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Jack Welch and the General Electric Management System

Alekhya Kotti Avineet Sadani Kartikey Maheshwari Nitin Sharma Sajani Bajaj Sugandha Sinha 12PGDM006 12PGDM014 12PGDM023 12PGDM032 12PGDM043 12PGDM056

Principal Strategic and Organizational changes introduced by Welch

Reconfiguring Business Portfolio
Focused around a limited number of sectors Retained business that held number one and number two position within their global markets Sold off its few business (Electronics, Mining, Small house hold appliances etc.) and made few major acquisitions (RCA, NBC etc.)

Changing the Structure

Eliminated several layers of management and large number of administrative positions Formation of Corporate Executive Council

Strategic Planning
Business heads to prepare a slim Playbook summarizing key strategic issues and how they intended to address them

Financial Planning and Control

Preparing set of financial objectives for each operating unit to reflect each units prospects and to reduce gamesmanship To line allow managers to propose changes to the plans and hence budgets could be subject to revision

Human Resource Management

Giving more recognition to individual contributors and higher rewards to superior performers 20%-70%-10% evaluation system adopted

Corporate Initiatives
Work-Out Boundary-less organization Globalization Six Sigma Digitization GEs Operating System

Q2:Why has the strategy, structure, and systems created by Welch been successful in delivering shareholder value and insulating GE from the fashion for breakup to which most other conglomerates succumbed?
Focused on attractive sectors which showed potential for profitability and growth. Emphasized on technology based businesses. He designed his organizational structure on the basis of trust, simplicity and informality. These factors helped in easy implementation and adoption of various corporate initiatives Capability of management to share and put into action the best ideas and practices from different verticals of the company.(Concept of Boundary less organization) Change in structure helped in giving more exposure to managers and this helped in promoting new business ideas and processes The delayering also helped in becoming flexible and responsive The new structure has been able to create an effective internal market for financial as well as human resources.

Theory of Management
Organizational Transformation Developing general management capabilities Succession of initiatives Financial Planning & Control Performance driven culture Portfolio Planning Models

Q4: To what extent should other large, diversified corporations imitate the management systems and leadership style developed by Welch at GE?
Getting inspired can be the best option but not imitating. Also depends on the personality of the head. Even initially Welch himself focussed around a limited number of sectors Delayering/ empowering employees at times can backfire Confusion Duplicacy etc Maintaining simplicity and constant of stretching of goals Creating a more learning and open culture But the large diversified corporations can focus on a particular capabilities and disinvest the unrelated portfolios , like Welch did by focusing on technology-based business and service business ; while selling off mining interests , radio stations etc.