GE’s two Decades TransformationJack Welch’s Leadership

Group 112P139 Ishpreet Singh12P141 Karan Jaidka12P142 Kshitij Agrawal12P143 Kshitij Ahuja12P146 Manav Gupta12P178 Vikas Jain

Company’s time line

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

Reg Jones(1973-1980)GE was benchmark for others companies(imitated its SBU based structure & planning process).

Jack Welch(1981-2001)Challenged to be “better than the best”Be no. 1 or no. 2 or close

• 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

Neutron JACK

Effective Strategic LeadershipEffective Strategic Leadership

Determining Strategic Direction

Effectively Managing the Firm’s Resource

Portfolio

Sustaining an Effective Organisational Culture

Emphasizing Ethical Practices

Vision and Mission

360 Degree feedback process

Weeding out Autocratic Leaders

A Players and Four E’s

Fix, Sell or CloseDeveloped Human and Social Capial

“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

ServicesGECC InformationConstruction & Engineering Nuclear Services

TechnologyIndustrial Electronics

Medical SystemsMaterial

AerospaceAircraft Engines

CoreLighting

Major Appliance Motor

TransportationTurbine Construction

Equipment

SupportLadd PetroleumSemi ConductorGE Trading Co.Utah Mining

VenturesCalma

OutsideHousewaresCentral Air-ConditioningTV&AudioCableMobilePower DeliveryRadio Stations

Three-Circle Vision for GE

Welch's Vision

• 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

“Restructuring the Hard Drive”

Delayering“sector” level

Downsizingelimination of about

123,450 jobs

Destaffingelimination of an

additional 122,700 jobs

• 1980’s most of the restructuring was complete• Jack’s priorities were shifting to Culture

Second Stage of Rocket

“A company can boost productivity by restructuring, removing bureaucracy and downsizing, but it cannot sustain high productivity without cultural change”

Work Out Best Practices

Work Out Best Practices

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

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

“Software” Initiatives

Europe economic downturn

$17.5 billion invested in from 1989-1995,on new plants, acquisitions and

finance.

Working Philosophy

Going Global

Opportunity

Problem

First

• Delivers commitments

and share values.

Second

• Doesn’t meet commitment and doesn’t

share values.

Third

• Misses Commitments

but shares Values

Fourth

• Delivers commitments

but doesn’t share values.

Autocrat and need to weed out from GE

• 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

• Introduced 360 degree feedback process.[rating employees on scale of 1-5]

Developing Leaders

• To strengthening GE’s Individual Businesses

• Bonus and rewards for idea sharing and not just idea creation

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

Boundaryless Behavior (Third Wave)

• How good can you be?

• 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

Manager HITBasic

Targets

accountable

not accountable

Higher Goals

Rewarded

Stretch: Achieve the IMPOSSIBLE

STRETCH

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.

ProductsProducts

Selling Products to Customers

Helping our customers winTRANSITION

185%

215%

1980

155%

245%

1990

145%2

55%

1995

133%

267%

1998

Products Services

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.

• Tied 40% bonus to Individuals[Six Sigma was not optional].

• Medical Systems= tenfold increase,62% reduction in turnaround time.

• Change the DNA of GE whose central strand is QUALITY.

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

Six Sigma Quality

"A Players" With "Four E's"

A Players Individuals with vision, leadership, energy and courage.

Execution 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 e-business.

• Early results of digitizing the company was success.

Flexible

Organisational

Result-Oriented

Communication

Education Welch’s

“FORCE” Model

• Work-Out• Speed, simplicity & Confidence

Reduced Hierarchy, so as to have maximum Control

Long term Results such as stock option based incentive

1. Product to service

2. Staff Incentives

• Increased focus on MDI• Constant Evolution of Process

Thank You