In a laboratory here stands a doughnut-shaped "supermagnet," so strong that it once snatched a heavy metal cart away from a technician. It took a truck to pull the cart free.
The magnet at the General Electric Co. laboratory is the heart of a new medical diagnostic technology. Called magnetic resonance (MR), it uses an extremely powerful magnetic field to outline bones and tissues inside the human body in far greater detail than X-rays and scanners now provide.
It also symbolizes how the rush of technology in the 1980s has forced a profound change in corporate strategy on GE.
General Electric is trying to build MR into a hundred-million-dollar-plus business in only 30 to 36 months, says GE Chairman John F. Welch Jr. But it took GE much longer to create businesses of that scale from the older diagnostic technologies of CAT scanning (computer aided tomography) and X-rays.
"I think in CT scanning it took maybe 60 months . In X-ray, it might have taken 10 years," Welch said.
GE cannot afford to wait that long for the critical answers about the future of a technology as costly and risky as MR. And so it is pushing ahead as fast as it can.
"We're not changing GE for the sake of changing GE," said Welch. "We'll try to adapt GE to a world that we see that is on fire."
Throughout the company, GE officials have embarked on a furious program of research, development and acquisition designed to transform their company from a sleeping industrial giant into a high-technology superpower.
The company, oriented toward new technology from its very origins as the vehicle for Thomas Edison's commercialization of the light bulb, now wants to be as well-known for microchips and sophisticated medical equipment as it is for clock radios and dishwashers.
Since becoming GE's chief executive officer three-and-a-half years ago, Welch has overseen a sweeping makeover of the company.
Seeking efficiency, the company has closed or announced plans to close more than two dozen plants, idling 60,000 of its 400,000-plus work force in 1981. It is spending billions of dollars modernizing other plants.
In addition, Welch has directed a fundamental change in GE's way of looking at the world and at itself, stressing flexible planning and speedy reactions to changing market conditions.
As part of his reordering of GE's corporate culture, Welch is urging his managers to look for the big hit rather than being content with marginal business improvements. "We have to have a lot of people who are willing to go for the quantum change, who are not willing to do a little better than last year every time -- who are willing to change the nature of the business they are in," Welch said.
Underlying this new philosophy is a perception of fundamental changes going on in the business and economic environment in which GE operates.
Managers see a world of slower general economic growth coupled with rapid technological advancement and increased competition, especially from abroad.
"I think the '80s are clearly different from the '70s," GE Vice Chairman Edward E. Hood Jr. said. "A world with a smaller overall growth rate. A world that is increasingly competitive on a worldwide basis."
And by the end of the decade -- except for a few specialized business niches -- "if you aren't competitive on a world-scale basis, you are in serious jeopardy," Hood added.
"You can't be a world-class competitor with a domestic headset," Welch said. "You have got to think of selling not in 50 states, but in 50 nations. You have to think of sourcing not in one state or one country, but in 50 countries. You've got to have a world view of this whole thing."
To fund its vision of the future, GE has $5 billion in cash, the largest corporate war chest ever assembled without debt.
The money has been accumulated over the past few years from profits and the sale of scores of businesses that GE executives didn't think fit the company's future -- including its Utah International mining division, sold earlier this year for $2.3 billion.
GE plans to spend the money on developing and marketing new technologies, expanding and modernizing its existing businesses, and making acquisitions. Much of the money is targeted for investment in technology to improve the lot of both GE's older businesses and its high-tech ventures.
"Technology is in old businesses, it's in new businesses, it's everywhere to get competitive. It's in every corner of the place," Welch said. "If you look at a company like General Electric, we can only win in games that require technology and investment."
GE is spending $2.6 billion this year to fund internal development, with 60 percent earmarked for updates of products and facilities in its "core" businesses, such as lighting and appliances.
The company is in the process of spending more than $1 billion on plant modernization projects that, among other things, will double its light-bulb-making capacity, will apply flexible manufacturing and robotics technology to the manufacture of diesel railroad locomotives, and will put state-of-the-art production equipment in place at its sprawling major-appliance plant in Louisville.
"The technology investments are the only way the core can survive," Welch said. "We can't have anything in our core -- in GE -- that doesn't require, or doesn't have the opportunity for, technological leapfrogs, process technology wins and investment," he added.
GE also is plowing money into developing products from research. The list of research projects at the GE corporate labs here reads like a Scientific American-to-Silicon-Valley tour of the high-technology frontier, including engineered materials, computer-aided engineering design, very-large-scale integrated VLSI computer circuits, artificial intelligence, "seeing" robots and magnetic resonance.
Some of the various technologies being developed by GE have higher priorities than others, reflecting the differing characteristics of GE's many businesses.
"Various industries have their clocks ticking at different rates, basically," said Roland W. Schmitt, GE's senior vice president for corporate research and development. "What's short term with a large turbine business is infinity for electronics.
"I call them the runners and the joggers," he said. "You know, the runners are the ones that are really flat out, like MR, like VLSI and so on. But then there are a number of other things that are progressing at a nice clip, but clearly could be speeded up."
"There's a growing recognition of the value of speed in moving technology into products," Schmitt said. "Three or four years ago, we took a look, with Operations, at several different programs, and we started asking ourselves the question: Suppose we turn up the resources in these programs to bring them to market a couple of years earlier? That would obviously cost a lot of money; the question is, would it pay off?
