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LETTER TO SHAREOWNERS
we attempted to manage volatility
through layers and reviewers. Like
many companies, we were guilty of
countering complexity with com-
plexity: more P&Ls, more inspectors,
multiple reviewers. Along the way, we
had created a higher-cost structure,
an artifi cial sense of risk management,
and we were insulating our people
from the heat of the market. If you
want to see where speed and account-
ability go to die, watch the third review
of anything.
We are transforming GE around the
“culture of simplifi cation.” This is not
a reorganization or an initiative. Rather,
it defi nes the way we make decisions,
work together and work with our cus-
tomers. We are focused on effi ciency,
speed and market impact. We are
driving decisions closer to markets and
making our teams accountable for
outcomes, not process.
We are driving a leaner structure. In
administration, less is more. We have
learned that fewer layers, simpler rules
and more fi eld empowerment actually
improve execution and accountabil-
ity. Every decision should have no
more than two approvers: We should
empower the experts in the market,
reinforced by governance and best
practice sharing. In addition, we plan
to execute the majority of our admin-
istrative processes through shared
services, with common standards
across our businesses. This will make
us more competitive. We expect to
reduce our administrative overhead
cost by $4 billion between 2012 and
2016. Ultimately, we will end up with
selling and administrative cost of 12%
of revenue; this is a world-class bench-
mark. Our Power & Water business
is reducing its overhead by more than
20%, while increasing its number of
new products and growing share. Our
Healthcare business has eliminated
one-third of its P&Ls, while improving
customer responsiveness. We are
creating more value with lower cost.
All processes are faster. We have
combined the principles of Lean Six
Sigma with the culture of “The Lean
Startup,” from Silicon Valley, in a pro-
cess called FastWorks. It is based
on fast action, quick adjustments and
measured outcomes. FastWorks accel-
erates impact, learning, improvement
and validation. Dual-fuel power gener-
ation is an important product gap
for our Distributed Power business. Our
initial approach was an investment
of $350 million and seven years of
development. Using FastWorks, we
will be in the market in 2014, while
investing a fraction of the initial esti-
mate. FastWorks is catching fi re inside
GE across multiple processes, improv-
ing speed and competitiveness.
We are increasing customer inten-
sity. We have reconfi gured all of our
commercial processes to work at
market speed. Our commercial teams
are empowered to lead, supported by
enabling functions that are mea-
sured on market success. We have
increased the number of experts in
the fi eld to deliver for our customers.
Because we have invested in our
growth market framework, we can
Leveraging big data from intelligent
machines and predictive analytics to drive
powerful outcomes for our customers.
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2013 2014E
8 GE 2013 ANNUAL REPORT