In 1981, Jack Welch faced the difficult challenge of taking charge at GE after its predecessor, Reg Jones, had left the company. Welch successfully led major changes to GE's structure and culture, taking advantage of the economic recession to restructure and internationalize GE. In the late 1980s and early 1990s, Welch launched a series of initiatives aimed at adding value and building a solid foundation for future growth at GE through restructuring, rebuilding, and establishing new opportunities for growth. Welch's leadership played a key role in GE's substantial growth and financial success between 1981 and 2000.
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GE's Jack Welch Leads Massive Turnaround
1. Strategic Management > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. <
2. GE – Organizational History Founded in 1878 by Thomson Edison “ regarded as the model of American management practices, GE was constantly undergoing change…” > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. <
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4. Q1 > How effectively did he take charge? > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. < Change Source: Bartlett, C.A., and Wozny, M. (2005). GE’s Two-Decade Transformation: Jack Welch’s Leadership, Harvard Business Publishing . 1961 1981 Growth Sales 4,667 27,240 484% Profit 432 2,447 467% Net earnings 238 1,652 593% Cap Mkt 6283 13,073 108% US 523 2’708 418%
5. Q2 > What is Welch's objective in the series of initiatives he launches in the late 80's and early 90's? What is he trying to achieve in the round of changes he put in motion in that period? > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. < Objective: ADD Value & Build Solid Ground for future growth
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12. … THANK YOU FOR YOUR ATTENTION… > Morgan DELASSUS, Humberto GARCIA, Rebecca SIGUIER, < > Fabien VACHER, Arnie VAN GROESEN. <
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Notes de l'éditeur
Change D Put 1981 – in a different color!
Predecessor: Reg Jones A legend Change Initiative Made GE grow Complex Structure Recession: US economy High interest rate High unemployment rate Low purchasing power
ADD CAPABILITIES Restructuring phase (1981-1988): the hardware #1 or #2 objective, means become the 1st of 2nd competitor of the industry or disengage 3 circle concept (to be explained) W adomnition Fix, Sell, or Close uncompetitive business gain capital by selling some businesses (200 units = 11 billion) allows investment in profitable other businesses (370 units = 21 billion) Destaffing process: 50% reduction of 200-person strategic planning staff reduce the number of hierachical levels (sector level) Replace strategic planning system by real time planning Strategy playbook
Goal = growth, market shares, money Objective = Build solid ground thru people for future growth and profit Stages he went thru : SOFTWARE = people and culture (work out and best practices)
Triangle diagram = structure (save money & portfolio management) > people () > culture () Why choose this change process? What is the process? 1. Restructuring = hardware 2. Rebuilding people, culture = software initiatives, going global, developing leaders 3. Growing more = stretch goals, boundarylessness, knowledge transfer, services Why? Need money for investment and recession Establishing foundations New opportunities
Critics Multi businesses break up Portfolio seulement PORTFOLIO MANAGEMENT + ADDING VALUE Doing the right thing and improving Fit thru innovation Envisoning = have a common strategy, vision Coaching and facilitating Intervening = portfolio Ways of not adding value: Adding management costs Adding bureaucratic complexity Obscuring financial performance
People: - Building: Recruiting, Developing, Assessing, Laying-off. - Linking: Glocal management. - Bonding: Leadership, Bottom-up. - New varsity team. - A players & 4 E's (firing bad performers). - Training (best practices, etc.). All added value, focused to one or many aspects of the company (S, P, C)
“ Barely hierarchised“ Strong leadership & personality Growth & profits Organisational processes Culture: Better than the best Conglomerate Long term vision (Ex: business evaluation, employee appraisal)
Cognitive obstacle key people, clear message and sticks Resource obstacle freed up cash, invested in new profitable businesses (services) Motivation obstacle short hierarchy, rewards/compensation package, & did better than focusing on key ppl (focused on a bigger base Political obstacle 4 type of leader (p8), those who didn't share the values were not hired/ were fired.
Cognitive obstacle key people, clear message and sticks Resource obstacle freed up cash, invested in new profitable businesses (services) Motivation obstacle short hierarchy, rewards/compensation package, & did better than focusing on key ppl (focused on a bigger base Political obstacle 4 type of leader (p8), those who didn't share the values were not hired/ were fired.