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GENERAL ELECTRIC COMPANY CASE STUDY

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Running head: GENERAL ELECTRIC COMPANY

General Electric Company Case Study

Osako Marie Ngoie (Djemo)

Argosy University Chicago
DBA Program

GENERAL ELECTRIC COMPANY

Table of Contents
Abstract 4
Introduction . 5
Background of GE Company .. 6
Literature Review... 7
The Characteristics of Innovation and Change in GE Organization .. 8
GE Challenges and Commitments . 9
SWOT Analysis of GE .......10
Analysis and Evaluation 11
Structure Idea Management (SIM) and the System of GE Company .. 12
The diffusion innovation theory ... 13
The diffusion innovation process 14
Inter and Intra-Networking Effects on organizations 15
GE core aspect of leadership . 16
Executive Leaders 16
Board of Directors...16
Effects of Leadership Ethics .. 17

GENERAL ELECTRIC COMPANY

Cornings Five-Stage Stage-Gate Process . .18

The Stages of the process... 19
The Gates of the process.....19
Leadership ..... 20
The individuals20
The inter-organizational network... 21
Research Summary . 22
Conclusion ...23
References .24

Graphics
The Structured Idea Management Process..12
The graphical presentation of the process. 14
Logistic function innovation process, S curve.15
Cornings Five-Stage Stage-Gate Process model..16

GENERAL ELECTRIC COMPANY

Abstract
This paper discusses different characteristics of innovation and change within General Electric
(GE) Company. Corporations are highly challenged in the business environment by the
competitors and the customers satisfaction. The advanced pace in technology and the
globalization aspect have allowed many corporations as well as individuals to use their
creativity abilities and leadership skills to innovate new products and services, also new ways of
perceiving and presenting things. The change in peoples needs and socio-environmental
expectations has led GE Company to work through imagination by turning challenges into
opportunities and weaknesses into strengths. Innovation is the game to play in order to remain
successful and sustainable in the current global marketplace for all industries.
Keywords: Leading Innovation, Change, and General Electric Company,

GENERAL ELECTRIC COMPANY

5
Introduction

The globalization and the competition on the marketplace have led many organizations
to improve their products and services through innovation. Creativity plays a leadership role for
a successful innovation. However, does every new or creative idea lead to innovation? Should
the company credit the success of innovation to individuals (personnel) with new ideas working
toward innovating new products and services? Or should the company credit the leadership
momentum of innovative skill? Why some of the companies are successfully innovative while
others fail to implement their new ideas in order to produce innovative results? Do the diffusion
of innovations and innovation process play a grand role for the organizations success?
In this paper, General Electric (GE) Company is considered to be a case study to answer
these questions. GE is one of the highly innovative companies in the world. GE works on
toughest challenges to transform imagination trough creativity into innovations. They find
solutions for energy, health and home, transportation and finance. This company differentiates
itself by building, powering, moving and curing the world. GE ensures that they invest in their
leadership, personnel, and work environment to support the creativity and innovation.
The organization of this paper includes the Background of GE company, Literature
review, The characteristics of innovation and change in GE organization, The GE Challenges
and Solution Commitments, The SWOT Analysis of GE, SIM and the System of GE, The
diffusion innovation theory, Cornings Five-Stage Stage-Gate Innovation Process, Application
of the Innovation Process, Inter and Intra-networking effects on organizations, The role of
Leadership, Role of Ethics and Responsibility, Principles and practices for implementing
innovation at GE, Research Summary, and Conclusion.

