How difficult a challenge did

Welch face in 1981? How

effectively did he take charge?

CHALLENGES
Big shoes to fill

Economic environment

Extremely high bar set up by Reg

Jones

Economy hit by recession resulting

in countrys highest employment
rates and GE had 4,04,000
employees

The Wall Street Journal proclaimed

Jones a management legend
Declared CEO of the year three
times, CEO of the decade just
before retirement

Increased problem due to high

interest rates and strong dollar
The company needed to be
restructured and that needed
modernization and streamlining of
operations,
downsizing
the
organization, reduction of payrolls
and stringent efficiency measures

STEPS TAKEN BY WELCH

#1 or #2 : Fix, Sell or Close
Set standard for each business needed to be 1 or 2 competitor in its industry or to disengage

Restructuring : The Three Circle

Concept and beyond
Business categorized as :
Core : Priority of reinvesting in productivity and quality
High-technology : Challenged to stay on the leading edge by investing in R&D
Services : Required to add outstanding people leading to contiguous acquisition

Carried out highly disciplined destaffing process to make GE internally lean and agile resulting in:
Delayering: Elimination of the sector level
Downsizing: Elimination of about 123,450 jobs
Divestiture: Elimination of an additional 122,700 jobs

Removing bureaucracy : Scrapped GEs laborious strategic planning system and replaced it with real
time
planning built around a five page strategy playbook, reduced hierarchical levels from
9 to 4 to ensure all business reported directly to him
Replaced 12 of his 14 business heads

The Second Stage

Best
Work Out
Practices
Going
Global

Software
Initiatives

Developi
ng
Leaders
Second Wave

The Third Stage

Boundaryl
Service
ess
Businesses
Behavior
Six Sigma

E-Business

Third Wave

How important is Welch to GEs

success? What are the
implications for his replacement

JACK WELCH : CEO EXTRAORDINAIRE

If you don't have a competitive advantage, don't compete
Vision : To restructure GE and to make each of its business the #1 or #2 in their respective industries.

Major Focus
Embraced change
Drove his team to be better
than the best

METHOD TO THE
MADNESS

Corporate Restructuring
Reduced the number of layers at the large
headquarters group

Built a sustainable culture to

foster innovation

Spearheaded a major de-staffing process,

creating a lean organization with major
departmental heads reporting directly to
him

Encouraged learning and growth

through external and internal
learnings

Teams members were pushed to take

charge, think out of the box and be team
players

Offered generous bonuses and incentives

JACK WELCH : CEO EXTRAORDINAIRE

The GE WorkOut Program

Best Practices Program

Created the WorkOut program, where

management and employees were given
a forum where they could explore new
ways of working together

It was created in an effort to learn from

other companies and identify the
reason for their successes

Identifying Future Leaders

Adapted the Human Resource Department to fall in line with the overall corporate goals
Challenged managers to identify future leaders, and then developed training programs and developmental
plans for all key jobs
Created the Stretch programme to get people to think of fundamentally better ways of doing their work
Insisted on building a capable team to guide GEs success for the present and the future

Challenges for his Successor

Clearly communicate vision

Continue to foster open communication, teamwork, innovation needed
Create programs to foster employer employee relationships

Discuss your views on how such a large,

complex diversified conglomerate can
continue to grow so profitably. How have
Welchs various initiatives added value?

When Welch joined

Complex diversified conglomerate having 46divisions and 190
departments supporting 43 business units
Were faced with arecession, high unemployment, high interest rates,
and an overvalued U.S Dollar
Welchs way out
Strategy was not just aboutbuilding a position of sustained competitive
advantage
It as about creating successive temporary advantages
It can be done by formation and implementation of a strategy based on
the developmentof timely responses and flexibility
Achieving such objectives required reconfiguration of organizations
resources and competences
In times ofuncertainties and recession, the normal course of actionfor
many businesses is to engage in costcutting strategies, but studies
demonstrate that such strategies are not always sufficient.
Cost Cutting

Investment

Fix, sell or close

Through this strategy company analysed 43 businesses under it
only those businesses that were number one and twoin their respective
industries were maintained
Others were sold or closed down
Businesses that were maintained became the centre of strategic investments

The underlining principle

In order to operate effective and efficient world class business,
andsustain number one or two positions in industry, invest in theright
businesses and develop staffs that are the best at what they do
Value Addition
GE had acquired firms that enabled it to expand globally and developed globaloperations
that resulted in the company almost doubling its international revenue to $42.8billion
company became lean and agile, with increased efficiency and organizational
culturetransformation
service business was added whichcontributed to two-thirds of the companys revenues
With Welchs leadership GE ventured into new sectors, developeda massive global market
Values addedalsoincluded the transforming of GE culture to a more learning, knowledge
sharing and demandingof excellence, commitment and service to the goal of the
organization
introduction of the Six Sigma quality initiatives led to 62% in turnaround time, return of
$750million over the investment exceeding expectations along witha forecast of additional

THANK YOU!