Team Globalization Case Analysis GE’s Two Decade Transformation: Jack Welch’s Leadership
Yasmine Abdo Al-Kouraishi Muhammad Howard Steven D. Johns Kenneth V. Oliver Kimberly N. Lomax
AMBA 670 Managing Strategy in the Global Workplace July 25, 2012
2 GE’s Two Decade Transformation
Executive Summary Team Globalization has conducted an in depth analysis on General Electric's (GE) two decade transformation achieved by the company’s former Chief Executive Officer (CEO) Jack Welch. This report consists of a reflective examination performed by the team, incorporating perspective gained through professional experience and key concepts gleaned from selected course reading selections. As CEO of GE, Jack Welch's management skills became legendary, with little tolerance for bureaucracy and archaic business processes. Acquiring new businesses and ensuring that each business unit under the GE umbrella was one of the best in its field was a primary concern for Mr. Welch. Under his guidance, the company expanded dramatically from 1981 to 2001 (GE, 2012). The culture of innovation and learning, which included incorporation of measures related to new product development, technological leadership, and rates of improvement, aided Welch and the company in defying the critics as the company continued to profit.
3 GE’s Two Decade Transformation
Introduction Surviving in today’s challenging business environment necessitates innovative thinking in terms of crafting strategies to enable the establishment and sustainment of a competitive advantage. Through an established strategy, structured options and decision making processes, organizational leaders will be able to facilitate organizational development and growth. Overcoming the odds and competitive pressures sometimes requires defying critics and popular views to develop initiatives that not only streamline the organization, but create profitable business operations and human resources to add value to the organization. The analysis that follows identifies and defines the challenges which Welch of GE encountered during his tenure, and outlines his approach to strategic corporate leadership and taking charge. The report is followed by a breakdown of Welch’s objectives in regards to innovation and his strategy on creating value. The authors will also provide an evaluation of Welch’s approach to leading change with emphasis on the overall impact that Welch had on GE’s success. Finally, this paper will take a look at the implications of Welch’s replacement.
How difficult a challenge did Welch face in 1981? How effectively did he take charge?
Welch faced a very difficult challenge taking over the position as CEO of GE. His predecessor, Reg Jones, set the bar extremely high at the company leaving a legacy for Welch to compete with as the new CEO. Jones had been considered a “management legend” and had been voted CEO of the year three times for his brilliant accomplishments with GE. Jones was also labeled CEO of the Decade two years before he retired. Needless to say, Welch had some big shoes to fill once named as CEO. During this transition, the business world was highly
4 GE’s Two Decade Transformation
competitive, with the economy, environment, and political climate in constant flux. If not handled properly, the transition could be detrimental to the company. Welch was up for the challenge and knew that a successful transition would mean developing a team that would make GE even more prosperous earning stakeholder trust. This required assessing the current environment to accurately determine a way to improve it. Welch convinced his team to buy into his new vision of where the company should go and challenged employees to be “better than the best”. In order to accomplish this enormous task, Welch placed executives and management in key places to could assist his efforts to redirect overall company culture. Managers that did not fit...