General Electric (see chart here) announced today it is looking at ways to sell its appliance business (see article here).  Great move!  Too many companies hold onto a business for all the wrong reasons, and refuse to take action to keep themselves in the Rapids.

GE needs to Disrupt.  The old CEO, Jack Welch, was famous for taking Disruptions.  That’s how he got the nickname Neutron Jack.  Keeping his eyes on the future, he kept GE focused on new opportunities and he used White Space to develop new Success Formulas.  And while he had the top job GE performed admirably, growing multi-fold.  If a business didn’t meet goals, Mr. Welch sold the business and invested his management talent and money in better opportunities.

Now GE finds itself nearing the Flats.  Last quarter saw a profit decline.  Two in a row, and the company falls into Growth Stall from which it has only a 7% chance of returning to consistent growth exceeding 2%.  So that blip in a century-old record was a very big deal.  And the good news is that the current CEO seems not to be ignoring it.  He looked around, and found one of the long-legacy businesses of GE with little innovation and limited growth.  While competitors were re-introducing front-loading washers, low energy and low water washers, and scads of various innovations in large appliances his team was #1 in share but far from #1 in market leadership.  Management was happy to blame poor performance on the bad U.S. economy, and the stagnation in U.S. new home sales, planning on a recovery some time in the future.  So sell it! That’s what Mr. Welch would have done, and that’s what Mr. Immelt is now doing.  There are always opportunities for innovators in all markets, and keeping around Locked-in management teams that think they are doing OK because their markets turn south only breeds ongoing poor results.

Yes, GE was in appliances for 100 years.  But so what?  Today appliances are only 4% of this $178billion revenue behemoth.  And GE needs to maintain its growth goal of 10%.  The CEO can’t accept excuses.  Millions of houses are being built in India and China and South America – and with enough innovation current homeowners will replace old appliances.  Insufficient growth is a management issue – not a market issue.  Markets are how you define them, and if your defined market isn’t growing go into another one! GE needs to stay in the growth Rapids, and having been around a long time is no reason to coddle a management team that doesn’t know how to maintain growth.  GE is in a lot of businesses, and it has gotten out of a lot of businesses, and it can get into a lot of new businesses.  Congratulations to the top executives for not letting history put the company at risk of going into the Flats and then the Swamp of low returns.

Too many leaders are unwilling to Disrupt.  They let ties to Lock-ins keep them trying to "fix" a business.  Doing more of the same, trying to be faster or cheaper, when what’s needed is a new Success Formula.  GE is showing us that if you keep your eyes on the future, and hold tight to meeting your growth goals, you can’t afford to let Status Quo Police keep you focused on Lock-ins.  You can’t try to succeed by merely Defending & Extending what you always did.  You have to be willing to Disrupt and do entirely new things.  You have to Take Action before it’s too late.  Good job GE.