By Interview by Peter Guest | Published: 28 December, 2009
“We spent the last 25 years saying that, look, we are a private business, we do private business things. You are the government, stay out of the way. And then this crisis happened, and all of a sudden we come across the fact that governments, after all, have a role to play”
President and CEO of GE International, Ferdinando “Nani” Beccalli-Falco jokes that his role is not unlike that of a foreign minister, and in the current global climate, it is probably close to the truth.
The state is back, and for many companies, investor relations and customer relations are increasingly becoming government relations. Technological solutions for environmental problems are discussed at the highest levels of politics. Colossal businesses have emerged from the developing world offering products to consumers at a fraction of the prices of their Western competitors.
Huge global conglomerates, such as GE, seem to some extent anchored to the pre-downturn world economy, the period of runaway growth in the developed world fuelled by advances in technology and globalisation, where the corporate actor was destined to outgrow and outshine the public one. Faced with the waning of those orthodoxies as the relative power and growth potential in the West falls, and as emerging market giants rise, GE, and others like it, should be a company in decline.
Not so, according to Mr Beccalli-Falco. “The world is getting more complicated,” he says, “but that’s OK, it’s also getting more interesting.”
The world, he says, is trending towards multipolarity, with influence coalescing around a number of influential nations: the US, China and potentially Russia, Brazil and Iran, all of whom will produce – or own – globally significant companies, which will have to become either competitors or partners for GE. “Each one of these pole leaders that you are going to face is a political and economic hegemony that will be reflected by the fact that there are companies that are part of, or belonging to these poles, that are going to become global players. We have to face it,” he says.
The notion that the private sector has to work in a vacuum, isolated from government, has also now been challenged. “Let’s talk about the last 25 years. We spent them saying that, look, we are a private business, we do private business things. You are the government, stay out of the way. And then this [crisis] happened, and all of a sudden we come across the fact that governments, after all, have a role to play,” Mr Beccalli-Falco says. “And it could be a role that is not only in an emergency situation, but it could be a role as a partner for the future. For a long period of time, from now on, governments are going to be the entities that have the money and the possibilities.”
Couple this with a global structural shift towards emerging economies and GE faces markets and customers with different demands. It needs to develop products and services for smaller economies and, ultimately, for consumers far more sensitive to pricing. “Our hope is one of being able to recreate a situation that is going to forge another 25 years of consistent growth. What we have to do is to find out where, how and when.” While GE’s day-to-day activities – “selling aircraft engines to the airlines, power generation units to the utilities, diagnostic equipment to the hospitals” – will continue, there is a new business emerging in tackling some of the problems facing individuals towards the bottom of the pyramid.