...GE’S Two-Decade Transformation 1.How difficult a challenge did Welch face in 1981? How effectively did he take charge? When Jack Welch assumed as CEO of GE in April 1981, he had the challenge of revitalizing the competitiveness and productive competency of the company. In 1981 the economy was in a recession and high unemployment combined with high interest rates exacerbated GE’s problems. GE needed to be restructured and this entailed the modernization and streamlining of operations, downsizing the organization, reduction of payrolls and stringent efficiency measures. Welch Early Priorities: GE’s Restructuring 1 or 2: Fix, Sell or Close Each business needed to be 1 or 2 competitor in industry. It had to be a broad strategy because it was a broad corporation. Circle Vision: Services (acquisition), Technology (leading edge), Core (re-invest in productivity) Support, Outside, Ventures. Internally wanted company “lean and agile,” chip away bureaucracy example laborious strategic planning system or budgeting process (targeted towards competitors), reducing hierarchical levels from 9 to 4 ensured all business reported directly to him Downsizing, de-staffing, de-layering 123,000 staff cut, operating profits rose dramatically, and set base for strong increase in sales and earnings for second half of decade (exhibit 5) Replace 12 of 14 business heads, called “Varsity Team,” all strong commitment to new management values, and willingness to break old culture...
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...GE’s Two-Decade Transformation Case Analysis March 17, 2005 For: Anne Becker From: Scott Ashby 999004953 _ Phil Parkinson Judy Lee 04003094 Gianni Liburdi 049003649 Executive Summary This report’s objective is to provide analysis of the leadership challenge that General Electric (GE) is currently facing, and to recommend solutions. The primary problem is determining what kind of candidate is required to replace retiring CEO Jack Welch. This has left GE to question how much does the company want to change policy over the previous era, and where does the company want to be in future? Detailed examination of the impact Jack Welch has had as CEO over the past twenty years reveals a leadership style that is the driving force behind a successful transition from a corporate model that was highly centralized and bureaucratic to one that is dynamic, flexible, and many times more profitable. If GE wishes to sustain and build upon the progress of the Welch era, it would do well to nominate a new CEO from within the organization who is familiar with his brand of leadership, and who can continue to provide it for many years to come. 2 Table of Contents Executive Summary................................................................................................................... 2 Table of Contents ....................................................................................................................... 3 Statement of Problem ...............................
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...GE’s Two Decade Transformation: Jack Welch’s Leadership 1. Jack Welch was hired to take on the role as the CEO at General Electric (GE) and responsible for rebuilding the organization. Jack was faced with several obstacles prior to taking on this position at GE. One obstacle was that prior to his assignment a powerful leader had a great impact on reorganizing GE’s business strategy. Another obstacle was that several companies were moving towards globalization and GE now had to compete in this market. Therefore, Welch had to react rather quickly before foreign companies replaced GE or any other company. The last challenge was that during 1981, the economic markets were experiencing a recession. Welch’s vision of reconstructing GE was that it became the most competitive, diversified, branded and profitable company in the near future. He suggested an effective strategy to help the company by fixing, selling or closing it. Therefore, he chose to make changes to the business strategy by doing away old culture and adapting effective new ways. First, he began by restructuring the company’s current departmental managers. These managers had to agree and commit to doing away with the old GE culture and accepting new ways. Second impact was that the company’s revenues increased by 9 billion dollars from 1981 through 1986 (Exhibit 1). However, GE’s operating earnings increased from 0 in 1981 to $36 billion in 1986 drastically during the same period (Exhibit 1). Therefore, the new...
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...GE’s Two Decade Transformation: Jack Welch’s Leadership 1. Jack Welch was hired to take on the role as the CEO at General Electric (GE) and responsible for rebuilding the organization. Jack was faced with several obstacles prior to taking on this position at GE. One obstacle was that prior to his assignment a powerful leader had a great impact on reorganizing GE’s business strategy. Another obstacle was that several companies were moving towards globalization and GE now had to compete in this market. Therefore, Welch had to react rather quickly before foreign companies replaced GE or any other company. The last challenge was that during 1981, the economic markets were experiencing a recession. Welch’s vision of reconstructing GE was that it became the most competitive, diversified, branded and profitable company in the near future. He suggested an effective strategy to help the company by fixing, selling or closing it. Therefore, he chose to make changes to the business strategy by doing away old culture and adapting effective new ways. First, he began by restructuring the company’s current departmental managers. These managers had to agree and commit to doing away with the old GE culture and accepting new ways. Second impact was that the company’s revenues increased by 9 billion dollars from 1981 through 1986 (Exhibit 1). However, GE’s operating earnings increased from 0 in 1981 to $36 billion in 1986 drastically during the same period (Exhibit 1). Therefore, the new...
