ge’s two decades transformation
TRANSCRIPT
GE’s two Decades TransformationJack Welch’s Leadership
Group 112P139 Ishpreet Singh12P141 Karan Jaidka12P142 Kshitij Agrawal12P143 Kshitij Ahuja12P146 Manav Gupta12P178 Vikas Jain
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
• 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
Effective Strategic LeadershipEffective Strategic Leadership
Determining Strategic Direction
Effectively Managing the Firm’s Resource
Portfolio
Sustaining an Effective Organisational Culture
Emphasizing Ethical Practices
Vision and Mission
360 Degree feedback process
Weeding out Autocratic Leaders
A Players and Four E’s
Fix, Sell or CloseDeveloped Human and Social Capial
“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
ServicesGECC InformationConstruction & Engineering Nuclear Services
TechnologyIndustrial Electronics
Medical SystemsMaterial
AerospaceAircraft Engines
CoreLighting
Major Appliance Motor
TransportationTurbine Construction
Equipment
SupportLadd PetroleumSemi ConductorGE Trading Co.Utah Mining
VenturesCalma
OutsideHousewaresCentral Air-ConditioningTV&AudioCableMobilePower DeliveryRadio Stations
Three-Circle Vision for GE
Welch's Vision
• 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
Downsizingelimination of about
123,450 jobs
Destaffingelimination 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
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
Europe economic downturn
$17.5 billion invested in from 1989-1995,on new plants, acquisitions and
finance.
Working Philosophy
Going Global
Opportunity
Problem
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
• 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)
• 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 HITBasic
Targets
accountable
not accountable
Higher Goals
Rewarded
Stretch: Achieve the IMPOSSIBLE
STRETCH
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.
ProductsProducts
Selling Products to Customers
Helping our customers winTRANSITION
185%
215%
1980
155%
245%
1990
145%2
55%
1995
133%
267%
1998
Products Services
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.
• 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
"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.
E-Business• Each unit had full time dyb.com 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.
Flexible
Organisational
Result-Oriented
Communication
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
Thank You