GENERAL ELECTRIC COMPANY

Background of GE Company
From the earliest days, GE Company has used the tools of research, combined with a
little inspiration, to create the world of tomorrow. The legacy of GEs originality offers a rich
history based on the following question: Why predict the future when you can create it? For
over 130 years, GE has continued to innovate what has yet to be imagined.
Thomas Alva Edison opened a laboratory in Menlo Park, New Jersey in 1876 where he
was able to explore the possibilities of generator and other electrical devices that he had seen in
the Exposition. From that laboratory, Edison came up with the greatest invention of the age - a
successful radiant electric lamp. Edison brought his various businesses together in 1890 and
established the Edison General Electric Company.
Awkwardly, The Thomson-Houston Company emerged during that same period as a
dominant electrical innovation company led by Charles A. Coffin and became the Edison
General Electric Companys competitor. Coffin is a former shoe manufacturer from Lynn,
Massachusetts. Both business expanded and realized that either company could not produce
complete electrical installations relying solely on their own patents and technologies. Therefore,
the two companies decided to combine their business in 1892. They called the new organization
General Electric (GE) Company.
Many of the Edison's early business contributions are still part of GE today. Some of
these contributions include lighting, transportation, industrial products, power transmission, and
medical equipment. Earlier of 1890s, GE produced its first appliances electric fans at the Ft.
Wayne electric works while a full line of heating and cooking devices were settled in 1907. The
U.S. government started to search for a company that could develop the first airplane engine
"booster" for the inexperienced U.S. aviation industry in 1976 and identified GE Aircraft

GENERAL ELECTRIC COMPANY

Engines that was established since 1987. Edison's experiments with plastic threads for light
bulbs in 1893 led to the first GE Plastics department, created in 1930.
Literature Review
Some people may argue that individuals with creativity ideas are more important for an
innovative company, but others will argue that the leadership plays a very important role for an
innovative company. Both views may be considered true at certain extends. However, the
perspective of supporting the leaders seems to be more relevant as the organizations have to
invest in their leaders to ensure that they do develop their own innovative thinking capabilities
and also have the ability to develop their employees and teams innovative-creativity skills.
Rowe and Nejad (2009) stipulate that most of the leaders strategies consider human capital as
an important factor in innovation and the creation of core competencies, and they expend
considerable effort sustaining the health of this resource (human capital). Therefore, the core
aspects of leadership are important to leading innovation and change within an organization.
Hobcraft and Phillips (2012) provide the abilities of leaders to support their importance
in leading innovation and changes within an organization. Leaders are able to link innovation to
strategies; they create focus, engagement and passion for innovation; they direct funds and
resources to good innovation programs; they speed good ideas to market as new business
models, products and services; and they ensure defined innovation processes in order to produce
sustainable innovations. Leaders play a vital role in the success or failure of innovation.
Innovation can be misunderstood and not explicit enough. Therefore, leaders have the duty to
clarify the role of each participant for accountability purposes. Also, leaders have to make sure
that the company has built an accurate innovative culture through organizational culture.

GENERAL ELECTRIC COMPANY

GE is one of the worlds largest innovative Companies. GE believes that imagination

equals innovation. The company is determined to solve the worlds biggest problems by putting
their collective imagination to work for a better future. The chairman and CEO of GE, Jeff
Immelt, agree that building strong leaders is a strategic imperative. When times are easy,
leadership can be taken for granted but when the world is turbulent, great leaders are
appreciated. GE culture is among its innovations. GE leaders have built the companys
innovative culture by providing a place for creating and bringing big ideas to life. GE culture is
the unifying force for its many business units around the world.
The Characteristics of Innovation and Change in GE Organization
In today world of competition, companies are forced to meet the dynamic change of the
economy, customers satisfaction, socio-environmental requirements, etc. Companies have to
adjust to new competitions and new ways of doing business. Therefore, innovation is a must in
order to sustain and remain successful. Having a change management control process in place
ahead of time may reduce the cost of hindrances to leading innovation and changes.
The growth of a company is a process. GE Company needed to get out of the basement
in order to grow and be innovation driven. This describes a necessary practice for implementing
innovative processes for GE Company. GE is a great company, very innovative with big vision.
Despite all the threats and weaknesses that can slow the companys performance and efficiency,
the strengths and opportunities build the company and allow it to survive through tough moment
in business. The GE advantage policy allows the company to achieve the competition
advantage and enhance the customer values. GE understands the importance of the employees
system of innovation while ensuring a great leadership in order to be and remain successful and
competitive in the current marketplace.

