Jack Welch and Jeffry immelt:Continuity and change in strategy, Style, and culture at GE PankajUpadhaye NehaKhatri Niati Dixit Shikajain MdZeeshan Farooqui
Introduction to GE Founded by Thomas Alva Edison as EGEC in 1878. Merged with THEC in 1892 to form GE. First formal CEO Charles Coffin 1894. In 1896, General Electric was one of the original 12 companies listed on the newly formed Dow Jones Industrial Average. Acquired more than 350 companies, including mammoth players like- National Electric Lamp Association (NELA) , reacquired RCA, NBC television network .
GE at present Operates in 100+ countries worldwide 300,000+ employees worldwide 2009 revenue - $174 billion 2009 earnings - $31.4 billion One of original six companies still remains listed after 114 year on Dow Jones index
Who is Jack Welch? 1935: born in Salem, Massachusetts 1957: BS in Chemical Engineering 1960: MS and PhD in Chemical Engineering
Jack Welch 1999: Named “Manager of the Century” by Fortune Named one of the three most admired business leaders in the world by Financial Times September 7, 2001: Retired as CEO Published autobiography, “Jack, Straight from the Gut”
Jack Welch and GE 1960: Joined GE as a junior engineer 10 Years later he audaciously wrote in his annual performance review that his long-term goal was to become CEO 1972: Elected GE’s youngest VP 1977: Become senior vice president 1979: Vice Chairman April 1, 1981: Became the 8th Chairman and CEO of General Electric
Taking Over GE’s CEO Challenges from outside of GE
High interest rates
Highest unemployment rate since the depression
Challenges from GE Massive information and inefficient macro-business
Welch’s Vision “A decade from now, I would like General Electric to be perceived as a Unique, high-spirited, Entrepreneurial enterprise…the most profitable, highly diversified company on the earth, with world quality leadership in every one of its product lines”. -- Jack Welch Three-Circle Vision for GE
“Restructuring the Hard Drive” Challenged everyone to be “better than the best” Sold more than 200 businesses and made over 370 acquisitions Insisted GE become more “lean and agile” resulting Delayering: elimination of the “sector” level Downsizing: elimination of about 123,450 jobs Divestiture: elimination of an additional 122,700 jobs Replaced 12 of his 14 business heads
Initiatives - Objective Cut the companies spending on R & D. Work-Out – Group of 50 employees companies policy and process. Best Practices – Involving all employees in the quality process. Going Global Six Sigma - In late 1995 E-Business
Passing the Torch Retirement – September 2001 Lengthy process of succession Internal candidates only Never named candidates No strategic vision No common measure for candidates Long list of candidates
GE under Jack Welch
Welch – a hard task-master.
Surprise visits – a part of his style of functioning.
Under Welch, GE functioned as a true meritocracy.
The Annual ‘C’ session meetings.
Promoted the idea of ‘Boundary – less corporation’ at GE.
Jack Welch’s – Theory of Leadership – The 4E’s + P.
Theory of Leadership – The 4E’s + P
GE under Jack Welch Concept of borrowing unpatented ideas from other corporation. Sig Sigma, Demand Flow Technology, Bullet Train Thinking, Quick market Intelligence, etc. Bottom 10% least effective employees were fired. Tendency to jump to conclusions about people. An extremely demanding boss – “What have you done for me lately?”
GE Under Jack Welch Revenues shot up from 28 billion to 129.8 billion (1981 – 2001)
The Immelt Revolution
Who was Jeff Immelt?
Joined GE Plastic in 1982 (MBA from Harvard University)
Various global leadership positions over year career in GE
GE Electronics, GE Medicals, International Marketing
Elected as CEO to begin tenure in September 2001
GE UNDER IMMELT Release of Annual Report in March 2002. Redesigning of CEO Compensation Package. Acquisition with Vivendi Universal’s American assets value at US$ 14 billion. Invested in various Research centres. Promoted external communications. Cultural shift from performance to customer satisfaction and value
Continued…. External Recruitment for senior positions. Diversity in work force. “People Oriented” approach. Establishment of a Commercial Council. “Innovative Break-through” program. Launch of projects ranging from creating microjet engines to desalination.