GE’s two Decades Transformation
Jack Welch’s Leadership
Group 1
12P139 Ishpreet Singh
12P141 Karan Jaidka
12P142 Kshitij Agrawal
12P143 Kshitij Ahuja
12P146 Manav Gupta
12P178 Vikas Jain
Company’s time line
Jack Welch(19812001)
Reg Jones(1973-1980)
GE was benchmark for
others companies
Founded in 1878 by
Thomas Edison.
Focus on Generation,
Distribution, and use of
electric power
(imitated its SBU
based structure &
planning process).
Challenged to be
“better than the
best”
Be no. 1 or no. 2 or
close
Neutron JACK
• When joined GE the U.S. economy had lot
of problems:-
• Welch came out as a transformational leader
• To do so set in motion series of changes to restructure the
company over next five years.
• He had both authoritative and democratic styles of leadership
Effective Strategic Leadership
Fix, Sell or Close
Vision and
Developed
Mission
Human and
Social Capial
Effective Strategic
Leadership
A Players and
Four E’s
Determining Strategic
Direction
Effectively Managing
the Firm’s Resource
Portfolio
360 Degree
feedback
Weeding
out
process
Autocratic
Leaders
Establishing Balanced
Organisational
Controls
Sustaining an Effective
Organisational Culture
Emphasizing Ethical
Practices
Welch's Vision
Services
GECC Information
Construction &
Engineering
Nuclear Services
Support
Ladd Petroleum
Semi Conductor
GE Trading Co.
Utah Mining
Technology
Industrial Electronics
Medical Systems
Material
Aerospace
Aircraft Engines
Core
Lighting
Major Appliance
Motor
Transportation
Turbine Construction
Equipment
Ventures
Calma
Three-Circle Vision for GE
Outside
Housewares
Central Air-Conditioning
TV&Audio
Cable
Mobile
Power Delivery
Radio Stations
“A decade from now, I
would like General
Electric
to
be
perceived as a
Unique,
highspirited,
Entrepreneurial
enterprise…the
most
profitable,
highly diversified
company on the
earth, with world
quality leadership
in every one of its
product lines”. -Jack Welch
“Restructuring the Hard Drive”
• Sold more than 200 businesses[SPIN OFF] and made over
370 acquisitions.
• Replaced the strategic planning system with “real time
planning”.
• Built five-page strategy playbook.
• Budgeting process was redefined.[rather than internal
comparison used external means]
• Insisted GE become more “lean and agile” resulting
Delayering
“sector” level
Downsizing
elimination of about
123,450 jobs
Destaffing
elimination of an
additional 122,700 jobs
Second Stage of Rocket
• 1980’s most of the restructuring was complete
• Jack’s priorities were shifting to Culture
“A company can boost productivity by restructuring, removing
bureaucracy and downsizing, but it cannot sustain high
productivity without cultural change”
Work Out
Best Practices
“Software” Initiatives
Work Out
To get unnecessary bureaucratic
work out of the system
Forum in which employees and
their bosses could work out new
ways of dealing with each other
Groups of 40-100 employees were
invited to share views about the
business and how it can be
improved 3-Day session, there
was no documentation of meeting
Best
Practices
It was about increasing
productivity
through
Competitive Intelligence
[best practices of Ford, HP,
Xerox, Toshiba]
Through
best
practices
realization by managers that
they
were
measuring/
managing wrong things
Going Global
Opportunity
Working
Philosophy
Problem
Europe economic
downturn
$17.5 billion invested in
from 1989-1995,on new
plants, acquisitions and
finance.
Mexican peso
collapsed
Great buying opportunity,
acquired 16 companies.
Asia slipped into
Crisis
Welch urged its managers
to view this as an
opportunity to buy rather
than a problem
Developing Leaders
• People were GE’s key assets and are company's resource.
• Develop leaders aligned to GE’s new vision and culture.
Work Out Idea striked.
• Characterizations of Leaders
First
• Delivers
commitments
and share
values.
Second
Third
• Doesn’t meet
commitment
and doesn’t
share values.
• Misses
Commitments
but shares
Values
• Introduced 360 degree feedback process.
[rating employees on scale of 1-5]
Fourth
• Delivers
commitments
but doesn’t
share values.
Autocrat and
need to weed
out from GE
Boundaryless Behavior (Third Wave)
• To strengthening GE’s Individual Businesses
Integrated Diversity
Boundaryless
Company
The Boundaryless company
we envision will remove the
barriers among engineering,
manufacturing, marketing,
sales, and customer service;
it will recognize no
distinctions between
domestic and foreign
operation
• Bonus and rewards for idea sharing and not
just idea creation
Stretch: Achieve the IMPOSSIBLE
• How good can you be?
Higher
Goals
not accountable
Rewarded
accountable
Manager
HIT
Basic
Targets
• Don’t-punish-failure concept.[No disaster of Stretch target Idea]
• By 1995 GE did achieve Operating margin of 14.4% and inventory
turns of almost 7 in 1995
Service Business
• Future => offset slow growth in Products, started focus on
added value services.
– Medical Business -> “In Site”
– Real time diagnostic concepts applied in Aircraft and Power
systems.
• Biggest growth opportunities => Providing service to customer.
• Making existing assets of Customers more productive.
1980
1990
2
15%
Selling Products to
Customers
1
85%
2
45%
Products
Products
2
1
55%
55%
TRANSITION
Services
1995
1998
1
33%
1
45%
Products
Helping our
2
customers
win
67%
Closing out the decade
• Didn’t go by the trend.[breaking up
multibusiness companies].
• Six Sigma Quality Initiative.[AlliedSignal borrowed form
Motorola]
• Gary Reiner-VP of Business Development lead the Quality
Initiative.
• GE was operating in error[3.4 defects per million operations
and costing $8 - $12billion a year]
• Goal to reach Six Sigma quality levels company wide by
2000.
Six Sigma Quality
• Tied 40% bonus to Individuals[Six Sigma was not optional].
Green Belts
• 4 weeks training
5 Months
implementation
Black Belts
• 6 weeks of
instruction in
statistic , data
analysis and other
six sigma tools
Master Black
Belts
• Full time six sigma
instructors –
mentored the Black
Belt candidates
through the two –
years process
• Medical Systems= tenfold increase,62% reduction in
turnaround time.
• Change the DNA of GE whose central strand is QUALITY.
"A Players" With "Four E's"
A Players
Execution
Individuals with vision, leadership, energy and
courage.
Edge
Energy
Energize others
• Implemented Performance Appraisal System.
• Globalizing the intellect of the company.
• Continuously upgrading Quality of management was key
success of GE.
E-Business
• Each unit had full time dyb.com team
focused to redefine the business
model.
• Welch thought GE was late entrant to
Internet.
• Through the process of Six
Sigma, GE has done the hard work
which is needed to support ebusiness.
• Early results of digitizing the
company was success.
Reduced
Hierarchy, so as to
have maximum
Control
1.
Product
toon
• Increased
focus
MDIservice
• Constant
2.
Staff Evolution
of Process
Incentives
Flexible
Education
Welch’s
“FORCE”
Model
Organisational
• Work-Out
• Speed, simplicity &
Confidence
Communication
Result-Oriented
Long term Results
such as stock
option based
incentive
Thank You