The Innovation Formula

CHAPTER 1 CHALLENGE The Goldilocks factor — finding the level that's just right

Jeff Immelt took over from Jack Welch as the CEO of General Electric (GE) on Friday 7 September 2001, four days before two planes flew into the World Trade Center towers. It is an understatement to say that his timing was rough. Welch had delivered GE's shareholders average returns of 23 per cent per annum during his two decades as the company's leader. Welch's success had come from clever acquisitions and improving efficiencies, but Immelt felt he needed to take a different tack. In his first two years he focused on investments in R&D and leadership and on identifying new growth opportunities for the business. However, by the end of his second year, income and revenue were at levels similar to where they were back in 2000.

Immelt knew he had to go even further in his pursuit of organic growth. He created an initiative that is still front and centre at GE today. Immelt brought together his top marketing directors from across GE's varying businesses in September 2003 and asked them each to develop five Imagination Breakthroughs. These were defined as new business proposals that would deliver new growth to GE. And they had to be delivered within two months. In November 2003, 50 Imagination Breakthroughs were presented to Immelt and 35 were green-lighted.

Imagination Breakthroughs (or IBs, as they are called within the organisation) are now a core part of business leaders' roles at GE. Every year leaders ...