Case Study-2 GE Two-Decade Transformation: Jack Welch’s Leadership

GE founded in 1878 by Thomas Edison, focus on the Generation, Distribution and use of electric
power. By the 1950's GE had hundreds of department managers which led towards
decentralization. Reg Jones, become COE in 1973 and continued its SBU based structure &
planning process. GE become benchmark for many companies that imitated its SBU based
structure. Welch become CEO in April 1981, he faced a difficult challenge after taking over the
position as CEO. When he joined GE, the U.S. economy had lot of problems such as Economy in
Recession, High Interest rates and highest Unemployment rates since depression.
Welch demonstrated autocratic and democratic way of leadership during his tenure.

The Three Visions for GE

1. Core – Lighting, Major Appliance, Motor, Transportation, Turbine Construction, Equipment.
2. Technology – Industrial Electronics, Medical Systems, Material, Aerospace, Aircraft Engines.
3. Services – GECC Information, Construction and Engineering, Nuclear Services.
Welch came out as a transformational leader. To do so made series of change to restructure the
company over next five year.
Restructuring the Organization-Hardware
Sold more than 200 businesses and made over 370 acquisitions. Real time planning was
introduced replacing the strategic planning system. Budgeting process was changed. Results
were evaluated against external competitive rather than internal. Emphasis was given more on
“lean and agile”. Downsizing workforce and de-staffing 122,700 jobs.
In 1980's most of the restructuring was completed. Priorities were given to Culture.
Software Initiative
Work Out: Remove unnecessary bureaucratic work from the system. Employee can give ideas
and suggestion on business and get immediate responses to it on a forum. Group of 40-100
employees were invited to share views about the business and how it can be improved for
three-day’s session.
Best Practices: It was about increasing productivity through competitive intelligence i.e.
learning from other industries. Focus more on how things get done. People were GE's key
assets and are company's resource. Hence, develop leaders aligned to GE's new vision and
culture. Leaders were classified into four categories first, second, third and fourth. 360 degree
feedback process was introduced for rating employees on the scale of 1 to 5.

In 1990’s
Boundaryless Behavior: Focused on creating “integrated diversity”. Envision will remove the
barriers among engineering, manufacturing, marketing, sales and customer services. It
recognizes no distinctions between domestic and foreign operation.
Stretch: The program in an effort to push people to be the best they can be, to test boundaries,
and to get people to think of fundamentally better ways of performing their work.
Service Industries: Reduce dependency on traditional industrial products. Foresee biggest
growth opportunities is to providing service to customer and making existing assets of
Customers more productive

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 Case Study-2 GE Two-Decade Transformation: Jack Welch’s Leadership

Six Sigma was initiated for quality assurance which led reduction in turnaround time and
increased return on investment. Culture Change such as restructuring, removing bureaucracy,
Downsizing and changing attitude led to productivity in the company.