GE Chairman Immelt: Saying IT Doesn’t Matter Is Stupid

General Electric Chairman and CEO Jeffrey Immelt Thursday called a Harvard Business Review article titled "IT Doesn't Matter" just plain "stupid."

Speaking to a crowd of several hundred people at Technology Review's Emerging Technologies Conference at the Massachusetts Institute of Technology campus in Cambridge, Mass., Immelt said technology innovation is "a business imperative" in a "world of slower growth and higher risk."

The premise that now that "everyone has information technology it is a waste of money is stupid," Immelt said. "It is not true. What information technology does for a company like GE has nothing to do with Oracle or Dell or anybody else. It allows us to run the company differently. It allows us to make massive resource allocation decisions so we can now apply more resources to the things that we think are going to grow the company for the long term."

The May 2003 Harvard Business Review article Immelt referred to claims that there is a vanishing advantage to information technology.

Immelt predicted that the business environment will remain tough for the foreseeable future. "There is more excess capacity today than at any time since the 1970s," he said. "There is more volatility and geopolitical risk than any time in the last 20 years. And the toughest thing that any company has to get today is an order. It is one point of revenue growth. It is the toughest thing you have to get. And that is going to exist, I think, for some time."

Immelt said there is a "scarcity" around growing businesses. "The scarcity is going to be around finding new ideas and ways to fund growth," he said. "Innovation, for all of us, is not a nice to do, but a must do."

Immelt pointed out that the dominant business models today are distribution-oriented. "There are consolidating channels," he said. "Companies like Wal-Mart and Dell tend to dominate industries. They take value from the manufacturers."

That is driving what Immelt called "commodity damnation." The ability to innovate and differentiate is critical in growing businesses, he said. "Millions of dollars are won and lost based on innovation."

Immelt said that globalization must be embraced by companies. "We are facing the strongest competitors we have faced really in our lifetime in China and India," he said. "These are societies that have a technical foundation, both human and material resources. The truth is not low-cost labor. It is fact that we can hire two to three Ph.D.s in India for same amount we pay one hourly worker in Louisville. And you have to compete in that world."

As for what keeps him awake at night, Immelt said: "Right now if you look at our economy, it is very much driven by the consumer. So you ask yourself, 'What is the one thing that could take the consumer out of the marketplace today?' It is another big terrorist act."

Responding to a question on GE's plans for technology consulting and systems integration, Immelt replied: "We already do it in the industries we are in. In the domains we're in, we'll do it." GE's diverse units and companies, including Medical Systems and GE IT Solutions, already do billions of dollars in technology consulting and integration.

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