GE’s two Decades Transformation
Jack Welch’s Leadership
12P139 Ishpreet Singh
12P141 Karan Jaidka
12P142 Kshitij Agrawal
12P143 Kshitij Ahuja
12P146 Manav Gupta
12P178 Vikas Jain
Company’s time line
Founded in 1878 by
Focus on Generation,
Distribution, and use of
GE was benchmark for
(imitated its SBU
based structure &
Challenged to be
“better than the
Be no. 1 or no. 2 or
• When joined GE the U.S. economy had lot
• Welch came out as a transformational leader
• To do so set in motion series of changes to restructure the
company over next five years.
• He had both authoritative and democratic styles of leadership
Effective Strategic Leadership
the Firm’s Resource
Sustaining an Effective
Organisational Culture Emphasizing Ethical
A Players and
Fix, Sell or Close
“A decade from now, I
would like General
Electric to be
perceived as a
company on the
earth, with world
in every one of its
product lines”. --
GE Trading Co.
Three-Circle Vision for GE
• Sold more than 200 businesses[SPIN OFF] and made over
• Replaced the strategic planning system with “real time
• Built five-page strategy playbook.
• Budgeting process was redefined.[rather than internal
comparison used external means]
• Insisted GE become more “lean and agile” resulting
“Restructuring the Hard Drive”
elimination of about
elimination of an
additional 122,700 jobs
• 1980’s most of the restructuring was complete
• Jack’s priorities were shifting to Culture
Second Stage of Rocket
“A company can boost productivity by restructuring, removing
bureaucracy and downsizing, but it cannot sustain high
productivity without cultural change”
Work Out Best Practices
To get unnecessary bureaucratic
work out of the system
Forum in which employees and
their bosses could work out new
ways of dealing with each other
Groups of 40-100 employees were
invited to share views about the
business and how it can be
improved 3-Day session, there
was no documentation of meeting
It was about increasing
[best practices of Ford, HP,
Through best practices
realization by managers that
they were measuring/
managing wrong things
$17.5 billion invested in
from 1989-1995,on new
plants, acquisitions and
Great buying opportunity,
acquired 16 companies.
Asia slipped into
Welch urged its managers
to view this as an
opportunity to buy rather
than a problem
• Doesn’t meet
need to weed
out from GE
• People were GE’s key assets and are company's resource.
• Develop leaders aligned to GE’s new vision and culture.
Work Out Idea striked.
• Characterizations of Leaders
• Introduced 360 degree feedback process.
[rating employees on scale of 1-5]
• To strengthening GE’s Individual Businesses
• Bonus and rewards for idea sharing and not
just idea creation
The Boundaryless company
we envision will remove the
barriers among engineering,
sales, and customer service;
it will recognize no
domestic and foreign
Boundaryless Behavior (Third Wave)
• How good can you be?
• Don’t-punish-failure concept.[No disaster of Stretch target Idea]
• By 1995 GE did achieve Operating margin of 14.4% and inventory
turns of almost 7 in 1995
Stretch: Achieve the IMPOSSIBLE
• Future => offset slow growth in Products, started focus on
added value services.
– Medical Business -> “In Site”
– Real time diagnostic concepts applied in Aircraft and Power
• Biggest growth opportunities => Providing service to customer.
• Making existing assets of Customers more productive.
Selling Products to
Closing out the decade
• Didn’t go by the trend.[breaking up
• Six Sigma Quality Initiative.[AlliedSignal borrowed form
• Gary Reiner-VP of Business Development lead the Quality
• GE was operating in error[3.4 defects per million operations
and costing $8 - $12billion a year]
• Goal to reach Six Sigma quality levels company wide by
• Tied 40% bonus to Individuals[Six Sigma was not optional].
• Medical Systems= tenfold increase,62% reduction in
• Change the DNA of GE whose central strand is QUALITY.
• 4 weeks training
• 6 weeks of
statistic , data
analysis and other
six sigma tools
• Full time six sigma
mentored the Black
through the two –
Six Sigma Quality
"A Players" With "Four E's"
Individuals with vision, leadership, energy and
Execution Edge Energy Energize others
• Implemented Performance Appraisal System.
• Globalizing the intellect of the company.
• Continuously upgrading Quality of management was key
success of GE.
• Each unit had full time dyb.com team
focused to redefine the business
• Welch thought GE was late entrant to
• Through the process of Six
Sigma, GE has done the hard work
which is needed to support e-
• Early results of digitizing the
company was success.
• Speed, simplicity &
Hierarchy, so as to
Long term Results
such as stock
1. Product to
• Increased focus on
• Constant Evolution