"Even with our hard-nosed Operations guys at it, we came to the conclusion that, in a lot of cases, it paid off," he said. "It pays off because you got into the market faster, you've got a bigger market share and so on, so the extra cost is more than paid. Now we're trying to push that. . . . The more you move into businesses where the technology is changing, the bigger the premium on speed."
Welch cites as an example the field of diagnostic-imaging devices, which in the past two decades has evolved from X-ray machines to computer tomography (CAT, or CT) scanners, to magnetic resonance machines. The MR technology uses an extremely powerful magnetic field to align the nuclei of certain cells in a patient. A radio pulse bounces the nuclei out of position, and as they bounce back, a computer measures their position, providing technicians with sharp images of a patient's organs and bones.
GE is in a stiff race with Picker International Inc., an American firm, and Siemens of West Germany to perfect MR, a breakthrough technology that has yet to demonstrate its cost-effectiveness, given the million-dollar-plus price tags on the systems.
"We were No. 1 in the X-ray business. If we stayed at that pace and didn't adapt to CTs, we wouldn't have been No. 1 in diagnostic imaging any more," said Welch. "And if we didn't move faster even still in MR, we would have lost our No. 1 in the combined CT and MR . That's a perfect example of a company trying to adapt to change that's increased in its business."
In an effort to hasten new technology to market, Welch is asking GE managers to rely more fully on the corporate labs. "We've got to get from laboratory to marketplace faster," he said.
"He one time made the comment that he wanted to see the autos of every general manager in the company up here in the lab parking lot," Schmitt said of Welch. "So we expanded the parking lot." Last year, 265 GE officials at the level of general manager or higher visited the labs, Schmitt said.
Sometimes that interaction gets a little testy -- but that can prove Welch's point. Take the case of Comband, a recently announced GE product that uses a relatively inexpensive coding device to double the amount of information a cable television broadcaster can put on a single channel.
The technology, a somewhat serendipitous spinoff from GE's research into military communications, made it from lab to market in just two years. But that may not have been fast enough.
"The general manager whose business this went into, I thought would be bowled over with gratitude," said Kenneth A. Pickar, manager of GE's electronics laboratories.
"He came here and said, 'Well, it was okay, but you didn't get it fast enough. I'm not sure how long the market is going to be open, and you guys are going to have to work a lot faster.' "
In some cases, GE has found itself playing catch-up in the technology race, particularly in semiconductor and computer-related fields. That's the legacy of a decision made a decade ago by former GE chairman Reginald H. Jones to pull out of many sectors of the computer business in the face of heated competition from giants such as International Business Machines Corp. and mounting computer losses for GE.
GE managers today defend the decision as a prudent one, particularly because it allowed the company to devote resources to developing businesses such as plastics and jet engines that are now mainstays of the company.
But even Jones concedes that GE may have retrenched too much. "I think where we made a mistake was in not continuing, to the degree we should have, the emphasis on the semiconductor, on the electronic approach to controls, because controls are at the heart of so many businesses in General Electric," said the former chairman, who now is a consultant to the company. "We've had to fight our way into that."
To bolster its own integrated-circuit work, GE bought a pioneering semiconductor maker, Intersil -- one of several acquisitions made to fill in holes in its technological and business know-how. Other recent purchases include Calma Co., a leading computer graphics firm, and the precision ceramics division of Minnesota Mining and Manufacturing Co.
Acquisitions such as that are made possible by that $5 billion bankroll. GE has enough money, if it wants, to acquire for cash all but the very biggest of the Fortune 500 -- and the company could stretch that limit by borrowing. That possibility has set mouths watering among Wall Street's deal makers.
But GE officials say they have no plans for a major acquisition -- the money isn't burning a hole in their pockets, said Michael A. Carpenter, GE's vice president for corporate business development and planning. "The priorities, as I see it, are, first of all, reinvesting in the existing businesses to make sure they're as attractive 10 years from now as they are today," he said. "That's the first priority: make sure the foundation is secure. . . . The second priority is to fund all of the good internal ventures."
Welch has identified 15 major GE businesses as the foundations of the company's future.
These are broken into three groups, each of which contributes roughly equally to GE's revenue: the company's traditional "core" businesses such as lighting, electric motors, appliances and power turbines; high-technology lines such as electronics, materials and jet engines; and services, including credit, insurance, computer service and leasing.
"I've got 15 businesses that I've got a chance to be a powerhouse in," Welch said. "They're not all No. 1, they're not all clearly defined winners, but they're businesses to which we can bring these assets . . . technology, money, people, resources, to win. And they're big games, not small games."
The success or failure of Welch's efforts will be measured by the numbers that reflect GE's performance: its stock price and sales and earnings figures. The managers who run GE hope that, by remaking the company in a high-technology and service mode, they can break '' away from GE's traditional image as a sedate plodder that merely matches the growth of the U.S. economy.
"The world says we're a GNP-growth company," said Carpenter. "We are in markets which are above-GNP-growth markets. . . . I see the company being a GNP-growth company -- plus one, two or three points."
GE hopes that the company will have used its existing base to create a more powerful, modern entity by the end of the decade.
"I don't think any of us can see with great clarity what 1990 is going to look like, but I believe that, by 1990, the key businesses that we talk about -- our 15 fundamental key businesses -- will all be winners at that point," Hood said.
"The real test of how good and capable we are as a team is how good we look in 1990," Welch said. "One of the things that I have to do here is get a company that in 1990 I like a lot more than I like today."