GE’s Two Decade

Transformation-
Jack Welch’s Leadership

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 Strategic planning

manage cross-currents of change. Focus on R and D

Intellectual breadth
Jones Government relations
 Welch’s Era
• Three circle concept

• Getting out of pile

• Flying below the radar

• Getting closer to the big leagues

• Building self confidence

• Swimming in a bigger pond

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 Autobiography

Link to jack welch

https://www.youtube.com/watch?v=ojkOs8Gatsg leadership
THE SOFTWARE INITIATIVES OF LATE 1980s

• WORK OUT- AN INITIATIVE TO ERADICATE

BUREAUCRACY
• To create a culture of a small company and came up with the
idea of a forum where people can put forward their opinions
and get immediate response as well.
• At Welch’s request, James Baughman formed a small
implementation team with a group of 40-100 consultants
from outside to advice on how to improve their business.
• Emphasis on no documentation of meetings even though
that means there would be no clear assessment of how many
members participated in the Work Out program.
THE SOFTWARE INITIATIVES OF LATE 1980s

• Focus on development of effective processes than on individual

activities, customer satisfaction, treatment of suppliers as
partners, creation of high quality new products
• Focus on creating a new training program to introduce best
practices thinking in the organisation.
• Realisation that they were managing and measuring the wrong
things .
INTERNATIONALISATION

• “…..Businesses are global not companies”

• Appointment of Paulo Fresco as head of International Operations
• Broke numerous international deals ranging from partnership to
rampant acquisition of some of the leading companies across the
world
• Took advantage of global economic slowdown ranging from
European economic crisis in which GE invested $17.5 billion in the
region to Asian economic downturn in which GE invested some $15
billion on acquisitions in Japan in 6 months.
• International revenues shoot up to $42.8 billion in the next 5 years
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 Third wave

To strengthening GE’s Individual Businesses

• Bonus and rewards for idea sharing and not just idea creation Integrated
Diversity Boundaryless Company
The Boundaryless company we envision will remove the barriers among
engineering, manufacturing, marketing, sales, and customer service; it will
recognize no distinctions between domestic and foreign operation
Boundaryless Behavior
 Stretch
“Goals that u don’t know how to
reach”

• Welch introduced “stretch” to set performance targets

• Managers were not held accountable for the goals set,but those he
achieved the goals were rewarded.
• They aimed at inspiring or challenging the employees.
• Implementation of Stretch came with difficulties but was handled well by
their don’t-punish-failure concept
• Jack Welch said “in stretching for these impossible targets,we learned to do
things faster than we would have going after doable goals”.
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 Service business

• In 1994,Welch launched a new strategic initiative designed to reinforce

his earliest goals,”to reduce GE’s dependence on its traditional products”
• After the acquisition of financial service companies,GE’s profits came
from services
• A push for product services-the biggest growth opportunities
• Developing remote diagnostic capability(Aircraft engines, medical fields
etc..
• Welch’s view was to change internal mindsets from selling products to
helping our customers win.
 Four E’s
• “A players” – individuals with vision, leadership, energy and courage.
• Four E’s – energy, energize, edge and execution
• He insisted that GE should move to the phase three of its globalization
initiative
• Performance appraisal system that required every manager to rank each of
his or her employees.
• He believed that nurturing and continuously upgrading the quality of
management was one of the main keys to GE’s success.
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 Issues

• A successor has to be found to replace the retiring Jack Welch, as

no suitable candidate has yet been determined.
• Upon selecting a successor, the first issue that GE will encounter
will be how to transition from Welch as the CEO to the new
individual. This has to be done very carefully in order to strike a
balance.
• GE has to examine what strategy the firm is going to follow
 Recommendations
• There are following recommendations which are improved by GE in their recruitment process.

• Internal candidates of GE who don’t get the job may get demotivated. Telling unsuccessful
candidates why they were rejected and what corrective action they need to take is critical. This
needs to be done carefully and requires the managers’ and Interviewers’ time. There are a lot of
candidates of GE who apply for the position and interviewing all of them can be a time
consuming exercise. In the General electric company those candidates who move into the new
role may find it difficult to gain acceptance from a Group of previous peers. It is mostly seen in
the General Electric Company when a lot of managers come up through the Ranks, they may
have a tendency to maintain status ego, even when a new direction is required. Establish
relationships with employees outside the country. There are certain people who have experience
in a particular area. They enjoy goodwill and a stand in the company. There are certain
vacancies which are filled by recommendations of such people. The biggest drawback of this
source is that the company has to rely totally on such people which can later on prove to be
inefficient