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GE’s two Decades Transformation


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GE’s two Decades Transformation

  1. 1. GE’s two Decades Transformation Jack Welch’s Leadership Group 1 12P139 Ishpreet Singh 12P141 Karan Jaidka 12P142 Kshitij Agrawal 12P143 Kshitij Ahuja 12P146 Manav Gupta 12P178 Vikas Jain
  2. 2. Company’s time line Founded in 1878 by Thomas Edison. Focus on Generation, Distribution, and use of electric power Reg Jones(1973-1980) GE was benchmark for others companies (imitated its SBU based structure & planning process). Jack Welch(1981- 2001) Challenged to be “better than the best” Be no. 1 or no. 2 or close
  3. 3. • When joined GE the U.S. economy had lot of problems:- • 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 Neutron JACK
  4. 4. Effective Strategic Leadership Effective Strategic Leadership Effectively Managing the Firm’s Resource Portfolio Sustaining an Effective Organisational Culture Emphasizing Ethical Practices Determining Strategic Direction Establishing Balanced Organisational Controls Vision and Mission 360 Degree feedback process Weeding out Autocratic Leaders A Players and Four E’s Fix, Sell or Close Developed Human and Social Capial
  5. 5. “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 Services GECC Information Construction & Engineering Nuclear Services Technology Industrial Electronics Medical Systems Material Aerospace Aircraft Engines Core Lighting Major Appliance Motor Transportation Turbine Construction Equipment Support Ladd Petroleum Semi Conductor GE Trading Co. Utah Mining Ventures Calma Outside Housewares Central Air-Conditioning TV&Audio Cable Mobile Power Delivery Radio Stations Three-Circle Vision for GE Welch's Vision
  6. 6. • Sold more than 200 businesses[SPIN OFF] and made over 370 acquisitions. • Replaced the strategic planning system with “real time planning”. • 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” Delayering “sector” level Downsizing elimination of about 123,450 jobs Destaffing elimination of an additional 122,700 jobs
  7. 7. • 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
  8. 8. 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 productivity through Competitive Intelligence [best practices of Ford, HP, Xerox, Toshiba] Through best practices realization by managers that they were measuring/ managing wrong things “Software” Initiatives
  9. 9. Europe economic downturn $17.5 billion invested in from 1989-1995,on new plants, acquisitions and finance. Mexican peso collapsed Great buying opportunity, acquired 16 companies. Asia slipped into Crisis Welch urged its managers to view this as an opportunity to buy rather than a problem Working Philosophy Going Global Opportunity Problem
  10. 10. First • Delivers commitments and share values. Second • Doesn’t meet commitment and doesn’t share values. Third • Misses Commitments but shares Values Fourth • Delivers commitments but doesn’t share values. Autocrat and 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] Developing Leaders
  11. 11. • To strengthening GE’s Individual Businesses • Bonus and rewards for idea sharing and not just idea creation Integrated Diversity Boundaryless Company The Boundaryless company we envision will remove the barriers among engineering, manufacturing, marketing, sales, and customer service; it will recognize no distinctions between domestic and foreign operation Boundaryless Behavior (Third Wave)
  12. 12. • 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 Manager HIT Basic Targets accountable not accountable Higher Goals Rewarded Stretch: Achieve the IMPOSSIBLE
  13. 13. Service Business • 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 systems. • Biggest growth opportunities => Providing service to customer. • Making existing assets of Customers more productive. Products Products Selling Products to Customers Helping our customers win TRANSITION 1 85% 2 15% 1980 1 55% 2 45% 1990 1 45% 2 55% 1995 1 33% 2 67% 1998 Products Services
  14. 14. Closing out the decade • Didn’t go by the trend.[breaking up multibusiness companies]. • Six Sigma Quality Initiative.[AlliedSignal borrowed form Motorola] • Gary Reiner-VP of Business Development lead the Quality Initiative. • 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 2000.
  15. 15. • Tied 40% bonus to Individuals[Six Sigma was not optional]. • Medical Systems= tenfold increase,62% reduction in turnaround time. • Change the DNA of GE whose central strand is QUALITY. Green Belts • 4 weeks training 5 Months implementation Black Belts • 6 weeks of instruction in statistic , data analysis and other six sigma tools Master Black Belts • Full time six sigma instructors – mentored the Black Belt candidates through the two – years process Six Sigma Quality
  16. 16. "A Players" With "Four E's" A Players Individuals with vision, leadership, energy and courage. 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.
  17. 17. E-Business • Each unit had full time team focused to redefine the business model. • Welch thought GE was late entrant to Internet. • Through the process of Six Sigma, GE has done the hard work which is needed to support e- business. • Early results of digitizing the company was success.
  18. 18. Flexible Organisational Result-OrientedCommunication Education Welch’s “FORCE” Model • Work-Out • Speed, simplicity & Confidence Reduced Hierarchy, so as to have maximum Control Long term Results such as stock option based incentive 1. Product to service 2. Staff Incentives • Increased focus on MDI • Constant Evolution of Process
  19. 19. Thank You