Presented By:-Ashis Kyal (PGDM3/1608)

GE’s two-decade transformation: JACK WELCH’S LEADERSHIP

OVERVIEW

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FOUNDED1878, Thomson Houston Electric Company (THEC)

MERGER1892, Between GE and THEC formed General Electric

HEADQUARTERSFairfield, Connecticut, U.S

REVENUE$ 123.700 Billion (as of 2016)

• Founded in 1878 by Thomas Edison.• Focus on Generation , Distribution, and use of electric

power to become. • 1978 – Power Generation , household appliances,

lighting, Aircraft engines, medical systems and Diesel Locomotives.

INTRODUCTION

SINCE 1973GE – CEOs

1930Centralized

1950Decentralized

1960strengthen its corporate staff and develop sophisticated planning systems

REG JONES (1973 - 1980)PREDECESSOR

strategic 43units: To support strategic planning.

GE was benchmark for

others companies Imitated its SBU (

based structure & planning process).

Unable to review and approve

massive volumes of Information

generated by 43 SBU’s.

Formed a covering on GE’s

departments, divisions, groups and SBU’s with

“SECTORS”.

Country’s leading business

statesman.

YEAR ACHIEVEMENTS

1970 “CEO of the Year” 3 times by his peers.

1979 “CEO of the Decade”

1981 “Management Legend” by WSJ

BRIEF INTRODUCTIONJACK WELCH

John Francis "Jack" Welch, Jr. born( November 19, 1935), ALMA- MATER

•Salem High school•University of Massachusetts (Bachelor of

Science in Chemical Engineering, 1957)•University of Illinois at Urbana-

Champaign (M.S and PhD, 1960)

YEAR ACHIEVEMENTS

1997 National business hall of fame

1999 Manager of the 20th century

2001-2004 Forbes 400 richest Americans

CHALLENGES AS A CEOJACK WELCH

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ECONOMY IN RECESSION

HIGHEST UNEMPLOYMENT RATES SINCE DEPRESSION

HIGH INTEREST RATES

WHAT IS WELCH’S REACTION TO THESE CHALLENGES?

“Better than the Best”

“Restructuring the Hard Drive”#1 or #2: Fix, Sell or Close Three Circle Concept DeStaffing & Real Time Planning

The Budgeting process was equally radically redefinedSold more than 200 businesses and made over 370 acquisitionsInsisted GE become more “lean and agile” resulting

Delayering: elimination of the “sector” levelDownsizing: elimination of about 123,450 jobsDivestiture: elimination of an additional 122,700 jobs

Replaced 12 of his 14 business headsThe Drastic Restructuring in the early-and mid-1980s earned Welch the nick name “Neutron Jack”

“A decade from now, I would like General Electric to be perceived as a Unique, high-spirited, Entrepreneurial enterprise…the most profitable, highly diversified company on the earth, with world quality leadership in every one of its product lines”. -- Jack Welch

WELCH’s VISION

THREE CIRCLE CONCEPTINITIATIVES

SERVICESGECC Information

Construction & EngineeringNuclear Services

CORELighting

Major ApplianceMotor

TransportationTurbine

ConstructionEquipment

TECHNOLOGYIndustrial Electronics

Medical SystemsMaterialsAerospace

Aircraft Engines

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VISION

• Mr. Welch started from day one of his tenure as CEO to change the vision of GE as it relates to its employees, management and the aim of its products.

• His major goal was to fixed those poor achieving product lines that could be fixed, sell those product lines that could be sold but not fixed and drop those product lines that could not be fixed or sold.

MISSION

• Mr. Welch mission was to downsize, de-staff and de-layer the GE organization to streamline it to be more efficient and effective.

STRATEGIES

• Mr. Welch brought in various strategies; however, they all had three primary focus points in mind.

• He wanted to centralize the chain of command structure, while taking out layers of bureaucracy.

• He wanted input from all sectors of the GE family when determining how to do jobs better.

• He wanted management to be responsive up as well as down the chain of command.

STRATEGIES

• Mr. Welch brought in various strategies; however, they all had three primary focus points in mind.

• He wanted to centralize the chain of command structure, while taking out layers of bureaucracy.

• He wanted input from all sectors of the GE family when determining how to do jobs better.

• He wanted management to be responsive up as well as down the chain of command.

WORKOUT THE FIRST “SOFTWARE INITIATIVE IMPLEMENTATION

OBJECTIVE

OVERVIEW

• Implementation team (24 consultant)

• Group of 40-100 employees

• 3 day sessions

• On the spot • Decision on 80%• proposals.

• To design a process To get unnessary bureaucratic workout of the system.

• To create a culture of a small company, where all felt engaged and everyone had voice.

• An open discussion Forum employee Could give ideas and Suggestions on Business and get Immediate responses to it.

BEST PRACTICES THE SECOND “SOFTWARE”

RE

SULT Productivity Increase

Managers realized the key focus area of business

FOCUS MORE ON HOW

THINGS GET DONE.

LEARNING FROM OTHER INDUSTRIES

IMPLEMENTATION

EMPLOYEES DEVELOPING LEADERS FOR TOMORROW

• Keeping close tabs on top 3000 executive

• Succession Planning

• Improved Packages/Stock options

• Training institute at Croton Ville

• 360 Degree Feedback

BOUNDARYLESS BEHAVIOR

Integrated Diversity

Boundary less 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 …..

STRETCH

•1990 , Welch Introduced the notion of “stretch” to set performance targets and described it as “using dreams to set business targets, with no real idea of how to get there.”•Stretch Targets did not replace traditional forecasting and objectives-setting process.

ACHIEVING THE IMPOSSIBLE

SYSTEMs PLANNING

Welch got rid of the laborious strategic planning system and its corporate planning staff. He developed a simple one-page

answer to businesses five questions concerning current market dynamics. Competitors key recent activities and GE business response. The greatest competitive threat over the next three

years and GE’s planned response.

STAFF COMPETENCIES

STAFF IN FOUR LIGHTS

Those who delivered on commitments

Those individual who did not meet commitments

Those individual that did not meet commitments

Those individuals who met all commitments

STAFFING AND STAFFING

DEVELOPMENT Welch wanted to ensure that his staff

understood the culture he wanted implemented at GE. He provided for the necessary training to help his staff members develop into the leaders and employees he felt GE needed to survive and

maintain productivity.

MAINTAIN PRODUCTIVITY

SIX SIGMA QUALITY INITIATIVE

• Employees were dissatisfied with the quality of its product.

• GE was operating at error rates 10,000 times the six sigma quality level of 3.4 defects/million costing $8 -$12 billion/year.

• Series of planning, resource allocation, review, and communication meetings were done.

• Participation in initiative was compulsory, 40% Bonus was tied with it.

SIX SIGMA IMPLEMENTATION

GREEN BELT

BLACK BELT

MASTER BALCK BELT

Training-4 weeksImplementation-5

months project aims at improving

the quality

Training-6 weeks in statistics, data

analysis and other six sigma tools.

Full time sig sigma instructor

“A Players” with “Four E’s”RAISING THE BAR

“A Players” “Four E’s”

• Individuals with vision

• Leadership

• Energy

• Courage

• Energy

• Energize other

• Edge

• execution

CONCLUSION

• Leaner and more efficient

• Challenge for the future

• 360 degree review process

ANALYSIS

• Customer focused vision• Accountability and commitment• Self confidence• Passion for excellence• Stimulate and relish change