ueneial Electiic Coip.

CASE ANALYSIS


12]7]2011

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1hls case ouLllnes Lhe progress of Ceneral LlecLrlc from an elecLrlc power generaLlon company Lo a
buslness conglomeraLe runnlng large number of dlverse buslnesses 1hls case provldes a perspecLlve
of Ceneral LlecLrlc passlng Lhrough dlfferenL phases of growLh slnce lLs lncorporaLlon
1hls case also brlngs abouL Lhe dlfferenL ln funcLlonlng sLyles of Lwo legendary CLCs of CL 8eglnald
!ones and !ack Welch 1he case shows how !ones bullL an elaboraLe organlzaLlonal framework for
sLraLegy formaLlon whlle !ack Welch who was agalnsL bureaucracy changed Lhe enLlre funcLlonlng
of CL When !ack Welch Look over as CLC ln 1981 CL was faclng several dlfflculLles such as
economlc recesslon hlgh lnLeresL raLe compeLlLlon from !apanese companles eLc !ack Welch
carrled ouL masslve resLrucLurlng aL CL Pe reduced Lhe headcounL lmplemenLed Lhe #1 #2
sLraLegy scrapped corporaLe plannlng dlvlslon Pe came Lo be known as neuLron !ack Pe Look oLher
lnlLlaLlves such as 'Work CuL' whlch was a process deslgned Lo cuL bureaucracy and provlde a forum
Lo employees Lo employees Lo glve suggesLlons dlrecLly Lo Lhelr bosses Pe also lnlLlaLed Lhe besL
pracLlces program for Lhe developmenL of managers Pe sLarLed CroLonvllle Manager uevelopmenL
laclllLy for Lhe same purpose Welch also had Lo face crlLlclsm for Lhe relevance of hls #1 #2 pollcy
and Lhe masslve layoffs he lnsLlLuLed
1he reporL analyses Lhe key sLraLegles adopLed by !ack Welch LhaL broughL abouL a loL of changes ln
Lhe organlzaLlon ln Lerms of laylngoff employees lmprovlng Lhe exlsLlng buslness processes and
ldenLlfylng new areas for expanslon eLc and how lL beneflLed Lhe organlzaLlon 1hen Lhe culLural
changes LhaL were broughL abouL ln CL whlch alLered Lhe worklng envlronmenL for Lhe employees
are dlscussed nexL a deLalled examlnaLlon of Lhe lmpacL of !ack Welch as CLC over Lhe pasL LwenLy
years as a leader and hls leadershlp sLyle LhaL was Lhe drlvlng force behlnd a successful LranslLlon
from a corporaLe model LhaL was hlghly cenLrallzed and bureaucraLlc Lo one LhaL was dynamlc
flexlble and many Llmes more proflLable ls analyzed









GLNLkAL LLLC1kIC (GL) 8ackground
1homas Ldlson esLabllshed Lhe Ldlson LlecLrlc LlghL Company ln 1878 Cver a decade Ldlson
consolldaLed all hls companles under Lhe name of Lhe Ldlson Ceneral LlecLrlc Company ln 1892
Ldlsons company merged wlLh Lhe 1homsonPousLon LlecLrlc Company Lo form Ceneral LlecLrlc
Company (CL)
CL sLarLed off as an elecLrlc power company and was concerned wlLh Lhe generaLlon and dlsLrlbuLlon
of elecLrlc power Powever Lhe company dlverslfled over Lhe years and esLabllshed a presence ln a
mulLlLude of lndusLry segmenLs such as medlcal sysLems alrcrafL englnes consumer elecLronlcs eLc
CL wenL Lhrough a conLlnuous serles of organlzaLlonal sLrucLure ln dlfferenL eras ln Lhe 1930's lL was
hlghly cenLrallzed 8y Lhe 30's decenLrallzaLlon had sLarLed as Lhe organlzaLlon had grown Loo blg
and Loo dlverse Lo be managed cenLrally
uurlng Lhe 60's Lhe managemenL sLarLed Lo feel LhaL Lhe exlsLlng organlzaLlonal sLrucLure could noL
accommodaLe Lhe exlsLlng porLfollo of buslnesses 1herefore Lhe company sLarLed a masslve
resLrucLurlng program ln whlch Lhe number of dlsLlncL operaLlng unlLs was cuL down from more Lhan
200 Lo 43 1he secLlons were dlvlded lnLo growLh sLablllLy and no growLh caLegorles Lo faclllLaLe
dlvesLmenL of nonproflL maklng unlLs
Powever alLhough Lhe company had lmpresslve growLh ln Lhe 70's and Lrlpled lLs earnlngs sLock
performance wasn'L up Lo Lhe mark
1he keg Iones Lra
ln 1972 8eglnald !ones became presldenL and Lhen CLC of CL 8eg !ones lnherlLed Lhe company
afLer lL had compleLed a ma[or resLrucLurlng program !ones Look Lhls new organlzaLlonal sLrucLure
and made managemenL of Lhe S8u based sLrucLure lnLo an arL form wlLh oLher companles hurrylng
Lo emulaLe CL
!ones was proclalmed as a managemenL legend and CLC of Lhe decade by buslness [ournals under
!ones mosL of Lhe dlverslflcaLlon of CL came from sLrong lnLernal growLh supporLed by 8u
sLraLeglc plannlng and Lhe lnLroducLlon of Lhe secLor sLrucLure
under !ones Lhe company doubled lLs sales and earnlngs grew even more rapldly
1he Iack We|ch Lra
!ack Welch has ofLen been descrlbed as one of Lhe mosL lmporLanL and lnfluenLlal buslness leaders
of Lhe 20Lh CenLury by many analysLs and experLs
!ack Welch was an lnLulLlve sLraLeglsL he was wllllng Lo change Lhe rules lf necessary he was hlghly
compeLlLlve and he was a greaL communlcaLor Pe broughL abouL many lnsplraLlonal and lnnovaLlve
changes whlch resulLed ln CL's growLh from a $13 bllllon ln 1981 company Lo a $480 bllllon
lndusLrlal conglomeraLe by 2000 Welch oversaw 993 acqulslLlons and sold off 408 buslnesses
earnlng Lhe nlckname 'a deal maklng machlne'



