3. How does such a large complex diversified conglomerate defy the critics and continue to grow so profitably? Have Welch's various initiatives added value? If so ,how?
GE grew so big in its business portfolios that many critics became suspicious about its future, doubting how GE could add more value in its businesses. The answer from Welch was that GE was going to "grow bigger, but not smaller". The opportunities of growth, according to Welch, lied in quality improvement in both productions and human capital.
Through a detailed study of impact of quality programs in well-known companies like Motorola and AlliedSignal Inc, Welch found out GE was suffering $8 billion to $12 billion a year due to inefficiency. Welch saw great opportunity to launch Six Sigma Quality Initiative, a quality program aiming to improve quality, lower costs and increasing productivity. This initiative was a well-developed program covering detailed planning, resource allocation, reviews and forecasts in every business unit. To equip managers with the skills in achieving Six Sigma objectives, Welch assigned Reiner, vice president of Business Development, to design a massive training with three types, "Green Belts", "Black Belts" and "Master Black Belts". Moreover, the emphasis of Six Sigma Initiative was seen by tying 40% of individual's bonus, which was a pretty high proportion, to his or her Six Sigma objectives so that managers were highly motivated to implement, monitor and achieve Six Sigma plans.
Through Six Sigma Initiative, the company as a whole centred more on quality to add value to their exiting businesses. Lower production cost, improved productivity and increasing capacity were achieved smoothly and willingly in the whole company thanks to the solid foundations such as low bureaucracy, shared values and entrepreneur spirits in every business unit that had been built through the last decade. Some results were astonishing. For instance, Medical Systems saw a tenfold...
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