Jack Welch_Leadership_GE

1. Jack Welch‟s Leadership
GROUP 5, SECTION C, STRATEGIC MANAGEMENT-2
Anand Kumar 12P127
Ankush Singla 12P129
Bhoomi Ashwin 12P131
Aditya Chadha 12P132
Siddharth Bharadwaj 12P170
Soumyajit Sengupta 12P171
GE‟s Two Decades Transformation

2. General Electric: Background
Reg Jones (1973-1981)
 10 groups, 46 divisions and 190
departments were 43 strategic business
units to support strategic planning
 Benchmarked strategic planning and other
companies imitated its SBU – based
structure
 Unable to review & approve information
from 43
 New Organizational Layer of “Sectors”
introduced to cap the various
departments, divisions & groups
The GE Heritage
1878 - 1981
1878
Founded by
Thomas Edison
1930
Centralized,
Tightly controlled firm 1950
Decentralization
1973
Reg Jones became CEO
SBU Structure 1977
Firm restructured to
Sectors 1981
Jack Welch
Replaces Reg Jones
Jack Welch
1981 - 2001
1981
Three Circle Vision
<Core, Technology, Services>
1983 1988 1995 2001First Wave Second
Wave
Third Wave
Change Initiatives
- Work-out
- Best Practices
- Going Global
- Developing Leaders
Initiatives
- Boundary less behaviour
- Service Business
- Six Sigma
Internet
<destroyyourbusiness.com>
History
 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.

3. Strategic Context & 1st Restructuring Wave
 Internal Issues
 Massive information
 Inefficient macro-business
 Bureaucracy
 External Environment
 Economic recession
 High interest rates
 Highest unemployment rate since the
depression
 Strong Dollar
Restructuring of General Electric
Welch‟s “Three Circle Concept” Vision
Services
GECC Information
Construction &
Engineering
Nuclear Services
Technology
Industrial Electronics
Medical Systems
Material
Aerospace
Aircraft Engines
Core
Lighting
Major Appliance
Motor Transportation
Turbine Construction
Equipment
Support
Ladd Petroleum
Semi Conductor
GE Trading Co.
Utah Mining
Ventures
Calma
Outside
Housewares
Central Air-
Conditioning
TV&Audio
Cable
Mobile
Power Delivery
Radio Stations
Going about the job, the Welch Way
•Challenged everyone to be “better than the best”
•Sold more than 200 businesses and made over 370
acquisitions
•Insisted GE become more “lean and agile” resulting
•De layering: elimination of the “sector” level
•Downsizing: elimination of about 123,450 jobs
•Divestiture: elimination of an additional 122,700 jobs
•Replaced 12 of his 14 business heads

4. 2nd Wave of Restructuring
Work Out
Best
Practices
Going Global
Developing
Leaders
A process designed to get
unnecessary bureaucratic work
out of the system while providing
a forum in which employees and
their bosses could work out new
ways of dealing with each other.
•Focused more on developing
effective processes than controlling
individual activities.
• Customer satisfaction was main
gauge of performance.
•Treated their supplier as partners
•Emphasized the need for a constant
stream of high quality new products
designed for efficient manufacturing
•Appointed Paulo Fresco, a key
negotiator on the Thompson swap
• Continued to broker numerous
international deals
• Joint venture with German-based
Robert Bosch
• Partnership with Toshiba
• Acquisition of Sovac , the French
Consumer Credit Company
• Focus on employees on competitive
world rather than life time
employment
•Changed salary structure with stock
options
•Crotonville Management
Development facility to harness cultural
change and make leader
Productivity
increased from 2%
in 1981 to 4%
between 1988-1991
For Example: Head of
Corporate Audit told “ When I
started 10 years ago, the first
thing I did was count the $5,000
in the cash box. Today, we look
at $5 million in inventory on the
floor, searching for process
improvements that will bring it
down”
By 1998,
international
revenues doubled
in 5 years
Global revenues
were growing at
almost three times
the rate of
domestic sales
Crotonville
Management
Development facility
: Key Institution for
management
training focus :
“Work-Out”
Concept emerged
from here