Pe was a bellever of real Llme plannlng where any employee can parLlclpaLe and haLed bureaucracy
wlLh a passlon
1ransformat|on of GL from keg Iones to Iack We|ch
Companles grow by enLerlng new markeLs Lapplng unconLesLed markeL place and by challenglng Lhe
sLaLus quo ln Loday's dynamlc world Lhe buslness envlronmenL ls conLlnuously evolvlng wlLh
changlng cusLomer needs Lechnology compeLlLlve scenarlo and soclal Lrends 1hus ln order Lo be
prompL ln respondlng Lo such changlng exLernal envlronmenL organlzaLlonal change becomes an
lnevlLable feaLure of organlzaLlonal llfe AL Lhe Llme when !ack Welch Look over CL was faclng an
economlc crlsls yeL CL emerged as world's one of Lhe mosL successful lnsLances of Change
ManagemenL
under 8eg !ones Lhe company had 10 groups 46 dlvlslons and 190 deparLmenLs and Lo Lake care of
Lhese Lhere were 43 sLraLeglc buslness unlLs 8eg !ones formed varlous deparLmenLs for easy sharlng
of work whereas !ack Welch belleved ln SLreLch goals 1he #1 or #2 sLraLegy of !ack Welch (le any
company whlch was noL #1 or #2 compeLlLor ln lLs lndusLry was asked Lo flx Lhe problem and
become a ma[or compeLlLor ln Lhe lndusLry or was sold off or was closed down) shows Welch's
approach Lowards managemenL under !ack Welch's era Lhe organlzaLlon wlLnessed masslve layoffs
and delayerlng Pe removed all Lhe nonvalue add roles and responslblllLles and cuL down on all
managerlal poslLlons whlch slowed down Lhe process of declslon maklng under !ack Welch Lhe
proflLs Lrlpled and Lhe number of employees reduced from 402000 ln 1971 Lo 366000 ln 1980
under !ones Lhe sLock markeL caplLallzaLlon had a nomlnal rlse from 108703 ln 1971 Lo 121734 ln
1980 Whlle under Welch Lhe sLock markeL caplLallzaLlon saw an exponenLlal rlse from 130734 ln
1981 Lo 303449 ln 1990 and 3342369 ln 1998
Cne of Lhe mosL wldely used models of change managemenL ls kurL Lewln's 1hree SLep" model
Lewln argued LhaL successful changes ln organlzaLlon should follow Lhe Lhree sLeps
O unfreeze
O Move
O 8efreeze
Unfreeze 1he purpose of unfreezlng ls Lo challenge Lhe sLaLus quo and maklng Lhe employees aware
of Lhe lncongrulLy and lnefflclency of Lhe currenL sysLem 1hls sLep also lnvolves communlcaLlng Lhe
need for change
Move 1hls ls when Lhe acLual shlfL and resLrucLurlng happens
kefreeze 1hls ls Lhe mosL crlLlcal phase whlch ensures LhaL Lhere ls no roll back Lo Lhe prevlous
sysLem





