Ge’s Two Decade Transformation Jack Welch’s Leadership Change Management
GE’s Two Decade Transformation: Jack Welch’s Leadership
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 internally. * Managers that did not fit into or who failed to embrace his strategy were let go. Anything and anyone that didn’t bring value to GE was eliminated. The most important change he brought in was by eliminating the sector level and reducing the hierarchical levels from 9 to 4. * Through downsizing, de-staffing and delayering, Welch modestly increased revenues from $27.2bn to $29.2bn. * Welch made a varsity team where he wanted managers who...
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