GE Two decades of transformation

Q1: How difficult a challenge did Welch face in 1981? How effectively did he take charge?

ANS: The challenges that Welch faced in 1981:

1. economy recession.
2. Japanese competition.
3. Fair in employees due to layoffs
4. Cultural change.
5. Remain number one and number in the domestic market.
1ST He
divided his vision into three circle concepts:

The business which were not profitable he cut them off and freed up $11billion capital.

2ND He acquired more than 370 companies, investing more than $21billion. Later he had started the
de-staffing process.

3RD His charge made the company more effective and competitive, after all initiative he had taken,
the revenue rose $27.2billion to $29.2biilion, and operating profit from $1.6billion to $2.4billion

Q2: what is Welch’s objective in the series of initiatives he launched in the late 1980’s and early
1990s? what is he trying in the round of changes he put in motion in that period?

ANS: following were the objectives behind the initiatives launched:

1. Increase the productivity.

2. Realigning the skill set of employees.
3. Generation of leaders aligned to GE’s new vision and cultural norms.
4. Creating a boundaryless company.
5. Creating a desire culture through workout and best practices.
6. Creating number 1 and number 2 in world market.
7. “Stretch” to set targets and to measure the performance.
8. Supplementing its product with value added services.

He was trying to build a global company by developing his people through ideal leadership profiles.

Q3: Is there a logic or rationale supporting the change process?

ANS: During Welch decade the company grew tremendously for three consecutive years, named as
most admired company in United States and later in World. More specifically

Q4: How does such a large, complex diversified conglomerate defy the critics and continue to grow
so profitably

For presentation
What are key leadership lessons learnt?

Take changes as opportunity:

When Welch first takeover there was economic recession- restructure the company and took
initiatives to stable all businesses at either #1 or #2 position.

Economies downturn (Europe, Asia & Mexico)

Encouraging ideas from everywhere:

Created an open forum where employees can share ideas how they can do their work more
effectively.

Removing Boundaries:

Promoted a learning culture by other companies Best Practices.

Stretching the targets:

Basic targets were not replaced but they had been stretched out. By this way, they learn to do
things faster

Shared Values:

Leaders characterized in four types One type of leader who shares wrong values. They just
removed them.

Energize others:

They wanted only A Players those who have 4E’s (energize others, excited by ideas, those who
dream big).

How do you define Welch’s leadership style?

Are there any critics, if any, over his leadership style?