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NEUTRON JACK HOW JACK WELCH TRANSFORMED GE ORGANIZATION DESIGN AND CHANGE

TANMAY AGARWAL ARCHIT SHUKLA DAMAN AGGARWAL PRERAK GOEL SAURABH MISHRA SUDIPTO GHOSH

12P008 12P011 12P017 12P035 12P044 12P054

CONTENTS GENERAL ELECTRIC - HISTORY JACK WELCH – HUMBLE ORIGINS TO CEO GE’S CHALLENGES – 1980S

JACK WELCH’S VISION INITIATIVES CONTROVERSIES

GENERAL ELECTRIC - HISTORY 1889 Pre 1889, Edison had multiple business interests In 1889, Drexel, Morgan & Co., a company founded by J.P. Morgan financed Edison’s research and helped merging these interests under one corporation to form Edison General Electric Company In 1892 General Electric was formed by merger of Edison General Electric and Thomson-Houston Electric Company

GENERAL ELECTRIC - HISTORY Till 1950s In 1896, listed on Dow Jones Industrial Average In 1919 ,Radio Corporation of America (RCA) formed by General Electric and American Telephone & Telegraph GE Plastics started in 1930 to study advanced plastics

WW2 started the initiation of the company into Air Engines

GENERAL ELECTRIC - HISTORY 1970s REG JONES ERA The corporation is divided into Strategic Business Units 10 groups, 46 divisions, 190 departments, and 43 strategic business units Healthy Relationship between GE and US Government Expansion into Overseas Markets Sales more than doubled ($10 billion to $22 billion) and earnings grew even faster ($572 million to $1.4 billion)

JACK WELCH: HUMBLE ORIGINS TO CEO

EARLY YEARS

JOINING GE

RISE TO CEO

•Born in Salem, Massachusetts,1935 •BS in Chemical Engineering,1957 •MS and PhD in Chemical Engineering,1960

•Joins GE as a Chemical Engineer,1960 •Unhappy with the bureaucracy •Wants to quit but is pursuaded to stay

•Extensive mentoring from Reuben Gutoff •Rises exponentially from within the ranks •Youngest Chairman and CEO, 1981

GE’S CHALLENGES – 1980 1980 EXTERNAL CHALLENGES: Deepest Recession since 1929 Rising Interest Rates Increasing Unemployment INTERNAL CHALLENGES Creaking Organizational Structure Welch’s abrasive working style Antipathy towards existing hierarchy and top management Presences across various segments – market laggards in many

Blue line is Percent Change From Preceding Period in Real Gross Domestic Product Red line is Average GDP growth 1947–2009

JACK WELCH’S VISION

ENTREPRENEURIAL

LEADERSHIP

“A decade from now, I would like General Electric to be perceived as a Unique, High-Sprited, Entrepreneurial enterprise”

PROFITABLE

GE FOR THE FUTURE

“ The most profitable, highly diversified company on the Earth , with world quality leadership in every one of its product lines” -- Jack Welch

INITIATIVES : FIRST WAVE 1981-85 Create a new vision and strategy to drive reorganization, mass dismissals, divestments and acquisitions. • Reorganized the businesses into Core Business, Hi-Tech Business, Service. “Be First or Second, If NOT, you are OUT ! ”

FIRST WAVE

• Regrouped the 65 SBUs into 13 businesses, which he managed directly. • Carried his message to the field and met formally and informally with employees of all ranks

INITIATIVES : SECOND WAVE 1985-96 Revolutionize GE to gain the strengths of a big company with the leanness and agility of a small company

• “WORK OUT”

SECOND WAVE FIRST WAVE

• “INCREASE PRODUCTIVITY” • “GO GLOBAL” • “LEADERSHIP FOR THE FUTURE”

INITIATIVES : SECOND WAVE 1985-96

WORK OUT

PRODUCTIVITY

• Make suggestions to your boss • Have to be able to get a response – on the spot if possible

• Flattening of Org Pyramid from 8 to 4 levels • Reward system based on bonuses

GLOBAL

• Dedicated person - Paulo Fresco as Head international Operations • Tie Ups with Toshiba, Robert Bosch. Acquired Sovac , the French Consumer credit Company

LEADERS

• Leaders aligned to GE’s Vision,360 degree feedback • Focus changed to conquer markets rather than securing long term position within the company

INITIATIVES : THIRD WAVE 1996-2000 Develop an integrated, boundary-less, stretched, total quality company with A-players. • “SELECTING LEADERS” THIRD WAVE

• “BOUNDARY LESS BEHAIVIOUR” • “SIX SIGMA” • “4E’s Principles”

• “E-Business”

INITIATIVES : THIRD WAVE 1996-2000

INITIATIVES : THIRD WAVE 1996-2000 BOUNDARY LESS BEHAIVIOUR

SIX SIGMA

4 E’s

• No distinction between foreign markets to domestic markets • Best practices to be leveraged from across regions

• Outlined in 1996 by Welch as a target to be achieved by 2000 • Extensive training and mentoring programme • Tied 40% bonus to implementation of Six Sigma • “A” players – People with Vision, Leadership, Energy, Courage • "Energy" , Ability to "Energize" others , "Edge" - the ability to make tough calls , "Execution"- the consistent ability to turn vision into results.

• GE was a late entrant to the Internet boom • Each business unit had a destroyyourbusiness.com team to redefine itself E-Business • Billions of Dollars spent by GE to achieve traction

GE’S MOVING AHEAD – UNDER JACK WELCH 1990s

CONTROVERSIES • Welch’s firing spree in the 1980s might have had a negative impact in terms of hyper competition, impact on family life, team work skills. • Tying of bonuses to Six-Sigma meant that allegedly, some managers fudged numbers to claim success in implementation • The policy and practice at GE has always been no employment contracts. But in 1996, five years before his retirement, Welch negotiated a contract that included an extremely generous, even lavish, package of life-long, post retirement benefits.

THANK YOU !

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