1. GE’s Two Decade Transformation:
Allam Dinesh Reddy R810209012
M S S Charan R810209041
M Gopal Varma R810209044
Jack Welch’s Leadership

2. Contents
Challenges for Jack Welch
Initiatives taken by Jack Welch

3. Reg Jones (1973-81)
Jack Welch (1981-2001)
Jeffrey Immelt (2001- Present)

4. Challenges 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

5. Youngest CEO in action…
Initiatives by Jack Welch
Hardware Initiative
• Three Circle Concept
• De staffing process
• Strategic(Real-time) Planning system

6. Three Circle Concept
www.themegallery.comCompany Name

7. Disciplined Destaffing
LEAN
Less no. of people,
bureaucracy& politics
DESTAFFING
AGILE
Making 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?.”

8. Real Time Planning
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

9. Benefits 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

10. “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.”

11. Work 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 forum
2. 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 employees
3. Three day sessions
4. On the spot decision on 80% proposals.
Implementation

12. Best Practices
Learning from other
industries
Focus more on how
things got done
Implementation
1. Productivity increase
2. Managers realized the key focus areas of business
Results

13. Going 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)

14. Developing leaders for tomorrow
 Keeping close tabs on top 3000 executives
 Succession Planning
 Improved packages/Stock Options
 Training institute at Crotonville
 360 Degree Feedback

15. Boundaryless 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.”

16. Notion 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?”

17. Six 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.

18. “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”

19. Performance 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

20. Implementation
Training- 6 weeks
in statistics, data
analysis and other
six sigma tools.
Training – 4 weeks
Implementation-
5 Months project
aimed at improving
Quality.
Full time six sigma
instructors.
Green
Belt
Black
Belt
Master
Black
Belt
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

21. Summary of Initiatives