GENERAL ELECTRIC COMPANY

GE Challenges and Solution Commitments
The world is faced with big challenges that constitute GE challenges, such as reserves of
oil and gas are being depleted, global recognition of reducing greenhouse gas emissions, lack of
clean water, new demands on natural resources, infrastructure, and access to energy. GE tackles
these challenges by helping the environment and customers while rewarding shareowners. This
action is fulfilled by applying the following commitments.
GE Company has two commitments: Healthymagination and Ecomagination.
Healthymagination is GE commitment to making sustainable health a reality through innovative
technology and services focused on addressing three critical needs: lowering costs, touching
more lives and improving quality. Ecomagination puts into practice GE's belief that financial
and environmental performance can work together to drive company growth while taking on
some of the world's toughest challenges.
GE Company has a strong set of global businesses in infrastructure and finance aligned
to meet currents needs, such as (1) the demand for global infrastructure; (2) growing and
changing demographics that need access to healthcare, (3) finance and information; and (4)
environmental technologies.

GENERAL ELECTRIC COMPANY

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The SWOT Analysis of GE

Strengths

Weaknesses

Global recognition

Under-performing energy sector

Global strength and competitiveness

Bets on financial markets have proven

Diversified business portfolio and line

unsuccessful with economic turmoil

of operation

Weak revenue growth of industrial

Strong research & development

segment

(R&D)

Underperforming in Asian markets

Order backlog guarantees business

Leveraged

flow in the future

Generates more than half of its profits

Excellent management & Strong

from GE capital services, hard hit by

culture in terms of people, systems,

the economic downturn of 2008.

technology and measures

Threat to flexibility

Environmental initiatives
Economic Leader
Opportunities
Development of infrastructure
Aviation industry growth
Increasing global exploration and
production
Servicing and regeneration of
commercial airplanes around the
world customer services initiative

Treats

Rise of competition
Information security
Senior management - weak
performance by GE has put doubts on
Jeff Immelt's ability to be the next
Jack Welch

GENERAL ELECTRIC COMPANY

11

Mergers and acquisitions

Rising commodity prices

Research and development

Exposure to financial markets and

crisis
World economic slowdown in the
US and Eurozone, two of the most
important markets for GE
Media depictions

Analysis and Evaluation

The number of strengths in the above table indicates that GE Company is growing and
enhancing its profitability. Its global recognition, strengths strategies and competitiveness allow
GE to be in a favorable position as compared to its competitors, in the same sector. The use of
business units for management presents an effective way to manage the sprawling company.
This situation not only reduces the possibility of overpowering senior management with work
but likewise promotes productivity based on accountability expected from the business unit
managers. The company undertakes multi-activities which highly contribute to effectiveness.
This is enhanced by the mergers and acquisitions that have diversified the company's product
range and in turn leading to improvement on profits incurred.
GE strengths and opportunities have a lot of constraints. Countless threats and
weaknesses have creep up the performance of the company at some extend by presenting
restrictions on the company's management. Some of the threat elements to the companys
survival include high levels of competition, financial crises and risk of information loss.

GENERAL ELECTRIC COMPANY

12

Weaknesses within the company including the poor productivity of the energy sector and
flexibility threat could impact negatively on the company.
In order to reduce the impact of threats and weaknesses, the company could use the
strengths and opportunities to alleviate them. The efficient management can also be used to
prevent loss of data through implementing proper control measures and to avoid losses which
could exemplify the situation caused by the financial crisis. And now, GE has a new theory that
is changing the way of doing their business called GE Advantage where GE is pride on
driving consistency, operational excellence, and enhanced customer value. For this reason, the
company is placing some big bets on 40 high impact projects that will help increase its speed to
market, improve the quality of its products and services, significantly reduce costs, and drive
competitive advantage for its customers and the company.
Structure Idea Management (SIM) and the System of GE Company
Structured Idea Management (SIM) can be defined as a structured process of effectively
collecting, evaluating and managing ideas from employees and any other stakeholder in order to
turn best ideas into innovation. In other words, SIM is a process where creativity and structure
are pooled to find efficiently optimal innovative solutions. SIM empowers companies to
continuously innovate, grow and remain competitive.
The Structured Idea Management Process

GENERAL ELECTRIC COMPANY

13

Source: Rowbotham and Bohlin (2003)

