GE’s Two Decade Transformation:
Allam Dinesh Reddy R810209012
M S S Charan R810209041
M Gopal Varma R810209044
Jack Welch’s Leadership
Challenges for Jack Welch
Initiatives taken by Jack Welch
Reg Jones (1973-81)
Jack Welch (1981-2001)
Jeffrey Immelt (2001- Present)
Challenges for Welch as CEO
Matching and surpassing the standards set by his predecessor Reg Jones.
CEO of the year (3 times)
CEO of the decade (1979)
“Management Legend” (WSJ-1981)
Economy in recession (1981)
Strong Dollar Highest Unemployment rates
Youngest CEO in action…
Initiatives by Jack Welch
• Three Circle Concept
• De staffing process
• Strategic(Real-time) Planning system
Three Circle Concept
Less no. of people,
“We don’t need the questioners & checkers, the nit
pickers who bog down the process…
Today each staff has to ask, “How do I add value?”
How do I make people on the line more effective
Real Time Planning
Five page strategy Play book
One page answers to five questions
1. Current Market Dynamics
2. Competitors recent activities
3. GE’s Response
4. Greatest competitive threat over 3 years
5. GE’s Planned response
Benefits by “Hardware” initiatives
Number of Employees
404,000 to 292,000
$27.2 billion to $29.2 billion
$1.6 billion to $2.4 billion
• Fix, Sell/Close
•De staffing process
•Notion of stretch
Initiatives by Jack Welch
“By mid 1988 the “Hardware” structure was basically
in place. Now it was time to focus on organization’s
“Software”. A company can boost productivity by
restructuring, removing bureaucracy and downsizing,
but it can not sustain high productivity without
1. To design a process to get unnecessary bureaucratic
work out of the system.
2. To create the culture of a small company, where all felt
engaged and everyone had voice.
1. An open discussion forum
2. Employee could give ideas and suggestions on business
and get immediate responses to it.
1. Implementation team (24 Consultants)
2. Group of 40-100 employees
3. Three day sessions
4. On the spot decision on 80% proposals.
Learning from other
Focus more on how
things got done
1. Productivity increase
2. Managers realized the key focus areas of business
Appointing Paolo Fresco as Head, International Operations
Taking advantage of global economic slow down.
European Crisis- $17.5Bn
Mexican Peso collapse
Asian Economy Crisis (1997-98)
Developing leaders for tomorrow
Keeping close tabs on top 3000 executives
Improved packages/Stock Options
Training institute at Crotonville
360 Degree Feedback
Removing the barriers among engineering, manufacturing,
sales and customer service.
“Learning from others”
“We quickly began to learn from each other: Productivity
solutions from LIGHTING, Quick response asset management,
transaction effectiveness from GE CAPITAL, Cost Reduction
techniques from AIRCRAFT ENGINES, Global account
management from PLASTICS.”
Notion of “Stretch”
To set performance targets. “Using dreams to set business targets with no
real idea of how to get there.”
Try to get people think of fundamentally better ways of performing their
“Objective was to change the way targets were set and
performance was measured by creating an atmosphere that asked
of everyone, “How good can you be?”
Six Sigma Initiative
Employees were dissatisfied with the quality of its product.
GE was operating at error rates 10,000 times the six sigma
quality level of 3.4 defects/million costing $8-12 billion/year.
Series of planning, resource allocation, review, and
communication meetings were done.
Participation in initiative was compulsory, 40% Bonus was tied
“We have changed the very nature of what we do for a living.
Today services account for two-thirds of our revenues”
Foray into Service industry
To reduce dependence on traditional industrial products.
Biggest growth opportunity.
Performance Appraisal System
Rank Rating Reward
1 Top 10% TOP Stock Options
2 15% STRONG Stock Options
3 50% HIGHLY VALUED Training
4 15% BORDERLINE Improve or Move
5 Bottom 10% LEAST EFFECTIVE Weed out
Training- 6 weeks
in statistics, data
analysis and other
six sigma tools.
Training – 4 weeks
5 Months project
aimed at improving
Full time six sigma
1. 10Fold increase in life of CT scan X-ray tubes
2. 62% reduction in time at service stations
3. 30,000 Six Sigma projects were initiated a year.