Case study overview
H A R v A R D " u s r N E s sl t " H o o L
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C H R T S T O P H EA . B A R T L E T T
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MEC WOZNY
GE'sTwo-DecadeTransformation: fack Welch's
Leadership
Jack Welch glowed with pride at General Electric's Annual Meeting in March 1'999. For the first and, time, GE's revenues exceeded $100 billion, operating margins were at an all-time high of 1'6.7"/", earnings per share had increased1/% over 197's record level. In recognition of this outstanding performance and the company's transformation over the previous two decades, the Fortune poll of
"Most Admired Company" for the second year
U.S. corporate executives had voted GE the countqr's
"Most RespectedCompany in the World." rtrnning, and the FinancialTimeshad named it the
While the mood at the annual meeting was clearly upbeat, some shareholders worried about
Welch's intention to retire at the end of 2000. The company he would hand over to his successorwas radically different from the GE he took over in 1981. The question on many minds was whether anyone could sustain the blistering pace of change and growth characteristic of the Welch era. It would be a tough act to follow. (SeeExhibit l for financial summary of Welch's era at GE.)
The GE Heritage
Founded in 1878by Thomas Edison, General Electric grew from its early focus on the generation, distribution, and use of electric power to become, a hundred years later, one of the world's leading diversified industrial companies. In addition to its core businesses in power generation, household as appliances,and lighting,by 1978the company was also engaged in businesses diverse as aircraft engines, medical systems, and diesel locomotives.
Long regarded as a bellwether of American management practices, GE was constantly undergoing change. In the 1930s,it was a model of the era's highly centralized, tightly controlled corporate form.
By the 1950s,GE had delegated responsibility to hundreds
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5
9-399-1 0
R E V :F E B R U A R Y 5 , 2 0 0 4
2
C H R T S T O P H EA . B A R T L E T T
R
MEC WOZNY
GE'sTwo-DecadeTransformation: fack Welch's
Leadership
Jack Welch glowed with pride at General Electric's Annual Meeting in March 1'999. For the first and, time, GE's revenues exceeded $100 billion, operating margins were at an all-time high of 1'6.7"/", earnings per share had increased1/% over 197's record level. In recognition of this outstanding performance and the company's transformation over the previous two decades, the Fortune poll of
"Most Admired Company" for the second year
U.S. corporate executives had voted GE the countqr's
"Most RespectedCompany in the World." rtrnning, and the FinancialTimeshad named it the
While the mood at the annual meeting was clearly upbeat, some shareholders worried about
Welch's intention to retire at the end of 2000. The company he would hand over to his successorwas radically different from the GE he took over in 1981. The question on many minds was whether anyone could sustain the blistering pace of change and growth characteristic of the Welch era. It would be a tough act to follow. (SeeExhibit l for financial summary of Welch's era at GE.)
The GE Heritage
Founded in 1878by Thomas Edison, General Electric grew from its early focus on the generation, distribution, and use of electric power to become, a hundred years later, one of the world's leading diversified industrial companies. In addition to its core businesses in power generation, household as appliances,and lighting,by 1978the company was also engaged in businesses diverse as aircraft engines, medical systems, and diesel locomotives.
Long regarded as a bellwether of American management practices, GE was constantly undergoing change. In the 1930s,it was a model of the era's highly centralized, tightly controlled corporate form.
By the 1950s,GE had delegated responsibility to hundreds