1hls model can be applled ln case of CL where each phase was observed Lo be followed
Unfreeze 1hls was Lhe lnlLlal polnL when Lhe layoffs and Lhe delayerlng Look place
Change ln Lhls parL all Lhe sLraLeglc lnlLlaLlves llke Work ouL" Slx Slgma 8oundaryless
CrganlzaLlon 360 uegree leedback vlLallLy Curve eLc was lmplemenLed successfully
kefreeze ln Lhls phase Lhe performance appralsal and compensaLlon of employees were Lled Lo Lhe
performance of Lhe organlzaLlon wlLh Lhe help of Lmployee SLock CpLlons
Cha||enges for the new CLC
1he new CLC wlll have Lo face Lhe followlng challenges as lL Lakes over CL
CounLer effecL on employees as a fallouL of Lhe lmplemenLaLlon of Lhe vlLallLy Curve" (8ell
curve)
volaLlle markeL condlLlons
ulverslfylng Lhe buslness
Leverage on havlng proprleLary Lechnologlcal
Lxpand Lhe lnLernaLlonal buslness Lhrough SLraLeglc Alllances and !olnL venLures
GL before Iack We|ch
CL's buslness model ln Lhe 1930's was hlghly cenLrallzed and LlghLly conLrolled 1hls gradually
Lransformed ln 1930's Lo Lhe delegaLlon of responslblllLy Lo deparLmenL managers lnlLlaLlng Lhe
Lrend of decenLrallzaLlon CL ln 1960's sLarLed laylng emphasls on sLrengLhenlng Lhe corporaLe sLaff
and developlng a sophlsLlcaLed sLraLeglc plannlng sysLem

under Lhe leadershlp of 8ag !ones CL creaLed a S8u (sLraLeglc 8uslness unlL) sLrucLure Powever Lhe
effecLs of masslve revlew and approvlng of lnformaLlon generaLed by 43 sLraLeglc plans was
hamperlng deLalled focus on oLher buslness acLlvlLles As a resulL !ones comblned CL's S8u dlvlslon
and depL lnLo secLors as macro buslness Also a loL of focus was lald on governmenL regulaLlon As a
resulL Lhe operaLlng proflL rose from $3283 mllllon Lo $1314 mllllon and a drasLlc lncrease ln sales
from $87267 mllllon Lo $24930 mllllon




1he CL culLure propounded by 8ag !ones

O Lmphaslzed on sLraLeglc plannlng for developlng efflclency and foreslghL ln buslness
O lollowed a consensus framework for declslon maklng
O Pad [ob hlerarchy llke deparLmenL manager secLor manager unlL manager subunlL
manager eLc wlLh clear [ob descrlpLlon and roles
O 9racLlced an lncremenLal change model for golng ln new buslness or modlfylng Lhe exlsLlng
ones

GL dur|ng Iack We|ch
!ack Welch's reglme broughL abouL ma[or sLrucLural and behavloral changes ln CL managemenL and
culLure lollowlng are Lhe sallenL and slgnlflcanL changes lnlLlaLed by Welch
O 8alsed Lhe compeLlLlve sLreak and sLandard of Lhe company by seLLlng Lhe sLandard for each
buslness Lo elLher become #1 or #2 compeLlLor ln Lhe lndusLry and bulldlng Lhe aLLlLude of
flx sell or close Lhe buslness unlLs
O Welch emphaslzed on creaLlng a lean and aglle organlzaLlon sLrucLure and sLarLed Lhe
process of dlsclpllned desLafflng delayerlng and downslzlng of employees along wlLh
reducLlon ln Lhe hlerarchal level 1hls conLrlbuLed Lo Lhe rlse ln operaLlng proflL
O 8eal Llme plannlng replaced sLraLeglc plannlng and performance comparlson was done wlLh
lnLernal pasL performance and exLernal compeLlLlve crlLerla
O Welch lnlLlaLed a change ln Lhe CL old culLure wlLh an approach of openness candour and
faclng reallLy 1he core elemenLs emphaslzed were speed slmpllclLy and selfconfldence
O WlLh an ob[ecLlve Lo empower employees and help Lhem volce Lhelr problem and oplnlons
Lo work efflclenLly Lhe workouL" lnlLlaLlve was sLarLed where Lhe managers would dlscuss
Lhelr dlfflculLles ln lmplemenLlng ln operaLlons
O 1he besL pracLlces" program almed aL lncreaslng Lhe producLlvlLy Lhrough besL pracLlces
followed by successful companles 1he message Lhrough Lhls was clear LhaL CL belleved ln
consLanL learnlng and lmprovlng wlLh cusLomer saLlsfacLlon as Lhelr maln focus
O Along wlLh laylng a sLrong organlzaLlonal culLure and foundaLlon emphasls was lald on golng
global and becomlng #1 or #2 ln Lhe world markeL
O 9erformance revlew of company's Lop 3000 execuLlves lncrease ln compensaLlon package
(llnklng lL Lo Lhe overall proflL of Lhe company) was lmplemenLed Lo encourage employees ln
glvlng Lhelr besL Lo Lhelr [ob and weed ouL people whose values are noL conslsLenL wlLh
Lhose of CL 1he focus here was Lo brlng ln and susLaln rlghL klnd of people who wlll be a
long Lerm asseLs Lo Lhe company
O 9racLlclng boundary less behavlour for sharlng of new ldeas regardless of Lhelr orlgln
sLreLchlng Lhe performance level Lo make unachlevable LargeLs achlevable and lncrease ln
Lhe focus on servlces Lo add enhanced value Lo lLs producLs communlcaLed !ack Welch
sLraLegy Lo keep CL and lLs employees consLanLly compeLlLlve and lnnovaLlve ln Lhe changlng
world markeLs
7


