GE’s Two – Decade Transformation : Jack Welch’s Leadership

1. GE’s Two – Decade Transformation : Jack Welch’s Leadership Sandy Wibisono Address: General Electric CompanyInternet Registrations3135 Easton TurnpikeFairfield, CT 06828-0001USA

2. Introduction • Founded in 1878 by Thomas Edison. • Focus on Generation , Distribution, and use of electric power to become. • 1978 – Power Generation , household appliances, lighting + Aircraft engines, medical systems and Diesel Locomotives.

3. Introduction GE–a Bellwether of American Management Practices

4. Reg Jones – 1970’s Strategy-SBU based structure and planning processes • 10 groups, 46 divisions, 190 departments, and 43 strategic business units • Develop a constructive business-government dialogue • Wall Street Journal proclaimed him as a “management legend” Success • Sales more than doubled ($10 billion to $22 billion) and earnings grew even faster ($572 million to $1.4 billion) • A major thrust into international markets • Expansion of world trade and restoration of U.S. competitiveness

5. Jack Welch (1981 – 2001) • 1935: born in Salem, Massachusetts • 1957: BS in Chemical Engineering • 1960: MS and PhD in Chemical Engineering • 1960: Joined GE as a chemical engineer • 1972: Elected GE’s youngest VP • 1979: Vice Chairman • April 1, 1981: Became the 8th Chairman and CEO of General Electric

6. challenges in 1981 • Challenge form outside GE • Economic recession • High interest rates • Highest unemployment rate since the depression • Challenges from GE • Massive information and inefficient macro-business

7. What is Welch’s reaction to these Challenges? “Better than the Best”

8. Welch's Vission • “A decade from now, I would like General Electric to be perceived as a Unique, high-spirited, Entrepreneurial enterprise…the most profitable, highly diversified company on the earth, with world quality leadership in every one of its product lines”. -- Jack Welch Services GECC Information Construction & Engineering Nuclear Services Technology Industrial Electronics Medical Systems Material Aerospace Aircraft Engines Core Lighting Major Appliance Motor Transportation Turbine Construction Equipment Support Ladd Petroleum Semi Conductor GE Trading Co. Utah Mining Ventures Calma Outside Housewares Central Air-Conditioning TV&Audio Cable Mobile Power Delivery Radio Stations Three-Circle Vision for GE

9. “Restructuring the Hard Drive” • Challenged everyone to be “better than the best” • Sold more than 200 businesses and made over 370 acquisitions • Insisted GE become more “lean and agile” resulting • Delayering: elimination of the “sector” level • Downsizing: elimination of about 123,450 jobs • Divestiture: elimination of an additional 122,700 jobs • Replaced 12 of his 14 business heads

10. Iniatives - Objective Software Iniatives Second Wave

11. Iniatives - Objective Third Wave

12. Work Out • A process designed to get unnecessary bureaucratic work out of the system while providing a forum in which employees and their bosses could work out new ways of dealing with each other.

13. Best Practices • How to increase Productivity ? • Michael Fraizer of GE’s Business Development • They focused more on developing effective processes than controlling individual activities. • Customer satisfaction was their main gauge of performance. • They treated their supplier as partners • They emphasized the need for a constant stream of high quality new products designed for efficient manufacturing

14. Going Global • 1989 – appointed Paulo Fresco as head international Operations. • a key negotiator on the thompson swap • Continued to broker numerous international deals • a joint venture with German-based Robert Bosch • a Partnership with Toshiba • Acquisition of Sovac , the French Consumer credit Company

15. Developing Leaders

16. Boundaryless Behavior • To strengthening GE’s Individual Businesses Integrated Diversity The Boundaryless company we envision will remove the barriers among engineering, manufacturing, marketing, sales, and customer service; it will recognize no distinctions between domestic and foreign operation ….. Boundaryless Company

17. Stretch : Achieving the Impossible • 1990 , Welch Introduced the notion of “stretch” to set performance targets and described it as “using dreams to set business targets, with no real idea of how to get there.” • Stretch Targets did not replace traditional forecasting and objectives-setting process.

18. Service Business • In 1994, Welch launched a new strategic initiative designed to reinforce one of his earliest goals: to reduce GE’s dependence on its traditional industrial products. Products Services

19. Six Sigma Quality Initiative • Issue • When a 1995 Company Survey showed that GE employees were dissatisfied with the quality of its products and processes. • Six Sigma (Motorola Inc and AlliedSignal) • Improve Quality • Lower Cost • Increase Productivity

20. Six Sigma Quality Initiative • 1996 – Boca Raton- Welch announced a goal of reaching Six Sigma quality levels company – wide by the year 2000, describing the program as “the biggest opportunity for growth, increased profitability , and individual employee satisfaction in the history of our company.”

21. E-Business Iniative • destoryyourbusiness.com (www.dyb.com)

22. "A Players" With "Four E's" • “A – Players” • Individuals with vision , leadership, energy and courage • “4 E’s” • Energy , • Ability to Energize others , • Edge , the ability to make tough calls • Execution , the consistent ability to turn vision into results.

23. Result

24. Conclusion #1 or #2 – fix, sell, or close Work Out Best Practices 1990 1981 1988

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