Mike Cobb talks with GE Capital’s commercial director Maeve McMahon who found a gem hidden in plain sight and is securing new business leveraging the breadth of expertise of the GE Group
With an ever-more crowded market for lease finance, finding a gem idea which makes a company stand out from the crowd can sometimes be a difficult task. But in its Access GE project,GE Capital thinks it may have just found that sparkle.
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GE Capital also discovered that gem hidden in plain sight among the SME companies that are usually so well covered.
When Maeve McMahon, commercial director of Access GE, was appointed to head the project in early 2012 she decided to look at just one of the elements within the SME space and set her team to look at the needs of medium-sized companies in four nations across Europe: the UK, France, Italy and Germany.
What they found surprised them. "When we started trying to find out what research existed on these companies, to understand the challenges that they faced every day, there was nothing," McMahon tells Leasing Life ."I think it was largely ignored by
policy-makers."
With all the focus on smaller companies, medium-sized companies (which GE Capital deems companies with a turnover of between 10m and 500m) have been largely overlooked in their importance to the general economy, says McMahon.
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By GlobalData"What we’ve understood is that mid-market companies are the source of jobs. Over the course of the recession these companies have added more than 200,000 jobs in these [four] economies while large companies have shed 1.5 million."
GE Capital found this was a sector which had not only added jobs but, despite making up just 1.46% of all registered companies, the mid-sized firms contributed a third of the GDP, revenue and employment in the four nations targeted.It was also a market to which GE was a financial provider for one in three companies.
Partners
With the discovery this powerful market had been largely unresearched, GE Capital set about finding partners who could help them understand more fully what it was that middle tier companies needed for expansion.
GE Capital began to work with Warwick Business School in the UK, ESSEC in France, the University of Padova in Italy and IfM Bonn in Germany to analyse businesses in the sector.
Over the course of 2012 the partnerships interviewed 1,600 board-level executives.
"This year we took it a step further and we interviewed 2,200 mid-market executives, to really help us understand the challenges that these companies face every day and how we can help them as a financial provider," says McMahon.
And the end-result of the exercise showed just how different this mid-market was to those of small and micro-companies.
For example, a Siemens survey from December 2013 showed that 84% of manufacturers in the SME sector were in need of funding as a priority. GE Capital discovered that for middle-market companies that requirement was not so high.
"We were really amazed with what we found," says McMahon. "Access to finance was, yes, one of their top challenges, but it wasn’t the number one challenge."
She continues:"The number one challenge was how do I keep my costs down? And the second was how do I attract and develop employees? The third challenge was access to finance."
With this knowledge, GE Capital decided to combine its financial services offering with something more abstract and provide a consultancy service through which interested companies in the mid-market can access business expertise from within GE. This evolved into Access GE.
Access GE is not a financial product, despite it being run through GE Capital. Instead, McMahon describes it as "the programme that gives our customers and our prospects access to GE’s expertise and insights."
"You can tap into the 130-year expertise of GE and remember GE is in everything from aviation to light bulbs and everything in between," she says.
Nothing new
The idea behind the proposal was nothing new, adding value to a client base through sharing expertise is something that other organisations and companies do.
In particular Dell Financial Services works with its parent on ‘The Center for Entrepreneurs’ which utilises an in-house entrepreneur to offer advice to small, key clients and help them grow. For Dell Financial Services the goal is to incubate those firms and offer finance for growth.
For Access GE, while finance provision is important it’s not a specific target for the team, and the programme is open to companies which do not use the financial services side of GE, or for that matter, potentially any side of GE’s industrial group.
In addition, rather than focus on smaller companies, the project focuses on the mid-tier companies which the research has shown to be overlooked.
With a core need identified and further research under way, a pilot programme was launched allowing those interested in accessing the knowledge and expertise of GE’s management and staff through three different routes. All of these have been carried over to the recently launched full offering.
A primary method of access is expected to be through the existing sales channels, according to McMahon. The sales team will then direct the query through the appropriate routes to the relevant expert within the whole of GE’s industrial network.
And McMahon stresses that the Access GE platform is designed to use the expertise of the whole of the GE organisation, regardless of the original relationship that the customer may have with the group.
Regional expertise
McMahon suggests as an example any company looking to expand their business into Eastern Europe.
If that customer knows GE has experience in that region then they can talk to the sales representative after which "we will facilitate that conversation, through the Access GE network".
Another route into the programme is to sign up for access to the dedicated website.The site contains all the content and all of the expert profiles from across the GE Group.
Using this you can "self-serve to see if there is something on there that tickles your fancy," says McMahon, and claims that there are 400 already signed-up for this aspect of the programme in the UK.
A third option for entry to the Access GE network is to download the phone app, which has monthly updated content similar to the websites.
Whatever the route into the programme, there’s no cost and the ultimate aim remains the same, says McMahon. The company can look at the information it finds on the portal, or take it a step further and have one-on-one time with an expert who will best help solve its problem.
This conversation is then facilitated by a team in each country dedicated to the programme and they may arrange a number of ways the company can best access the information it needs.
The programme will also offer a series of seminars and conferences, which is also how GE Capital has been making industry aware of the programme at this early stage.
So far the programme’s pilot period has shown the customer base has accessed information much in keeping with GE’s original research findings.
For example, McMahon says GE’s talent expertise has been popular: "We have had a number of requests for us to come in and talk about GE’s leadership practices and talent management systems," she says.
"They just want to hear from someone who is in their industry and who has done it, and who does this every day. And they can take away anything."
Parallel projects
Overall the pilot has had 180 different enquiries in its first year across the four nations targeted. And with US and Asian parallel projects included, the total rises to about 500.
The plan for the first year in the UK is to have 50 such engagements, and if the project proves to be a success and the clients demand more, then more managers and more engagement can be brought in.
While elements of the programme are invitation-only, particularly web access, none are exclusive to GE clients.
There may be no obligation to take a finance deal by anyone signing up, but there’s no escaping the fact that this programme hopes to attract new clients for GE Capital.So far in Europe, McMahon says, the figures show this could be working.
"We know from the new business we are generating that it’s paying for itself," says McMahon, and she estimates that in the four European countries involved the new business directly generated in the 10 months to October for GE Capital was about $360m (261m).
Particularly in Italy the effect on new prospects has been pronounced. One example McMahon is able to give is of a company which had shown little initial interest in using GE as its finance provider.
When the Access GE representative in Italy was able to talk to the managing director of the company about the expertise of GE in Central and Eastern Europe, the company was so impressed by the advice offered through the programme, that it went on to give GE Capital a finance deal and the managing director then spoke at one of the Access GE launch events.
Even if the financial rewards of the scheme fade, McMahon believes that this programme will be a cornerstone of its client offering for years to come.
As McMahon tells Leasing Life: "This is core to our value proposition; this is not a campaign. This is not going away."
