GE's two decade transformation

GE’s Two Decade Transformation:

Allam Dinesh Reddy R810209012

M S S Charan R810209041

M Gopal Varma R810209044

Jack Welch’s Leadership

Contents

Challenges for Jack Welch

Initiatives taken by Jack Welch

Reg Jones (1973-81)

Jack Welch (1981-2001)

Jeffrey Immelt (2001- Present)

Challenges for Welch as CEO Matching and surpassing the standards set by his predecessor Reg Jones.

CEO of the year (3 times)

CEO of the decade (1979)

“Management Legend” (WSJ-1981)

Economy in recession (1981)

Strong Dollar Highest Unemployment rates

Youngest CEO in action…

Initiatives by Jack Welch

Hardware Initiative • Three Circle Concept• De staffing process• Strategic(Real-time) Planning system

Three Circle Concept

www.themegallery.comCompany Name

Disciplined DestaffingLEAN

Less no. of people,

bureaucracy & politics

DESTAFFINGAGILEMaking people

productive and

competitive

“We don’t need the questioners & checkers, the nit pickers who bog down the process…

Today each staff has to ask, “How do I add value?” How do I make people on the line more effective and

competitive?.”

Real Time Planning

Five page strategy Play book

One page answers to five questions

1. Current Market Dynamics

2. Competitors recent activities

3. GE’s Response

4. Greatest competitive threat over 3 years

5. GE’s Planned response

Benefits by “Hardware” initiatives

Number of Employees(1981-89)

404,000 to 292,000

Revenue(1981-85)

$27.2 billion to $29.2 billion

Operating Profits(1981-85)

$1.6 billion to $2.4 billion

“Hardware” Initiative

• Fix, Sell/Close• Three Circle

Concept• De staffing process• Strategic Planning

system

“Software” Initiative

• Work Out• Best Practices• Go Global• Develop Leaders• Boundary less

Behavior• Notion of stretch• Six Sigma

Initiatives by Jack Welch

“By mid 1988 the “Hardware” structure was basically in place. Now it was time to focus on organization’s “Software”. A company can boost productivity by

restructuring, removing bureaucracy and downsizing, but it can not sustain high productivity without

cultural change.”

Work Out

1. To design a process to get unnecessary bureaucratic work out of the system.

2. To create the culture of a small company, where all felt engaged and everyone had voice.

Objective

1. An open discussion forum2. Employee could give ideas and suggestions on business

and get immediate responses to it.Overview

1. Implementation team (24 Consultants)2. Group of 40-100 employees3. Three day sessions4. On the spot decision on 80% proposals.

Implementation

Best Practices

Learning from other industries

Focus more on how things got done

Implementation

1. Productivity increase2. Managers realized the key focus areas of businessResults

Going Global Appointing Paolo Fresco as Head, International Operations

Rampant acquisitions

Taking advantage of global economic slow down.

European Crisis- $17.5Bn

Mexican Peso collapse

Asian Economy Crisis (1997-98)

Developing leaders for tomorrow

Keeping close tabs on top 3000 executives

Succession Planning

Improved packages/Stock Options

Training institute at Crotonville

360 Degree Feedback

Boundaryless Behavior Removing the barriers among engineering, manufacturing,

sales and customer service.

“Learning from others”

“We quickly began to learn from each other: Productivity solutions from LIGHTING, Quick response asset management, transaction effectiveness from GE CAPITAL, Cost Reduction techniques from AIRCRAFT ENGINES, Global account management from PLASTICS.”

Notion of “Stretch” To set performance targets. “Using dreams to set business targets with no

real idea of how to get there.”

Try to get people think of fundamentally better ways of performing their

work.

“Objective was to change the way targets were set and performance was measured by creating an atmosphere that asked of everyone, “How good can you be?”

Six Sigma Initiative Employees were dissatisfied with the quality of its product.

GE was operating at error rates 10,000 times the six sigma

quality level of 3.4 defects/million costing $8-12 billion/year.

Series of planning, resource allocation, review, and

communication meetings were done.

Participation in initiative was compulsory, 40% Bonus was tied

with it.

“We have changed the very nature of what we do for a living. Today services account for two-thirds of our revenues”

Foray into Service industry To reduce dependence on traditional industrial products.

Biggest growth opportunity.

“In-site concept”

Performance Appraisal SystemRank Rating Reward

1 Top 10% TOP Stock Options

2 15% STRONG Stock Options

3 50% HIGHLY VALUED Training

4 15% BORDERLINE Improve or Move

5 Bottom 10% LEAST EFFECTIVE Weed out

Implementation

Training- 6 weeks in statistics, data analysis and other six sigma tools.

Training – 4 weeksImplementation- 5 Months project aimed at improving Quality.

Full time six sigma instructors.

GreenBelt

BlackBelt

MasterBlackBelt

1. 10Fold increase in life of CT scan X-ray tubes2. 62% reduction in time at service stations3. 30,000 Six Sigma projects were initiated a year.

Results

Summary of Initiatives