Ecomagination at 10: A status report
Ecomagination at 10: A status report
It’s been a decade since General Electric, on May 9, 2005, launched Ecomagination, its marketing play with an environmental focus. As I reported at the time, “the $150 billion company is hitching its future to the growth of clean energy, clean water and other clean technologies.”
It was a bold move. At the time, GE had a pretty low reputation in environmental circles — it was considered a pariah, in fact. During a 30-year period following World War II, the company had heavily contaminated the Hudson River with polychlorinated biphenyls, better known as PCBs, a toxic chemical compound used in transformers and other electrical equipment. The chemical contaminated sediment, water and wildlife throughout the Hudson River ecosystem. It took until 2009 before the cleanup began.
It was against this backdrop that GE chairman and CEO Jeff Immelt stood at a podium in Washington, D.C., to announce a new initiative to "focus our unique energy, technology, manufacturing and infrastructure capabilities to develop tomorrow's solutions such as solar energy, hybrid locomotives, fuel cells, lower-emission aircraft engines, lighter and stronger materials, efficient lighting and water purification technology.”
(As I noted at the time, I played a small advisory role with a team hired to help the company design and launch the program.)
Ecomagination (called Eco, in GE shorthand) was notable for a number of reasons. First, it was unabashedly a growth play, designed to build the company’s revenue via these cleaner technologies. But it was more than marketing hype. The company created a set of internal standards for what constituted Ecomagination products and revenue, and a scorecarding system, audited by outsiders, to measure Ecomagination's energy and environmental improvement claims.
The company set five-year R&D, emissions and revenue goals, all of which it surpassed. Its $5 billion target to invest in cleaner products was met in 2009; a year later it upped the ante by another $10 billion, for a total R&D commitment of $15 billion. In 2009, the company reported $18 billion in revenue for Eco products and said, “Ecomagination revenue will grow at twice the rate of total company revenue in the next five years.” Annual Eco revenue in 2013 was $25 billion, and cumulatively reached $200 billion since the program's inception, according to numbers just released by the company.
Capital improvementToday, Ecomagination is all grown up — it’s become part of the fabric of the company. (It’s also grown a capital-E, replacing the lower-case “e” when the program was launched.) As much as ever, Eco seems to align with the company’s businesses and overall strategy, as GE spun off its media and appliance businesses — and, recently, its behemoth financial services business — and last year acquired Alstom, a French multinational company in the electricity generation and rail transport markets. It is now firmly entrenched in engines, power generation, water systems and other businesses that sync with Ecomagination's focus on efficiency and emissions reductions.
The program is not without controversies. The technologies the company has put under the Ecomagination umbrella include those for fracking, tar-sands exploration and nuclear power — technologies generally not considered to be clean or green by most environmental activists and investors, but for which GE claims significant energy and water efficiencies over its competitors' products.
Meanwhile, GE has shifted its gaze beyond hardware, notably at software and services that improve operational and energy efficiency, under another marketing effort dubbed Industrial Internet. That program overlaps with Eco — its messaging touts “jet engines, trains and power plants that run dramatically cleaner” — causing some to wonder whether Ecomagination might soon fade away.
It isn’t fading. GE hasn’t yet set new five-year goals for Ecomagination, though I suspect those will come in the weeks and months ahead, but the program remains alive and well, albeit less publicly visible than it was a few years back.
On the occasion of its 10-year anniversary, I recently spoke with Deb Frodl, Ecomagination's Global Executive Director, about how far the program has come and where it is headed. The conversation has been edited for clarity and length.
Joel Makower: How does GE thinks about Ecomagination differently now than it did in 2005?
Deb Frodl: We're at a completely different point. When we started, there were a lot of questions around what we were doing. Now, we're proven. You know what the big global trends are today. We still have increasing population, rising middle class, water scarcity, a demand for more energy. And so Eco is more relevant than ever. Today, it's less about proving ourselves. It's really about how do we continue to make a bigger impact, more scale?
Makower: Does Ecomagination still mean the same thing as it did before?
