Ge apr 2009_final03

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  • Change D Put 1981 – in a different color!
  • Predecessor: Reg Jones A legend Change Initiative Made GE grow Complex Structure Recession: US economy High interest rate High unemployment rate Low purchasing power
  • ADD CAPABILITIES Restructuring phase (1981-1988): the hardware #1 or #2 objective, means become the 1st of 2nd competitor of the industry or disengage 3 circle concept (to be explained) W adomnition Fix, Sell, or Close uncompetitive business gain capital by selling some businesses (200 units = 11 billion) allows investment in profitable other businesses (370 units = 21 billion) Destaffing process: 50% reduction of 200-person strategic planning staff reduce the number of hierachical levels (sector level) Replace strategic planning system by real time planning Strategy playbook
  • Goal = growth, market shares, money Objective = Build solid ground thru people for future growth and profit Stages he went thru : SOFTWARE = people and culture (work out and best practices)
  • Triangle diagram = structure (save money & portfolio management) > people () > culture () Why choose this change process? What is the process? 1. Restructuring = hardware 2. Rebuilding people, culture = software initiatives, going global, developing leaders 3. Growing more = stretch goals, boundarylessness, knowledge transfer, services Why? Need money for investment and recession Establishing foundations New opportunities
  • Critics Multi businesses break up Portfolio seulement PORTFOLIO MANAGEMENT + ADDING VALUE Doing the right thing and improving Fit thru innovation Envisoning = have a common strategy, vision Coaching and facilitating Intervening = portfolio Ways of not adding value: Adding management costs Adding bureaucratic complexity Obscuring financial performance
  • People: - Building: Recruiting, Developing, Assessing, Laying-off. - Linking: Glocal management. - Bonding: Leadership, Bottom-up. - New varsity team. - A players & 4 E's (firing bad performers). - Training (best practices, etc.). All added value, focused to one or many aspects of the company (S, P, C)
  • “ Barely hierarchised“ Strong leadership & personality Growth & profits Organisational processes Culture: Better than the best Conglomerate Long term vision (Ex: business evaluation, employee appraisal)
  • Cognitive obstacle  key people, clear message and sticks Resource obstacle  freed up cash, invested in new profitable businesses (services) Motivation obstacle  short hierarchy, rewards/compensation package, & did better than focusing on key ppl (focused on a bigger base Political obstacle  4 type of leader (p8), those who didn't share the values were not hired/ were fired.
  • Cognitive obstacle  key people, clear message and sticks Resource obstacle  freed up cash, invested in new profitable businesses (services) Motivation obstacle  short hierarchy, rewards/compensation package, & did better than focusing on key ppl (focused on a bigger base Political obstacle  4 type of leader (p8), those who didn't share the values were not hired/ were fired.
  • Ge apr 2009_final03

