Hannah Hurst

BUS 497A

12/6/22

When you are running a business and you are hitting a wall, your first instinct is to find a

solution. That is easier said than done;however, Jack Welch saw something in the company that

no one else did. His vision was for General Electric to be better than the best, and he knew

exactly how to acquire that goal. This analysis will explain the way Jack Welch’s mind works,

and how other companies will be able to accomplish the same successes in their own product

lines.

A business can sound successful on paper, but the inner core might be rotten. Jack

Welch’s plan was to revamp General Electric from the inside out. He was very adamant to hit

every important factor, which were: the most profit-making, highly variegated amongst all

companies across the world, and top of the line leadership throughout their products and

services. Welch’s motivation for the company was if you are not where you would like to be,

figure out what is needed to get there, and put it into action. Welch made his first step in

revamping the company in 1983 when he developed the “Three Circle Concept” which divided

all businesses into three categories: Core, High Technology, and Service areas. Instead of

worrying about every competitor, he compressed his focus to the businesses that control their

markets;however, exclusively 15 businesses.

Welch wanted to rebuild the company by reinvesting in acquisitions and large R&D

investments to gain productivity and quality. By investing in building the company through

implementing excellent people that can produce novel ventures, along with obtaining

acquisitions that aligned with their product lines. Welch’s drive to improve General Electric
inside and out derives from four simple questions that create a comprehensive strategy to fix a

company. The four simple questions are: “what we are,where we are not,where we can’t find a

solution and where we have to disengage”. Welch mentions that the word disengage has a bad

connotation of horrible management or horrible people, when it is just a key step needed when

put in a bad situation.

From 1980 to 1984, General Electric were stereotyped as “mean” due to Welch’s

implementation of destaffing. During this time the workforce across the company decreased

from 402,000 to 333,000. This was implemented because Welch believed that for a GE of a

company to be competitive, they had to become and stay “lean and agile”. This required a

custom review of each business’s key issues versus the common focus of “comprehensive

strategic documentation or planning concepts”. To stay competitive the focus might have been to

become “lean and agile” by focusing on each business as its own;however, Welch’s purpose of

this was to cut out the communication between planners, and create communication and

relationships between general managers to decipher the best strategy.

While the total workforce was being depleted for good reason, Welch did not slow down

on the acquisition side of General Electric. Between 1981 and 1990, over 370 business deals had

been finalized, and General Electric had sold over 200 businesses. This allowed for the GE’s to

be able to invest in over $17 billion within acquisitions and obtained over $9 billion from

divesting. Selling those businesses made up 25% of sales in 1980. The question still remains of,

why did Jack Welch want to invest his entire self into fixing General Electric. He wanted to pave

the path for current and future businesses by starting with General Electric. A path that aided

being able to know the first steps in repairing a company;however, it had to be easily understood

across the company.