GE's ecomagination Challenge: An Experiment in Open Innovation SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of GE's ecomagination Challenge: An Experiment in Open Innovation
University of California, Berkeley-Haas collectionThe GE ecomagination Challenge case study takes place in 2010 when Beth Comstock, chief marketing officer and senior vice president of General Electric is planning a meeting with GE's CEO, Jeffrey Immelt. The pair plan to discuss the company's ecomagination Challenge, an open innovation process that solicited energy ideas from individuals and start-ups to identify potential ventures for in green and renewable energy areas for GE to invest in. Pursuing this approach required several organizational processes that were new to GE. For one, they chose to partner with four outside VC firms, and pool the due diligence process with them and co-invest with them. For another, they chose to receive submissions to the ecomagination Challenge through a publicly available website. Nearly 4,000 submissions were received, and 75,000 people participated in the process. By 2011, the ecomagination Challenge had already resulted in $140 million (out of its allocated $200 million) of investments in 23 ventures. However, the scale of these results was dwarfed by GE's $37 billion energy business. And it would take years for these young ventures to reach a size that would be of direct business value to GE's energy business. And of course many of the young ventures would likely fail along the way. So the time has come in the setting of the case for Comstock to evaluate the results of the ecomagination Challenge more carefully, and decide on whether and how to continue this kind of activity within GE's energy business, or in other GE businesses. How should GE measure ecomagination's results in order to justify its existence and possible future investments? What new processes and structures would be required to make sure that some of the Challenge's investments would pay off for GE down the road? Based on the program's results to date, was the program a good investment for GE and something GE should repeat, or was it a noble experiment that should be discontinued?
Swot Analysis of "GE's ecomagination Challenge: An Experiment in Open Innovation" written by Henry W. Chesbrough includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ecomagination Ge facing as an external strategic factors. Some of the topics covered in GE's ecomagination Challenge: An Experiment in Open Innovation case study are - Strategic Management Strategies, Entrepreneurship, Innovation, Leadership and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the GE's ecomagination Challenge: An Experiment in Open Innovation casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, increasing commodity prices, talent flight as more people leaving formal jobs,
customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, etc
Introduction to SWOT Analysis of GE's ecomagination Challenge: An Experiment in Open Innovation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in GE's ecomagination Challenge: An Experiment in Open Innovation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ecomagination Ge, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ecomagination Ge operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of GE's ecomagination Challenge: An Experiment in Open Innovation can be done for the following purposes –
1. Strategic planning using facts provided in GE's ecomagination Challenge: An Experiment in Open Innovation case study
2. Improving business portfolio management of Ecomagination Ge
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ecomagination Ge
Strengths GE's ecomagination Challenge: An Experiment in Open Innovation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ecomagination Ge in GE's ecomagination Challenge: An Experiment in Open Innovation Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Ecomagination Ge are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Ecomagination Ge is one of the leading recruiters in the industry. Managers in the GE's ecomagination Challenge: An Experiment in Open Innovation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Ecomagination Ge is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Innovation & Entrepreneurship field
– Ecomagination Ge is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Ecomagination Ge in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Ecomagination Ge has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in GE's ecomagination Challenge: An Experiment in Open Innovation Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Organizational Resilience of Ecomagination Ge
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ecomagination Ge does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the GE's ecomagination Challenge: An Experiment in Open Innovation Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Low bargaining power of suppliers
– Suppliers of Ecomagination Ge in the sector have low bargaining power. GE's ecomagination Challenge: An Experiment in Open Innovation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ecomagination Ge to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Ecomagination Ge is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Ecomagination Ge is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in GE's ecomagination Challenge: An Experiment in Open Innovation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Ecomagination Ge is present in almost all the verticals within the industry. This has provided firm in GE's ecomagination Challenge: An Experiment in Open Innovation case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Highly skilled collaborators
– Ecomagination Ge has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in GE's ecomagination Challenge: An Experiment in Open Innovation HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Ecomagination Ge is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Henry W. Chesbrough can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Weaknesses GE's ecomagination Challenge: An Experiment in Open Innovation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of GE's ecomagination Challenge: An Experiment in Open Innovation are -
Lack of clear differentiation of Ecomagination Ge products