    1. 1. Strategic Management > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. <
    2. 2. GE – Organizational History Founded in 1878 by Thomson Edison “ regarded as the model of American management practices, GE was constantly undergoing change…” > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. <
    3. 3. <ul><li>In 1981, Welch faced a very difficult challenge … </li></ul>Q1 > How difficult a challenge did Welch face in 1981? > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. < Predecessor Reg Jones A legend Collaborative management style Made GE grow Complex Structure Recession US economy High interest rate Low purchasing power Competition Japanese players Strong dollar … that he successfully achieved … Change structure and culture Recession is an opportunity Internationalisation strategy
    4. 4. Q1 > How effectively did he take charge? > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. < Change Source: Bartlett, C.A., and Wozny, M. (2005). GE’s Two-Decade Transformation: Jack Welch’s Leadership, Harvard Business Publishing . 1961 1981 Growth Sales 4,667 27,240 484% Profit 432 2,447 467% Net earnings 238 1,652 593% Cap Mkt 6283 13,073 108% US 523 2’708 418%
    5. 5. Q2 > What is Welch's objective in the series of initiatives he launches in the late 80's and early 90's? What is he trying to achieve in the round of changes he put in motion in that period? > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. < Objective: ADD Value & Build Solid Ground for future growth
    6. 6. <ul><li>Restructuring </li></ul><ul><ul><li>Keep cash available </li></ul></ul><ul><li>Rebuilding </li></ul><ul><ul><li>Establishing foundations </li></ul></ul><ul><li>More growth </li></ul><ul><ul><li>New opportunities </li></ul></ul>Q2 > Is there a logic or rationale supporting the change process? > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. <
    7. 7. <ul><li>Portfolio management + Adding value </li></ul>Q3 > How does such a large, complex diversified conglomerate defy the critics and continue to grow so profitably? > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. < Low Fit (Profit) High High Fit between BU & parent (Feel) Low Value trap Ballast businesses Heartland Alien Value-adding activities: - Envisionning - Coaching and facilitating - Providing central services and resources - Intervening & getting rid of the value-destroying activities & structures Source: ASHRIDGE PORTFOLIO on Johnson, G., Scholes, K., and Whittington, R. Exploring Corporate Strategy, 8 th ed. Prentice Hall: London.
    8. 8. <ul><li>Initiatives adding value:  </li></ul>Culture: - Coevolving : meetings on a regular basis, boundarylessness, knowledge transfer. - &quot;Better than the best&quot; People: - Building: A players & 4 E's, training. - Linking: Work-Out & Best Practices. - Bonding: Stock options & reassessed bonuses. Structure & fit: - Portfolio management : #1 or #2. - Flat, lean organisation . - Forward integration: service oriented. > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. < Q3 > Have Welch's various initiatives added value? If so, how? Strategy: - Going global. - Service businesses. - Six Sigma. (- e-business.)
    9. 9. Q4 > What is your evaluation of Welch's approach to leading change? How important is he to GE's success? > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. < <ul><li>Good Change Manager : </li></ul><ul><li>Strategy: Direction & Intervention </li></ul><ul><li>Practices: Education / Communication & Collaboration / Participation </li></ul><ul><li>Good strategist: </li></ul><ul><li>Build solid ground for growth </li></ul><ul><li>Long term vision </li></ul><ul><li>Recognized opportunities </li></ul><ul><li>Employee involvement </li></ul><ul><li>Got over tipping point obstacles </li></ul>
    10. 10. <ul><li>8 steps to transforming the organisation: </li></ul>Q4 > What is your evaluation of Welch's approach to leading change? How important is he to GE's success? > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. < Source: Kotter, J.P. (1995). Leading Change: Why transformation efforts fail. Harvard Business Review , Vol. 73, No. 2. Pp. 59-67, retrieved march 2009 on http://www.ebscohost.com/ Step Sense of Urgency Guiding Coalition Create vision Communicate vision Empowerment Short term wins Consolidate Institutionalise Ex: #1 or #2 Ex: Varsity team Better than the Best Ex: Strategy playbook Ex: 4 E’s & Passion Ex: Work Out Continuous improvements Ex: Best Practices
    11. 11. <ul><li>Requirements: </li></ul><ul><li>BEST “A Player” & 4E’s profile. </li></ul><ul><li>Knowledge & experience with GE. </li></ul><ul><li>Capable of building a new long-lasting vision. </li></ul><ul><li>People oriented. </li></ul><ul><li>Challenges: </li></ul><ul><li>Very high expectations. </li></ul><ul><li>Keep the culture of change. </li></ul><ul><ul><li>Ingredients for successful change </li></ul></ul><ul><li>Keep adding value. </li></ul>Q4 > What are the implications for Welch’s successor? Source: Bartlett, C.A., and Wozny, M. (2005). GE’s Two-Decade Transformation: Jack Welch’s Leadership, Harvard Business Publishing . 1981 2000 Growth Sales 27,240 129,853 377% Profit 2,447 19,630 702% Net earnings 1,652 12,735 671% Cap Mkt 13,073 389,443 2879% US 2’708 9’276 243% Welch Done
    12. 12. … THANK YOU FOR YOUR ATTENTION… > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. <
    13. 13. <ul><li>Bartlett, C.A., and Wozny, M. (2005). GE’s Two-Decade Transformation: Jack Welch’s Leadership, Harvard Business Publishing . </li></ul><ul><li>Bartlett C. & Ghoshal, S. (2002) Building competitive advantage through people. MIT Sloan Management Review. Vol. 43. No. 2. retrieved March 2009 on http://www.ebscohost.com/ </li></ul><ul><li>Eisenhardt, K.M., and Gahmic, D.C. (2000) Coevolving: At last a way to Make Synergies Work. Harvard Business Review, Vol. 78, No. 1. Pp. 91-101. retrieved April 2009 on http://www.ebscohost.com/ </li></ul><ul><li>Johnson, G., Scholes, K., and Whittington, R. Exploring Corporate Strategy, 8 th ed. Prentice Hall: London. </li></ul><ul><li>Kotter, J.P. (1995). Leading Change: Why transformation efforts fail. Harvard Business Review , Vol. 73, No. 2. Pp. 59-67, retrieved march 2009 on http://www.ebscohost.com/ </li></ul><ul><li>Kim, W.C., and Maubourgne, R. Tipping Point Leadership. Leadership Excellence , Retrieved March 2009 on http://www.ebscohost.com/ </li></ul><ul><li>Pascale, R.T., and Sterning, J. (2005). Your Company’s secret change agents. Harvard Business Review . Vol. 83, No. 5. Pp. 72-81. </li></ul>References

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