jack welch: ge's two decade of transformation
DESCRIPTION
It is about Jack Welch's leadership at GE. Initiatives taken by him by which GE became what today it is! PPT made from HBR case "GE's two decade of transformation: Jack Welch's leadership"TRANSCRIPT
LOGO
GE’s Two Decade Transformation:
Mrudang Thakor
Jack Welch’s Leadership
LOGOContent
1. GE- Overview
2. All about- Jack Welch
3. Initiatives taken by Jack Welch
“Hardware” Initiative
• #1 or 2 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
LOGO1. GE- Overview
Founded -1878, Thomson Houston Electric Company (THEC)
Merger- 1892, Between GE and THEC Formed General Electric
Headquarters: Fairfield, Connecticut, U.S
Revenue: US$ 147.300 Billion (2012)
Source: Wikipedia
LOGO1. GE- CEOs (Since 1973)
Reg Jones (1973-81)
Jack Welch (1981-2001)
Jeffrey Immelt (2001- Present)
LOGO2. All about Jack Welch
John Francis "Jack" Welch, Jr. (born November 19, 1935),
Peabody, MA
Father: Conductor at Boston and Maine Corporation
Mother: Home maker
Alma- maters:
Salem High school
University of Massachusetts (Bachelor of Science in Chemical
Engineering, 1957)
University of Illinois at Urbana-Champaign (M.S and PhD, 1960)
Source: Wikipedia
LOGOChallenges 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
LOGOYoungest CEO in action…
“Hardware” Initiative
• #1 or 2 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
LOGODisciplined Destaffing
LEANLess no. of
people, bureaucracy
& politics
DESTAFFING
AGILEMaking 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?.”
LOGOReal Time Planning
STRATEGIC PLANING REAL TIME PLANING
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
LOGOBenefits 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
LOGO
“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.”
LOGOWork 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
None of these meetings
were recorded…
So that employees don’t
end up with MORE
BUREAUCRACY.
LOGOBest Practices
Learning from other
industries
Focus more on how things got done
Implementation
1. Productivity increase2. Managers realized the key focus areas of
businessResults
LOGOGo 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)
LOGODeveloping leaders for tomorrow
Keeping close tabs on top 3000
executives
Succession Planning
Improved packages/Stock Options
Training institute at Crotonville
360 Degree Feedback
LOGO“A” Players
“A” players
Excited by ideas and attracted to turbulence Energy
Infecting everyone with enthusiasm for ideaEnergize
The ability to make tough callsEdge
Consistent ability to turn vision into resultsExecution
LOGOPerformance Appraisal System
Rank 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
LOGOBoundaryless 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.”
LOGONotion 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?”
LOGO
“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”
LOGOSix 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.
LOGOImplementation
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 tubes
2. 62% reduction in time at service stations
3. 30,000 Six Sigma projects were initiated a year.
Results
LOGOSummary of Initiatives
LOGO
Mrudang Thakor, MBA (09892734547)