GE’s Two-decade Transformation
Jack Welch’s Leadership Managing Konwledge and Learning (#9-399-150) ANALYSIS of GE Advantage, Problems and risks including my suggestion/ * (1) GE *Key factors*: Hardware restructure*:
When Reg Jones, Welch’ Predecessor, became CEO in 1973, the company organization was just completed to be centralized, but Jones could not able to keep up with reviewing massive volume of information generated by 43 strategic plans. Finally in 1977, he capped GE’s departments, divisions, groups, and SBUs with a new organizational layer called “sectors”, which represented macrobusiness agglomerations. Under a economic recession, high interest and highest unemployment, Welch as new CEO targeted “better than the best” and set in motion a series of changes that were to radically restructure the company over the next five years. Following this philosophy, he started the actions under the following strategies below. First strategy: Welch set up simple notion overall GE that businesses were categorized as core, high-technology and services. Then, he accept to let only #1 or #2 business survive and other business be sold or close. This drastic strategy brought not only improvement of financial statement of the company, but also good tension in the company and was close to the actual environment and east to fit customers demands. In organizational strategy, Welch downsized all larger headquarters groups including the number of strategic planning staffs under the simple strategy, which realized more lean and agile organization. Especially laborious strategic planning system was destaffed and was replaced by Welch and his 14 key business heads as same as budgeting process radically redefined. In 1985, Welch also eliminated the sector level his predecessor built. Welch completely chipped away at GE bureaucracy and hierarchical levels was reduced from nine to four. Finally he replaced 12 of his 14 business heads in 1986, which consisted of...
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