Organizational Change:

Case Study on General

Electric
Dayao | Exconde | Jose | San Jose | Saylago | Yu
MBA 2A-R
Outline of Report
• Introduction
• Change in GE
• Factors of Change
• Forces of Change
• Resistance of Change
• Management Approaches
• Reason and Forces for Change
• Types of Changes
• Steps in the Change Process
• Problems to Change Process
• Results of Change Process
• Effectiveness of Change Strategies
• Recommendation
• Conclusion
Introduction
General Electric History
• In 1981, Jack Welch assumed the top position of the GE that had a
market value of $12 billion.
• By 1995, Welch decided that the company was due for a complete
overhaul and did so by implementing the Six Sigma method
• This methodology helped the GE company to save $10 billion in 5
years.
• Welch left GE in 1998 and by that time, the company was worth $280
billion.
• GE in 2018 has reached its downfall and its lowest stock value down
to 69.05%
Downfall of GE
Change in General Electric
Factors of Change
• Internal Factors
• Change in products and services
• Designs Innovation
• Location of Office and Factory
• Customer Service Approach
• External Factors
• New government policies and legislation
• Social and Cultural Value Change
• Change in national and global economic conditions
• Trade regulations and policies
Change Forces
• Political:
1. Continuing governmental support for digitization of
industries
2. Continuing governmental support for the shift to
renewable energy
3. Governmental openness to global trade
4. Increasing governmental support for intellectual
property protection
Change Forces

•Economic:
1. Economic growth of developing
countries
2. Increasing disposable incomes
3. Increasing global trade of firms from
developed countries
Change Forces

•Economic:
1. Economic growth of developing
countries
2. Increasing disposable incomes
3. Increasing global trade of firms from
developed countries
Change Forces

•Social:
1. Increasing popularity of green lifestyles
2. Increasing adoption of mobile
technologies
3. Increasing popular support for renewable
energy use
Change Forces

•Technological:
1. Increasing digital technology adoption in
industries
2. Increasing adoption of online mobile
services
3. Increasing availability of renewable
energy technology
Change Forces

•Environmental:
• 1. Limited oil reserves
• 2. Increasing availability of recyclable
materials
• 3. Growing global energy consumption
Change Forces

•Legal:
1. Widening reach of intellectual property
protection laws
2. Increasing complexity of waste disposal
laws
3. Increasing complexity of online product
regulation
Resistance of Change

• With its history, evolution and globalization, I can say

that GE has no resistance to change but on the
contrary.
• GE believes that a change in culture is a continuing
Journey:
• Using change as a Strategic and Competitive Advantage
• Optimizing Change Effectiveness
• Building a Culture that Drives Change
No Resistance to Change
Cultural Change
• Jack Welch desired a management style that was based on openness,
candor and facing reality. The culture he wanted to create was
characterized by speed, simplicity and self-confidence.
These were done using two mechanisms:
1. WORK OUT - In an effort to recreate the forum of honest, energetic
interaction, Jack Welch initiated Work out – a forum in which superiors
and subordinates could openly discuss ideas, proposals and get
immediate feedback on the same.
2. BEST PRACTICES - The objective of ‘best practices’ was to learn from
organizations that were having higher productivity than GE.
Globalization

GE’s globalization pattern

GE followed an aggressive policy of inorganic

growth in Europe, Mexico and East Asia.
Leadership Development

Facility and the

Feedback to all Employee
hiring of top-
employees Interaction
class academics
Boundaryless Behaviour

“Integrated Remove All Boundaryless

Diversity”. Barriers Organization
Management Approaches
Management Approaches
Management Approaches
Reason and Forces For
Change Of GE
Main Forces of Change

• External Forces – Solution “better than the best”

• Recession
• High interest rate
• High level of unemployment
• Internal – Solution “decentralized management”
• Company was too large
• Restructuring program
• New management scheme
Types of Changes
The Company decided to create radical changes which
include structural change, culture change, and process change.
Also included was the change in the vision of the Company in
which Welch set the standard to be competent enough to stay at
#1 or #2 position in the industry. These changes came in three
phases commonly known as first wave, second wave and third
wave which will be further discussed in the next section.
Steps in the Change Process

1 st Wave
2 nd Wave
3 rd Wave
The Four Key Goals of GE's Work-Out
Meetings
• Encourage employees to share their views in a collaborative
culture
• Vest greater responsibility, power, and accountability with front-
line employees
• Eliminate wasteful, irrational, and repetitive steps in the work
process (which would come to light through employee
feedback)
• Dismantle the boundaries that prevent the cross-pollination of
ideas and efforts.
Problems to Change Process
1. Managers at GE struggled to build #1 or #2 positions given the
pain of the recessionary economy and level playing field provided
by globalization. Welch’s admonition to “fix, sell, or close”
uncompetitive business most of the times led to the latter
options. Between 1981 and 1990, GE generated $11 billion of
capital by selling off more than 200 businesses and investing that
money to make about 370 acquisitions in diverse fields.
2. Since Welch insisted GE to become more “lean and agile”. It
resulted in cutting number of employees working in the
organization at all the headquarters group, in the name of
removing non-value add, non-effective and non-competitive
work force.
Problems to Change Process
3. By undergoing delayering, de-staffing and downsizing, GE
eliminated thousands of workers. Though there was marginal
increase in the revenues, but the profits surged by two folds from
$1.6 billion to $2.4 billion.
4. Countless threats and weaknesses have creep up the
performance of the company, some of which are the risk of
competition, information security, weak senior management,
rising commodity prices, exposure to financial markets and crisis
and threat to flexibility.
Results of Change Process

Transformation
Effectiveness of Change Strategies

1.Leadership identifies a critical organization issue

or problem.
2. A small group of people from several functional
areas comes together for uninterrupted work time
with the pressure of a deadline as a catalyst and
the assistance of skilled facilitators to support their
work.
3. The group works to develop and present
recommendations it can implement.
Effectiveness of Change Strategies

4. Leadership hears their recommendations and

gives a “Yes,” “No,” (and “Here is why”) or “Further
Study” and then empowers teams to implement
approved recommendations.
5. The teams implement accepted
recommendations.
6. The teams come back together at a
predetermined time usually 90 – 120 days later to
report their progress.
Recommendation

Stability and being visionary

Welfare and the skills of their employees.
Retention and sustenance of their employees
Success also comes with risks
Conclusion
References
• https://www.ge.com/news/company-information/philippines
• https://www.company-histories.com/General-Electric-Company-Company-
History.html
• https://notesmatic.com/2018/03/ge-pestel-analysis/
• http://panmore.com/general-electric-ge-pestel-pestle-analysis-recommendations
• https://www.ukessays.com/essays/business/the-change-management-process-at-
general-electric-business-essay.php
• https://www.blackwellpublishing.com/content/GrantContemporaryStrategyAnalys
is/6th_Edition/case_teaching_notes/CSA6CaseNotes_17.pdf
• https://www.slideshare.net/ericmoon/ges-growth-strategy
• http://www.free-management-ebooks.com/news/adams-equity-theory/
• https://www.slideshare.net/fminnov8/the-only-constant-at-ge-is-change