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...GE’s Two Decade Transformation: Jack Welch’s Leadership Submitted by: Group 11 When Jack Welch took over GE as CEO in April 1981, GE comprised of a complex diversified conglomerate consisting of 10 overlaying groups of 46 divisions and 190 departments all supporting 43 business units. GE was already considered as a bench mark for its sophisticated strategic planning and management practices. But at that time US was facing recession, an economy of high unemployment, high interest rates, and strong U.S dollar. So Welch set in motion a series of changes that were to radically restructure the company over the next few years. Welch set the target for each of the businesses to be number 1 or 2. He laid down a three circle concepts in which each business was categorized as core, with the priority of investing in productivity and quality, high technology, with the purpose of having an edge over competitors and services, to add outstanding people and to make contiguous acquisition. He also followed a ‘fix, sell or close’ policy under which many businesses were sold. The money which was collected through sales was invested in acquisition. He tried to make GE more lean and agile which resulted in a highly disciplined de-staffing process. He chipped away bureaucracy, laborious strategic planning system was scrapped and instead real time planning system was bought in. Hierarchy was removed and confined to four levels and made all businesses to report directly to himself. Due to this drastic...
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...Change Management GE’s Two Decade Transformation: Jack Welch’s Leadership Answer 1 In April 1981, when Jack Welch became the CEO of GE, US was in recession. There were high interest rates. Strong dollar resulted in country’s highest unemployment rates. In this rapid changing and uncertain environment it was extremely difficult task for him to handle a conglomerate as big as GE and ensure that general confidence among the investors is not lost. His predecessor, Reg Jones, had set the bar extremely high at the company leaving a legacy for Welch to compete with as the new CEO. Also, acquiring new businesses and ensuring that each business unit under the GE umbrella was one of the best in its field was another challenge. Welch was extremely effective in taking over the GE reins. He challenged each to be ”better than the best” and planned radical changes across the company. Under his guidance, the company expanded dramatically from 1981 to 2001. * He instilled in everyone a culture of innovation and learning, and incorporated measures related to new product development, technological leadership, and rates of improvement. * He set the standard for each of business to become #1 or #2 or get out of business. * Welch categorized business in 3 circles as core, high technology and services and sold off 200 businesses which all together contributed for 25% of sales. * Even budgeting process got radically changed and evaluation started against external competition rather...
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...General Electric – Case Study Out of recession The callange Welch faced in 1981 Welch‘s objective Which goal did Welch aim at? Welch´s meassures strategic and organizational iniatives The change process The logical structure behind the change process Added values The values Welch added related to the change process Our opinion Evaluation of Welch‘s approach Welch‘s heritage Longterm implications for GE Summary Short overview of Welch‘s achievments 2 THE CHALLENGE WELCH FACED IN 1981 Out of recession 1. 2. 3. Reorganization of his predecessor (Reg Jones) CEO of the year (3 times), CEO of the decade (1979)… Recession of US economy (1981): High interest and unemployment rate(s), strong currency Strong competitors: Especially from Japan Welch‘s objective Welch‘s measures The change process Added values Our opinion Welch‘s heritage Summary 3 Leads to the radical restructuring during 1981- 88 HOW EFFECTIVELY DID HE TAKE CHARGE? Out of recession #1 or #2: Fix, sell or close Core Welch‘s objective - Three circle concept (1983) Welch‘s measures The change process Added values From 1981 – 1990: - Sold more than 200 business ($11 billion ) - Made over 370 acquisitions ($21 billion) Service Technology Our opinion Welch‘s heritage Summary 4 HOW EFFECTIVELY DID HE TAKE CHARGE? Out of recession Disciplined destaffing Chip away at bureaucracy „Real time planning“ Welch‘s objective - To become...
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...Jeremy Daniel Managing Change May 2, 2008 Case Write-Up Final – GE’s Two-Decade Transformation: Jack Welsh’s Leadership 1.) How difficult a challenge did Welch face in 1981? How effectively did he deal with it? What major lesson can we learn from his “first stage” that should be incorporated into our general “planned change” framework? Jack Welch faced several difficult challenges when he came into office in 1981. One of his primary areas of concern had to be replacing the retiring CEO Reg Jones. Jones had had great success during his time at GE, particularly in terms of growth of strategic planning with the organization. He restructured the organizational levels of the company to handle the tremendous volume that his strategic planning process was producing. Many of these processes used within the business community as benchmarks to follow. The public perception of Reg Jones was also very high, as he had been recognized with “CEO of the Year” honors multiple times, as well as “CEO of the decade.” Welch had to be up to the task of replacing a man that many in the industry considered a legend. Another major challenge Welch faced that can’t be overlooked is the external environment when he took over as CEO. At the same time he was charged with the task of replacing his successful predecessor, Welch also had to deal with a U.S. economic recession. Additionally, there was an increasing amount of rivalry from global competition that compounded the problems being faced...