O CL durlng Welch leadershlp garnered besL LalenLs reLenLlon and creaLlon Lhrough lLs
leadershlp developmenL programs and seL ln world class quallLy for lLs producLs and
servlces(slx slgma quallLy lnlLlaLlve
O CL wanLed employees LhaL had 4 Ls ln common Lnergy Lnerglzlng oLhers Ldge and
LxecuLlon 1he Lheme of globallzlng Lhe lnLellecL of Lhe company" sLarLed a paradlgm shlfL
ln Lhe LradlLlonal managemenL sLyle requlrlng employees Lo be of supreme quallLy and
movlng ouL Lhose wlLh lesser quallLy
O 1he vlslonary aLLlLude of Welch fasL Lracked CL Lo much hlgher growLh level creaLlng a
sLrong foundaLlon Lhrough quallLy workforce and a progresslve and lnnovaLlve organlzaLlon
culLure
In|t|at|ves taken the|r Cb[ect|ves and kesu|ts
1) c|rc|e concept
Welch dlvlded Lhe buslnesses lnLo Lhree Lypes
O Core buslnesses lncludlng llghLlng moLor LransporL Lurblne and equlpmenL eLc 1he
prlorlLy of Lhe company ln Lhese buslnesses was Lo relnvesL ln producLlvlLy and quallLy
O Plgh Lechnology buslnesses such as lndusLrlal elecLronlcs medlcal sysLems alrcrafL
englnes eLc ln Lhese buslnesses Lhe company needed Lo lnvesL heavlly Lo sLay on Lhe
leadlng edge
O Servlces Welch sLarLed a ma[or push Lowards servlces buslnesses saylng LhaL CL should
parLlclpaLe ln more llnks ln Lhe food chaln Lo compensaLe for Lhe slowlng growLh ln lLs
lndusLrlal producLs Also servlces was seen as Lhe fuLure of Lhe company 1he focus was
Lo add ouLsLandlng people and make conLlguous acqulslLlons

2) #1 or #2 I|x Se|| or C|ose
Welch declded LhaL CL should concenLraLe only on buslnesses where lL can be #1 or #2 ln Lhe
lndusLry Pence he sLarLed an lnlLlaLlve LhaL lf any of Lhe buslnesses owned by CL ls noL aL #1 or
#2 lL should elLher Lry Lo lmprove on lLs poslLlon and achleve Lhe Lop poslLlons or qulL Lhe
buslness alLogeLher Pe dlsposed of many buslnesses llke LoasLer ovens and 1v's accordlng Lo
Lhls phllosophy

Making the organization lean:
Welch sLarLed masslve layoffs Lo reduce Lhe headcounL and make CL a more nlmble and aglle
organlzaLlon !ack Welch shed more Lhan 100000 [obs a fourLh of CLs work force 1ens of
Lhousands of oLher hlgh paylng manufacLurlng [obs were moved Lo cheaper unlonfree
locaLlons overseas lollowlng Lhls !ack Welch was nlck named Neutron Iack afLer Lhe nuclear
weapon LhaL kllled people buL lefL bulldlngs largely lnLacL 1he number of employees aL CL
dropped from 402000 aL Lhe end of 1980 Lo as low as 220000 ln mld1990s !ack Welch felL
LhaL maklng CL a leaner company was necessary Lo ensure healLhy proflLs ln Lhe wake of hlgh
lnflaLlon and sLlff !apanese compeLlLlon 8y 2000 Lhe number of employees wenL up Lo 314000
mosLly as a resulL of acqulslLlons





