Ge's Two-Decade Transformation: Jack Welch's Leadership

Case Analysis: GE's Two-Decade Transformation: Jack Welch's Leadership

Presented by:

Enrique Quijano

Management 320 class

As CEO of General Electric, Jack Welch became in an icon for the company, his management skills became a legend distinguished by little tolerance for bureaucracy and old fashion business processes. He acquired new businesses and give them the same importance.

In 1982 Welch entered to General Electric as a CEO and found a decentralized business structure that generated additional work and little visibility, but with these the expected results were achieved.
Welch's first strategy was be the number 1 or number 2 in the business model, otherwise the business will close. During this time, there were a high unemployment rate, an environment of economic recession and strong attack by Japanese competitors.

Over the years General Electric diversified its activities incorporating the assembly of aviation engines and diesel locomotives and activities in the medical systems, but being inverse in all these activities in the 30s the company needed to be centralized and controlled. Already in the 50s, the delegation of responsibilities was changed (with this, they eradicated centralization), this change had to be phased out by the strategic planning management system, which involves a great effort for which General Electric, at the time , was cataloged as a leading and sophisticated industrial company in the world.

On the other hand, this case mentions two important characters for General Electric: Reg Jones and Welch, both CEOs. The first delivers important changes when the company had just completed a major reorganization seeking to support strategic planning, which was fundamental in the management process of General Electric. This action turned the company into a reference for others that imitated its structure, but it also generated a lot of work for its creator (Reg Jones), since he had to supervise too many strategic plans.

Thus, in 1981 Welch takes over Jones and decides to close or sell those businesses that are not pioneers within the company, dismisses a large number of workers because there were many unnecessary jobs generated by the bureaucracy of the environment.
It began to involve each worker more, to ask them: How can I add value to what I do? This is how the dismissals continued in all areas, and this measure was applied even to those responsible for each deal. Such is the case, that he forms a Select Team made up of executives with a strongly compromise with a new management values and willing to disrupt the old culture and tactics and, above all, people able to take charge and make changes a reality.

As another measure in the year 1988 creates two group called "Work-out" and "Best Practices", basically in the first was a meeting in which all workers attended and they recounted the difficulties they faced in their performance of activities in the company and offered ideas on how to improve and correct these problems. The second group was a replica of the first, unlike the purpose of this was to increase productivity.

Following the success of the previous programs, Welch set out to change the mentality of workers through the "development of leaders" program, which worked in Crontoville. The program consisted in the development of a generation of leaders aligned with the new vision and cultural norms of General Electric.