Jeff Immelt has driven ecomagination forward at GE for 5 years. Other companies can learn the value of a big, strategic business case and more from his recent talk to the Cambridge Programme for Sustainability Leadership.
Last Thursday I was fortunate to see Jeff Immelt, CEO of GE, speak at Cambridge Programme for Sustainability Leadership‘s London Lecture. Ecomagination galvanised corporate sustainability when it was launched 5 year ago. Immelt had five lessons for his audience, which I will give in a second, but there were lessons other companies can draw.
A. Have a big, strategic business case for sustainability.
Immelt started by saying there are four pillars to a competitive country: education, finance for entrepreneurs, affordable health care and clean energy. Of course, GE is a big player in the last two (with healthymagination mirroring ecomagination). He also said that “clean energy is one of the biggest opportunities we will face in the coming decades”.
This is not a business case based on marginal cost efficiencies or slightly reduced reputation risk. This is a large, strategic case which says: our core capability is innovation, and our core assets are across the spectrum of energy intensive industries. Let’s go out of create the market, and drive our revenues, through long-term R&D commitments.
Ecomagination is part of how Immelt is reinventing GE. When combined with healthymagination, he has re-directed the focus of R&D. He is also reinventing where it happens by turning to India and elsewhere in a something called ‘reverse innovation’ (requires subscription).
B. Rebrand the public debate to be about jobs, growth and energy security.
The way Immelt frames the business case above and his lessons below is about appealing to today’s political debates. During the speech he announced that GE were repatriating manufacturing for one area (my pen had run out, so I couldn’t write it down!). I’m willing to bet that those repatriated jobs hit GE’s profit a bit in the short-term. But the longer game is about retaining faith in globalisation. The Great Recession has brought to the surface fears about the impact of globalisation on jobs and incomes in developed countries. Those anxieties are one driver of things like the Tea Party. Protecting globalisation means addressing those anxieties.
He also asserted that shale gas was clean energy, a surprise to the former oil & gas executive I was sitting next to. The driver here is energy security. If GE can create a slightly less horrible extraction process (‘fracking’) then the US government and consumer will be very grateful, the Saudis and President Chavez of Venezuela less so.
C. Be prepared to go without government support or regulatory certainty
Because there won’t be any of substance. He was clear that government could be a catalyst, and that the major policy options on clean energy were well-known: carbon price; global standards on what counts as clean energy; government support from initial technology to commercialisation; and financing for infrastructure. But he didn’t think it would happen any time soon in the US, and with the Republicans on track to win the mid-term elections who can blame him.
Here are the five lessons that Immelt had:
1. invest broad and deep in innovation. This is good advice at the start of getting into a field, when it is unclear which approaches will succeed . Of course, GE is a conglomerate which is based on a portfolio approach, so it will always do this. Other companies will need to look for more partners earlier to get the breadth they need. This approach also needs quick learning (fail early, and fail once) if you are to not waste resources and create baronies that simply endure.
2. sustainability engages the ‘extended enterprise’. He said that employees were enthused and customers and suppliers like it. This fits with what other companies tell me.
3. clean energy creates jobs and economic competitiveness. He said they had already created 50,000 jobs in their ecomagination supply chain. The next decade would see 10m US jobs for the transition to a low-carbon economy. Here is post-Great Recession public policy messaging.
4. Business alone cannot deliver a clean energy future. Long-term bets are too disconnected from short-term returns. They need stable and forthright public policy.
5. people disagree. And we need to reflect why they do, not simply be critical.