Major brand owners prepare for the recovery

18 June 2010

NEW YORK: Brand owners such as General Electric, Cisco and Microsoft are all adapting their global strategies in a bid to strengthen their positions during the economic recovery.

General Electric, the conglomerate, is one firm that has tried to revolutionise major aspects of its portfolio in recognition of the seismic shifts that have resulted from the recession.

"This economic crisis doesn't represent a cycle. It's an emotional, social, economic reset," Jeff Immelt, its chief executive, said.

"The interaction between government and business will change forever. In a reset economy, the government will be a regulator and also an industry policy champion, a financier and key partner."

While arguing the repercussions of the credit crunch amounted to the biggest "challenge of our lifetime," Immelt added that the opportunities have proved to be equally large.

General Electric's Ecomagination programme and its targeted approach to innovation in countries like India and China are just two examples of this trend.

"I've told our leaders at GE that if they are frightened by this concept, they shouldn't be here," Immelt said.

"But if they're energised and desire to play a part in transforming the company for the future, then this is going to be a thrilling time." 

Cisco, the networking specialist, has outlined 26 goals that will inform its overall operations, ranging from gaining a leading role in cloud computing to manufacturing technology that can be used in space.

It is also keen to encourage the transition to "Web 3.0" in China and make further in-roads in Mexico, Brazil and Russia in an effort to boost its annual turnover by 25% in each of the next five years.

It has established 26 separate "councils and boards" to head up its activities in these areas, with 250 senior managers staffing these units.

"We're doing what we think has not been done before in business, with a replicable process that allows you to scale and grow and to add flexibility," said John Chambers, Cisco's ceo.

"By doing this we can have 26 priorities, whereas in the past we might have had one or two. If this works, this will be probably the most fundamental change in business over the last couple of decades."

Microsoft, the IT company, is also seeking to roll out a variety of new products as it tries to tap in to the new realities of the market.

"In my view, what we now have will be a fundamental economic reset," said Steve Ballmer, its chief executive.

"Instead of innovation and productivity driving growth, it's really been unsustainable levels of debt, particularly private debt, that have been a key driver of economic growth. The bubble has burst."

In response, Microsoft recently unveiled new devices such as a tablet computer and a "social" smartphone, and it plans to continue emphasising research and development going forward.

"America really has to return to growth that's built on innovation and productivity, rather than leverage and private debt. That must happen," said Ballmer.

Kate Robertson, UK group chairman of EuroRSCG, also suggested that acquiring an understanding of new media will be essential in engaging the 18–26 year old demographic.

"Everything they address in the future, the good and the bad, is actually about a single world," she said.

"Digital platforms make the sense of that possible for them and that is a completely different world. Digital platforms also offer them a chance to be heard in a way that's never been possible before."

Data sourced from Daily Telegaph; additional content by Warc staff