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Published: May 25, 2010
 / Summer 2010 / Issue 59

 
 

It Makes Sense to Adjust

General Electric (GE) has implemented an even more global use of the sense-and-adjust approach. In 2001, soon after Jeffrey Immelt was named CEO to replace Jack Welch, the company transformed its organization from one prioritized around productivity to one focused on organic growth. GE set the ambitious goal of increasing revenue at a pace two to three times faster than world GDP growth and developed a new set of management methods to accomplish that objective. This marked shift was precipitated by a warning from the company’s sense-and-adjust system that the onslaught of globalization and increasing energy costs would favor companies that could innovate and generate their own growth.

As Immelt said in a 2006 Harvard Business Review article: “If you run a big multi-business company like GE and you’re trying to lead transformative change...you’ve got to have a process.... Investors have to see that it’s repeatable.”

For some companies, particularly those without the mature planning processes and deep leadership bench necessary to implement a full-fledged sense-and-adjust strategy, a programmatic transformation can offer a clear path toward that goal. For example, a major financial-services firm recently began a programmatic effort primarily to slash costs, in which new planning guidelines were created that cut across functions to develop strategic, annual, and financial goals. But to make sure that this long-term, ongoing campaign produced continuous results over time, the company eventually morphed this effort into a sense-and-adjust approach by designing performance metrics that monitored the goals emerging from the planning process. Key indicators are tracked to identify root causes of performance issues or point to emerging opportunities.

If nothing else, all companies must recognize that the pace and magnitude of change is far faster and greater now than ever before and that transforming their business is no longer something they can avoid, defer, or out-manage. Even small moves to increase an organization’s sense-and-adjust skills will reap significant and sustainable rewards.

Author Profiles:

  • Vinay Couto is a partner with Booz & Company in Chicago. He focuses on global organization restructuring and turnaround programs in the automotive, industrials, and consumer packaged goods industries.
  • Frank Ribeiro is a partner with Booz & Company in New York. He focuses on overall corporate transformation and associated capability-building programs to increase an organization’s effectiveness and efficiency.
  • Andrew Tipping is a partner with Booz & Company in Chicago. He focuses on large-scale organizational transformation to increase the effectiveness and efficiency with which companies meet customer needs.
  • Also contributing to this article were Booz & Company Senior Associate Matthew Siegel and Principal Curt Mueller.
 
 
 
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