Destaff|ng rocess keduct|on |n the number of emp|oyees

Lffect|veness of rocess Neutron Iack hase
) keduct|on of 8ureaucracy
Welch was an ardenL crlLlc of bureaucracy ln Lhe organlzaLlon and dld hls uLmosL Lo ellmlnaLe lL
Pe scrapped Lhe SLraLeglc 9lannlng SysLem as well as Lhe CorporaLe 9lannlng SLaff Pe dld away
wlLh Lhe old sLraLeglc plannlng process and esLabllshed a real Llme plannlng process Welch
reduced Lhe number of hlerarchlcal levels ln Lhe organlzaLlon from nlne Lo four
) 8udget|ng process
Welch made radlcal changes ln Lhe budgeLlng process Larller Lhere were lnLernally focused
comparlsons wlLh documenLed pasL performance now resulLs were lnsLead evaluaLed agalnsL
exLernal compeLlLlve daLa such as wheLher sales lncrease ls due Lo an lncrease ln markeL share
do marglns lndlcaLe a cosL advanLage over compeLlLors eLc
) I|atten|ng the organ|zat|on 28 reducLlon ln sLaff
7) Work out
O Cb[ect|ves
1o creaLe a small company culLure where all felL engaged and have a volce
Core elemenLs of Welch's ldeal organlsaLlon speed slmpllclLy and self
confldence
O Deve|opment
ln 1988 Welch was lnsplred by Lhe Lown hall llke sesslons aL Lhe managemenL
uevelopmenL lnsLlLuLe
Welch deslgnaLed !ames 8aughman CL's dlrecLor of managemenL
developmenL Lo execuLe Lhe workouL plan
0
30000
100000
130000
200000
230000
300000
330000
400000
430000
1981 1986 1990 1991 1992 1993 1994 1993 1996 1997 1998
N
o

o
f

e
m
p
|
o
y
e
e
s
1981 1986 1990 1991 1992 1993 1994 1993 1996 1997 1998
8evenue 2724 3672 4969 3128 3303 337 601 7002 7917 9084 10046
neL Larnlngs 16 24 43 26 47 43 47 63 72 82 92
0
20
40
60
80
100
120
(
5

b
|
|
|
|
o
n
s
)



3 uays Sesslon
uay 1 1eam leaders presenL a challenge or agenda
uay 2 Lmployees dlscuss soluLlons
uay 3 Lhe manager llsLens Lo Lhe employees recommendaLlons
8eneflLs
Pelps people Lo challenge Lhemselves beyond Lhelr currenL performance level
9rovldes a more organlsed way Lo solve problems glves more focus
Clves employees a sense of empowermenL by leLLlng Lhelr volce be heard by
managemenL
uownslde
9uLLlng pressure on managemenL wlLh on Lhe spoL" declslons
O kesu|ts
lncrease ln producLlvlLy
1he average annual growLh raLe from 19811987 was 2
1he raLe doubled Lo 4 beLween 1988 1992
) 8est pract|ces
O Cb[ect|ves
lncrease producLlvlLy
Learn from companles LhaL were performlng beLLer Lhan CL
O kesu|ts
CusLomer saLlsfacLlon
1reaLlng suppllers as parLners
Lmphaslzed Lhe need for hlgh quallLy new producLs
) Go|ng G|oba|
Many lnLernaLlonal deals were lnlLlaLed CL Look advanLages of economlc downLurn and
acqulred many companles 1he global revenues were Lhrlce LhaL of domesLlc revenue
10)Deve|op|ng |eaders
1he ob[ecLlve was Lo lmprove Lhe mlndseL afLer downslzlng and culLure lnlLlaLlves
3 key polnLs
O Leaders share Lhe company's vlslon
O Leaders harness Lhe power of exchange
O Look for Lhe four L's energy ablllLy Lo energlze oLhers edge and execuLlon
O ConfldenL managers
O Managers who puL cusLomers flrsL
11)8oundary|ess behav|our
Cpen anLl parochlal envlronmenL frlendly Lowards seeklng and sharlng of new ldeas
O ;ulck response program
O no place aL CL for adherenLs of old culLure
O Changlng Lhe crlLerla for bonuses and opLlons awards Lo reward ldes seeklng and
sharlng and noL [usL ldea creaLlon
12)Stretch goa|s
O ln sLreLchlng for Lhe lmposslble LargeLs managers learned Lo do Lhlngs fasLer and more
efflclenLly uurlng mld 1990's sLreLch goals became a parL of Lhe CL culLure
1)Serv|ce 8us|ness
10


