Ge’s Two Decade Transformation: Jack Welsh’s Leadershipge’s Two Decade Transformation: Jack Welsh’s Leadership
GE’s Two Decade Transformation: Jack Welsh’s Leadership
Introduction
GE was founded in 1878. It has grown multi folds since the time of inception. It has been named as “Most Admired Company in Us” and “Most Admired Company in the World”. It has companies in the field of electricity production, electric appliance, lighting, aircraft engines, medical system, and diesel locomotives. GE has 43 independent SBU (Strategic Business Unit). Despite all these variations available there was steadfast growth in the company. The management practices in GE were considered as bellwether of American management practices. This was due to the procedures adopted by Jack Welsh.
Q1: How difficult a challenge did Welch face in 1981? How effectively did he take charge?
Challenges faced by the Welch when he took over the position of CEO:
• SBU-based structure of the organization under the leadership of Reg jones
• Multilayer structure of the organization with departments, divisions, groups and SBUs topped with organizational layer of sectors
• U.S Economy in recession- High Interest Rates, highest unemployment rate since the depression
• Global competition faced by the company- more often in the form of Japanese. GE at present was unable to face it to their full potential
• Bureaucracy structure of the organization leading to inefficiency and often delay, costing the company its edge
The Changes made under Welch’s leadership:
• CEO challenged each to be “better than the best”
• Two tier approach of fixing- the hardware “company’s processes and structure” and the software ”management style, culture and structure”
• Risk taking behaviour expected out of business heads and let go of the old GE culture
Hardware Approach- Overall restructuring, downsizing, de-staffing and delayering o Goal to be #1 or #2 competitor in the respective industry or to disengage translating to – “fix, sell or close” strategy o Transition to three circle concept- core, high-technology and
Introduction
GE was founded in 1878. It has grown multi folds since the time of inception. It has been named as “Most Admired Company in Us” and “Most Admired Company in the World”. It has companies in the field of electricity production, electric appliance, lighting, aircraft engines, medical system, and diesel locomotives. GE has 43 independent SBU (Strategic Business Unit). Despite all these variations available there was steadfast growth in the company. The management practices in GE were considered as bellwether of American management practices. This was due to the procedures adopted by Jack Welsh.
Q1: How difficult a challenge did Welch face in 1981? How effectively did he take charge?
Challenges faced by the Welch when he took over the position of CEO:
• SBU-based structure of the organization under the leadership of Reg jones
• Multilayer structure of the organization with departments, divisions, groups and SBUs topped with organizational layer of sectors
• U.S Economy in recession- High Interest Rates, highest unemployment rate since the depression
• Global competition faced by the company- more often in the form of Japanese. GE at present was unable to face it to their full potential
• Bureaucracy structure of the organization leading to inefficiency and often delay, costing the company its edge
The Changes made under Welch’s leadership:
• CEO challenged each to be “better than the best”
• Two tier approach of fixing- the hardware “company’s processes and structure” and the software ”management style, culture and structure”
• Risk taking behaviour expected out of business heads and let go of the old GE culture
Hardware Approach- Overall restructuring, downsizing, de-staffing and delayering o Goal to be #1 or #2 competitor in the respective industry or to disengage translating to – “fix, sell or close” strategy o Transition to three circle concept- core, high-technology and