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Presentation given in Strategic Management.

Presentation given in Strategic Management.



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Welch Welch Presentation Transcript

  • Jack Welch and the General Electric Management System Presentation for MGT4133 Momchil Metodiev – M00237116 Yash K. Bajaj – M00241969 Masood Junaid Bin– M00236383
  • Introduction – History of GE
    • GE was founded in 1892 – merger of Electric Light Company and the Thomas Houston Company;
    • GE became one of the largest industrial corporations in the 20 th century; constant growth and profits;
    • The only company that has remained a member of the Dow Jones index since its creation in 1896;
    • By 1981 it consisted of 33 different business groups.
  • Introduction – Jack Welch’s Career
    • Joined GE in 1960;
    • Spent time in several of the conglomerate’s business sectors;
    • Appointed CEO in 1981 – the choice surprised many people;
    • Retired in 2001;
    • Welch was revered as possibly the greatest manager in history.
  • Welch’s Philosophy & Actions
    • Some of Welch’s ideas countered what was held as common sense at the time, which was why many considered him a “maverick”;
    • Believed in constructive conflict, acknowledging disagreement and confronting reality – that led to open arguments with high-ranked managers;
    • His goal – to have his managers convince him, as well as themselves, that their approach would work; this makes them more confident and determined to succeed.
  • Welch’s Philosophy & Actions (Continued)
    • Real world achievements
    • Self-confidence
    • Simplicity
    • Speed
    • Winner
  • Welch’s Philosophy & Actions (Continued)
    • Annual planning meetings with the heads of the business units – Welch gave them 5 questions they had to answer
      • What are your market dynamics globally today, and where are they going over the next several years?
      • What actions have your competitors taken in the last three years to upset those global dynamics?
      • What have you done in the last three years to affect these dynamics?
      • What are the most dangerous things your competitor could do in the next three days to upset those dynamics?
      • What are the most effective things you could do to bring your desired impact on those dynamics?
  • Welch’s Philosophy & Actions (Continued)
    • ‘ Stretching’ meant using dreams to set business targets;
    • Welch saw good business leaders as visionaries who would be able to suit their visions to their companies and would be relentless in driving the vision to completion;
    • Those who did not share that vision could not last long in the company;
      • “ They wanted to sit back, to keep things the way they were. And that’s just what they did – until they and most of their staff had to go.”
  • Welch’s Philosophy & Actions (Continued)
    • Welch was opposed to the bureaucratic system that had taken over business; that is why he eliminated several layers of management positions;
      • “ When layers are taken out, the managers are exposed to more pressure”.
    • He believed managers should have 10-15 people reporting to them, instead of 6-7;
    • As a result, the number of employees in the conglomerate was reduced – from 404,000 in 1981 to 221,000 in 1994
    • By 2001, the number had grown to 310,000 due to foreign expansion – employees in the US only grew from 156,000 to 158,000
  • HR Management
    • According to Welch, GE’s core competency was its people; therefore, performance assessment had to be strict;
    • 20-70-10% principle;
    • The bottom 10% were to be removed from the company every year.
  • Changes in GE’s Portfolio
    • He only wanted to keep companies who had the largest or second largest market share in their global markets – he sold off a lot of the companies in the conglomerate;
    • Acquired many large companies, such as RCA, NBC, Kidder Peabody, CGR;
    • Some of his acquisitions were considered to be mistakes – Kidder Peabody, Montgomery Ward;
    • The acquisition of Honeywell, which was going to be his last major deal was stopped by the European Commission on antitrust grounds.
  • A More Detailed Look at GE’s Company Culture
    • Research on following aspects of the company:
    • Everyday realities (Soft):
      • Routines
      • Rituals
      • Stories
      • Symbols
    • Top-executive realities (Hard):
      • Power Structure
      • Control Systems
      • Organizational Structure
    • Methodology – desk research .
  • GE’s Operating System
    • Consisted of company initiatives that Welch introduced once every two years: Work-Out, Boundarylessness, Globalization, Six Sigma, Digitization;
    • The most important aims were to contribute to improving employees’ performance by incorporating the best practices from other businesses around the world;
    • It worked rapidly – all the initiatives became operational within one month of launch and have produced positive results within their first cycle.
  • Impact of the GE Operating System on Other Companies
    • Have other large companies followed the example of Welch and used the Operating System or another system derived from it?
    • Was it successful?
    • Is it feasible to incorporate GE’s Operating System for a different company – e.g., smaller in size or one that is not a conglomerate?
    • Methodology – desk research, perhaps in-depth interviews; comparison between the position of the companies before and after the incorporation of the system.
  • Conclusion
    • Welch’s management style and the innovations he brought to GE’s company culture became an example for other executives;
    • Instilled the company’s values – trust, informality, simplicity, boundary-less behaviour and love of change;
    • Considered “a living legend” and “best manager of the past half-century” by his successor Jeff Immelt – for these reasons it is important to study Welch’s ideas and achievements.