Jack Welch (1981 2001)

OBJECTIVES
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#1 or #2: Fix,
Sell, or Close
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GE to be
perceived as a
unique, high
spirited,
entrepreneurial
enterprise
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There was no
point to invest
in
uncompetitive
business.
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Downsizing,
Destaffing and
Delayering
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Centralisation
and to reduce
the number of
hierarchical
levels
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By downsizing
the operating
profits rose
from $1.6bn to
$2.4bn.
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Going Global
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To make GE #1
company on
world market
position
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Took advantage
of economic
downturn.
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Developing
Leaders
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GE as a place
where people
have the
freedom to be
creative, the
place that brings
out the best in
everybody
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He spent $45
million on new
buildings and
improvements
at Crotonville
management
development
facility
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Appointed
Paolo Fresco as
head of
International
Operations
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Going Global
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He was key
negotiator on
the Thomson
swap
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GE values
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Everybody
should carry
the values
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He removed
the people who
doesnt share
the values of
the company.
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Boundaryless
Behaviour
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Open environment,
seeking and sharing
of new ideas, to
remove the barriers
between the
departments
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Canadian GE
identified a process
of producing a broad
range of products in
efficient manner,
which was then
applied in GEs
Appliance park in
USA
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Stretch:
Achieving the
impossible
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To push the
employees and
company
beyond its limit
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Targets were
set very high
then the
forecasted ones
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Service Business
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To reduce GEs
dependence on
its traditional
industrial
products
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He started a
Services Council
through which
top managers
could exchange
ideas and target
on value added
services on the
products.
Fiedler Contingency Model
Willingness to change is a strength, even if it means plunging
part of the company into total confusion for a while.


I own the People. You Just
rent them
#1 or #2
Fix, Sell, or Close
How do I add Value? How
Do I make people on the line
more effective & Competitive
Situational Leadership Theory
GOALS
Restructuring
Rebuilding
Cultural Change
Employee Skill Set Enhancement
High Productivity
Globalization
Great Place to work
Value Added Service Provider
6 Sigma
E-commerce
Motivation
Subordinates
Leader Participation Theory
Making decision is as important as to what he or she decides
Leader behaviour must adjust to reflect the task structure
John Kotters 8 step plan and
Change initiative in GE
Establish a sense of urgency
Recession in the US economy
#1 or #2, Fix, Sell or Close
Study of impact of quality program showed huge error rate
and loss(Six Sigma)
Removal of type 4 managers, who do not share GE values
Release of least effective (rank 5) team members

Create the guiding coalition
Replacement of 12 of 14 business heads in 1986Varsity
Team
Appointment of Paolo Fresco for internationalization effort as
vice-chairman
Gary Reiner- in charge of Six Sigma training program
Hiring of Jim Baughman(Harward) & Noel Tichy(Michigan) for
Crontonville management development facility
Develop a change vision
Going global-mid-1980s
Software initiative in mid-1988
Work-out to remove bureaucracy
Best Practices-1989
Boundaryless Behavior-1990s
Stretch-1990s
Service Business-1994
Six Sigma-1995
E-business-1999

Communicate the change vision for
buy-in
Company-wide program rollout by two dozen
outside consultants for Work-out
Training program for Best Practices throughout the
orgnaisation
Urge to managers to see economic downturn as
buying opportunity
Idea sharing among various dept. for boundaryless
behavior
Inspiration of 15% op. margins for achieving
Stretch
Compulsory participation for Six Sigma



Empowering broad based action
Downsizing : GE eliminated 59,290 salaried and
64,160 hourly positions between 1981 and 1988.
Divestiture eliminated an additional 122,700
De-staffing : Welch scrapped the laborious
Strategic planning system and made way for Real
Time Planning
De-layering: In 1985, Welch eliminated the sector
level. He also made sure that all businesses
reported directly to him by reducing the
hierarchical levels from 9 to 4




Generating short term wins
Welch came out with the notion of Stretch
where employees were required to set higher
goals, those who achieved were rewarded with
bonuses and stock options.
Expanded the number of recipients of stock
options from 300 to 30,000, stock option
allocations being tied with individual performances
Never letting up
Established and personally involved himself with the
companys Management Development Institute
Concepts of Work Out and Best Practices
Mergers and Acquisitions
Came up with the Boundaryless theme
Introduced the notion of Stretch to his employees



Incorporating changes into the culture
Developed a organizational culture which is
deeply committed to its people
Focused on creating an environment where
people could do their best
Harnessed this culture change by its
Crontonville management development
facility where he focused to develop a
generation of future leaders for GE