Most of us have seen General Electric’s ecomagination advertisements. But while ecomagination may make for a catchy slogan and an interesting, and even compelling advertising campaign, it is much more than a marketing program. It is a totally new way of viewing General Electric’s value proposition, of defining markets and conceiving products and of allowing GE to “Create Shared Value”—a set of business policies and practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates.

GE CEO Jeff Immelt has spoken directly and often of the private sector’s responsibility to the country. He believes that the private sector must embrace the realities of environmental, national security, and other societal concerns; and that it must assume responsibility for addressing these challenges.

The company’s ecomagination initiative is a central component of his willingness to stake General Electric’s future on this proposition. His recent acceptance of President Obama’s invitation to chair the newly created Council on Jobs and Competitiveness is indicative of his believe that business must partner with the government to jointly address such needs.

The Genesis of Ecomagination

One may be forgiven for assuming that GE’s five-year old ecomagination initiative, which has been at least partially promoted around GE’s concerns for the environment and a desire to “leave the earth as they found it”, has its roots planted firmly in the clouds.

This, however, is not the case. The initiative, which is intended to promote the development and sale of energy-efficient products is, in fact, a hard-headed business decision. It is based primarily on Jeff Immelt’s conviction that energy efficiency and alternate energy are becoming big growth markets and that most resources, and especially energy resources, will become increasingly scarce, costly and subject to government regulation. And since GE is already so ensconced in so many related markets (from water purification to jet engines and all stages of the electricity chain, from huge nuclear plants through home appliances and light bulbs (or as one exec poetically puts it, “from turbines to toasters), it was ideally situated to stake out a leadership position.

This vision of proactive business opportunity is bolstered by another, much more defensive calculation—that Americans’ perception of big business is in a “dark cycle” where the people who can make our economy better (including corporate executives) are considered its worst enemies. With citizens’ trust in big business at an all-time low, Immelt is concerned that “populism will turn to protectionism”, harming not only economy as a whole, but GE in particular.

To some, ecomagination was initially perceived primarily as a marketing campaign. The program, however, is a corporate business strategy built upon the belief that one doesn’t have to choose between economic viability and environmental responsibility; you can have both. The program has steadily gained momentum as public awareness and commitment grew around sustainability, as GE doubled down on its investments, and as the market has come to accept—and indeed demand—a growing number of energy-efficient products. Over the program’s first five years, GE:

• More than doubled its investment in cleaner technologies, from $700 million in 2004 to $1.5 billion in 2009;
• Earned more than $70 billion in revenue from ecomagination; and
• Introduced more than 90 ecomagination products. (Note: Ecomagination products must be both significantly and measurably better in operating performance and in environmental performance. GE business applications are audited by GreenOrder, a sustainability strategy consulting firm. Compliance is measured by a GE corporate approval council.)

GE surpassed a number of its initially, publically-stated ecomagination goals and has now committed to going further—re-doubling its ecomagination investments over the next five years to $10 billion and growing ecomagination revenues at twice the rate of the company’s top line. Employees and investors have long since come to recognize that what’s good for the environment can be good for business—and vice versa.

Ecomagination Initiatives

Ecomagination initiatives now pervade the company. General Electric has and will be dedicating $15 billion over 10 years to work on new ecomagination-related projects and virtually every division of the company is involved, with many introducing new product categories, in addition to fielding more energy-efficient versions of traditional offerings.

The company’s power and energy groups, in particular, are commercializing smart grid solutions, sodium and lithium battery technology, offshore wind, multi-fuel gas turbines and new generations of nuclear reactors and clean coal technology. Examples across GE groups, as shown at www.ecomagination.com/technologies, include:

• GE Appliance’s ENERGY STAR qualified washers, refrigerators, dishwashers and GeoSpring water heaters;
• GE Aviation’s GEnx Aircraft Engines and Fuel and Carbon Services consulting solutions and ecomagination-certified TrueCourse™ flight management system to help airlines optimize jet fuel use;
• GE Energy’s 7FA and LMS 100 gas turbines, wind turbines, nuclear generators, and Integrated Gasification Combined Cycle coal gasification process;
• GE Lighting’s compact fluorescent and LED lights;
• GE Rail’s Trip Optimizer throttle control systems and especially its Evolution series of locomotive;
• GE Software + Services, which pulls together offerings from multiple groups, including GE Digital Energy, with its Digital Energy UPS system, and GE Intelligent Platforms, with its Proficy software platform, that helps industrial and commercial companies improve energy efficiency;
• GE Water’s line of advanced water and wastewater treatment systems, which cut water consumption, energy usage and its associated greenhouse gas emissions); and
• GE Healthcare, which is generally focused on the company’s parallel (to ecomagination) vision of “Healthymagination,” is also improving the energy efficiency and reducing emissions and paper usage attributable to products by going digital, including through its use of Digital X-Ray, Digital Mammography, High Efficiency MR (Magnetic Resonance) Systems and Voluson ultrasound technology.

Then there is the rapidly growing number of specialized ecomagination products, including a growing portfolio of solar- and wind-powered alternative energy systems, smart meters and recently announced Nucleus home energy management hub and Wattstation electric car charging station.

Even the company’s Finance units get in on the ecomagination action. Its Business Finance group, for example, finances purchases of the company’s locomotives and jet engines and the building of solar and wind farms. It also earns money from eco-friendly assets by investing in third-party verified carbon offset projects that would not have been viable without the offsets. GE Energy Financial Services now counts on renewable energy investments for 30% of its $26 billion portfolio.

In fact, GE Broadcasting is one of the few divisions that is not in the ecomagination act (unless, that is, you count the ecomagination commercials that are run on NBC and other GE networks). But now that 51% of NBC Universal is being sold to, and will be operated by Comcast, it no longer counts.

Whatever one believes may have been the original motivation for ecomagination, there can be little doubt that it is now fundamental to the General Electric’s business. But, as discussed in my next post, it is now becoming more than a core part of the company’s business. It is becoming part of the company’s Business Philosophy and its Social Contract.