CASE ANALYSIS:

GE’S 2 DECADE
TRANSFORMATIOM
SUPRAJA B
RAJAPPAH
PRASANNA
MUNAVAR
SHRIRAM ARVIND
 WHO IS JACK
WELCH?
 John Francis "Jack" Welch Jr. (born November 19, 1935)
is an American business executive, author,
and chemical Engineer.
 He was chairman and CEO of General Electric between
1981 and 2001.
 During his tenure at GE, the company's value rose
4,000%.
 In 2006, Welch's net worth was estimated at $720
million.
 When he retired from GE he received a severance
payment of $417 million, the largest such payment in
history.
 By 1968, Welch became the vice president and head of
GE's plastics division, which at the time was a $26
million operation for GE.
 Under Welch's leadership, GE increased market value
from $12 billion in 1981 to $410 billion when he retired
EARLY PRIORITIES:
RESTRUCTURING
 After studying Welch for some time, it is clear that
his approach to business improvement has gone
through three cycles of learning:
 In the first cycle (early 1980s to late 1980s) he
focused GE on the elimination of variety in its
portfolio of businesses by reducing the
nonperforming business units as judged by market
performance.
 During a subsequent learning cycle (late 1980s to
mid-1990s), Welch focused the company on
simplifying and eliminating nonvalue-added
activities through creative efforts of teams using
Work-Outs and the Change Action Process (currently
called the Change Acceleration Process).
 In 1995, Welch discovered Six Sigma and studied its
implementation at both Motorola and Allied Signal.
This third phase of discovery focused on the
elimination of variation from already lean business
operations to drive gains in productivity and
financial performance.
 SERIES OF
INITIATIVES
FIRST STAGE OF ROCKET:
#1 OR #2: FIX, SELL OR CLOSE:

 Fix: If the business has a good product, then maybe

the problem is with the cost structure or the
marketing. Fixing those may keep the business alive.
 Sell: If the business problems are too big or too
expensive to fix, then maybe selling the business is the
best option. Obviously, if the business is that broken,
you are not likely to get a good price. But getting out
at any price may be better than throwing additional
money on a business that may never get better.
 Close: If the business is broken and it will take too
much effort to fix and no one wants to buy it, then
closing the business becomes the next obvious option.
Declaring bankruptcy and selling off any parts of the
company that someone may want to buy is the final
way to stop the losses.
 If the business is broken, one of those 3 things has to
be done. so in that respect, the solutions are
universal.
 SERIES OF
INITIATIVES
SECOND STAGE OF ROCKET:
WORK OUT AND BEST PRACTICES
 To get unnecessary bureaucratic work out of the
system.
 Forum in which employees and their bosses could work
out
 New ways of dealing with each other.
 Groups of 40-100 employees were invited to share
views about the business and how it can be improved.
 3-Day session, there was no documentation of meeting.
 This resulted in birth of a movement called “Best
Practices”
 Competitive Intelligence[best practices of Ford, HP,
Xerox, Toshiba].
 Through best practices realization by managers that
they were measuring/managing wrong things.
 GLOBALIZATION
 “It is very difficult to jump into the world arena
if you don’t have a solid base at home, but once
the solid base was created, we really took the
long jump” – Paulo Fresco, GE Europe President
 Globalization not a one time effort but an
ongoing theme.
 $17.5 billion invested in from 1989-1995,on new
plants, acquisitions and finance (Adding value)
 Welch urged its managers to view this as an
opportunity to buy rather than a problem.
 “I Own the People” => good people were GE’s
key assets and are company's resource.
 Introduced 360 degree feedback process.
 SERIES OF
INITIATIVES
THIRD STAGE OF ROCKET:
BOUNDARY-LESS COMPANY
 Ideas free to flow, No distinction between
foreign and domestic markets.
 Best practices can be leveraged by
boundaryless behavior.
 Adopted Fisher & Paykel – Job-Shop
techniques in their appliance business.
 GE’s appliance Park “must see” destination
for other businesses.
WELCH’S IMPORTANCE TO GE SUCCESS
THANK YOU