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MBA Graduates Fuel General Electric's European Growth

Ferdinando “Nani” Beccalli-Falco, European CEO of General Electric, maps out his European ambition – and stresses the importance of hiring the right leaders.

Thu Oct 16 2014

BusinessBecause
 
Last month Ferdinando “Nani” Beccalli-Falco, European CEO of General Electric, sat down for a meeting with the multinational conglomerate’s commercial leadership team from his Frankfurt base in Germany. 
 
There was little to bind the boss’s backgrounds together – but he noticed that four of the chief marketing officers came through GE’s prestige leadership track. Corporate leaders are often found through headhunting firms or poached from rival businesses. GE, however, prefers to groom the next generation from within.
 
Its ECLP – experienced commercial leadership program – has snapped up 1400 candidates since its inception. It will take on 80 more this year. Many of them are holders of MBA degrees. 
 
“Most of [the] ECLPS have done very well. [It] is a good path and we should continue to encourage this way of developing talent,” says Nani from GE’s regional headquarters.
 
Nani says he values MBA students because they guarantee a certain amount of experience. “Most come from good [business] schools, good backgrounds,” says the chief executive who is also CEO of GE Germany, his Italian accent beaming.
 
It is important to him who the company hires. Nani is responsible for the growth of the European arm of General Electric, a business with global revenues of $36.2 billion in the second quarter of this year, up 3% from the same period in 2013, which employs 94,000 people across Europe.
 
Central to growing GE’s extensive portfolio of businesses – it has operations in healthcare, energy, finance and oil and gas, to name but a few – is a strong hiring machine. 
 
GE is a global conglomerate but Europe is central to this international growth ambition. About 60% of the €8 billion which GE has invested in acquisitions in the past two years has been invested in Europe, says Nani. 
 
Its latest, a $16.9 billion offer to take over most of Alstom’s energy business, will be GE’s biggest ever industrial acquisition. The deal to acquire the French engineering champion is expected to close next year.
 
“Europe is a cradle of tech,” Nani enthuses. “Europe defines those pieces of technology [which are] important for us to improve our portfolio.”
 
But he knows Europe has also seen its fair share of difficultly. There have been calls for fresh measures to tackle the Eurozone’s stuttering economy and persistently low inflation.
 
He thinks that Europe needs significant reform – social, political, economic and fiscal – and greater integration of its 28 member states. 
 
“There is not a united security policy [or] energy policy,” he says. “We created the open market but not a common, open labour market to revert to. [There are] too many differences between member state to member state to have a free flow of workers,” Nani says. 
 
However he earmarks energy, oil and gas and GE Capital, the company’s financial services unit, as key to GE’s growth in Europe. But he also says its healthcare unit is “flat” in the region because of the reduction of expenditures from hospitals and other healthcare services centres, in contrast to a surge in growth in the emerging markets of Southeast Asia. 
 
GE is beginning to see the benefits of assembling a division providing products and services for oil and gas companies. It spent about $11 billion on acquisitions in the oil and gas market between 2010-2013, and Nani thinks the sector has similarly bright prospects now. 
 
“It is a growth area for General Electric… And we make investments because we believe there are big opportunities,” he says.
 
These acquisitions have made GE one of the world’s largest suppliers of oil and gas equipment and services, with about 45,000 employees worldwide. Equipment orders for its oil and gas business fell 9% in the second quarter of 2014, yet services orders were up 23%.
 
“The core of [the] oil and gas industry is still in Europe, despite the fact most exploration doesn’t happen in Europe,” says Nani. “Oil and gas is particularly concentrated for us in Europe. Five of the seven sisters of big oil producers are in Europe,” he adds. 
 
The region’s energy sector has similarly bright prospects for the company which evolved from a small business belonging to Thomas Edison, inventor of the incandescent light bulb, in 1878.
 
Nani says there is now more sustainable energy production across Europe, creating a “great rush” in renewable energies such as wind. Central to the growth of GE Europe’s energy business is Germany. It is no coincidence that Nani is based in Frankfurt, the country’s fifth largest city – Europe represents about 40% of GE's international revenues.
 
“Germany is the biggest market and is growing. It is doing better than most of the other European markets,” he says. 
 
He admits that GE has not always faired so well in the Eurozone’s largest economy – “if you look at the potential, we were doing very poorly compared to other countries like France, Italy [and the] UK” – but things have now improved dramatically, he says. 
 
“Since 2010 we have more than doubled the size of our energy business in Germany. It [Germany] is very important.”
 
The German government last month unveiled a new “digital agenda” and Nani sees the fledgling digital economy as one element of growth. “GE needs to be at the forefront of this digital wave, and… Any investment we make in this area is helping us [strengthen] the leadership positions we have,” he says.
 
Nani adds that it is important for ECLP candidates to come to Germany and to understand the German market. “We created the ECLP to create a certain amount of commercial leadership [which] we were lacking.”
 
Nani may be focused on European growth but he values leaders with an international outlook. He began his career at GE in in 1975 in the United States but most recently served as CEO of GE International for nine years. Prior to that, he held leadership positions in GE Capital and GE Plastics in the US, the Netherlands and Japan.
 
In February last year, he was appointed to the Science and Technology Advisory Council to outgoing European Commission President José Manuel Barroso, and was previously an international advisor to former French Prime Minister Jean-Pierre Raffarin.
 
He says that GE Capital continues to be a “solid performer”, and continues to help GE Europe in its growth. But GE is also committed to reducing its financial services business to approximately 25% of the overall company. Commercial leadership, however, is still central to GE’s European ambitions. 
 
For Nani, last month’s management meeting may have been an indication that the strategy is working. “The important thing is who we hire,” he says. 

 

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