Q.2 What is Welch s objective in the series of initiatives he launched in the late 1980s and early 1990s?

What is he trying to achieve? Is there logic or rationale supporting the change process? If so, what is it?

1950 was an era of highly centralized and tightly controlled corporate form, by 1950 GE had delegated responsibility to hundreds of department managers leading a trend towards greater decentralized organization. The earlier predecessor Reg Jones bought strategic planning in an art form was unable to keep up with reviewing and approving massive volumes of info generated by 43 strategic plans.

Early 1980 s
1. Welch s objective was to make the business no. 1 or no. 2 and then elaborated the objective into a three circle concepts. Business was categorized as core with the priority of investing in productivity and quality, high Technology with the purpose of having an edge over competitors and add outstanding people and to make contiguous acquisition 2. Many businesses were sold. The money which was collected through sales was invested in acquisition. The purpose was to make the company more lean and agile Laborious strategic planning system was scrapped and instead real time planning system was bought Hierarchy was removed and confined to four levels. Direct reporting made for him things easier & to understand the data. By cutting the jobs effectiveness was increased and this resulted in increase in profit

Late 1980 s
Introduction of GE Norm- approach based on openness, candor and facing reality. This was done to bring speed, simplicity and self confidence. WORK OUTA forum for the employees for discussion. To remove bureaucracy and to give employees a platform for discussion so that they feel engaged and everyone has a voice. They can also get immediate responses to their proposals for effective running of the businesses. This resulted in increase in productivity. BEST PRACTICES 9 Top companies were listed and common characteristics were searched. More effective processes were worked out and customer satisfaction was given maximum preferences. Suppliers were considered as partners and quality was given preferences. Many of the wrong practices were scrapped with it

Globalization Position 1 and 2 bar was now changed to global market. Earlier globalization strategy was not adopted so as to allow each business to strengthen in the field in the US Developing Leaders New strategic initiatives and organization imperatives were taken that will allow the employees to direct their emotional energy to the competitive world. Providing best training and developmental resources for personal and professional growth. This will bring the cultural changes to the individual level. Appraisal system were also redefined to help achieve the objectives, predictably adding his own intense personal style to its implementation. Stock option was also brought into compensation package and tied them with the individual performances. Outside faculty was removed by developing inside leaders at Crotonville. GE top level managers were also rated to weed out type 4 managers Later on the process was developed to rate every employee at the scale of 1 to 5 on various values of GE like team building, quality focus and vision.

Into the 1990 s

Boundary less BehaviorsFriendly towards seeking and accepting new ideas regardless of their origin. Integration model was developed from post acquisition reviews. This model guided the action of managers in any part of the company responsible for integrating a newly acquired operation. StretchStretch goals were expected to be set by the managers for the business. Those who achieved these goals were rewarded with substantial benefits or stock options. Don t punish- Failure concept was honored so as not to let down the employees. Service organizationInsite Welch introduces value added services to offset the slow growth of the products. A cadre of rising rising executives was asked to focus on the issue. Service council was setup to exchange ideas. Service initiative itself lead to a new round of acquisition Service now comes around 2/3rd of their revenue.