Give Them Credit

Before GE could reach out to Chinese consumers, it had to learn to work with Chinese banks.

Shortly after signing its agreement with SDB, GE’s integration team sat down with its counterparts at the bank to discuss how the two organizations approach planning. The differences were clear. Compared with GE’s heavily metrics-based planning, the bank made many decisions on gut feel. Plans looked out only one year. “Their 2007 plan would start in January and then end in December,” remembers Barrett. “But when you look at China’s market, you have to anticipate the growth of the marketplace and plan for things like new technology or new products, which themselves might take 12 months to launch.”

GE worked with the management team to encourage them to push planning out to three to five years, and to think differently about decision-making. In some cases, those efforts have met resistance. “We talked about how we analyze what products we want to create or what markets we want to enter,” says Barrett. “But we heard, ‘That’s not how we do it here. We don’t have the data.’” In response, Barrett sat down with the bank managers to figure out how to get the necessary data. For example, while China now has a credit bureau, its information is spotty. So GE and SDB identified other measures they can look at as a proxy for credit-bureau information, such as disposable income, profession, and how long an applicant has lived in one place.

GE also sent an anonymous employee questionnaire to SDB employees prior to starting work. What had employees heard about GE? What did they expect from this partnership? What would they like to see happen? (Some responded that they expected to be working harder for the same pay, given GE’s process focus.) “This gives us a good benchmark for how we should plan the integration,” says Pinto. “We have to force ourselves to listen. We’ve done this so many times that it’s easy to just end up telling the business what to do.” Other surveys get administered periodically during the integration to identify any cultural problems that may be brewing.

The company also sends some of its partner’s managers to GE’s leadership-training center in the United States. And it relies on the integration manager (who is often recruited from an operation that was itself bought by GE) to serve as a cultural bridge between the two companies. “If the president of the acquired company isn’t a GE person, then that person needs a coach who he can talk to in the GE universe,” comments Ron Ashkenas, head of consulting firm Robert H. Schaffer & Associates who has worked extensively with the company on its M&A processes. “That person can also act as an umbrella to shield the company from all the well-intentioned GE people who want to visit.”

4. Flexibility. GE Money is willing to adapt its approach to suit local conditions — a virtue in China, where markets evolve rapidly and rules can change overnight. In fact, part of Pinto’s job description as regional COO is to make sure the company does just that. “My job is to take our global approach to deals and make sure we’re modifying it for each particular deal,” he says.

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