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GE Healthcare invests about $1-billion on research and development, of which about $800-million is spent in the equipment division. (iStockphoto)
GE Healthcare invests about $1-billion on research and development, of which about $800-million is spent in the equipment division. (iStockphoto)

TALKING MANAGEMENT

Transcript: Innovation the ‘lifeblood’ of GE Healthcare Add to ...

KARL MOORE: This is Karl Moore of the Desautels Faculty of Management at McGill University, Talking Management for The Globe and Mail. Today I am talking to Tom Gentile, who is the CEO of [GE Healthcare’s Health Systems division].

So Tom, when you look at innovation, how has innovation at GE changed over the last five or 10 years, in your experience?

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TOM GENTILE: Well, GE, across all of our industrial businesses, really depends a lot on innovation. So whether it is energy, aviation or health care, innovation is really our lifeblood.

As I mentioned in my speech recently, Thomas Edison was our founder in 1878 and we really have to live up to his standards, and so innovation has always been a core part of what we do.

Now, in health care, we invest over a billion dollars every year in research and development and, in my business, which is the equipment part of the business, we spend about $800-million of that, and it drives a tremendous amount of focus, not only on new hardware but also software, process – and our innovation delivers about 60 or so new products every year. Those 60 products generate over $2-billion of sales in the year that we introduce them and that represents about 25 per cent of our global equipment sales, which means that our portfolio is turning over every four years.

What is important about innovation is that we want to be at the forefront in terms of new technology and ideas. We want to be state of the art because we want to appeal to our most advanced customers but the fact of the matter is, if we miss a generation of technology, then we will be out of a market for at least four years, and very quickly.

We have seen that happen in a few modalities, which I won’t mention, but we have to stay on top of innovation for a lot of reasons. So the way we tend to drive our ideas is through different mechanisms.

One mechanism we have is our global research laboratories, and so Thomas Edison actually created our first laboratory in a place called Niskayuna, New York, which is near Albany, and that is what we call our global research centre.

We have over 3,000 engineers there: They are all scientists – very advanced, deep thinking, and they tend to do research and develop for products that are five to 10 years out – so, very advanced thinking. We have now replicated that global research centre in Shanghai, in Brazil, in Munich and in Bangalore, so we have five major, now global, research centres. Those scientists, as I said, are doing very advanced thinking on the latest technologies and sciences that will feed back into the products.

KARL MOORE: So why did you choose Munich? Upstate New York we understand, but why did you choose Brazil, Shanghai and Bangalore?

TOM GENTILE: Well, two of the fastest-growing markets and biggest markets are India and China, so those were almost easy decisions. Munich was simply because there are so many talented scientists in Munich, and in Germany in general, that it was an opportunity to tap into some of the best scientific minds in the world. And then Brazil, there was really, for a relatively small economy but a big population and a big geographic mass, Brazil has a lot of innovation that is happening and it is such a big market and such a fast growing market that we felt that was an important place.

The other place, there is a small innovation centre is actually in Detroit, Michigan. Detroit, and I am from Detroit so I am very fond of it, but it is not a place you would naturally think to put a research centre but with the auto industry contracting, there was a tremendous amount of information technology talent available and so we put a small research centre there and it is paying off huge dividends.

So that is one method of developing ideas.

We also use medical advisory boards: So we go to hospitals and we get the best clinical minds in the industry to come together on particular topics and help us generate ideas.

And then a third way we have been driving innovation is what we call Connect Strategies and so when we look at our whole portfolio, it encompasses things like hardware, software, wetware – like contrast agents or radio-pharmaceuticals and services – and we look across the continuum of care of different disease types, or we look at different care areas, and we pull together our teams across those disease areas in that continuum of care and we brainstorm about where are the gaps in care and what type of innovation could we develop to fill in those gaps in order to deliver better overall patient outcomes.

So it is thinking holistically, end-to-end, in very horizontal ways and that has probably proven to be one of the best methods of developing ideas for new developments and new technology innovations.

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