The text below is an extract from an interview with Professor James Santomier of the John F. Welch College of Business, at Sacred Heart University, Connecticut. James and his colleague Tim Crader were discussing Tim’s professional experience at GE one day and he off-handedly mentioned ‘pull-through’ marketing, and implied that GE had benefited significantly from its IOC relationship, which stimulated further discussion and research.
Beth Comstock, who is the CMO, co-authored an article for the Harvard Business Review, published in late 2010, which focused on the fact that up until 10 years ago, to all intents and purposes, GE didn’t have a marketing programme – it had simply been so confident in its technologies. But one very evocative paragraph near the beginning paints a picture of growing realisation: ‘GE was learning that it could not win simply by launching increasingly sophisticated technologies… Some of its best thought-out new offerings were fast becoming commodities.’
So in 2003, GE began to evolve its marketing function, doubling the size of the function, and marketing became ‘the torchbearer’ for what was internally called ‘Commercial Innovation’ – which included ‘Imagination Breakthroughs’ across many categories. And essentially, Dan Henson and Beth Comstock were the driving forces behind the softening of GE, the femininising of GE if you will, and making it a much more user-friendly organisation. And the sponsorship played into that.
Around the same time, NBC, the media business unit of GE, was bidding for the media rights to the Games in 2010 and 2012, and GE’s top management made a strategic decision to seek a TOP position with the IOC. NBC’s winning bid represented a 33% premium on their payments for 2006 and 2008 and then, in addition, GE paid approximately US$180 million to join the TOP programme.
The drivers of the IOC relationship were most likely Dan Henson and Jeffrey Immelt. Beth was more focused on communication, and wasn’t CMO at the time. And I think, if Peter Foss hadn’t been a friend of Immelt’s, and hadn’t had experience in sponsorship, they may not have done the deal. Beth Comstock told me: ‘at the time we took the Olympics we really were trying to push from a commercial – a sales and marketing perspective – cross-selling … The Olympics allowed us to focus on this … in a very powerful way, that made it real.’
When Jeffrey Immelt convinced Peter Foss to take on the job, Peter pushed to flatten the organisation and to make GE Olympic-centric. And it’s my guess that because GE was so fresh to marketing, there was little by way of restrictions in terms of how they could integrate the sponsorship – whereas for other major companies, their marketing processes would be too institutionalised and rigid.
The GE WorkOut is a proprietary OD tool developed back in 1988, after CEO Jack Welch emerged from a meeting with mid-level managers in which many expressed concern that, amongst other things, process was slowing down important decisions. The WorkOut brings together a cross-functional group of people together to develop actionable recommendations to a business challenge that has been identified as a priority. These are tied to action plans which, if approved by leadership, are implemented within 90 days.
So when Peter Foss was hired, he developed a WorkOut related to the Olympics. His vision was a new, very flat, and non-bureaucratic organisation with a single point of contact for each of GE’s business units. That individual would be responsible for driving the revenue for his or her respective business and have a matrixed relationship with other profit /loss and internal GE cost centres. And now that’s exactly the way they’re selling all their infrastructure, and clean energy, and new grid technology.
Dan Henson, the former CMO, went on record to say that GE has ‘always been good at selling in the context of the P&L, but the Olympics forced us to be adept at responding to opportunities that span three, four or five business units … to present one GE face to the customer’.
The most interesting aspect was how the organisation embraced the sponsorship and how they were willing to adapt the organisation in response. For most organisations, sponsorship is an appendage. Beth told us in our meeting that the sponsorship became a learning experience for them.