By August 19, 2006 1 Comments Read More →

Wall St. Doesn’t Respect GE’s Processes

With Its Stock Still Lackluster, G.E. Confronts the Curse of the Conglomerate – New York Times

Thanks to blog reader Steve for sending this my way. This article has some examples of how GE is using Lean to drive improvements across business units. Ideally, this is how a business (such as power systems) should benefit from being part of a conglomerate – common processes and sharing of ideas (such as lean).

The locomotive division showed how G.E. techniques helped it discern that customers wanted to speed up the time between order and delivery, and then to whittle that time down to 10 days from 31.

The consumer finance division showed how it was using the same tools to shorten the 63 days it takes for G.E. to agree to administer a store’s private-label credit card.

Going from 31 days to 10 days is the typical scale of cycle time improvements that can be achieved using lean. I bet they can still get faster than 10 days.

The article focuses less on Lean methods and more about how Wall St. looks at GE.

“We are definitely honing the total G.E. message, trying to make everyone understand how the pieces of G.E. fit together,” said Keith S. Sherin, the chief financial officer. “Investors should realize that G.E.’s management spends tons of time focusing on processes to achieve growth.”

Does Wall St. understand processes? Or just the end-result, bottom-line numbers? It seems that they only focus on the numbers. I guess, at some point, you might just have to just manage the business the best you can and hope that the Wall St. results follow? I bet you get into more trouble by focusing only on Wall St. and trying to “jumpstart” your stock, as that can be a distraction from customers, employees, and processes.

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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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1 Comment on "Wall St. Doesn’t Respect GE’s Processes"

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  1. curiouscat says:

    “Wall Street” analysis general just “understands” the bottom line plus good stories (see the .com boom). “Wall Street” as reflected by what happens to the stock price is a refleection of the whole market (thus if we buy Toyota because of our belief in great process lean manaufacturing we are part of “Wall Street”).

    Ben Graham (or David Dodd?) {pretty much the 2 most influencing stock analysis experts ever – Buffet is a big follower of their ideas). said in the short term the stock market behaves as a voting machine (popularity moves prices in the short term) and a weighing machine in the long run (the bottom line results win out in the long term). At this time, and pretty much all the time (though depending on fads this can change), excellent processes are not popular with the “voters” so trying to jump start you stock with talk of that would fail (it is a waste anyway…). But if process excellence works as a business strategy (and I think it does along with strategic vision, respect for people, customer focus…) then the results will acrue and the stock will reflect that in the long run.

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