Ge - Leading in an Organization - Jack Welch

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TABLE OF CONTENTS

Section _                                                                                                PAGE

        Introduction        2

1. Teams         3

        Organization        3

        Leadership / Management Style        4

        Executive Team        4

        Best Practices        5

1. Organizational Vision          6

        Strategic Plan        6

        Vision         7

        Strategic planning Methods Not Employed         9

1. Organizational Culture         10

        Power        10

        Structure        14

        Change        14

1. Problem Solving        15

        Self-assessment        15

        Welch’s Skills and Abilities        16

        Problem Solving Tools, Strategies & Methods        17

1. Conflict Management        19

        Self-assessment        19

        Welch’s Conflict Management / Negotiation Techniques & Skills.        20

        Skills for Conflict Management and Negotiation to Emulate        21

1. Conclusion        23

        Works Cited        25

Introduction

Jack Welch saw bloated bureaucracy and a top heavy management structure as a recipe for future decline. Welch put eliminating bureaucracy, inefficient processes, and barriers to the free flow of ideas at the forefront of his agenda over the next 40 years (Jack Welch 1935-, n.d.).  

To accomplish this goal and his vision, Welch immediately began his transformation.  To take the company from a top heavy manufacturing conglomerate to a modern agile service and technology centered company.  A company dedicated to quality and equipped to quickly take advantage of opportunity and enhance shareholder value.  To accomplish this Welch made effective use of positional, personal, and political power to steer the transformation he began immediately after assuming the role of CEO.  He began with a series of closures, consolidations, divestitures, and new acquisitions designed to change the direction of GE.

First he reorganized the company’s business units, executive teams, and functional teams.  Once complete, Welch reorganized the companies culture to allow unleash the company’s greatest asset, its people.  Later in 1995 with the realization that unlocking, creativity, eliminating bureaucracy, and efficient use of capital could only go so far.  Welch decided to solve this problem and wring out the variations that caused performance to fluctuate over time through the adoption of the Six Sigma Program (Watson, 2001, P. 8).

Welch was a creative thinker and many of his problem solving and conflict management skills are derived by use of the creative process.  He was personally skilled at identifying, dissecting, and simplifying an issue and from there creating a solution or mechanism to correct the problem.

On the following pages we look at Jack Welch as he performed the transformation of GE with attention to his processes, methods, abilities, and leadership style.  We then finish with conclusions and a discussion of how this analysis can be used to further my personal leadership development.

I. Teams

Organization

In 1981 General Electric was a complex conglomerate consisting of overlaying groups of 46 divisions and 190 departments all supporting 43 business units.  Management was an autocratic top down structure consisting of 25,000 managers, 130 Vice Presidents and thousands of strategic planners resisting change and making decisions across divisions.  Welch moved quickly to reduce the bureaucracy and begin the transformation toward his vision of a lean, agile, and competitive company equipped to dominate.

Divisions were reduced through consolidation, closure and divestiture.  Forty six eventually reduced to 14 in 1986 and 12 in 2001, within three “core circles”.    These circles were lighting and locomotives, technology intensive businesses, and services (Tischy, Charan, 1989).

Strategic planning and decision making were transferred into the hands of those leading the units.  Divisions and teams were structured to consist of members from needed functional areas to facilitate efficiencies and take quick advantage of opportunities.  Units were empowered to make decisions, eliminate inefficient processes, and share best practices with other units.  The distance between upper management and the production floor was greatly reduced as he whittled down the twenty nine layers of management to nine (Byrne, 1998).  

Leadership / Management Style

Welch predominantly used a participative and consultative style of leadership.  Top down management was transformed into a bottom up system.  All employees were empowered and encouraged to share ideas question methods, and identify problems.  Welch charged his managers with soliciting and considering ideas from team members.  He led sessions that afforded managers with an open-forum, to vent their issues and concerns and encouraged candor and informality at all levels.  

Welch, promoted the concept of “boundary-less behavior”.  This meant tearing down century-old fiefdoms such as engineering, manufacturing and sales and developing cross-functional teams to solve problems and come up with new ideas (Bennot, 2008).  Unit heads reported directly to Welch and his two vice chairmen insuring direct access to the executive suite (Tischy, et.al., 1989).  While collaborative Welch always reserved the final say and if the situation required he could be authoritative in his approach.

Executive Team

While completing many of his business restructuring goals, Welch turned his focus toward organizing and optimizing his human capital.  Executives and management were placed in key places to assist his efforts to redirect overall company culture.  Managers that did not fit into or who failed to embrace his strategy were let go.  Welch looked to eliminate anything and anyone that didn’t bring value to GE.  

The Corporate Executive Council consisted of the leaders of the business units and key corporate staff.  Welch met with the CEC, in an informal environment, once a quarter to openly and candidly discuss issues and problems facing the company.  In the words of Jack Welch:   “The CEC creates a sense of trust, a sense of personal familiarity and mutual obligation at the top of the company. We consider the CEC a piece of organizational technology that is very important for our future success (Tischy, et.al., 1989).”  The council served as an informal vehicle for exchanging ideas and allowing the CEO to monitor the pulse of the company.  Welch could reinforce his vision, enhance team work, and gain buy-in from unit leaders by soliciting their input and legitimizing their concerns. While this council began on the corporate level it has since filtered down to the individual business units and become a GE best practice.