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Case Analysis: GE’s Two-Decade Transformation- Jack

Welch’s Leadership
Welch Transformation Framework- Business Simplification &
Portfolio Planning:
1. Welch set the standard for each business to become the” #1 or #2
competitor” in its industry- or to disengage. Businesses having low
potential or weak competitive position were sold, which helped
company to make major acquisitions.
2. ‘Three circle concept’ for categorizing businesses:
A. Core( priority is reinvesting in productivity and quality)
B. High Technology(“stay on the leading edge” by investing in R&D)
C. Services(add outstanding people and make continuous
It set clear priorities for businesses and helped them to plan the future
3. The company did major acquisitions of $21 billion and major
divestitures of $11 billion.
The prime focus was on becoming industry leader in growing industries
like medical equipment, container leasing etc.
4. By providing products with added-value services, GE became a service
oriented company, with services adding 75% of its total revenues. It
could build an ecosystem around its products, which gave it an edge
over competitors.
5. The company started focusing on products and services having high
profit margins, which meant better return on assets.
6. There was no imposition on corporate globalization strategy on
businesses, each business was responsible for implementing a plan
appropriate for its needs. This decentralized approach on globalization
meant that company was thinking global but acting local.
Strategy Playbooks:
The removal of lengthy processes made them to have focus on the right
businesses and also very efficient decision making process.
Also this process has a probability of over sighting a few factors as it involves
quick decision processing

“stretch” goals for their businesses. As company had a vision of becoming lean and agile. Those who achieved stretch goals were rewarded with bonuses or stock options.employees graded by manager. Adopting best practices from leading companies and small companies at the same time helped GE to improve its practices and make them more efficient. Managers had to set higher. this process may increase their belief in the leadership and might have a positive effect on stock price. as per below table: Ra nk 1 2 3 4 5 Rating Category Reward Top 10% 15% 50% 15% Bottom 10% Top Strong Highly valued Borderline Least Effective Stock Options Stock Options Training Improve or Move Weed Out 2. 360 degree feedback process. Performance Management: 1. Work outs and Best Practices: Work outs helped company to get unnecessary bureaucratic work out of the system and devise new ways of employees and their bosses work style. It created an atmosphere of thinking beyond their basic targets. Huge layoffs also create negative impression on the employer as it creates a lot of insecurity among employees who are working and also who are aspiring to become a part of the company Coming to investor sentiments. 40% of individual bonuses tied to their Six Sigma objectives. Performance appraisal system. 5. peers and subordinates. 4.Delayering: Mr. though they have no complete power on them. . Welch eliminated sector level which used to be the powerful center of strategic control This actually creates a lot of problem to middle level managers as they have to communicate the corporate strategy to lower level employees and should try to get the work done. 3.

2. Execution. which had following charateristics: A. 6. vision and future roadmap. Learnings from Case: 1. so that disruption risks due to some implementation failures are minimized. 4. Businesses that transform themselves can sustain in long run. market share. There should be continuous evaluation of company performance in terms of its financials. Ability to energise others C. We also feel that all the major company transformation activities should be carried out phase -wise. Adopt the best practices and be open to new ideas. 5. Welch urged managers to expand their efforts in “globalizing the intellect of the company” and upgrade the quality of their existing employees 7. 4. 3. Edge. those who had wrong values were removed from GE. Energy B. Also. development and succession planning reviews known as ‘Session C’ 2. . Companies should focus on making a product and service portfolio which make them industry leader and not just another market player. He characterized leaders on the basis of commitment and values. Leadership Creation: 1. as it cut costs to company. 7. 3. GE created and maintained a leadership pipeline which was always ready to take new challenges and perform in a boundary less fashion with commitment and confidence. Be lean and agile. Welch introduced real time challenges to the future leaders in his sessions at Crotonville and shared his vision with future leaders. There should be clear communication of company's vision. mission and strategies to all employees. GE’s Crotonville management development facility dedicated to develop a generation of leaders aligned to GE’s new vision and culture norms. 5.consistent ability to turn vision into results 6.ability to make tough calls when needed D. Top executives committed to rigorous management appraisal. GE was described as a company that wanted only A players. transformation strategy depends on type of organization and its industry.GE made sure that performance benchmarks were achieved by employees while carrying out their tasks.

8. leadership creation demands focus and the best leaning resources of a company. So. . Leadership can either make or break a company.