will hijack the car, throw you out and bring in a new driver.”
5. Timing : It is better to acknowledge that many technologies are in their infancy, not robust enough, do not have wider adoption and yet to make big impacts in the real world. Your play with them is likely to be longer term that needs dollops of patience and perseverance.

Go into Digital with your eyes wide open, being aware of both sides of the coin.

Grit - Little Known Secret

You could have the greatest / most original ideas and thought processes in the world but to see them make an impact needs this less glamorous, critical attribute — Grit. It is not simple dogged persistence, illogical pursuits, blind obsession…

Its different from these. It is conviction , end goal orientation, learning from the setbacks on the way, not losing focus, not giving up early.

Almost everything that can go wrong, will and usually does go wrong. People cross your paths, block your progress, surprises appear, unforeseen accidents happen, plans go awry. If you encounter challenges that nobody predicted, possibly because nobody attempted what you are trying to do. Its the curse of the torch bearer.

One of the key skills most valued today is enterprenurial expreience . Why? It takes lot more than skills and knowledge to cross the known and venture into something unknown , results unpredictable and success so elusive. More than the success/failure of the enterpreneurial venture, the learnings and experiences are so priceless as no academic course can teach them. More and more of the business world today is about re-imagining because , if you dont do it, someone else will.

A key enterprenuerial attribute is Grit. As John Mackey — founder of Whole foods says, everytime someone told him his idea won't work or had unforeseen challenges, he realised that he is trying something none has done before. Many of his co-founders left the venture, his expansion plans failed, media riled him…..

“Mackey has something which 99% of all CEO’s lack: grit and [guts]. Good for him. I may even go buy something at Whole Foods! Do they sell cigarettes?” commented “Drathaeur,” referring to the August Wall Street Journal op-ed on health-care reform.

While Amazon buying Whole Foods does not vindicate him, the learning is about the little spoken quality of Grit that is an attribute thats so valuable in real world.

One more reason why Robots and Excel spreadsheets cannot create value from an algorithm!!