GE Jack Welch

					Jack Welch‟s Leadership
     Rebecca Brosseau
       Krystal Castillo
      Meekash Masters
        Crystal Miles
        Carrie Mizell
         Diego Sole
     Bryan Witherspoon
“Be courageous. I have seen many
 depressions in business. Always
America has emerged from these
stronger and more prosperous. Be
brave as your fathers before you.
    Have faith! Go forward.”

        - Thomas Edison
                     GE Background
• GE was formed by the 1892 merger of
  Edison General Electric and Thomson-
  Houston Company
• HQ in Fairfield, Connecticut
• Ranked as the world‟s largest company by
  Forbes in 2009
• 323,000 employees
• Appliances           • Power Generation
• Aviation             • Electric Motors
• Lighting             • Wind Turbines
• Locomotives          • Medical Imaging &
• Entertainment          Technology
   – TV                • Water
   – Motion Pictures   • Oil & Gas
• Finance              • Security

History of change and leading edge
management practices
• 1930‟s – Very centralized and tightly
• 1950‟s – Delegation & Decentralization
• 1970‟s – Strategic Business Units (43)
  to facilitate strategic planning
                               Wave 1
                        “Neutron Jack”
• April 1981, John
  Francis Welch Jr.
  became CEO of GE
• U.S. Economy in
• High Inflation
• High Interest Rates
• Highest
  Unemployment Rate
  since Depression
                                 Wave 1
                   Restructuring 81 - 86
• Fix, Sell, or Close
• 3 Circle Concept
   – Core - “reinvesting in        Services
     productivity & quality”
   – High-technology - “stay
     on leading edge”
   – Services - “add                     High-
     outstanding people and     Core
     make contiguous
• Flattening the Organization
   – 28% Reduction in Staff
                              Wave 2
                           Late 1980s
    “Second Stage of the Rocket”
• Restructuring complete
• Getting past the Neutron-Jack image
• New objectives - “Software”:
  – Work-Out
  – Best Practices
• Going Global
• Developing Leaders
                             Wave 2
• To create a small company culture
  “where all felt engaged and have a
• Core elements of Welch‟s ideal
  organization -Speed, simplicity, self-
                              Wave 2
• In 1988, Welch was inspired by the
  town-hall like sessions at the
  management Development Institute.
• Welch Designated James Baughman,
  GE”s director of management
  development, to roll-out the work-out
                             Wave 2
3 Day Sessions:
• Day 1- Team leaders present a
  challenge or agenda.
• Day 2 – Employees discuss solutions.
• Day 3 – The manager listens to the
  employees‟ recommendations.
                              Wave 2
• Helps people to challenge themselves
  beyond their current performance level.
• Provided a more organized way to solve
  problems, gives more focus.
• Gives employees a sense of
  empowerment by letting their voice be
  heard by management
                          Wave 2
• Putting pressure on management
  with “on the spot” decisions.
                         Wave 2
• Increase in productivity.
• The average annual growth rate
  from 1981-1987 was 2%.
• The rate doubled to 4% between
                             Wave 2
                      Best Practices
• Increase productivity
• Learn from companies that were
  performing better than GE.
• Michael Frazier (GE‟s Business
  Development) develop the Best
  Practices plan.
• Nine companies were selected
                              Wave 2
                       Best Practices
• Developing effective processes rather
  than individual activities.
• Customer satisfaction was used as the
  main performance gauge.
• Suppliers were treated as partners.
• Emphasized the need for high quality
  new products.
                             Wave 2
                         Going Global
• 1987 - #1 or #2 applied to the world
• Trade deal w/ Thomson S.A.
• 1989 - Paulo Fresco becomes head of
  International Operations
• Many international deals were
                              Wave 2
                          Going Global
• Advantages of Economic Downturns
• Europe (1989 to 1995) – $17.5 billion
• Mexico (1995) – The peso collapsed; GE
  acquired 16 companies
• Japan (1997 – 1998) - $15 billion
• 1998 – Revenues were $42.8 billion
• Global revenues = 3 times domestic
                            Wave 2
                 Developing Leaders
• Improve the mindsets after
  downsizing and cultural initiatives
• “Jobs at GE are the best in the world
  for people willing to compete.”
• Good people are GE‟s major asset
• Crontonville facility
• Identify & develop new Leaders
                             Wave 2
                  Developing Leaders
5 key points
1. Leaders share the company‟s vision.
2. Leaders harness the power of change.
3. Look for the “Four E‟s”.
4. Confident managers.
5. Managers put customers first.
                            Wave 2
                    Human Resources
• 4 types of managers
• 360 Review Process
• The Four E‟s
  – Energy
  – Ability to energize others
  – Edge
  – Execution
• “People who are freed from the confines of their box
  on the organizational chart, whose status rests on
  real-world achievement, those are the people who
  develop the self-confidence to be simple; to share
  every bit of information available to them; to listen to
  those above; below, and around them; and then to
  move boldly.”
• “A flat-reward system is a big anchor to
  incrementalism. We want to give big rewards to
  those who do things, but without going after the
  scalps of these who reach for the big win but fail.
  Punishing failure assures that no one dares.”
                             Wave 3
                     Into the 1990‟s