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...1 GE’s Two Decade Transformation Team Globalization Case Analysis GE’s Two Decade Transformation: Jack Welch’s Leadership Yasmine Abdo Al-Kouraishi Muhammad Howard Steven D. Johns Kenneth V. Oliver Kimberly N. Lomax AMBA 670 Managing Strategy in the Global Workplace July 25, 2012 2 GE’s Two Decade Transformation Executive Summary Team Globalization has conducted an in depth analysis on General Electric's (GE) two decade transformation achieved by the company’s former Chief Executive Officer (CEO) Jack Welch. This report consists of a reflective examination performed by the team, incorporating perspective gained through professional experience and key concepts gleaned from selected course reading selections. As CEO of GE, Jack Welch's management skills became legendary, with little tolerance for bureaucracy and archaic business processes. Acquiring new businesses and ensuring that each business unit under the GE umbrella was one of the best in its field was a primary concern for Mr. Welch. Under his guidance, the company expanded dramatically from 1981 to 2001 (GE, 2012). The culture of innovation and learning, which included incorporation of measures related to new product development, technological leadership, and rates of improvement, aided Welch and the company in defying the critics as the company continued to profit. 3 GE’s Two Decade Transformation Introduction Surviving in today’s challenging business environment necessitates innovative thinking in...
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...1 GE’s Two Decade Transformation Team Globalization Case Analysis GE’s Two Decade Transformation: Jack Welch’s Leadership Yasmine Abdo Al-Kouraishi Muhammad Howard Steven D. Johns Kenneth V. Oliver Kimberly N. Lomax AMBA 670 Managing Strategy in the Global Workplace July 25, 2012 2 GE’s Two Decade Transformation Executive Summary Team Globalization has conducted an in depth analysis on General Electric's (GE) two decade transformation achieved by the company’s former Chief Executive Officer (CEO) Jack Welch. This report consists of a reflective examination performed by the team, incorporating perspective gained through professional experience and key concepts gleaned from selected course reading selections. As CEO of GE, Jack Welch's management skills became legendary, with little tolerance for bureaucracy and archaic business processes. Acquiring new businesses and ensuring that each business unit under the GE umbrella was one of the best in its field was a primary concern for Mr. Welch. Under his guidance, the company expanded dramatically from 1981 to 2001 (GE, 2012). The culture of innovation and learning, which included incorporation of measures related to new product development, technological leadership, and rates of improvement, aided Welch and the company in defying the critics as the company continued to profit. 3 GE’s Two Decade Transformation Introduction Surviving in today’s challenging business environment necessitates...
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...9-399-150 REV: MAY 3, 2005 CHRISTOPHER A. BARTLETT MEG WOZNY GE's Two-Decade Transformation: Jack Welch's Leadership On September 7, 2001, Jack Welch stepped down as CEO of General Electric. The sense of pride he felt about the company's performance during the previous two decades seemed justified judging by the many accolades GE was receiving. For the third consecutive year, it had not only been named Fortune's "Most Admired Company in the United States," but also Financial Times' "Most Admired Company in the World." And, on the eve of his retirement, Fortune had named Welch "Manager of the Century" in recognition of his personal contribution to GE's outstanding 20 year record. Yet while the mood at GE's 2001 annual meeting had clearly been upbeat, some shareholders wondered whether anyone could sustain the blistering pace of change and growth characteristic of the Welch era. And specifically, many worried if any successor could generate the 23% per annum total shareholder return Welch had delivered in his two decades leading GE. It would be a tough act to follow. (See Exhibit 1 for financial summary of Welch’s era at GE.) The GE Heritage Founded in 1878 by Thomas Edison, General Electric grew from its early focus on the generation, distribution, and use of electric power to become, a hundred years later, one of the world’s leading diversified industrial companies. A century later, in addition to its core businesses in power generation, household appliances, and lighting...
