The General Electric Turnaround
Saptarshi Dutta (11DM-140)
The General Electric Turnaround (1981-2000)
Ranked at number 6 in the fortune 500 list, GE is the world’s most valuable and admired company. This status is attributed to the changes made by the company in the two decades from 1981 to 2000 under the leadership of CEO Jack Welch. In the 20 years that Jack led GE’s, revenues rose from $30 to $130 billion and company value went from $14 to $410 billion.
Jack Welch’s entire strategy took place in 3 waves-
First Wave (1981) - Create a unified vision and strategy for the entire company. All GE business had to fit within three categories (three circle concept)- 1. Core business with moderate returns (cash cows) 2. High tech business with high growth, negative cash flow and high investments 3. Services with high returns, high growth, cash generation and low investments
After evaluation of each business, those that were first or second in their industry were placed inside one of the three circles. The others were given two years to become first or second. If not achieved they were either sold or closed
Second Wave (1985) –Revolutionize GE to gain the strengths of a big company with the leanness and agility of a small company
Third Wave (1996) – Develop an integrated, boundary-less, total quality company with A-players.
These changes led to an amazing growth and are recorded as one of the most successful turnaround strategies of all time.
The final report would cover the following aspects- * The entire strategy mechanism involving GE in the two decades * The various models implemented by GE to achieve this turnaround * The drastic restructuring of the internal business of GE * The competitive strategy implemented * Parallel between French Revolution and the GE Revolution * Hard effects on GE employees (strategy, structure, employment, rewards) * Soft effects concerning culture, work climate, indoctrination * Involvement of Jack Welch *
The General Electric Turnaround (1981-2000)
Ranked at number 6 in the fortune 500 list, GE is the world’s most valuable and admired company. This status is attributed to the changes made by the company in the two decades from 1981 to 2000 under the leadership of CEO Jack Welch. In the 20 years that Jack led GE’s, revenues rose from $30 to $130 billion and company value went from $14 to $410 billion.
Jack Welch’s entire strategy took place in 3 waves-
First Wave (1981) - Create a unified vision and strategy for the entire company. All GE business had to fit within three categories (three circle concept)- 1. Core business with moderate returns (cash cows) 2. High tech business with high growth, negative cash flow and high investments 3. Services with high returns, high growth, cash generation and low investments
After evaluation of each business, those that were first or second in their industry were placed inside one of the three circles. The others were given two years to become first or second. If not achieved they were either sold or closed
Second Wave (1985) –Revolutionize GE to gain the strengths of a big company with the leanness and agility of a small company
Third Wave (1996) – Develop an integrated, boundary-less, total quality company with A-players.
These changes led to an amazing growth and are recorded as one of the most successful turnaround strategies of all time.
The final report would cover the following aspects- * The entire strategy mechanism involving GE in the two decades * The various models implemented by GE to achieve this turnaround * The drastic restructuring of the internal business of GE * The competitive strategy implemented * Parallel between French Revolution and the GE Revolution * Hard effects on GE employees (strategy, structure, employment, rewards) * Soft effects concerning culture, work climate, indoctrination * Involvement of Jack Welch *