• Boundary less Behavior
• Stretch: Achieving the Impossible
• Service Business
                            Wave 3
             Boundary-less Behavior
• Integrated Diversity
• New Vision for GE
  – Open anti-parochial environment,
    friendly toward the seeking and
    sharing of new ideas, regardless of
    our origins
                            Wave 3
             Boundary-less Behavior
Model Organization for GE of Best
Practices: Fisher & Paykel
• Found by managers of the Canadian GE
• More than 200 GE employees from
  Louisville went to Montreal to study it
• Quick Response program
                            Wave 3
             Boundary-less Behavior
Model Organization for GE of Best
• Quick Response Program
  – Cut US production cycle by 20%
  – GE‟s Appliance Park in Louisville became
    a “must see” for many other businesses
  – Techniques adapted for businesses as
    diverse as locomotives and jet engines
                           Wave 3
            Boundary-less Behavior
• No place at GE for adherents of old
• Changed the criteria for bonuses and
  options awards to reward idea-seeking
  and sharing, not just idea creation.
                            Wave 3
             Boundary-less Behavior
• We began to learn quickly from each
  other: productivity solutions from
  Lighting; “quick response” asset
  management from Appliances;
  transaction effectiveness from GE
  Capital; cost reduction techniques from
  Aircraft Engines; and global account
  management from plastics.
                            Wave 3
             Boundary-less Behavior
Integration Model
• Developed from hundreds of post-
  acquisition reviews
• Used to: realign the organization,
  identifying and removing “blockers” to
  implementing GE tools and programs.
                              Wave 3
                        Stretch Goals
Stretch: Achieving the Impossible
• New attack on GE cultural norms
• A reinforcement of rising managerial
• The idea of stretch to set targets
  described as “dreams with no real idea
  of how to get there”
• Budget Bonus
                                  Wave 3
                            Stretch Goals
• Mid-1990‟s: stretch goals a part of GE culture
• Don‟t punish failure concept: without it,
  stretch targets become a failure.
• “In stretching for these „impossible‟ targets,
  we learned to do things faster than if we had
  doable goals, and we have enough confidence
  now to set new stretch targets of at least
  16% operating margin and more than 10 turns
  by 1998.”
                            Wave 3
                   Service Business
Maintain Momentum
• Numerous service business
• To offset slow growth of its
  products, supplement them with
  added value services
         Wave 3
Service Business
                   Jack Welch‟s Lessons for YOU
                                Lead More, Manage Less
1. Lead                                     6. Energize Others
2. Manage Less                              7. Face Reality
3. Articulate Your Vision                   8. See Change as an Opportunity
4. Simplify                                 9. Get Good Ideas from Everywhere
5. Get Less Formal                          10. Follow Up
Build a Winning Organization                Harness Your People
11. Get Rid of Bureaucracy                  16. Harness Everyone
12. Eliminate Boundaries                    17. Make Everyone a Team Player
13. Put Values First                        18. Stretch
14. Cultivate Others                        19. Instill Confidence
15. Create Learning Culture                 20. Make Business Fun
                            Build the Market-Winning Company
21. Be Number 1 or Number 2                 24. Live Speed
22. Live Quality                            25. Behave like a Small company
23.Constantly Focus on Innovation
                            Wave 4
                 End of the Decade

• Six Sigma
• “A Players” with “Four Es”
• E-Business
                             Wave 3
                           Six Sigma
• History
• The Basics: Quality
• 1995 – Implementation: Opportunity
• GE‟s new: “Operating System”
• 1998 – 30,000 projects
• 1999 - $2 BILLION in savings
                       Wave 3
                    “A Players”
A Players      The Four E‟s
• Vision       • Energy
• Leadership   • Ability to
                 energize others
• Energy
               • Edge
• Courage
               • Execution
   Wave 3
“A Players”
                              Wave 3
                           “A Players”
“Vitality Curve”
• Employees are ranked by managers
   – Top 10% are 1‟s
   – Strong 15% are 2‟s
   – Highly valued are 3‟s
   – Borderline 15% are 4‟s
   – Least effective 10% are 5‟s
• Problems with the “Vitality Curve”
                               Wave 3
• “Change means opportunity”
• Late to the Internet Party
• Solid business foundation = easier
  transition in to e-business
                   Ch. 8 - Goals & Plans
•   Overreaching mission and vision
•   Strategic goals and plans
•   Operational goals and plans
•   Implement and monitor
                Ch. 14 - Motivation
Natural Bases of Motivation
• Personality
• Innate Needs
                 Ch. 14 - Motivation
Nurtured Bases of Motivation
• Desires for Achievement / Significance

• Desires for Equity / Justice

• Desires for Affiliation / Community

• Desires for individual / shared power
Class Discussion or
• Management, Current practices and New Directions; by: Dyck /
• The GE Work-Out; by:Dave Ulrich, Steve Kerr, and Ron
• The Jack Welch Lexicon of Leadership by Krames, Jeffrey A
• The Leadership Investment : How the World's Best
  Organizations Gain Strategic Advantage Through Leadership
  Development; by: Fulmer, Robert M.; Goldsmith, Marshall.
• The Six Sigma Handbook, by Thomas Pyzdek
• http://www.abraham-

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