Management Theory

How GE Manages to Do It

CASE 1

This is an individual assignment. Due date March 20, 2016.

Founded by Thomas Edison in 1878, GE is the only one of the original Dow Jones Industrial Average 12—the dozen firms that made up the first DJIA in 1896—that’s still on that venerable list. In fact, while all the other original firms have been acquired or gone out of business, GE is still one of the most consistently profitable companies in the world. It doesn’t boast the fastest growth or the highest market value, but it’s consistently among the world’s most highly regarded firms, garnering high marks year after year in surveys of the world’s “most admired” and “most innovative” companies.

Indeed, from its earliest days, GE has been a leader in developing not only new products and manufacturing processes, but new management techniques and practices as well. Many of these have been duplicated by other firms, but rarely does a firm beat GE to a new development or surpass GE’s skill in implementation. The company’s first organizational innovation was the creation of a corporate research and development lab, established in 1900, and in the 1930s, GE was the first U.S. firm to offer pension and profit‑sharing plans.

GE also centralized decision making in the 1950s, producing the unique “Blue Books” that governed manageers’ every move until the 1980s. In the 1960s, the company pioneered the application of strategic management as an approach to handling business opportunities and challenges, and today the principles of strategic management are so thoroughly ingrained in management thinking and practice that they’re often the capstone course for undergraduate degrees in business. At about the same time, the company lent its name to the GE Business Screen—a process, developed jointly with the consulting firm McKinsey, for identifying a corporation’s optimal portfolio of business units. By the 1980s and 1990s, GE was building an effective global culture while...