GE’S TWO-DECADE TRANSFORMATION:

JACK WELCH’S LEADERSHIP

CONTENT

GE OVERVIEW

ALL ABOUT JACK WELCH

INITIATIVES TAKEN BY JACK WELCH

GE’S VISION FOR 2013 & BEYOND

TWOS ANALYSIS

OVERVIEW

1

2

3

4

FOUNDED1878, Thomson Houston Electric Company (THEC)

MERGER1892, Between GE and THEC formed General Electric

HEADQUARTERSFairfield, Connecticut, U.S

REVENUE$ 147.300 Billion (as of 2012)

imagination at work

ACHIEVEMENTS (2012-13)OVERVIEW

3rd Largest Company in the world (Forbes)

5th Best Global Brand (Interbrand)

6th Largest in USA (Gross Revenue)

7th Best company for Leaders (Fortune)

14th Most profitable company in the world (Fortune)

15th Most admired company (Fortune)

19th Most Innovative company (Fast Company)

SINCE 1973GE – CEOs

REG JONES (1973 - 1980)PREDECESSOR

43 strategic units: 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),

Peabody, MA

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

3

1

2

ECONOMY IN RECESSION

HIGHEST UNEMPLOYMENT RATES SINCE DEPRESSION

HIGH INTEREST RATES

WELCH’S EARLY PRIORITIES INITIATIVES

HARDWARE INITIATIVE

#1 or #2 - Fix, Sell or Close

o Three Circle Concept

o De-Staffing & Real Time Planning

SOFTWARE INITIATIVE

o Work Out

o Best Practices

THREE CIRCLE CONCEPTINITIATIVES

SERVICES

GECC Information

Construction & Engineering

Nuclear Services

CORE

Lighting

Major Appliance

Motor

Transportation

Turbine

Construction

Equipment

TECHNOLOGY

Industrial Electronics

Medical Systems

Materials

Aerospace

Aircraft Engines

OUTSIDEHousewares

Central Air-Conditioning

TV & Audio

Cable

Mobile

Power Delivery

Radio Stations

SUPPORT

Ladd Petroleum

Semiconductor

GE Trading Co.

Utah Mining

VENTURES

Calma

DISCIPLINED DESTAFFINGINITIATIVES

“We don’t need the questioners & checkers, the

nit-pickers who bog down the process.….

Today each staff has to ask, “How do I add

value?” How do I make people on the

line more effective and competitive?.”

LEAN & AGILE: Making people productive and competitive

REAL TIME PLANNINGINITIATIVES

FIVE PAGE STRATEGY PLAY BOOK

ONE PAGE ANSWERS TO 5 QUESTIONS:

1. Current Market Dynamics

2. Competitors’ Key Recent Activities

3. The GE Business Response

4. Greatest competitive threat over next 3 years

5. GE’s Business’s Planned Response

BENEFITS OF “HARDWARE” INITIATIVEINITIATIVES

Number of Employees (1981-89)

•404,000 to 292,000

Revenue

(1981-85)•$27.2 Billion to $29.2 Billion

Operating Profits (1981-85) •$1.6 Billion to $2.4 Billion

THE FIRST “SOFTWARE” INITIATIVE WORK OUT

Implementation Team (24

consultants)

Group of 40-100 employees

3 day sessions

On the spot decision on 80%

proposals.

IMPLEMENTATION

To design a process to get

unnecessary bureaucratic

work out of the system.

To create the culture of a

small company, where all felt engaged and

everyone had voice.

OBJECTIVE

An open discussion

forum

Employee could give ideas and

suggestions on

business and get immediate

responses to it.

OVERVIEW

THE SECOND “SOFTWARE” INITIATIVE BEST PRACTICES

FOCUS MORE ON HOW

THINGS GET DONE

LEARNING FROM OTHER INDUSTRIES

IMPLEMENTATION

RES

ULT Productivity Increase

Managers realized the key focus areas of business

GO GLOBAL

Appointing Paolo Fresco as Head,

International Operations

Rampant

Acquisitions

Taking advantage of global economic slow down

• European Crisis- $17.5Bn

• Mexican Peso collapse

• Asian Economy Crisis (1997-98)

DEVELOPING LEADERS FOR TOMORROWEMPLOYEES

Keeping close tabs on top 3000 Executives

Succession Planning

Improved Packages/Stock Options

Training institute at Croton Ville

360 Degree Feedback

“A” Players (Characterized by 4Es – Energy, Energize, Edge, Execution)

PERFORMANCE APPRAISAL SYSTEMEMPLOYEES

RANK RATING REWARD

1 Top 10% TOP Stock Options

2 15% STRONG Stock Options

3 50% HIGHLY VALUED Training

4 15% BORDERLINE Improve or Move

5 Bottom 10% LEAST EFFECTIVE Weed Out

Boundary less

Behavior

Notion of “Stretch”

Service Businesses

THE THIRD WAVEINTO THE 1990s

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.

QUALITY INITIATIVE SIX SIGMA

MASTER BLACK BELT

BLACK BELT

GREEN BELT

Training- 6 weeks in statistics, data

analysis and other six sigma tools.

Training – 4 weeksImplementation- 5

Months project aimed at improving

Quality.

Full time Six Sigma instructors.

RESULTS10 Fold increase in life of CT scan X-ray tubes.

62% reduction in time at service stations.

30,000 Six Sigma projects were initiated a year.

IMPLEMENTATION SIX SIGMA

SUMMARY

PR

OD

UC

TIV

ITY

Restructuring

Removing Bureaucracy

Downsizing

Changing Attitude

CULTURAL CHANGE“going for the leap”

COMPARISON

• Promoted internal communication

• Focus on performance & strictly quantifiable results

• mostly promoting from within

• Focused on production

• demanding and intimidating

• External communication (Investors & Third Parties)

• Allowed employees to come up with innovative ideas

• Brought a number of outsiders into Organization

• Focused on marketing

• Made GE more environmentally conscious

• Friendlier and more approachable

JAC

K W

ELC

HJEFF EM

MELT

TOWS ANALYSIS

TOWS ANALYSIS

T O

SW

Competition

Information security

Financial crisis

Media depictions

Evaluation and Analysis

Under-performing energy sector

Threat to flexibility

Mergers and acquisitions

Research and development

Global recognition

Global strength and competitiveness

Excellent Management

Diversified lines of operation

Environmental initiatives

PERFORMANCE2012

180154 150 147 147

2008 2009 2010 2011 2012

CONSOLIDATED REVENUES (In $ Billions)

16.9

9.912.4

14.916.1

2008 2009 2010 2011 2012

OPERATING EARNINGS(In $ Billions)

• Total Industry Segment Revenue + GE Capital Revenue (45%)

• Change in portfolio• Sale of 49% stake of NBCU

• Rising profit from selling Air craft engines and transportation equipments

• Acquisition of Lufkin Industries• Rise in orders from aviation and oil

GE’S VISION FOR 2013 & BEYONDSTRATEGIES

Margin Expansion

Growth from Emerging Economies

Product and Service launches

Energy, Healthcare and Aviation to drive growth

01

02

03

04

THANK YOU!FOR YOUR ATTENTION