O numerous servlce buslness acqulslLlons
O 1o offseL slow growLh of lLs producLs CL supplemenLed Lhem wlLh added value servlces
O As Lewls LdelhelL sLaLes 1he producL wlll become [usL one plece of Lhe plcLure 1he
blggesL growLh opporLunlLles may come from provldlng servlces Lo Lhe cusLomer
provldlng Lhe cusLomer Lo become more producLlve and wlLh Lhe lnformaLlon so
valuable Lhe cusLomer wlll pay for lL"
1)S|x S|gma
CL has a LargeL of becomlng a slx slgma quallLy company by Lhe year 2000 1o achleve LhaL lL
wlll have Lo dellver producLs LransacLlons and servlces LhaL are nearly defecL free ln facL Lo
achleve Lhls goal CL wlll have Lo reduce defecL levels by an average 84percenL per year (Slx
Slgma ls achleved when a company has a raLe of 23000 defecLs per mllllon operaLlons)
1o achleve Lhls goal CL has developed a four sLep program called MAlC
1 Meosurement ldenLlfy Lhe processes LhaL are crlLlcalLoquallLy (C1;) and measure Lhe
number of defecLs produced
2 no/ysis 1ry Lo undersLand why defecLs are generaLed by each speclflc C1; process and Lhe
key varlables responslble for Lhose defecLs
3 lmprovement ;uanLlfy Lhe effecL of lmprovemenLs ln each of Lhe key varlables ldenLlfled and
make sysLem modlflcaLlons
4 ontro/ Lnsure Lhe modlfled process ls now enabllng key C1; process varlables Lo sLay wlLhln
accepLable ranges
CL has also Lralned employees Lo make sure LhaL Slx Slgma goals are achleved lor Lhls 200
'champlons' were selecLed from senlor managers who deflnes Lhe Slx Slgma pro[ecLs 700
'masLer black belLs' who are menLors Lo black belLs were selecLed 2600 'black belLs' who spend
Lhelr Llme leadlng quallLy focused Leams whlch focus on key processes and 13000 'green belLs'
who work parLLlme or on a Lemporary basls on slx slgma pro[ecLs were selecLed
Slnce Slx Slgma was lnlLlaLed ln 1993 $170 mllllon ln cosLs savlngs was achleved ln 2 years 8y
1998 Lhe company was beglnnlng 37000 Slx Slgma pro[ecLs wlLh an envlsaged beneflL of over
$1 bllllon ln cosL savlngs
1)L bus|ness
Welch declded LhaL buslness heads should Lry Lo undersLand ls ecommerce ls a huge
opporLunlLy for cosL savlngs uslng Lbuslness Lhey can easlly lnLegraLe wlLh suppllers and
cusLomers Lhrough elnlLlaLlves Pence ln 1999 Welch added e8uslness as Lhe fourLh sLraLeglc
lnlLlaLlve
Pe launched a program called desLroyyourbuslnesscom (dybcom) Pe esLabllshed full Llme
dybcom Leams for each unlL whlch focused on how Lo redeflne Lhe buslness model before
someone else dld
1)V|ta||ty curve
O Lmployees are ranked by managers
1op 10 are 1's
SLrong 13 are 2's
Plghly valued are 3's
8orderllne 13 are 4's
LeasL effecLlve 10 are 3's
Advantages
11


