Heads-Up! on Organizational Innovation

CEO's Secret Handbook

The July issue of Business 2.0 offered an article about Raytheon CEO Bill Swanson's secret handbook which has become an underground hit among senior executives.  While most of the rules are common wisdom, Swanson adds his own spin.  Here's an example:

You can't polish a sneaker.

› My apologies to those who cherish their sneakers, but my point is that even if you polish a hollow shell, it's still nothing more than a hollow shell. When I was growing up, we used white Kiwi polish to make our sneakers look new, but no matter how hard we tried, an ugly sneaker remained an ugly sneaker. Now when I see a briefing that's heavy on style but short on substance or focus, I say, "You're not gonna be able to polish that sneaker."

Swanson has made a copy available to anyone who asks (however, it's only sent by mail.  Here's the link to request your copy  http://wwwxt.raytheon.com/communications/whs_rules/

Jeffrey Immelt: Innovation is King

In a presentation to Yale School of Management, Jeffrey Immelt, CEO of GE, emphasized the importance of innovation and growth and outlined five trends that were driving business as of February, 2004, and seem to be still active today.

The following are some notes I made as I listened to him talk. While I appreciated his comments on innovation, I especially liked his views on the roles of leaders at the end of this column.

* Profound excess capacity in every market ... relatively slow economic growth and strong price pressure.

* Different competitive dynamics driven by China and India.  China graduates a million and half engineers every year.  Need to think about global technical trends.

* Most dominant business models today are in distribution ... getting products and messages to the customer in a way that creates value.  Owning the customer interface is worth a lot.

* Role of demographics creates unstoppable trends such as in health care and China.

* Much more volatile globally.  The need for cultural and financial stability is critical.

Immelt's one message:  the one thing that will make a difference is the ability to drive growth.  A premium will be paid on the ability to drive growth.  Focus on the "What Initiative" ... What markets? What products?  Quality products are critical:  any product that can be sold by more than three companies is driven to the lowest margin rates.  Any product that is only sold by one company can command a higher margin.

"Technology management and innovation are going to become king in any company.

"Getting on the same side of the customer and help them become more profitable is a primary drive.  Service is an extremely important part of our strategy.  We are trying to build world-class customer relationships.  We also focus on portfolio management and picking businesses for acquisition.

"Half of our employee base is outside the US today.

"China is ready to spend $300 Billion in infrastructure, utilities and hospitals and 20 airports.  GE is an infrastructure company so we have a great capability in that market place.

"The investment in innovation and technology are what really makes you competitive.

"Leaders are in place to drive change.  We have great people ... if we were going to go on the way we are right now, we could do without the top 200 people in the company.

"My job is a public trust ... to leave the place in a better shape than I found it."

US Must Innovate - IBM CEO

From Council on Competitiveness

IBM CEO says U.S. must innovate to keep jobs Reuters (October 30, 2003)

NEW YORK, Oct 30 (Reuters) - International Business Machines Corp. (IBM.N) Chief Executive Officer Samuel Palmisano said on Thursday that the United States needs to step up the pace of innovation to help stem the flow of technology jobs overseas.

Palmisano said that he expects 13 million jobs to be created in the next two years around the world, including in rapidly developing countries such as China, India and South Korea.

"We are at a critical moment," he said. "Because if we're not careful, the U.S. will fall out of step with the new realities of innovation. If that were to happen, the innovators and risk-takers would go elsewhere. Because today they can."

He was speaking at the annual meeting of the Council on Competitiveness in Washington D.C., which is creating a National Innovation Initiative to come up with ideas on how to continue to innovate in the face of such competition.

Other countries are becoming more competitive not only in wages but in education, job skills and network infrastructure, he said.

"We believe the United States must again raise the bar - to take the steps necessary to keep the nation at the forefront, to continue to offer the most fertile and attractive environment for innovation in the world," Palmisano said.