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Ge’s two – decade transformation
- 1. GE’s Two – Decade Transformation : Jack Welch’s Leadership
- 2. Introduction • Founded in 1878 by Thomas Edison. • Focus on Generation , Distribution, and use of electric power to become. • 1978 – Power Generation , household appliances, lighting + Aircraft engines, medical systems and Diesel Locomotives.
- 3. Introduction 1930 •centralized 1950 •Decentralization 1960 •strengthen its corporate staff and develop sophisticated planning systems GE – American Management Practices
- 4. Strategy-SBU based structure and planning processes • 10 groups, 46 divisions, 190 departments, and 43 strategic business units • Develop a constructive business-government dialogue • Wall Street Journal proclaimed him as a “management legend” Success • Sales more than doubled ($10 billion to $22 billion) and earnings grew even faster ($572 million to $1.4 billion) • A major thrust into international markets • Expansion of world trade and restoration of U.S. competitiveness Reg Jones – 1970’s
- 5. • 1935: born in Salem, Massachusetts • 1957: BS in Chemical Engineering • 1960: MS and PhD in Chemical Engineering • 1960: Joined GE as a chemical engineer • 1972: Elected GE’s youngest VP • 1979: Vice Chairman • April 1, 1981: Became the 8th Chairman and CEO of General Electric Jack Welch (1981 – 2001)
- 6. Challenge form outside GE Economic recession High interest rates Highest unemployment rate since the depression – Challenges from GE • Massive information and inefficient macro-business Challenges in 1981
- 7. “Better than the Best” Welch’s reaction to these Challenges..!
- 8. Welch's Vission • “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
- 9. • Challenged everyone to be “better than the best” • Sold more than 200 businesses and made over 370 acquisitions • Insisted GE become more “lean and agile” resulting – Delayering: elimination of the “sector” level – Downsizing: elimination of about 123,450 jobs – Divestiture: elimination of an additional 122,700 jobs • Replaced 12 of his 14 business heads “Restructuring the Hard Drive”
- 10. Iniatives - Objective Iniatives - Objective Work Out Best Practices Going Global Developing Leaders Second Wave Software Iniatives
- 11. Iniatives - Objective Iniatives - ObjectiveBoundaryless Behavior Service Businesses Six Sigma E-Business Third Wave
- 12. • Michael Fraizer of GE’s Business Development • They focused more on developing effective processes than controlling individual activities. • Customer satisfaction was their main gauge of performance. • They treated their supplier as partners • They emphasized the need for a constant stream of high quality new products designed for efficient manufacturing Best Practices
- 13. • 1989 – appointed Paulo Fresco as head international Operations. a key negotiator on the thompson swap Continued to broker numerous international deals a joint venture with German-based Robert Bosch a Partnership with Toshiba Acquisition of Sovac , the French Consumer credit Company Going Global
- 14. Developing Leaders Loyal Creative Strong People Professional Self- Confidence Passion for Excellent Aggressive Capacity to develop global brain Change
- 15. Boundary less Behavior • To strengthening GE’s Individual Businesses Integrated Diversity Boundaryless Company The Boundary less 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 …..
- 16. • 1990 , Welch Introduced the notion of “stretch” to set performance targets and described it as “using dreams to set business targets, with no real idea of how to get there.” • Stretch Targets did not replace traditional forecasting and objectives-setting process. Stretch : Achieving the Impossible
- 17. • In 1994, Welch launched a new strategic initiative designed to reinforce one of his earliest goals: to reduce GE’s dependence on its traditional industrial products. 1 85% 2 15% 1980 1 55% 2 45% 1990 1 45% 2 55% 1995 1 33% 2 67% 1998 Products Services Service Business
- 18. • Issue – When a 1995 Company Survey showed that GE employees were dissatisfied with the quality of its products and processes. • Six Sigma (Motorola Inc and AlliedSignal) – Improve Quality – Lower Cost – Increase Productivity Six Sigma Quality Initiative
- 19. Six Sigma Quality Initiative • 1996 – Boca Raton- Welch announced a goal of reaching Six Sigma quality levels company – wide by the year 2000, describing the program as “the biggest opportunity for growth, increased profitability , and individual employee satisfaction in the history of our company.” 4 weeks training 5 Months implementation 6 weeks of instruction in statistic , data analysis and other six sigma tools Full time six sigma instructors – mentored the Black Belt candidates through the two –years process
- 20. • “A – Players” – Individuals with vision , leadership, energy and courage • “4 E’s” – Energy , – Ability to Energize others , – Edge , the ability to make tough calls – Execution , the consistent ability to turn vision into results. "A Players" With "Four E's"
- 22. Conclusion GE’s Restructuring First Wave Cultural Changes Second Wave Boundary lessness Third Wave Work Out Best Practices #1 or #2 – fix, sell, or close 1981 1988 1990