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...9-399-150 REV: MAY 3, 2005 CHRISTOPHER A. BARTLETT MEG WOZNY GE's Two-Decade Transformation: Jack Welch's Leadership On September 7, 2001, Jack Welch stepped down as CEO of General Electric. The sense of pride he felt about the company's performance during the previous two decades seemed justified judging by the many accolades GE was receiving. For the third consecutive year, it had not only been named Fortune's "Most Admired Company in the United States," but also Financial Times' "Most Admired Company in the World." And, on the eve of his retirement, Fortune had named Welch "Manager of the Century" in recognition of his personal contribution to GE's outstanding 20 year record. Yet while the mood at GE's 2001 annual meeting had clearly been upbeat, some shareholders wondered whether anyone could sustain the blistering pace of change and growth characteristic of the Welch era. And specifically, many worried if any successor could generate the 23% per annum total shareholder return Welch had delivered in his two decades leading GE. It would be a tough act to follow. (See Exhibit 1 for financial summary of Welch’s era at GE.) The GE Heritage Founded in 1878 by Thomas Edison, General Electric grew from its early focus on the generation, distribution, and use of electric power to become, a hundred years later, one of the world’s leading diversified industrial companies. A century later, in addition to its core businesses in power generation, household appliances...
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...GE Two-Decade Transformation: Jack Welch’s Leadership 1A. Vision. Mr. Welch started from day one of his tenure as CEO to change the vision of GE as it relates to its employees, management and the aim of its products. His major goal was to fixed those poor achieving product lines that could be fixed, sell those product lines that could be sold but not fixed and drop those product lines that could not be fixed or sold. B. Mission. Mr. Welch mission was to downsize, de-staff and de-layer the GE organization to streamline it to be more efficient and effective. C. Strategies. Mr. Welch brought in various strategies; however, they all had three primary focus points in mind. He wanted to centralize the chain of command structure, while taking out layers of bureaucracy. He wanted input from all sectors of the GE family when determining how to do jobs better. He wanted management to be responsive up as well as down the chain of command. D. Organizational Structure. Mr. Welch knew he badly had to implement a cultural change if he intended to sustain high productivity. He wanted to replicate a small business culture, where ideals were freely shared with management and decisions were made on the spot. He started an initiative called “Work-out,” where employees with the help of a facilitator put their ideals on paper. Once the employee ideals were captured on paper, management was called in to hear the...
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...GE's Sustainability Assessment Week 2 Assignment | AbstractAn analysis of GE's sustainability efforts and missteps, from the years in which the company was under the leadership of Jack Welch to ongoing activities today. Abdul H Shakur DeVry University – March 2016 Sustainability Operations Professor: Brad Bergman | GE's Sustainability Assessment Week 2 Assignment | AbstractAn analysis of GE's sustainability efforts and missteps, from the years in which the company was under the leadership of Jack Welch to ongoing activities today. Abdul H Shakur DeVry University – March 2016 Sustainability Operations Professor: Brad Bergman | GE's Sustainability Assessment Introduction General Electric, (GE) the 1892 brain child, and merger of two companies Thomson-Houston Electric and Edison General Electric. Early on the main products included light bulbs, motors, toasters, elevators, and other appliances. From the humble beginnings the General Electric Company (GE) has grown into a monolith. The company now manufactures products such as engines for airplanes, petroleum production equipment, power and nuclear generators. Also GE is a common household name and has long been one of the top providers of household appliances. GE is reponsible for producing some of the greatest innovations that the world has known. GE, while famous for big innovation is also recognized...
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...Case Study Write Up: GE’s Two Decade Transformation: Jack Welch’s Leadership Teri Raven, EMBA 709 “GE’s Two-Decade Transformation” analyzes the leadership of Jack Welch, CEO of General Electric. When he took over GE as CEO in 1981, Jack Welch had big shoes to fill. His predecessor, Reg Jones, had been referred to as a “management legend” and been voted “CEO of the Year” and “CEO of the Decade” 3 and 1 times, respectively. Jones had led the company for 8 years and had done well both professionally and politically. Upon his initiation as CEO in 1981, the Wall Street Journal had already likened Welch’s replacing Jones to replacing a legend with a “live wire.” The business climate was shaky when Welch took over in April 1981, with the economy in recession. Welch had only one option: success. And to achieve success in the current climate, he would need his team to be “better than the best.” In fact, the choices were to be #1, #2, or nothing at all. He soon used this philosophy in his categorization of businesses into core, high-technology, and services. Welch’s 10 year vision was to lead GE to a state in which it would be viewed as “the most profitable, highly diversified company on earth, with world quality leadership in every one of its product lines” (Bartlett/Wozny); he sought to achieve this via a massive restructuring of the business. His philosophy of “fix, sell, or close” businesses was born, yet the reality was often that in the economic state of that time,...
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