A case study analysis of General Electric's two decade transformation under Jack Welch's leadership. The case study of Harvard Business School.

1. GE’S TWO-DECADE TRANSFORMATION:
JACK WELCH’S LEADERSHIP

2. CONTENT
GE
OVERVIEW
ALL ABOUT
JACK WELCH
INITIATIVES TAKEN BY
JACK WELCH
GE’S VISION FOR 2013
& BEYOND
TWOS
ANALYSIS

3. OVERVIEW
1
2
3
4
FOUNDED
1878, Thomson Houston Electric Company (THEC)
MERGER
1892, Between GE and THEC formed General Electric
HEADQUARTERS
Fairfield, Connecticut, U.S
REVENUE
$ 147.300 Billion (as of 2012)
imagination at work

4. 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)

5. SINCE 1973GE – CEOs

6. 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

7. 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

8. CHALLENGES AS A CEOJACK WELCH
3
1
2
ECONOMY IN
RECESSION
HIGHEST UNEMPLOYMENT
RATES SINCE DEPRESSION
HIGH INTEREST
RATES

9. WELCH’S EARLY PRIORITIESINITIATIVES
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

10. 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
OUTSIDE
Housewares
Central Air-Conditioning
TV & Audio
Cable
Mobile
Power Delivery
Radio Stations
SUPPORT
Ladd Petroleum
Semiconductor
GE Trading Co.
Utah Mining
VENTURES
Calma

11. 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

12. 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

13. 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

14. THE FIRST “SOFTWARE” INITIATIVEWORK 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

15. THE SECOND “SOFTWARE” INITIATIVEBEST PRACTICES
FOCUS MORE
ON HOW
THINGS GET
DONE
LEARNING
FROM OTHER
INDUSTRIES
IMPLEMENT
ATION
RESULT
Productivity Increase
Managers realized the key
focus areas of business

16. 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)

17. 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)

18. 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

19. Boundary less
Behavior
Notion of
“Stretch”
Service
Businesses
THE THIRD WAVEINTO THE 1990s

20. 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 INITIATIVESIX SIGMA

21. MASTER
BLACK
BELT
BLACK
BELT
GREEN
BELT
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.
RESULTS
10 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.
IMPLEMENTATIONSIX SIGMA

22. SUMMARY
PRODUCTIVITY
Restructuring
Removing Bureaucracy
Downsizing
Changing Attitude
CULTURAL CHANGE
“going for the leap”

23. 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
JACKWELCH
JEFFEMMELT

24. 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

25. PERFORMANCE2012
180
154 150 147 147
2008 2009 2010 2011 2012
CONSOLIDATED REVENUES
(In $ Billions)
16.9
9.9
12.4
14.9
16.1
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

26. GE’S VISION FOR 2013 & BEYONDSTRATEGIES
Margin Expansion
Growth from Emerging Economies
Product and Service launches
Energy, Healthcare and Aviation to drive growth
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27. THANK YOU!
FOR YOUR ATTENTION