GEs Two Decade Transformation:

Jack Welchs Leadership

Mrudang Thakor

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Content
1. GE- Overview

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2. All about- Jack Welch

3. Initiatives taken by Jack Welch
Hardware Initiative
#1 or 2 Fix,
Sell/Close

Software Initiative
Work Out Best Practices Go Global Develop Leaders Boundary less Behavior Notion of stretch Six Sigma

Three Circle Concept De staffing process Strategic Planning system

1. GE- Overview

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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

1. GE- CEOs

(Since 1973)

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Jack Welch (1981-2001)

Reg Jones (1973-81)

Jeffrey Immelt (2001- Present)

2. All about Jack Welch

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

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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

Challenges for Welch as CEO

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Matching and surpassing the standards set

by his predecessor Reg Jones.

CEO of the year
(3 times) (1979) (WSJ-1981) (1981)

CEO of the decade

Management Legend Economy in recession

Strong Dollar Highest Unemployment rates

Youngest CEO in action

Initiatives by Jack Welch

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Hardware Initiative
#1 or 2 Fix,
Sell/Close

Software Initiative
Work Out Best Practices Go Global Develop Leaders Boundary less Behavior Notion of stretch Six Sigma

Three Circle Concept De staffing process Strategic Planning system

Disciplined Destaffing
LEAN questioners & We dont need the
Less no. of people,

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checkers, the nit pickers who bog down bureaucracy & politics 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?.

DESTAFFING
Making people productive and competitive

AGILE

Real Time Planning

STRATEGIC PLANING

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REAL TIME PLANING

Five page strategy Play book One page answers to five questions
1. 2. Current Market Dynamics Competitors recent activities 3. 4. GEs Response

Greatest competitive threat over 3 years 5. GEs Planned response

Benefits by Hardware initiatives

Number of Employees
(1981-89)

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404,000 to 292,000

$27.2 billion to $29.2 billion

Revenue
(1981-85)

Operating Profits
(1981-85)

$1.6 billion to $2.4 billion

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Initiatives by Jack Welch

was basically in place. Now it was time to Fix, Sell/Close focus on organizations Software. A Three Circle company can boost productivity by Concept restructuring, removing bureaucracy and De staffing process downsizing, but it can not sustain high Strategic Planning productivity without cultural change. system

Hardware By mid 1988 the Hardware structure Initiative

Software Initiative
Work Out Best Practices Go Global Develop Leaders Boundary less Behavior Notion of stretch Six Sigma

Work Out

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Overview

1. An open discussion forum 2. Employee could give ideas and suggestions on business and get immediate responses to it. 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. 1. 2. 3. 4. Implementation team (24 Consultants) Group of 40-100 employees Three day sessions On the spot decision on 80% proposals.

Objective

Implementation

Best Practices

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Learning from other industries

Focus more on how things got done

Implementation

Results

1. Productivity increase 2. Managers realized the key focus areas of business

Go Global
Appointing Paolo Fresco as Head,

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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 tomorrow Keeping close tabs on top 3000

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executives
Succession Planning Improved packages/Stock Options Training institute at Crotonville 360 Degree Feedback

A Players
Energy

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Excited by ideas and attracted to turbulence Infecting everyone with enthusiasm for idea The ability to make tough calls Consistent ability to turn vision into results

players

Energize Edge Execution

Performance Appraisal System

Rank 1 2 3 Rating Top 10% 15% 50% TOP STRONG HIGHLY VALUED Reward Stock Options Stock Options Training

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4 5

15% Bottom 10%

BORDERLINE LEAST EFFECTIVE

Improve or Move Weed out

Boundaryless Behavior
Removing the barriers among engineering,

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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.

Notion of Stretch
To set performance targets. Using

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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?

Foray into Service industry

To reduce dependence on traditional

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industrial products.
Biggest growth opportunity.

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

Six Sigma Initiative

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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.

Implementation
Green Belt
Training 4 weeks Implementation5 Months project aimed at improving Quality.

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Black Belt

Master Black Belt

Training- 6 weeks in statistics, data analysis and other six sigma tools.

Full time six sigma instructors.

Results

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.

Summary of Initiatives

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Mrudang Thakor, MBA (09892734547)

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