– To increase the profitability and margins on the products, Ecomagination Ge needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Ecomagination Ge is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Ecomagination Ge needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ecomagination Ge to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Ecomagination Ge has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to strategic competitive environment developments
– As GE's ecomagination Challenge: An Experiment in Open Innovation HBR case study mentions - Ecomagination Ge takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
No frontier risks strategy
– After analyzing the HBR case study GE's ecomagination Challenge: An Experiment in Open Innovation, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Aligning sales with marketing
– It come across in the case study GE's ecomagination Challenge: An Experiment in Open Innovation that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case GE's ecomagination Challenge: An Experiment in Open Innovation can leverage the sales team experience to cultivate customer relationships as Ecomagination Ge is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study GE's ecomagination Challenge: An Experiment in Open Innovation has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Ecomagination Ge 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study GE's ecomagination Challenge: An Experiment in Open Innovation, is just above the industry average. Ecomagination Ge needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Skills based hiring
– The stress on hiring functional specialists at Ecomagination Ge has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow decision making process
– As mentioned earlier in the report, Ecomagination Ge has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Ecomagination Ge even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Products dominated business model
– Even though Ecomagination Ge has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - GE's ecomagination Challenge: An Experiment in Open Innovation should strive to include more intangible value offerings along with its core products and services.
Opportunities GE's ecomagination Challenge: An Experiment in Open Innovation | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study GE's ecomagination Challenge: An Experiment in Open Innovation are -
Developing new processes and practices
– Ecomagination Ge can develop new processes and procedures in Innovation & Entrepreneurship industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ecomagination Ge can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Ecomagination Ge in the consumer business. Now Ecomagination Ge can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Ecomagination Ge can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Innovation & Entrepreneurship segment.
Buying journey improvements
– Ecomagination Ge can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. GE's ecomagination Challenge: An Experiment in Open Innovation suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Leveraging digital technologies
– Ecomagination Ge can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Ecomagination Ge can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Ecomagination Ge has opened avenues for new revenue streams for the organization in the industry. This can help Ecomagination Ge to build a more holistic ecosystem as suggested in the GE's ecomagination Challenge: An Experiment in Open Innovation case study. Ecomagination Ge can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ecomagination Ge to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Ecomagination Ge to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Ecomagination Ge has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ecomagination Ge can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, GE's ecomagination Challenge: An Experiment in Open Innovation, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ecomagination Ge in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ecomagination Ge can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats GE's ecomagination Challenge: An Experiment in Open Innovation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study GE's ecomagination Challenge: An Experiment in Open Innovation are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ecomagination Ge in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Consumer confidence and its impact on Ecomagination Ge demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Regulatory challenges
– Ecomagination Ge needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ecomagination Ge can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study GE's ecomagination Challenge: An Experiment in Open Innovation .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Ecomagination Ge can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Ecomagination Ge has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Ecomagination Ge needs to keep up with the evolution of technology in the Innovation & Entrepreneurship sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study GE's ecomagination Challenge: An Experiment in Open Innovation, Ecomagination Ge may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Ecomagination Ge business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Ecomagination Ge high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Ecomagination Ge.
Stagnating economy with rate increase
– Ecomagination Ge can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of GE's ecomagination Challenge: An Experiment in Open Innovation Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study GE's ecomagination Challenge: An Experiment in Open Innovation needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study GE's ecomagination Challenge: An Experiment in Open Innovation is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study GE's ecomagination Challenge: An Experiment in Open Innovation is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of GE's ecomagination Challenge: An Experiment in Open Innovation is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Ecomagination Ge needs to make to build a sustainable competitive advantage.