lL sysLemaLlcally ldenLlfles hlgh performers for commensuraLe reward and ldenLlfles
low/weak performers for Lralnlng/forced aLLrlLlon
D|sadvantages
lL ls a lorced dlsLrlbuLlon meLhod
Pere lf a person ls asked Lo leave oLher lssues crop such as who wlll feed hls famlly whaL
happens Lo hls selfesLeem who wlll arrange for hls reengagemenL eLc
8ell curve meLhod ls hlghly sub[ecLlve Slnce Lhe bell curve ls applled noL across all Lhe
employees buL Lo lndlvldual deparLmenL / Leam / funcLlon Lhere ls a good chance LhaL Lhe
worsL ln Lhe hlgh performlng group may be beLLer Lhan Lhe besL ln an average performlng
group llnally Lhe company may be lefL wlLh low performers whlle loslng some good ones
lurLher applylng Lhls meLhod year afLer year may resulL ln erroneous resulLs
Iack We|ch Leadersh|p
!ack Welch surpassed hls role by noL only belng Lhe CLC of CL and drlvlng CL Lowards hlgher growLh
level buL also belng a vlslonary and leavlng behlnd hlm an organlzaLlon wlLh sLrong culLure and
sLrucLural foundaLlon LhaL would propel lLs growLh durlng changlng Llmes ln fuLure 1he changes LhaL
Welch broughL forLh durlng hls Lenure were consLrucLlve fuLurlsLlc and engaglng for everyone
relaLed wlLh Lhe company 1o lnlLlaLe Lhls radlcal change Welch emphaslzed aL go for leap sLraLegy
raLher Lhan an lncremenLal one 1hls lncluded lmplemenLlng change ln Lhe phases of
O unfreezlng brlnglng radlcal changes ln Lhe organlzaLlon Lhrough resLrucLurlng of
organlzaLlon sLrucLure adopLlng Lhe real Llme sLraLegy raLher Lhan sLraLeglc plannlng
approach downslzlng brlng openness ralslng Lhe quallLy performance and dellvery
sLandards keeplng Lhe rlghL klnd of people and empowerlng employees
O 8rlnglng change lmplemenLlng Lhese changes Lhrough programs almed aL bulldlng lL up le
workouL and besL pracLlces leadershlp developmenL program slx slgma quallLy program
O 8efreezlng sLablllze Lhe organlzaLlon by maklng Lhese programs a parL of organlzaLlonal
culLure and lngralnlng lL deeply ln organlzaLlonal pollcy and pracLlces 1he ob[ecLlve here ls
Lo make Lhe new culLure become Lhe only culLure followed ln Lhe company
Welch very effecLlvely lmplemenLed Lhls process ln CL creaLlng a culLure based on speed
openness candor slmpllclLy and selfconfldence



12


Iack We|ch Leadersh|p sty|es
Cn Lhe basls of Lhe LransformaLlons and changes LhaL Welch broughL ln CL followlng are Lhe
leadershlp sLyles clearly aLLrlbuLed Lo hlm
O 9oslLlve relnforcemenL le when a poslLlve sLlmulus ls presenLed ln response Lo a
behavlor lncreaslng Lhe llkellhood of LhaL behavlor ln Lhe fuLure Welch Lhrough lLs up
gradaLlon of compensaLlon package rewardlng and awardlng employees conLrlbuLlng
and encouraglng Lhe developmenL of leadershlp skllls ln Lhls pracLlced poslLlve
relnforcemenL wldely Lo creaLe a quallLy workforce
O SlLuaLlonal leadershlp based on Lhe slLuaLlons/markeL scenarlos LhaL he faced or
predlcLed Lo face ln fuLure he alLered hls ob[ecLlves and leadershlp sLyle Lo sulL and
meeL LhaL goal
O luncLlonal leadershlp Lhrough hls conLrlbuLe Lo organlzaLlonal or unlL effecLlveness by
Laklng care of Lhe groups/employees needs Lo enhance group effecLlveness and
coheslon
O 1ransformaLlonal leadershlp by brlnglng ln radlcal LransformaLlon and changes ln CL
and sLarLlng a paLh for new culLure and sLrucLure ln Lhe organlzaLlon
O Pls leadershlp sLyle showed Lhe LralLs of lnnovaLlon recognlzlng encouraglng and
nurLurlng LalenLs/capablllLles fuLurlsLlc vlslon and ouLlook rlsk Laklng declslon maklng
consLanLly pushlng Lhe sLandards and llmlLs forward Lo obLaln excellence and
relnforclng Lhls ln Lhe ouLlook of all Lhe employees Lo make lL an lnherenL parL of CL
culLure
I|ed|er's mode| ana|ys|s
1askorlenLed leadershlp would be advlsable ln Llmes of crlsls 1he LaskorlenLed leader who geLs
Lhlngs accompllshed proves Lo be Lhe mosL successful lf Lhe leader ls conslderaLe (relaLlonshlp
orlenLed) Lhey may wasLe Llme ln Lhe dlsasLer LhaL Lhlngs geL ouL of conLrol Accordlng Lo Lhls
model a 1ask orlenLed leader ls mosL effecLlve ln an exLremely favorable and unfavorable and a
people orlenLed leader ls mosL effecLlve ln a moderaLe slLuaLlon !ack Welch was more Lowards a
Lask orlenLed leader
1he effecLlveness of Lhls leadershlp sLyle was evldenL ln Lhe growlng proflL levels and
successful globallzaLlon lmplemenLaLlon of CL lLs ouLcome resulLed Lo
O Lmpowerlng Lhe employees by volclng Lhelr oplnlons and problems
O 8educLlon ln bureaucracy
O lmplemenLaLlon of besL pracLlces and ldeas
O Changlng organlzaLlonal culLure and aLLlLude
O 8alslng quallLy of producL and servlce
O lncreased compeLlLlveness and lnnovaLlve sLreak ln workforce
O 8elnforcemenL of wlnnlng culLure and globallsed ouLlook
O locus on maklng CL a learnlng organlzaLlon
1


key Issues faced by GL
1 Pow Lo add value Lo Lhe hlghly dlverslfled buslness porLfollo
2 Crumbllng of Lhose who felL over worked
3 8esldual dlsLrusL lefL over from Lhe layoffs
4 ueallng wlLh Lhose managers who seemed unwllllng or unable Lo embrace Lhe open
parLlclpaLlve values
3 SelecLlng a new CLC Lo Lake over Lhe relns from !ack Welch
6 ueallng wlLh rapld dlverslflcaLlon ln Lerms of buslnesses goods and servlces eLc
7 !olnlng Lhe lnLerneL parLy ebuslness