The former legendary CEO of GE (Kotelnikov, n.d.), Jack Welch, trained the company
by saying "Use the brains of every worker", "Make sure that it is the person with the best idea
who wins. GE Company uses the employees system of innovation because of the established
idea of may the person with the best ideas win. GE Company knows how to use its
employees sense of creativity; Welch advised the rewards and celebration of new ideas do
encourage others to want contribute as well. The company must reward those who live the
company's values, show "guts".
According to Kotelnikov, the advises of Welch has led GE to become one of the most
innovative, profitable, and admired companies on earth. At its core, SIM is a very simple
concept based on the premise that those closest to the work know its best. When the ideas of
those people, irrespective of their functions and job titles, are solicited and turned immediately
into action, an unstoppable wave of creativity, energy, and productivity is unleashed throughout
the organization. SIM is intergrated in GE as a work out "Town Meetings" that give the
corporation access to an unlimited resource of imagination and energy of its talented employees.
SIM can be used to resolve resistance to change in case the company is losing market
share or can no longer afford to compete. The company may be very slow, and even resistant, to
the adoption of new ideas. But, change takes place in a social system and requires acts of
communication and management.
The diffusion innovation theory
The diffusion innovation is a theory that tries to explain how, why, and at what rate new
ideas and technology spread through cultures. This theory has been promoted in 1962 by a

GENERAL ELECTRIC COMPANY

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professor of rural sociology, Everett Rogers, in his book Diffusion of innovations. According
to professor Rogers, the diffusion is the process by which an innovation is communicated
through certain frequencies over time among the members of a social system.
The diffusion innovation process
It appears that many organizations are predominantly interested in the diffusion process.
This is explained by the fact that the diffusion innovation theory defines the success and failure
of any new products introduced in the market. The diffusion innovation process is related to the
decision making process. Therefore, its absolutely rational for an organization to understand
the theory of diffusion innovation and its process in order to be able to manage and extend the
range of the new products or services.
The process of diffusion innovation goes through five stages (Rogers, 1962): awareness,
interest, evaluation, trial, and adoption. Rogers mentioned that the diffusion process was first
identified by Ryan and Gross in 1943. In the later editions, Rogers changed the terminology of
the five stages of diffusion process into: knowledge, persuasion, decision, implementation, and
confirmation. Nonetheless, the descriptions of stages remained similar trough editions.
The graphical presentation of the process
1. Five Stage innovation process

Source: Rogers (1962)

GENERAL ELECTRIC COMPANY

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2. Logistic function innovation process, S curve

Source: Rogers (1962)

Comment: This graphic demonstrates consecutive groups of consumers adopting the
new technology (blue curve) and its market share (yellow curve) which will ultimately reach the
satiety level. In mathematics the S curve is known as the logistic function.
Cornings Five-Stage Stage-Gate Innovation Process
Marketplace competition and customers satisfaction have challenged organizations to
emphasize on products innovation. The Cornings five-stage stage-gate process provides a way
of developing profitable new products. With this process, the project management teams are
able to move through the production system more proficiently. The Five-Stage Stage-Gate
process was created by Dr. Robert G. Cooper and Dr. Scott J. Edgett.
The development of Cornings Five-Stage Stage-Gate process is accepted and adopted
as a project management technique for managing innovation and developing new products. This
adoption has been endorsed after a careful study of how successful project teams work toward
developing winning new products. The model of stage-gate optimizes the efficiency of a new
product development process and allows the management to detect and kill poor projects at a

GENERAL ELECTRIC COMPANY

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very early stage. Therefore, the management of the model is focused on potentially winning
projects.
Cornings Five-Stage Stage-Gate Process model

Source: Dr. Robert Cooper and Dr. Scott Edgett

According to Cooper and Scott (1996), the cornings Five-Stage Stage-Gate System is
defined as a conceptual and operational road map for moving a new-product project from idea
to launch. This process allows management and verification of the products development from
one stage to the other. The Stage-Gate Product Innovation system has been referred to as the
single most important discovery in product innovation
The Stages of the process
Each stage in the process is a decision point that leads to a Go/kill or prioritization decision
point. The structure of each stage is similar to the chart below:

Source: Dr. Robert Cooper and Dr. Scott Edgett

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The Gates of the process

The Gates in the process are decision points where non well-performed projects are discarded
and resources are allocated to the best projects. The Gates systems deal with three quality
issues: quality of execution; business rationale; and the quality of the action plan. The structure
of each gate process is similar to the Chart below:

Source: Dr. Robert Cooper and Dr. Scott Edgett

Cooper and Scott (1996) established some benefits of using the Stage-Gate system:

Accelerates speed-to-market

Increases likelihood of product success

Introduces discipline into an ordinarily chaotic process

Reduces re-work and other forms of waste

Improves focus via gates where poor projects are killed

Achieves efficient and effective allocation of scarce resources

Ensures a complete process no critical steps are omitted

Application of the Innovation process

Leadership
Leadership innovative skill is very important to any stage-gate process. There are multiple
levels of approval in a stage-gate process to keep a new product in development. This allows for

GENERAL ELECTRIC COMPANY

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multiple stages in which a project can be evaluated for potential and either killed or given the
resources it needs to go forward. The success or the failure of the stage gate process is attributed
to the leaders decision. Leaders have to be involved and together with the management
decision makers, they have to establish successful criteria for each project to achieve the goal of
having fewer, but better, new-product projects.
The individuals
The leaders put in place a creative and innovative environment, and work with individuals with
new ideas or innovative thinking in the change process to solve the organizations challenges.
The individuals involved in the process of new products using the Cornings Five-Stage StageGate process are accountable for any success or failure of the innovation result. These
individuals have to understand that the companys reputation and sustainability rely on the
outcome of their efficiency and productivity. Therefore, they have to make sure that they
understand and make right decisions for every stage and gate of the cornings Five-stage
system.
The inter-organizational network
The implementation of a product innovation strategy requires that people at all level within the
organization work in collaboration in order to achieve full success of the innovation result.
Every individual or group of individuals has a role to play to solve the challenges of the
organization. The inter-organizational network is very important as this will determine the result
of the cornings Five-Stage stage gate process. A poor inter-organizational network will
produce less effective innovative result compare to the strong inter-organizational network.

GENERAL ELECTRIC COMPANY

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The organizational learning processes

The cornings Five-Stage stage gate process is a well-established process system that has been
adopted by many innovative industries to develop and produce new products. However, every
organization can adapt this process to meet its mission and its goals. The review process after
every set of results should empower the organization by working toward correcting their
mistakes and improve the future outcome process. This review phase can be identified as a
learning process. The more the organization reviews the processed innovation results the more it
improves its future outcome.
Inter and Intra-Networking Effects on Organizations
The need for innovation is often refer to as a foremost reason for the development of
network forms of organizations. Obviously, Networks work to the advantage of the innovation
spread. According to Robertson, Scarborough, and Swan (2002), Innovation is considered to be
an iterative, recursive and episodic process surrounding the design and development, diffusion
and implementation of new ideas for the adopting organization.
The inter-networking diffusion can be understood as the spread of a new idea or any
innovation from one person or organization to the other until it reaches a critical mass within the
network, a point at which the diffusion is self-sustaining and speedily disperses throughout.
While the intra-networking diffusion understanding relies on how an innovation or a new idea
diffuses within an organization of adoption. The intra-networking diffusion tries to establish the
understanding of how the innovation, once adopted, is integrated into the network of the
adopted organization through innovation use.

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Considering the above understanding, both inter and intra-networking effects of

diffusion innovation on organization are critical for the diffusion process. These inter and intranetworking diffusion innovation complements each other and completes the diffusion of
innovative process.
Role of Leadership at GE
GE's Chairman and CEO, Jeff Immelt, has worked very hard since he started his tenure
in 2001 to transform GE into a leader in essential themes tied to world development, such as
emerging markets, environmental solutions, demographics and digital connections. Mr. Immelt
also laid the vision for GE's ambitious ecomagination initiative and has been named one of
the "World's Best CEOs" three times by Barron's.
Executive Leaders
The men and women who are driving GE's many businesses are highly considered as the
top leaders in their industries. They are the new generation of leaders and each is leading their
respective organizations to become closer to their customers, while finding new operational
efficiencies and ways to work toward a distinguished future.
Board of Directors
GE's Board of Directors provide comprehensive oversight of the major strategic issues
of the company while ensuring that the company serves the interests of shareowners and other
key stakeholders with the highest standards of integrity and compliance. However, critics and
wise counselors are among some social issues that are raised most of the time to ensure that the
company is serving equally.

