Transcript GE’s Two – Decade Transformation : Jack Welch’s Leadership

Revised (3 final) by Euiho Suh
Sandy Wibisono
Address: General Electric Company
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One of the world’s most admired companies, GE
World’s Most Admired Companies, 2006World’s Most Admired Companies, 2015
GE is in the list of world’s most admired companies more than 10 years
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GE net income graph
How GE can become one of the most successful companies in the world?
3
 Founded in 1878 by Thomas Edison.
 Focus on Generation , Distribution, and use of electric
power to become.
 1978 – Power Generation , household appliances,
lighting + Aircraft engines, medical systems and Diesel
Locomotives.
1960
1950
• Decentralization
• strengthen its
corporate staff
and develop
sophisticated
planning
systems
1930
• centralized
GE –a Bellwether of American Management Practices
Strategy-SBU based structure and planning processes
•
•
•
10 groups, 46 divisions, 190 departments, and 43 strategic business units
Develop a constructive business-government dialogue
Wall Street Journal proclaimed him as a “management legend”
Success
•
•
•
Sales more than doubled ($10 billion to $22 billion) and earnings grew even
faster ($572 million to $1.4 billion)
A major thrust into international markets
Expansion of world trade and restoration of U.S. competitiveness
 1935: born in Salem, Massachusetts
 1957: BS in Chemical Engineering
 1960: MS and PhD in Chemical Engineering
• 1960: Joined GE as a chemical engineer
• 1972: Elected GE’s youngest VP
• 1979: Vice Chairman
• April 1, 1981: Became the 8th Chairman and CEO
of General Electric
 Challenge form outside GE
 Economic recession
 High interest rates
 Highest unemployment rate since the depression
 Challenges from GE
 Massive information and inefficient macro-business
 “A decade from now, I would like
Services
Technology
GECC Information
Construction &
Engineering
Nuclear Services
Industrial
Electronics
Medical Systems
Material
Aerospace
Aircraft Engines
Core
Support
Ladd Petroleum
Semi Conductor
GE Trading Co.
Utah Mining
Lighting
Major Appliance
Motor
Transportation
Turbine
Construction
Equipment
Ventures
Calma
Three-Circle Vision for GE
General Electric to be perceived
as a Unique, high-spirited,
Entrepreneurial enterprise…the
most profitable, highly
diversified company on the earth,
with world quality leadership in
every one of its product lines”. -Jack Welch
Outside
Housewares
Central Air-Conditioning
TV&Audio
Cable
Mobile
Power Delivery
Radio Stations
 Challenged everyone to be “better than the best”
 Sold more than 200 businesses and made over 370
acquisitions
 Insisted GE become more “lean and agile” resulting
 Delayering: elimination of the “sector” level
 Downsizing: elimination of about 123,450 jobs
 Divestiture: elimination of an additional 122,700 jobs
 Replaced 12 of his 14 business heads
Work Out
Best
Practices
Going
Global
Developing
Leaders
Software
Iniatives
Second Wave
Boundaryless
Behavior
Service
Businesses
Six Sigma
E-Business
Third Wave
 A process designed to get unnecessary bureaucratic
work out of the system while providing a forum in
which employees and their bosses could work out new
ways of dealing with each other.
 How to increase Productivity ?
Michael Fraizer of GE’s Business Development
• They focused more on developing effective processes than controlling
individual activities.
• Customer satisfaction was their main gauge of performance.
• They treated their supplier as partners
• They emphasized the need for a constant stream of high quality new
products designed for efficient manufacturing
 1989 – appointed Paulo Fresco as head international
Operations.
 a key negotiator on the thompson swap
 Continued to broker numerous international deals
 a joint venture with German-based Robert Bosch
 a Partnership with Toshiba
 Acquisition of Sovac , the French Consumer credit Company
Loyal
Creative
Strong People
Professional
SelfConfidence
Passion for
Excellent
Aggressive
Capacity to
develop
global brain
Change
 To strengthening GE’s Individual Businesses
Integrated Diversity
Boundaryless Company
The Boundaryless
company we envision
will remove the barriers
among engineering,
manufacturing,
marketing, sales, and
customer service; it will
recognize no distinctions
between domestic and
foreign operation …..
 1990 , Welch Introduced the notion of “stretch” to set
performance targets and described it as “using dreams
to set business targets, with no real idea of how to get
there.”
 Stretch Targets did not replace traditional forecasting
and objectives-setting process.
 In 1994, Welch launched a new strategic initiative
designed to reinforce one of his earliest goals: to
reduce GE’s dependence on its traditional industrial
products.
1980
1990
1995
1998
2
15%
2
45%
1
33%
1
45%
1
55%
2
55%
2
67%
1
85%
Products
Services
 Issue
 When a 1995 Company Survey showed that GE
employees were dissatisfied with the quality of its
products and processes.
 Six Sigma (Motorola Inc and AlliedSignal)
 Improve Quality
 Lower Cost
 Increase Productivity
 1996 – Boca Raton- Welch announced a goal of
5 Months
implementation
6 weeks of
instruction in
statistic , data
analysis and
other six sigma
tools
Master Black Belts
4 weeks training
Black Belts
Green Belts
reaching Six Sigma quality levels company – wide by
the year 2000, describing the program as “the biggest
opportunity for growth, increased profitability , and
individual employee satisfaction in the history of our
company.”
Full time six
sigma
instructors –
mentored the
Black Belt
candidates
through the two
–years process
 destoryyourbusiness.com (www.dyb.com)
 “A – Players”
 Individuals with vision , leadership, energy and courage
 “4 E’s”
 Energy ,
 Ability to Energize others ,
 Edge , the ability to make tough calls
 Execution , the consistent ability to turn vision into
results.
First
Wave
Second
Wave
GE’s
Restructuring
#1 or #2 – fix, sell, or
close
1981
Third
Wave
Cultural
Changes
Work Out
Best Practices
1988
1990
Boundaryless
ness
Discussion Questions & Exam Question Candidates
■ Discussion Questions (DQ)
– 1. What was the problem of the GE corporate culture in 70s and 80s?
– 2. What were the rising problems in GE before JW ?
– 3. What did JW do to fix the problems
■ Exam Question Candidates
– 1. DQ 1 , 2, & 3
– 2. Explain each of those JW did for BI.
– 3. Why do people call JW “A Neuron bomb” ?
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