Corporate Strateg|es
We have learned LhaL afLer a polnL Lhe experlence curve sLarLs leanlng upwards because of Lhe
dlseconomles of Scale whlch seL ln WlLh CL lL seems Lhanks Lo !ack Welch's obsesslon wlLh Leachlng
managemenL managemenL Lhls has so far noL seL ln 1rue Lhe company sLarLed wlLh Alva Ldlson
lnvenLlng Lhe bulb buL from Lhe case sLudy lL would appear LhaL lL ls noL so much Lhe 8u buL Lhe
operaLlonal and managerlal efflclency whlch ls allowlng Lhe company Lo grow and have such hlgh
reLurns Lo lLs shareholders
1he company follows a mulLlbuslness model ln such a model Lhe buslness musL malnLaln Lwo levels
of sLraLegy one belng aL Lhe buslness (S8u) level and Lhe oLher aL a hlgher level aL Lhe corporaLe P;
level whlch [usLlfles lLs enLry lnLo dlfferenL buslnesses and lndusLrles 1haL ls Lo say CL whlle
malnLalnlng lLs separaLe pollcles for markeLlng eL al aL Lhe buslness level Lhere has Lo be some
pollcles aL Lhe corporaLe level whlch by Lhemselves creaLe value Lo Lhe flrm whlch ls whaL needs Lo
be leveraged whlle dlverslfylng Llke ln Lhe case of CL lL would be Lhe prlnclples values and sysLems
lald down by lLs CLC !ack Welch
9rahlad and Pamel ln Lhelr P88 paper LlLled CompeLlng for Lhe fuLure" suggesLs LhaL companles
can expand ln four ways by leveraglng compeLencles wlLh regard Lo Lhelr lndusLrles (9remler plus 10
Mega opporLunlLles llll ln Lhe blanks or WhlLe spaces) now ln Lhe case of CL Lhe compeLencles LhaL
Lhey have bulld up over Lhe years under Mr Welch are so generlc (Ceneral CrganlzaLlonal
CompeLencles llke culLure value sysLems people power) LhaL lL can be applled unlversally Lo any
new lndusLry or venLure CL enLers ln Lo Meanlng Lhey do noL have Lo look Lo necessarlly bulld new
compeLencles buL [usL need Lo leverage Lhe same Whlch Lhanks Lo Lhe flnanclal clouL Lhe company
en[oys lL can leverage ln any lndusLry lL so wanLs Lo as Lhese are LralLs whlch all companles look Lo
bulld buL so few have Lhem 1hls very facL added Lo Lhe noLlon of Welch suggesLlng LhaL Lhey
acqulre companles whlch are aL Lhe Lop of Lhe lndusLry can lead Lo dramaLlc shareholder value
lncrease for Lhose companles once acqulred


1



kecommendat|ons
MalnLaln a mulLlbuslness model
lurLher bulld on generlc (Ceneral CrganlzaLlonal) compeLencles as Lhese can be unlversally
leveraged such as (and as rlghLly polnLed ouL by Mr Welch) e buslness
CorporaLe P; should be looklng Lo bulld compeLencles of Lhe sorL menLloned above whlle
leavlng lL Lo Lhe S8us Lo bulld Lhelr own respecLlve sLraLegles
Scallng up lnvesLmenLs ln emerglng markeLs llke Chlna lndla and oLher developlng naLlon lL
should prlmarlly lnvesL ln Lhe healLhcare secLor ln Lhese naLlons lL should dlverslfy lnLo
producLs llnes dependlng on LhaL markeL's need
CL should look ouL for locaLlon economles so as Lo cuL down on cosL and lmprove on quallLy
CS8 8elng one of Lhe Lop companles ln Lhe world CL should focus on CS8 acLlvlLy so as Lo
bulld lLs brand lmage lL should Lry and be amongsL Lhe flrsL ones Lo cuL down on carbon
emlsslon drasLlcally whlch ls a ma[or concern ln Loday's scenarlo