GE 2006 Annual Report Download - page 7

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  
Invest and Deliver
Leadership Businesses Growth as a Process
2-3X 10%+ 20%
gdp revenue earnings returns
Demographics. Aging populations in the developed world and
exploding population growth in the developing world are important
trends. Healthcare, GE Money and NBCU are examples of some
of our businesses that have benefitted from these dynamics.
Great People and Teams Execution and Financial Discipline
Winning in the Future
Infrastructure Technology
Emerging Markets
Environmental Solutions
Digital Connections
Global Liquidity
Demographics
We have invested to build a substantial Healthcare business,
which could double in size over the next five years. We are a leader
in diagnostics with the capability to improve access to care, fi nd
diseases earlier and treat them more effectively. We have invested
in our consumer finance business which we can double every
five years by marketing innovative fi nancial products globally.
We have built a strong Hispanic network in Telemundo, which
will grow close to 10% per year in the U.S. and has signifi cant
global opportunity. GE has the scale to capture these massive
global opportunities.
Strategic Principles
Being a reliable growth company also requires consistent
execution on strategic principles that drive performance every
quarter and every year. We have consistently executed on
four strategic principles:
• Build leadership businesses
• Focus on reliable execution and fi nancial discipline
• Drive growth as a process
• Spread ideas across great people and teams that share
common values
Our strategies create strengths and capabilities, which, in turn,
drive competitive advantage. The consistent execution of the
same strategic principles year after year, provides the foundation
to invest and deliver.
Leadership Businesses
GE has six strong businesses: Infrastructure, Healthcare, Commercial
Finance, GE Money, Industrial and NBCU. We expect these
businesses to achieve 10%+ earnings growth most years, with
long-term returns of 20%. We expect them to be industry leaders
in market share, value and profitability. We want businesses
where we can bring the totality of the Company — products,
services, information and financing — to capitalize on the growth
trends I mentioned earlier.
We run these businesses with common finance and human
resource processes. We have one leadership development
foundation and one global research infrastructure to achieve
excellent results with a common culture. We have a few
Company-wide Councils, like Services, so we can share ideas
with minimum bureaucracy.
We compete hard and are tough-minded about winning.
We invest to lead in our core businesses in good times and bad.
Sometimes good businesses go through bad cycles and we
must have the patience to fix them. However, when we fi nd that
a business cannot meet our financial goals or could be run
better outside GE, we will exit that business rather than erode
shareowner value.
It is interesting for investors to think about the Company over
10+ years, the way an owner would think about it. This way you
can get a sense for the strategic investments that were required
to build the business that is delivering today.
In 1996, our Healthcare business had $4 billion in revenues
and $550 million in operating profit. We were basically a U.S.
diagnostic imaging company. The Healthcare results were buried
as part of the “Technical Products and Services” segment with a
bunch of businesses no longer in GE. However, we believed that
Healthcare would benefit from demographic forces and was in a
great market for GE. We knew we could generate good returns,
so we invested.
ge 2006 annual report 5