JACK WELCH- CASE PRESENTATION

GENERAL ELECTRIC
Founded in 1878 by Thomas Edison Generation, distribution, and use of electric power 1978 the company diversified to aircraft engines, medical systems, and diesel locomotives Reg Jones became CEO in 1973 In 1977 he capped GE's departments, divisions, groups, and SBUs with a new organizational layer of sectors, representing macro business agglomerations such as consumer products, power systems, or technical products.

JACK WELCH
Welch became CEO in April 1981 Restructuring of GE Fix, Sell or Close

MAJOR ACQUISITIONS
MAJOR ACQUISITIONS($21 Billion Total) Calma (CAD/CAM equipment) Intersil (semiconductors) Employers Reinsurance Corp. Decimus (computer leasing) RCA (NBC Television, aerospace, electronics) Kidder, Peabody (investment banking) Polaris (aircraft leasing) Genstar (container leasing) Thomson/CGR (medical equipment) Gelco (portable building leasing) Borg-Warner Chemicals (plastics) Montgomery Ward Credit (credit cards) Roper (appliances) Penske Leasing (truck leasing) Financial Guaranty Insurance Co. Thungsram (light bulbs) Burton Group Financial Services Travelers Mortgage (mortgage services) Thorn Lighting (light bulbs) Financial News Network (cable network) Chase Manhattan Leasing

200 business were sold 370 business were taken over

RESTRUCTURING
Downsizing, destaffing, and delayering in GE. GE eliminated 59,290 salaried and 64,160 hourly positions between 1981 and 1988. Divestiture eliminated an additional 122,700. Even when offset by the acquisitions, the number of employees at GE declined from 404,000 in 1980 to 330,000 by 1984 and 292,000 by 1989.

1980- SECOND STAGE ROCKET

Software Initiatives "A company can boost productivity by restructuring, removing bureaucracy, and downsizing, but it cannot sustain high productivity without cultural change. Work Out Remove unnecessary bureaucratic work & providing a forum to work out new ways

BEST PRACTICES
Michael Frazier of GE's Business Development department Characteristics of Successful Companies developing effective processes than controlling individual activities; customer satisfaction was main gauge of performance; Treated their suppliers as partners; Constant stream of high-quality new products designed for efficient manufacturing.

"We should have focused more on how things get done than on just what got done.

GOING GLOBAL
Internationalization arena "It's very difficult to jump into the world arena if you don't have a solid base at home." 1989 Welch appointed Paolo Fresco as head of International Operations Converted economic uncertainty into business opportunity

DEVELOPING LEADERS
Implementation of global thrust and new cultural initiatives Focusing on the realignment of skill sets Redefining the implicit contract
Psychological contract Kind of loyalty Focus people inward Need to focus outward

Deeply committed towards developing people Broad cultural changes

Individual level Establishing the human resource to the goals Session C

REVIEWING SESSION
Progress of the company's top 3,000 executives Close attention on the upper 500 Exposed to high potential managers presenting results on major projects Top executive Identify the future leaders Outline development plans Succession plans Good people are key assets I own the people You just rent them Feedback Professional level employees Managers Coaching Developing staff

COMPENSATION PACKAGE
Narrow increase
Base salary

Bonuses Stock options Primary component

Expanding the option recipients(300 to 30,000) Bonus awards

To create a best environment

CORPORATE INITIATIVES
Develop generation of leaders GEs new vision Cultural norms Training center Discussion leaders Results oriented action

CHARACTERIZATION OF LEADERS
Delivers on commitments and shares values of the company Misses commitments but share values Does not meet commitments and does not share values Delivers commitments but doesnt share values

360 FEEDBACK PROCESS

Graded by Manager peers Subordinates Identifying
Training needs Coaching opportunities Career planning

Powerful tool smile up and kick down

THIRD WAVE (1990)

Entering the 1990s, Welch felt that GE's new foundation had been laid. Despite the slowdown in the industrial sector in the first few years of the new decade. Committed to the task of rebuilding the company at an even more urgent pace.

BOUNDARYLESS BEHAVIOR
Integrated diversity "open, anti parochial environment, friendly toward the seeking and sharing of new ideas, regardless of their origins" A boundary less organization will ignore or erase group labels such as "management," "salaried," or "hourly," which get in the way of people working together.

ACHIEVING THE IMPOSSIBLE

"using dreams to set business targets, with no real idea of how to get there. Stretch goals were an established part of an GEs culture. Get people to think of fundamentally better ways of performing their work.

SERVICES BUSINESS
Launch of a new initiative To reduce GE's dependence on traditional industrial products Initial tilt towards service businesses Acquisition of financial service companies

PUSH FOR PRODUCT SERVICES

Participation in the food chain High-quality hardware Focusing on the issue Future challenge
Offset slow growth Value added services Cadre of rising executives Services Council

Biggest growth opportunities in [GE's] history

EXPLORING NEW GROWTH OPPORTUNITIES

Medical business In Site ( Real time diagnostic concepts) Aircraft engines Monitored by GE Service experts GE's power systems

OPPORTUNITY FOR GROWTH IN PRODUCT SERVICES

Unlimited growth Strong platform 9,000 GE commercial jet engines 10,000 turbines 13,000 locomotives 84,000 medical diagnostic imaging equipment

$8 BILLION EQUIPMENT SERVICES BUSINESS

Growth Changing internal mindsets Selling products Helping our customers to win. Making customers' existing assets more productive Helping customers reduce their capital outlays New round of acquisitions 1997 - 20 service-related acquisitions and joint ventures

Closing Out the Decade Welch's Final Chapter

Company Name

SIX SIGMA QUALITY INITIATIVE

Dissatisfaction of employees Meeting with Lawrence Bossidy, an old friend Study of the impact of quality programs at companies Defining the goals of six sigma

SIX SIGMA
Green Belt -improving quality Black Belts -instruction in statistics, data analysis, and other Six Sigma tools Master Black Belts

 Return on investment They have begun to change the DNA of GE to one whose central strand is quality -Jack Welch

A PLAYERS WITH FOUR ES

4 Es Energy - excited by ideas and attracted to turbulence because of the opportunity it brings Energize others - infecting everyone with their enthusiasm for an idea and having everyone reaming the same big dreams Edge- the ability to make tough calls Execution -the consistent ability to turn vision into results

COMPANY TO BE AN A PLAYER
These are his words to upgrade the quality of their existing employees:

We're an A plus company. We want only A players. We can get anyone we want. Shame on any of you who aren't facing into your less than the best. Take care of your best. Reward them. Promote them. Pay them well. Give them a lot of [stock] options and don't spend all that time trying to work plans to get Cs to be Bs. Move them on out early. It's a contribution.

ONE MORE INITIATIVE

He launched a major program "destroyyourbusiness.com The team focused on the challenge of redefining its business model through e-commerce "Change means opportunity," he said. "And this is our greatest opportunity yet."