The following is Team Coeus’s analysis of Harvard Business School’s case study of Jack Welch’s two-decade leadership at GE. During his tenure Welch completely transformed the corporate culture of GE from an inefficient bureaucratic organization to a lean and efficient organization.
At his departure from GE in 2001, the firm had been named Fortune’s “ Most Admired Company” three years in a row. Our analysis will discuss the steps that Welch undertook to complete this transformation.
Welsh vision for GE when he was hired as CEO in April 1981, was to have the firm perceived as a “unique, high-spirited, entrepreneurial enterprise…the most highly diversified company on earth, with world quality leadership in every one of its product line” (p.2). To achieve his goal Welch’s restructured GE in three phases starting in the early 1981 to the mid 1990’s. Welsh’s rationale for these organizational changes were to replace a broken corporate culture with a corporate culture where all staff members added value.
Phase One: Fix, Sell or Close
During this phase Welch challenged each business unit to become the leader or second competitor in its industry. He visualized his vision as the ‘Three-Circle Vision for GE 1982’. (See Exhibit 1, Appendix).
Welch attempted to make GE a lean and agile organization by reducing management hierarchy levels from nine to four and to ensure that all business segment heads reported directly to him. He also implemented a real time planning process to replace the current inefficient strategic planning process.
Phase Two: Second Phase of the Rocket
During this phase Welsh created two ‘Software’ initiatives titled Work-Out and Best Practices. The Work-Out initiative was a process designed to reduce bureaucracy and provide a forum for management/employee communications to improve performance across the organization. The Best Practices initiative goal was to increase productivity by replacing...