Page 180 - Accelerating out of the Great Recession

A NEW MANAGERIAL MIND-SET

ization and reinventing the business model to focus on the so-
called BRIC countries: Brazil, Russia, India, and China. In so
doing, GE is widening the market in the rapidly developing
economies and preempting local challengers from creating simi-
lar products with which they could attack GE in developed mar-
kets. The offensive move is also a first line of defense for GE.
GE says that the centralized, scale-driven, product-focused
structures and practices that underpinned globalization get in
the way of reverse innovation because the new approach
requires that resources be based and managed in the local mar-
ket. It is those local teams that must decide which products to
develop for their markets (because they are closest and under-
stand them best), drawing on the company’s global resources as
necessary.
An example of this philosophy in action is GE’s $3 billion
program for health care innovation aimed at driving down costs,
increasing access, and improving quality. Two radical inventions
demonstrate the value of the GE approach: a $1,000 handheld
electrocardiogram (ECG) device and a portable ultrasound
machine that sells for around $15,000. Designed to be small
and relatively cheap, these inventions are also remarkable
because although they were designed for emerging markets (the
ECG device for rural India and the ultrasound machine for
rural China), they are now being sold in the United States.
The changing nature of globalization will require managers
to rethink their entire approach to business—from research and
development and product design through manufacturing and
sales and marketing. Long-standing prejudices about business
models should be jettisoned, and a flexible mind-set should be
developed that can devise quick responses to the challenges of
rapidly transforming global markets.

■ 159 ■