New Delhi: John G. Rice, vice-chairman of General Electric Co. and president and chief executive of GE Technology Infrastructure, is scheduled to shift from the US to a new base in Hong Kong. It will be the first time a GE executive as senior as him will relocate from the company’s headquarters. In an interview in Delhi, Rice said the move will bring the multinational company more in tune with local needs. Edited excerpts:
How is GE making the transition to deal with the fact that an increasing share of its revenue is coming from outside the US?
About 60% of our revenue comes from outside the US, which is not an insignificant percentage. So, that’s the good news. On the other hand, now we need to do more. The world is changing at a rapid rate. The customers expect more… global and local competitors are getting better and tougher. We have to do more.
In this era of communication technology, somebody at your level moving to Hong Kong is unusual. It sends a different signal.
I probably would be better off answering that in a year or two. Look, when you have headquarters or groups of people in a certain time zone working in a different time zone that tends to be the time zone…you run the place in. It puts everybody else at a disadvantage. So, we are operating at 24 different time zones. We have customers flying or engines operating our gas turbines, doing things that need our support in just about every time zone in the world. We have to be a 24x7 company everywhere. Now, this is just one small point. There is lot more importance to it than that.
It is important because our customers need to know they can get hold of us and get the right decisions made and get responses during their work day, and not on the work day that exists in the United States. So, among the things that we will change to be more global is the orientation around that. We will try to be even more sensitive to the work activities that take place everywhere. In some of our important countries, Friday is the religious day of the week and in some Sunday is the religious day. You have to be sensitive to all of that.
You have talked about localization in the past. So, is this move to Hong Kong part of that strategy? Has the company arrived at such a strategy for India?
The move to Hong Kong is a combination of strategy and symbolism. It conveys much more global focus than if I would remain located in the United States. And, it is a more global focus. Our goal is really to put more senior resources out in the regions and the countries where they belong—so that we can in a way recentralize decision making and take more decisions that are today being made by senior people in headquarters locations and allow them to be made by senior people in countries and regions.
How do you assess the experiment that you are carrying out in India, where everybody reports to (GE’s India head) John Flannery and not to the head in Atlanta?
I think, at this point, we are quite positive with the progress. That is partly because of the organization around the P&L (profit and loss) concept, which confers a lot of responsibility to this team. But it is also a function of John’s leadership. Because you still have to take advantage and leverage global strength. So, organizing self-contained P&L in India is not the end of the story because this group wants to take advantage of (our) global technical strengths.
So, John doesn’t want to have 100% autonomy because he needs to work with those global business units to maximize the potential for this country. So, the science is we can create a P&L and directly connect everything to John Flannery and the art is how this team continues to interact with global product lines in order to make one plus one equal to three.
Can you give an example of a decision that could not be taken as you were in a different time zone, which triggered your thoughts to move to Hong Kong?
Look, there could be dozens of examples. I remember an example... where we were looking for approval to get something accomplished for a customer in a country and it was 3 am. And back in the US, the person who had to approve it didn’t have his cellphone on. We couldn’t get the approval and we put the order at risk.
Look, that happens in every country and this new organization is not going to eliminate all of that. But we don’t want our customers to have to operate or think in time zones that may be important to us and not to them. Now, you solve their problems in a couple of different ways. You can solve it by localizing more authority in decision making, but you can’t transfer everything to every market. So, there are limits to that. And, you also can address that by being more flexible in your headquarters locations and maybe people have to come in at 4 o’clock in the morning if they are supporting customer work that is being done eight time zones away. So, we will do all with a lot of different things to move the needle on our global processes. It’s a kind of hardware and software thing. Time zones and customer interactions are sort of software and different investments we need to think and make to support our activities locally. That’s another piece, which is a part of our strategy.
Since you have taken up this new role, what are the key result areas you have set for these new markets?
Well, it’s a combination of things. There is operating emphasis that goes with current orders and pipeline and execution. I mean, we have to do what’s in front of us today and execute on the commitments which we made last year and year before. We also have to plant the seeds for next year’s growth and the year after. So, what products should we be thinking about that might be important to the Indian market, which we haven’t concentrated on before? With some investments and a focus of our product team, we can reduce the cost of a CT (computerized tomography) scanner and bring in an ECG (electrocardiogram) machine, which fits the Indian market.
And then, I think the third dimension is for our global teams to think even more strategically about our global partnerships and which company out there should we be working with. Maybe an outright acquisition, pure M&A (merger and acquisition), maybe a joint venture, maybe a minority stake that will help us get smarter about market. We are open to all of those concepts.
Anything on nuclear energy?
Look, we are very interested in nuclear here in India. I think you are well versed in our efforts to get some laws passed in India, which make it easier for us to work here. That’s a very high priority for us. It is a high priority for not just the US government, but for other governments and other players in the nuclear arena. And we are hopeful that it will happen. Until that happens, there is not much that we can do.
What sort of policy or laws are you looking at from the government?
Liability framework. That would allow us to operate and not expose the company to unnecessary risk. We basically have said we will operate our nuclear business only in countries that limit the liability it goes with, being in the nuclear business. Not because we don’t have a tremendous amount of confidence in our technology, but because you don’t always have control of what happens to it, after you build the plant.
What kind of exchanges have you been having with the Indian government after US President Barack Obama’s visit? Is there a change in tone in terms of the nuclear liability talks?
We remain hopeful. As yet, we don’t see a path to the answer. But we remain confident and hopeful that there will be one. We think as a reputed global company, it makes sense to have us as part of the nuclear efforts here in India. We don’t see a path to it yet, but we remain hopeful.
If you look at GE, how has the organization changed over the last decade?
I had a lot of hair at the beginning of that decade (laughs). I think we have recognized the significance of having a world class infrastructure businesses... I am immensely proud of the fact that we endured a very tough global recession over the last couple of years. We continue to invest in research and development. We added to those investments over the last couple of years. It is going to go up by 15-20% this year. And that was during the period when it would have been easier to cut it and everybody would have understood that. But we didn’t cut it, we added to it. (The key thing) is the importance of sticking with long-term strategies. You always see speed bumps along the way. Things don’t work perfectly. You have things that maybe don’t work at all. You fix them. So, we have to take long-term view on these things.