Q&A with GE executive John Flannery

Having recently taken the newly created role of president and CEO of GE’s business operations in India, John Flannery’s job is to consolidate all businesses into one team with an integrated strategy in the critically important country. Since GE’s business leaders have traditionally reported to their respective GE business divisions in countries such as India, we asked John to tell us what the changes will mean:

A mini-GE: “India is growing quickly and literally every sector of the economy has needs,” John said. “Everywhere you look there is a lot of demand and opportunity for growth.”

What is GE doing to make India more of a focus in its global strategy?
John: In the past, the teams in India reported back to the GE team outside of India. Instead of having decision making in other parts of the world, we’re building an organization of businesses in India that will report to me and we will be able to make more decisions on the ground. The center of gravity will move towards India, it will be like a mini GE. It’s important to underscore that this is not a walling off of India from the rest of the company. It’s really the best of both worlds: Local decision-making and access to the global firepower of research and product ideas.

What challenges does GE face in India that are different from other developing countries?
John: Broadly speaking we want to go where the opportunities are. The primary areas of opportunity are in infrastructure, energy, healthcare and water and clearly financial services. There is rising demand and a capacity shortage. There is demand in transportation infrastructure in both aircraft and locomotives.

We are seeing strong and growing local competitors in India and China. Multinationals can’t pick and choose to only compete with other multinationals. The challenge is how to compete locally. Right now, in manufacturing, we have strong capabilities at our healthcare business in India, so we need to look at our manufacturing strategy overall and deliver a low cost channel that can be competitive in this environment.

We need to be in a competitive position with localized products at lower price points and simpler technology. India is driving access to low-tech medical devices that are available to many more people versus devices with state of the art dynamics.

Local tech: One of GE’s major research labs is located in Bangalore, India. Says John: “We’ve developed a stripped-down ECG (The MAC 400 portable electrocardiograph) device at a fraction of the usual cost. It’s something that every physician in the country can have even in the most remote places.”

How does the Indian way of doing business differ from business in the U.S.?
John: One of the characteristics of Indian business is its model of innovation and creativity. They developed new business models for the entire outsourcing industry. They admirably make fast-paced and quick decisions and that’s a way of business we have to emulate. We need to engineer products at low price points and have the ability to customize our business models.

Essentially, many of their businesses are family-run, publicly listed companies. Quite often they are controlled by the family and run with the small business instinct of a family business. They’re able to move to the left or right very rapidly.

What has been some of your previous experience in 22 years at GE?
John: In the late 1990s, I had an overseas assignment (CEO GE Capital Argentina and Chile) in South America and was based in Argentina. I have been President and CEO of GE Capital Asia Pacific and CEO of GE Commercial Finance, Asia.

What are some of the things you’ve learned that you can bring to your new role in India?
John: There are a couple of things that jump out at me. It’s dangerous to assume that there is only one way to be successful. I’ve seen time and time again that there are many other ways of accomplishing things and I’m very open-minded about the potential of getting things done in different ways. We need to be open to the local mindset and letting go of always doing things in the traditional way.

In financial services there’s a business practice of giving a personal check as security for taking out a loan. In the United States we’d say this is a meaningless personal check with no value. But in India, it’s a very personal commitment, an oath of extreme importance and real commercial value. Lenders have something significant to look at.

As CEO, what are your short-term priorities and goals?
John: Right now, we have several billion dollars in sales, but we ought to be several times bigger. I come from financial services, so in the very short term my priorities are learning about the other businesses in the organization, firming up what we have, and expanding the organization’s capabilities.

What are India’s biggest needs as they relate to GE?
John: Two things that have struck me are the oil and gas and water businesses. It looks like there can be a lot of growth in oil and gas exploration and production. We’ll definitely turn up the heat and focus on finding local partners.

In the water business, there is a chronic shortage of water at the consumer and industrial level. We’re competing for industrial reuse. It’s a very small business today and if we play our cards right, it could become a big business.

Betting big on R&D: Hundreds of millions of dollars have been invested in R&D at GE in the last decade, resulting in a dramatic expansion of GE Global Research’s labs in Bangalore, India.

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* “Reverse innovation: Building GE’s local growth model”
* “Winning micro customers in mega markets”
* “Localized breakthroughs go global”
* “Cracking the thin film solar code in GE’s 4 global labs”
* “Cheers! To a decade of innovation at GE’s labs”