GE’s Two Decade Transformation

Topics: General Electric, Jack Welch, Reginald H. Jones Pages: 6 (1804 words) Published: November 2, 2014
1.)How difficult a challenge did Welch face in 1981? How effectively did he take charge? - Mychal Upon coming onboard with GE, Jack Welsh accepted an enormous uphill battle of completely restructuring such a huge and vastly industrially diversified conglomerate. Not only in recognizing the paramount importance for drastic organizational change in how GE conducted its business, but systematically carrying out detailed approaches to build value and make GE more competitive and profitable for the future was a tremendous undertaking. To compound difficulties, former CEO, Reg Jones passed the torch to Welch during trying economic times for the U.S. Welsh wasted no time in challenging each of GE’s divisions, departments, and SBU’s to be “better than the best”. This mindset shook GE and challenged its employees with gaining the competitive advantage through creativity and innovation. Like any leader, Jack Welsh experience resistance to the changes he imposed; however, his vision was clear and resolute. Between 1981 and 1989 he eliminated over 100,000 positions within GE. In addition, he made decisions to rid GE from negativity by eliminating 100 people and cutting the strategic planning staff group in-half. This decision was made to help reinforce how critical it was to have a positive attitude going forward. These difficult decisions transformed the company’s functionality and as a result productivity rose 2% annually, revenues increased, and profits nearly doubled. His relentless push for a better GE continued as he began even challenging scopes of control, other business models, and organizational efficiency theories. •High interest rates, unemployment – challenging economy (unfavorable exchange rates) •Global competition, particularly Japanese

Came in after complete reorg (strategic planning) and following strong leader •Coming in after strong leader arguably harder than coming in with a complete opportunity to revamp •He addressed the company through #1 & #2 “Fix, Sell, or Close” Strategy oInitial attempts in recessionary economy led to close

oAlso made strategic (and a lot) of acquisitions
He addressed the people/structure through “lean & agile” through destaffing process oEliminating layers & bureaucracy
oUsed a highly disciplined, somewhat “hard”, approach
oInitial attempt and communication style was awkward and not well received. Eventually abandoned GE Business Engine name to GE Social Architecture •Relentless to sticking to HIS strategy  no “fair process” in terms of human capital •Neutron Jack

Obsessive about what he wanted, 1 dimensional
Did what he felt was necessary to maintain business results in recession, but the “flattening”/”breaking of the structure” had a significant impact on morale & managerial overwork lending to his name Neutron Jack

2.)What is Welch’s objective in the series of initiatives he launched in the late 1980s and 1990s? What is he trying to achieve in the round of changes he put in motion in that period? Is there a logic or rationale supporting the change process? - Tim “Neutron Jack”. Welsh had aspirations of transforming GE to be the most diverse, profitable, and innovative company in the world, and identified several fundamental objectives that he considered crucial to success. The primary objective was to change the fundamental culture of GE to the culture of a small company, where everyone had a voice and their ideas and proposals got an immediate response. He also knew that he would have to cultivate leaders that were aligned with his new vision of GE and create an environment where people could be their best. He understood that people were his greatest resource and competitive advantage. To achieve this he launched several initiatives to free the organization from bureaucracy and restructured the organization entirely. “If you don’t have a competitive advantage, don’t compete.” Welsh realized that in order to achieve his vision he would...
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