GE 2006 Annual Report Download - page 10

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Investing in growth capability allows the
Company to deliver through economic cycles.
Our Energy team, led by John Krenicki, is a
dynamic example. They are growth leaders.
As the U.S. power bubble came to an end in
2001, the future of our Energy business was
uncertain. In 2001, 75% of Energy’s Power
Generation earnings came from selling large
gas turbines in the U.S. In 2007, this should
be 2% of their earnings. Yet our business
is booming. Why? Because we invested in
technology and growth.
Today, Energy has six products with revenues greater than
$1 billion versus one in 2000. Because of a focus on environmental
solutions, our lineup of renewable energy technologies is the
largest in the world with $5 billion in revenues. This leadership
in technology has created a large installed base generating
$10+ billion of services revenues.
We are using Lean and NPS to improve our performance.
Energy’s customer outage cycle has improved 30%, and their
parts repair cycle has improved 25%. Energy’s NPS with key
utility customers has gained five points, showing increasing
customer satisfaction.
We enhanced our commercial excellence by taking an enterprise
approach to customers. We have strengthened the coordination
with our Energy Financial Services business to fully serve customer
needs and improve investor returns. We can take a strategic
approach to major projects like integrated water and power gen-
eration in Saudi Arabia.
We are the industry leader in innovation. We are investing more
than $500 million in coal gasification and the next-generation
nuclear boiling water reactor. These will be “workhorse” technologies
as the world grapples with the need for low-cost power with
reduced greenhouse gas emissions. These products could generate
$10–$20 billion of orders over the next 10 years.
Energy is winning globally, by aggressively redeploying assets
to serve customers everywhere. We are operating in China, Russia
and the Middle East. We have created a coal center of excellence
in Poland. About 80% of our gas turbine orders in 2006 came from
outside the U.S.
We invested in a “growth team.” At Energy, Rick Stanley
(Technology) and Dan Heintzelman (Services) are alumni of our
Aviation business and recognize the importance of innovative
technologies linked with services. Alex Urquhart is the long-time
leader of Energy Financial Services with deep industry knowledge
and customer contacts. Jim Suciu, Chi Choi and Ricardo Cordoba
(Sales) are empowered to deliver for customers around the world.
Jody Markopoulus (Sourcing) and Larry Blystone (Manufacturing)
are reducing costs and fulfilling customer commitments.
As a result, Energy is delivering. It is a $19 billion business,
growing 16% organically. Because of our ability to invest and
deliver, Energy is an innovation powerhouse with decades of
growth ahead.
At GE, we launch initiatives so that we can unleash our teams’
intellect to create shareowner value. Sometimes, it is diffi cult
to see the value of our initiatives immediately. The story of our
Energy business is tangible proof that our growth process is
paying off.
Growth as a Process
Technology
Customers
Globalization
Commercial
Excellence
Innovation
Growth
Leaders
Execute for Growth
Great People and Teams
At the end of each training course that I teach at Crotonville,
I give our team a challenge: return to work as a GE zealot or
find a new job. It has never been more important for people to
understand exactly why they work for a company.
We value leaders who perform over time. As a result, we
don’t have a lot of debates about short-term versus long-term
performance. In the short term, we have a sense of mutual
accountability. In other words, the businesses are committed to
deliver for investors and for each other.
Our “average hold” of a business is measured
in decades. We do not “flip” assets. We are
builders of businesses. This takes people
who believe in teamwork and have pride in
workmanship. We have a team that is focused
on building a company that has enduring
value and makes the world a better place.
Our culture matches the expectations of
long-term investors.
8 ge 2006 annual report