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GE’s Two Decade Transformation:

Mrudang Thakor

Jack Welch’s Leadership

LOGOContent

1. GE- Overview

2. All about- Jack Welch

3. Initiatives taken by Jack Welch

“Hardware” Initiative

• #1 or 2 Fix, Sell/Close

• Three Circle Concept

• De staffing process• Strategic Planning

system

“Software” Initiative

• Work Out• Best Practices• Go Global• Develop Leaders• Boundary less

Behavior• Notion of stretch• Six Sigma

LOGO1. GE- Overview

Founded -1878, Thomson Houston Electric Company (THEC)

Merger- 1892, Between GE and THEC Formed General Electric

Headquarters: Fairfield, Connecticut, U.S

Revenue: US$ 147.300 Billion (2012)

Source: Wikipedia

LOGO1. GE- CEOs (Since 1973)

Reg Jones (1973-81)

Jack Welch (1981-2001)

Jeffrey Immelt (2001- Present)

LOGO2. All about Jack Welch

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

Peabody, MA

Father: Conductor at Boston and Maine Corporation

Mother: Home maker

Alma- maters:

Salem High school

University of Massachusetts (Bachelor of Science in Chemical

Engineering, 1957)

University of Illinois at Urbana-Champaign (M.S and PhD, 1960)

Source: Wikipedia

LOGOChallenges for Welch as CEO

Matching and surpassing the standards set

by his predecessor Reg Jones.

CEO of the year (3 times)

CEO of the decade (1979)

“Management Legend” (WSJ-1981)

Economy in recession (1981)

Strong Dollar Highest Unemployment

rates

LOGOYoungest CEO in action…

“Hardware” Initiative

• #1 or 2 Fix, Sell/Close

• Three Circle Concept

• De staffing process• Strategic Planning

system

“Software” Initiative

• Work Out• Best Practices• Go Global• Develop Leaders• Boundary less

Behavior• Notion of stretch• Six Sigma

Initiatives by Jack Welch

LOGODisciplined Destaffing

LEANLess no. of

people, bureaucracy

& politics

DESTAFFING

AGILEMaking people

productive and

competitive

“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?.”

LOGOReal Time Planning

STRATEGIC PLANING REAL TIME PLANING

Five page strategy Play book

One page answers to five questions

1. Current Market Dynamics

2. Competitors recent activities

3. GE’s Response

4. Greatest competitive threat over 3 years

5. GE’s Planned response

LOGOBenefits by “Hardware” initiatives

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

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“Hardware” Initiative

• Fix, Sell/Close• Three Circle

Concept• De staffing process• Strategic Planning

system

“Software” Initiative

• Work Out• Best Practices• Go Global• Develop Leaders• Boundary less

Behavior• Notion of stretch• Six Sigma

Initiatives by Jack Welch

“By mid 1988 the “Hardware” structure was basically in place. Now it was time to

focus on organization’s “Software”. A company can boost productivity by

restructuring, removing bureaucracy and downsizing, but it can not sustain high

productivity without cultural change.”

LOGOWork Out

1. To design a process to get unnecessary bureaucratic work out of the system.

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

Objective

1. An open discussion forum2. Employee could give ideas and suggestions

on business and get immediate responses to it.

Overview

1. Implementation team (24 Consultants)2. Group of 40-100 employees3. Three day sessions4. On the spot decision on 80% proposals.

Implementation

None of these meetings

were recorded…

So that employees don’t

end up with MORE

BUREAUCRACY.

LOGOBest Practices

Learning from other

industries

Focus more on how things got done

Implementation

1. Productivity increase2. Managers realized the key focus areas of

businessResults

LOGOGo 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)

LOGODeveloping leaders for tomorrow

Keeping close tabs on top 3000

executives

Succession Planning

Improved packages/Stock Options

Training institute at Crotonville

360 Degree Feedback

LOGO“A” Players

“A” players

Excited by ideas and attracted to turbulence Energy

Infecting everyone with enthusiasm for ideaEnergize

The ability to make tough callsEdge

Consistent ability to turn vision into resultsExecution

LOGOPerformance Appraisal System

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

LOGOBoundaryless Behavior

Removing the barriers among engineering,

manufacturing, sales and customer service.

“Learning from others”

“We quickly began to learn from each other: Productivity solutions from LIGHTING, Quick response asset management, transaction effectiveness from GE CAPITAL, Cost Reduction techniques from AIRCRAFT ENGINES, Global account management from PLASTICS.”

LOGONotion of “Stretch”

To set performance targets. “Using dreams

to set business targets with no real idea of

how to get there.”

Try to get people think of fundamentally

better ways of performing their work.

“Objective was to change the way targets were set and performance was measured by creating an atmosphere that asked of everyone, “How good can you be?”

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“We have changed the very nature of what we do for a living. Today services account for two-thirds of our revenues”

Foray into Service industry

To reduce dependence on traditional

industrial products.

Biggest growth opportunity.

“In-site concept”

LOGOSix Sigma 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.

LOGOImplementation

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.

GreenBelt

BlackBelt

MasterBlackBelt

1. 10Fold increase in life of CT scan X-ray tubes

2. 62% reduction in time at service stations

3. 30,000 Six Sigma projects were initiated a year.

Results

LOGOSummary of Initiatives

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Mrudang Thakor, MBA (09892734547)