Frodl: It's always going to be about innovation. But it's also about partnering. It's about ecosystems. It's about business models. It truly is about collaboration and partnership.
And, as you know, it's not just about hardware anymore. Today, the complement of sensors and software allow us to maximize resource productivity in a completely new way. So, it’s not just about hardware. It's about integrated systems and software.
Makower: A lot of this stuff that you're talking about feels like stuff that GE, as an innovative technology company, might do anyway. Can you point to things that GE did that are directly related to the fact that you have this program called Ecomagination? Or is Eco just a way of packaging the kinds of things that you tend to do anyway?
Frodl: It’s a great question. Not every GE technology is Ecomagination. We have a specific certification process that we go through where we make operational and environmental claims on the technology in order to use the Ecomagination brand. That's been in place since the beginning. So it is a segment of the GE portfolio — the cleanest technology in the portfolio.
One of the biggest technologies in the portfolio is wind. You think back ten years ago, wind was just starting. Through our innovation cycles we've been able to reduce the cost of wind by 70 percent in this timeframe. We have 25,000 wind turbines across 31 countries today. That is significant. And without the focus, without the investment, and without the energy around Ecomagination, I'm not sure we would've gotten there.
Or consider our Tier 4 locomotive. Now that the EPA has come out with their new standards, we've worked to design the most efficient engine. We were first to market and we’re sold out of that today. It's a reduction from the Tier 3 [model] of 76 percent in NOx emissions and 85 percent reduction in particulates.
Makower: When you launched Eco 10 years ago there was great fanfare. There were ads about dancing elephants and sexy women coal miners and all that. Now we don't see it much. Given that Ecomagination is a marketing play, why isn't it more visible?
Frodl: The advertising and branding strategy we have taken is more integrated at GE. I'm sure you've seen the "My Mom" ad with the trees running along with the train. Eco is embedded in there. It's not a specific Ecomagination commercial but it's integrated in the overall GE messaging today.
Makower: I'm sure you do tracking of opinion of both GE and Eco. What's changed? How well has that worked for you?
Frodl: We have a lot of brand value with the consumers. And in the survey that we did in December awareness of Eco was far above anything else that GE is currently working on.
Makower: That's remarkable considering that in 2005 GE was under a pretty dark reputational cloud within the environmental community.
Frodl: Eco is always so much more than just a traditional sustainability program where we're focused internally. We are bringing technology to market to help our customers be as productive as they possibly can. That strategy has been key to our success. It allows us to scale and win the hearts and minds of both consumers and our customers.
Makower: A couple years ago you launched this thing called Industrial Internet. What did you learn from Ecomagination that informed how you rolled out Industrial Internet?
Frodl: They were both big bold commitments right? That's what worked for us. Jeff Immelt was out there. We put a stake in the ground. We've built a software center with 1,200 employees. I think there were a lot of parallels to best practices because of the success of Eco. And there’s benefit too of merging the two together, which I think is successful as well. These are separate strategies inside GE but they are very much aligned.
Makower: Let's look ahead to 2020. GE continues to change. You’ll have spun off GE Capital. You’ll have integrated Alstom. There's a reasonable chance you'll have a new CEO. When we talk about Ecomagination for the 15th anniversary, what's the story you think GE will be telling about how it's continued to evolve?
Frodl: I think that is going to be an interesting journey because the world moves so quickly and times are so uncertain. I think what's for sure is that we are always going to be focused on innovation. And I think that innovation that we generate inside GE will be game-changing, will be scalable, might be disruptive.
And as I mentioned earlier, innovation going forward is going to require partnerships. When we announced our extension of our commitments last year we focused on announcing a couple of partnerships.
Those partnerships today are helping us solve some of those world's biggest challenges — flare gas for instance. We're working with Statoil and Ferus Natural Gas to build out an ecosystem where we can monetize and reuse that natural gas instead of letting it be flared, wasting it and also encompassing a pretty big environmental challenge. We'll be doing more things like that.