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Role of Ethics and Responsibility

Leaders are called to set an example for its followers. They play a responsible role
within the organization. Leaders are considered to be role model for the employees, or their
team members; therefore they can have tremendous impact on their life, behavior, moral,
productivity, efficiency, etc. Leaders demonstrate ethical behaviors when they are doing what is
morally right, just, and good, and when they help to elevate followers moral awareness and
moral self-actualization. According to Zhu (Spring 2008), ethical leadership encompasses more
than the fostering of ethical behaviors.
Ethical leadership can have positive or negative effects on organizational performance.
Innovative organizational processes are supported and enhanced by leadership ethics and values
because it fosters the development of one of the most crucial success elements; trust. An
innovative organization engages everyone throughout the organization in the task of developing
and implementing new ways to reach the organization's goals. The leadership can affect
ethically or unethically the organizational innovation and change.
For instance, corruption among leaders within the organization of innovation and change
must not be tolerated as it will spoil the workplace and diminish their responsibilities. This
behavior will spread in the organization and affect the trust and collaboration. Meanwhile, the
leadership awareness is a positive attitude that will encourage every worker and stimulate
everyone to do they share of work. The leaders awareness will affect positively the
performance of the organization innovation and change. Ethics and responsible behaviors are
required for qualified leaders and personnel.

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Principles and practices for implementing innovation at GE

In order to implement innovation at GE, some principles and practices have been put in place:

Aligning recruiting efforts with the strategy of holding on the best people;

Ensure the companys talent management practices is suitable with each worker;

Implant corporate culture into talent management processes such as hiring methods and
leadership development;

The CEO as well as all managers have to get involved at all levels in the company;

Establish the best balance of the companys global and local needs; and

Discovering new ways to distinguish the company from all competitors.

GEs growth strategy is grounded on five mainstays: technological leadership, services

acceleration, enduring customer relationships, resource allocation and globalization. According

to CEO Jeffrey Immelt, the GEs talent management system is its most powerful
implementation tool.

GENERAL ELECTRIC COMPANY

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Research Summary

GE is a great company, very innovative with big vision. GE works on things that matter
with a philosophy of May the person with the best idea wins. GE Company understands the
importance of using the brain of the workers. GE knows how to reward and celebrate people
who live at the value and standard of the company.The company takes on the toughest
challenges to build better people and better technologies. The company wants to make sure that
they find solutions in energy, health and home, transportation and finance. GE is building,
powering, and moving the world. This company does not just imagine these things but works to
make it happen.
Despite all the treats and weaknesses that can slow the companys performance and
efficiency, the strengths and opportunities build the company and allow it to survive through
tough moment in business. The GE advantage policy allows the company to achieve the
competition advantage and enhance the customer values. GE understands the importance of the
employees system of innovation while ensuring a great leadership in order to be and remain
successful and competitive in the current marketplace.
GE also understands that for its employees to flourish their performance, they have to be
placed in a sound work environment. That is why GE is committed to strengthens and use any
opportunity their get to support its leadership culture through systems and policies that foster
open communication, maintain employee and partner privacy. The company fights hard to
reduce its weaknesses and threats while assuring employee health and safety, and reduce the
cost of products to meet customers satisfaction.

GENERAL ELECTRIC COMPANY

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Conclusion

In this paper, GE company was used as a case study on organizational Innovation and
change. Different characteristics of innovation and change have been discussed within GE
Company. The competition on the actual marketplace in the world has challenged GE company
to come up with new ideas and innovative ways of developing and producing its products and
services. Dr. Cooper and Edgett have solved the competition argument by producing an
innovative system called cornings five-stage stage-gate process. This innovative process has
allowed companies, such as GE, to reinvent their ideas and launch new products and services. It
is more effective, efficient, faster process that improves the product innovation results. Leaders
and individuals within organization have to work in network collaborations in order to meet the
goals of their organizations, stand out the competition with innovative products and solve any
financial or sustainability challenges that the organization comes across. The inter and intranetworking effects are critical for GE diffusion innovation process. Thats why the SIM has
been very well integrated in GE Company, this has allowed the company to become one of the
most innovative, profitable, and admired companies on earth. The SIM can also be used to
resolve resistance to change by communication and management.
Thus, while the current discussion addresses key features of organizational innovation
and change that determine the success and sustainability of GE, more research is necessary to
understand and help GE Company remain competitive in this hungry world of creativity and
innovation. Innovation is the game to play in order to remain successful and sustainable in the
current global marketplace for all industries.

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