Jack Welch- Case Presentation

7/31/2019 Jack Welch- Case Presentation

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GENERAL ELECTRIC

Founded in 1878 by Thomas Edison

Generation, distribution, and use of electric power

1978 the company diversified to aircraft engines,

medical systems, and diesel locomotives

Reg Jones became CEO in 1973

In 1977 he capped GE's departments, divisions,

groups, and SBUs with a new organizational layerof sectors, representing macro business

agglomerations such as consumer products, power

systems, or technical products.


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JACK WELCH

Welch became CEO in April 1981

Restructuring of GE

Fix, Sell or Close


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MAJOR ACQUISITIONS

200 business

were sold

370 business

were taken

over

MAJOR ACQUISITIONS($21 Billion Total)

Calma (CAD/CAM equipment)

Intersil (semiconductors)

Employers Reinsurance Corp.

Decimus (computer leasing)

RCA (NBC Television, aerospace, electronics)

Kidder, Peabody (investment banking)

Polaris (aircraft leasing) Genstar (container leasing)

Thomson/CGR (medical equipment)

Gelco (portable building leasing)

Borg-Warner Chemicals (plastics)

Montgomery Ward Credit (credit cards)

Roper (appliances) Penske Leasing (truck leasing)

Financial Guaranty Insurance Co.

Thungsram (light bulbs)

Burton Group Financial Services

Travelers Mortgage (mortgage services)

Thorn Lighting (light bulbs)

Financial News Network (cable network) Chase Manhattan Leasin


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RESTRUCTURING

Downsizing, destaffing, and delayering in GE.

GE eliminated 59,290 salaried and 64,160 hourly

positions between 1981 and 1988.

Divestiture eliminated an additional 122,700.

Even when offset by the acquisitions, the number ofemployees at GE declined from 404,000 in 1980 to330,000 by 1984 and 292,000 by 1989.


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BEST PRACTICES

Michael Frazier of GE's Business Developmentdepartment

Characteristics of Successful Companies

developing effective processes than controllingindividual activities;

customer satisfaction was main gauge ofperformance;

Treated their suppliers as partners; Constant stream of high-quality new products

designed for efficient manufacturing."We should have focused more on how things get done than on just what got done


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GOING GLOBAL

Internationalization arena

"It's very difficult to jump into the world arena if you

don't have a solid base at home."

1989 Welch appointed Paolo Fresco as head of

International Operations

Converted economic uncertainty into business

opportunity


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DEVELOPING LEADERS

Implementation of globalthrust and new culturalinitiatives

Focusing on the realignmentof skill sets

Redefining the implicitcontract Psychological contract Kind of loyalty

Focus people inward

Need to focus outward

Deeply committed towardsdeveloping people

Broad cultural changes

Individual level

Establishing the humanresource to the goals Session C


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REVIEWING SESSION

Progress of the company'stop 3,000 executives

Close attention on the upper500

Exposed to high potentialmanagers presenting resultson major projects

Top executive

Identify the future leaders

Outline developmentplans

Succession plans

Good people are key assets

I own the people

You just rent them

Feedback Professionallevel employees

Managers

Coaching

Developing staff


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COMPENSATION PACKAGE

Narrow increase Base salary

Bonuses

Stock options Primary component Expanding the option recipients(300 to 30,000)

Bonus awards

To create a best environment


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CORPORATE INITIATIVES

Develop generation of leaders

GEs new vision

Cultural norms

Training center Results oriented action

Discussion leaders


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CHARACTERIZATION OFLEADERS

Delivers oncommitments andshares values of the

company

Does not meetcommitments and doesnot share values

Misses commitmentsbut share values

Delivers commitmentsbut doesnt share

values


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360 FEEDBACK PROCESS

Graded by

Manager

peers

Subordinates

Powerful tool smile up and kick down

Identifying

Training needs

Coaching

opportunities Career planning
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THIRD WAVE (1990)

Entering the 1990s, Welch felt that GE's new

foundation had been laid.

Despite the slowdown in the industrial sector in the

first few years of the new decade. Committed to the task of rebuilding the company at an

even more urgent pace.
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BOUNDARYLESS BEHAVIOR

Integrated diversity

"open, anti parochial environment, friendly toward theseeking and sharing of new ideas, regardless of their

origins" A boundary less organization will ignore or erase

group labels such as "management," "salaried," or"hourly," which get in the way of people working

together.
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SERVICES BUSINESS

Launch of a new initiative

To reduce GE's dependence on traditional industrial

products

Initial tilt towards service businesses

Acquisition of financial service companies


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EXPLORING NEW GROWTHOPPORTUNITIES

Medical business

In Site ( Real time diagnostic concepts)

Aircraft engines

Monitored by GE Service experts

GE's power systems


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OPPORTUNITY FOR GROWTHIN PRODUCT SERVICES

Unlimited growth

Strong platform

9,000 GE commercial jet engines

10,000 turbines

13,000 locomotives

84,000 medical diagnostic imaging equipment


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$8 BILLION EQUIPMENTSERVICES BUSINESS

Growth

Changing internalmindsets

Selling productsHelping ourcustomers to win.

Making customers'existing assets more

productive

Helping customersreduce their capitaloutlays

New round ofacquisitions

1997 - 20 service-relatedacquisitions and jointventures


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Closing Out the DecadeWelch's Final Chapter

Company Name


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SIX SIGMA QUALITYINITIATIVE

Dissatisfaction of employees

Meeting with Lawrence Bossidy, an old

friend

Study of the impact of quality programs at

companies

Defining the goals of six sigma


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SIX SIGMA

Green Belt -improving quality

Black Belts -instruction in statistics, data

analysis, and other Six Sigma tools

Master Black Belts


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Return on investment

They have begun to change the DNA of

GE to one whose central strand is quality

-Jack Welch


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A PLAYERS WITH FOUR ES

4 Es

Energy - excited by ideas and attracted to turbulencebecause of the opportunity it brings

Energize others - infecting everyone with their enthusiasmfor an idea and having everyone reaming the same bigdreams

Edge- the ability to make tough calls

Execution -the consistent ability to turn vision into results


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ONE MORE INITIATIVE

He launched a major program

"destroyyourbusiness.com The team focused on the challenge of redefining its

business model through e-commerce

"Change means opportunity," he said. "And this isour greatest opportunity yet."

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Jack Welch- Case Presentation

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