HOT TOPIC : E-BUSINESS – GE Uses the Internet to Grow Business

In 1999, GE embarked on a strategic planning exercise known as Destroy Your Business (DYB). Each unit of the organization visualized how it might be crushed by the dotcom juggernaut, on former CEO Jack Welch’s premise that if a company didn’t identify its own weaknesses somebody else would do it for them. (See “Destructive Behavior,” July 15, 2000.)

During the process, the business units discovered how they could use the Internet to their advantage, a concept that came to be known as Grow Your Business (GYB). We wondered whether GE was still gung ho about DYB/GYB now that the threat from Internet startups is a whimsical memory, so we went back to GE to check in.

It turns out General Electric’s interest in growing its business through the Internet hasn’t abated. What’s more, now the company is focusing on harnessing the power of e-business by digitizing its internal processes. John Seral, vice president and CIO of IT and e-business at GE Plastics in Pittsfield, Mass., calls e-business “a phenomenal tool” for delivering products and services to customers.

Indeed, GE Plastics conducts more than 50 percent?an estimated $3 billion?of its business over the Web (up from 15 percent or $1.5 billion in 2000). To handle this volume, Seral has to ensure that GE Plastics’ service and fulfillment lives up to GE’s Six Sigma quality standards. For instance, if a customer orders a colorant online and it is in inventory, the colorant is shipped to the customer right away. If the product is not in inventory, Seral says, the inventory system sends a message to the manufacturing plant indicating that the plant needs to fabricate the product and deliver it to the customer ASAP. He adds that GE Plastics is able to deliver materials to customers within two days of the date they’ve specified 98 percent of the time.

“Destroy Your Business woke us up. Grow Your Business was a home run,” Seral says. “Digitization is the third step. It’s taking the costs out of your internal processes while continuing to grow your business on the outside.” And judging by the company’s numbers (GE hit its second-quarter earnings on the nose), its investment in digitization is paying off?in spite of the economy.