5. 3rd Wave of Restructuring
Boundary less
Behavior
Stretch: Achieving
the Impossible
Service Businesses
The Boundary less 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
•In 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.
•In 1994, Welch launched a new strategic
initiative designed to reinforce one of his
earliest goals: to reduce GE‟s
dependence on its traditional industrial
products
• Biggest opportunity is to provide
services to customers
•Making existing assets of customers
more productive
•Making a shift from – selling products to
customers towards – Helping our
customers win - approach

6. Closing the Decade
E – Business
Initiative
„ A Players‟
with „ Four
Es‟
Six Sigma
Quality
Initiative
destroyyourbusiness.com
for each division in order to
redefine business model
Each division had its own
DYB team which helped in
digitizing the company
and added to its success
“A – Players” - Individuals with
vision , leadership, energy and
courage
“4 E‟s”
•Energy i.e. excited by ideas
•Ability to Energize others
•Edge , the ability to make tough
calls
•Execution , the consistent ability
to turn vision into results.
•In 1996 – Boca Raton- Welch
announced a goal of reaching Six
Sigma quality levels company – wide
by the year 2000, describing the
program as “the biggest opportunity
for growth, increased profitability , and
individual employee satisfaction in the
history of our company
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

7. Strategic Control
Balanced Scorecard Approach
•ROE increased from 18.1% in 1981 to 28.7% in 2000
•Revenues increased by 376.7%
•Net Earnings increased by 670.88%
Financial
•Best Practices : Aim of moving focus on to Customer Satisfaction
•Change on Internal mind-set from selling products to “Helping our customers
win”
Customer
•Three Circle Concept, Lean and Agile, Cut Bureaucracy
•Work-out, Session C, 360 degree feedback process
•Six Sigma
Internal Business
Process
•Work-out, Session C
•Crotonville Management development facility
•Integrated Diversity
•“A Players”
Learning and
Growth

8. Strategic Impact
Jack Welch had been a Strategic Leader for GE and he has taken GE in 20 years at a stage no one would
have thought of – a highly successful diversified company.

9. Jack Welch
From the perspective of the Generic Strategic Leadership Model
Task
Achieving the
common
Individual
Motivating
&
Developing
Team
Building &
Maintaining
Three Broad Functions
Task – Jack Welch defined overall targets for
the employees of GE and pushed them to
achieve the same
Team – Build his management team with
new people and constituted institutes to
develop future leaders and performers
Individual – Reward systems and incentives
based on performance to motivate people to
achieve more and stretch their limits
Seven Role Functions
Vision : Wanted GE to be perceived as a unique, high
spirited, entrepreneurial enterprise
Strategic Thinking : Restructuring, software initiatives,
going global, services business, e - business shows
Welch‟s long term strategies
Administration: Was authoritarian in his approach and
held his company and employees tightly
Flexibility: Welch was very particular in his approach
and can be particularly termed as flexible
Energy/Morale: Motivated his teams and all other
employees to achieve the organizational goals
Allies & partners: Made successful strategic alliances
with partners like Bosch, Toshiba, Sovac etc. to
strengthen GE
Leading by example: he did what he said and asked
others to do

10. Jack Welch
From the perspective of the 4-Framework Leadership Model
Structural Framework
•Focused on Strategy through re-structuring, joint ventures, e-
businesses
•Made formal working structure
•Made changes as per changing environment like in case of
recession
Human Resource Framework
•Approach based on openness, candor, and facing reality
•Made regular visits to company's Management Development
Institute
•Engaged managers in outspoken sessions & “Work – out‟ a
forum to find new ways to deal with issues
Political Framework
•As per this framework Welch wasn‟t a political leader as he
never used coalition or any form of manipulation
Symbolic Framework
•As per this framework, he was definitely a source of
inspiration and guidance to his team mates and other
employees
Jack Welch

11. Conclusion
Thus Jack Welch has guided GE strategically in a
- Strategic direction by forming “Three Circle Concept” Vision
- Effectively managed firm’s resource portfolio by making GE “Lean and
Agile”
- Create an Entrepreneurial Mind-set through Work-out and Best-Practices
- Build leaders through – Session C, “A Players”
- Create an Open Culture through Integrated Diversity
- Win Customers through Six Sigma, Innovation
- Training and Development through Crotonville management facility

12. Thank You!