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Sandy Wibisono
GE’s Two – Decade Transformation : Jack Welch’s
Leadership
Address: General Electric CompanyInternet Registrations3135 Easton TurnpikeFairfield, CT 06828-0001USA
Founded in 1878 by Thomas Edison.Focus on Generation , Distribution, and use of
electric power to become. 1978 – Power Generation , household
appliances, lighting + Aircraft engines, medical systems and Diesel Locomotives.
Introduction
Introduction
1930• centrali
zed
1950• Decentr
alization
1960• strength
en its corporate staff and develop sophisticated planning systemsGE –a Bellwether of American Management
Practices
Reg Jones – 1970’s
Strategy-SBU based structure and planning processes
• 10 groups, 46 divisions, 190 departments, and 43 strategic business units
• Develop a constructive business-government dialogue • Wall Street Journal proclaimed him as a “management legend”
Success• Sales more than doubled ($10 billion to $22 billion) and earnings
grew even faster ($572 million to $1.4 billion)• A major thrust into international markets• Expansion of world trade and restoration of U.S.
competitiveness
Jack Welch (1981 – 2001)1935: born in Salem, Massachusetts1957: BS in Chemical Engineering1960: MS and PhD in Chemical Engineering• 1960: Joined GE as a chemical engineer• 1972: Elected GE’s youngest VP• 1979: Vice Chairman• April 1, 1981: Became the 8th Chairman and CEO of General Electric
Challenge form outside GEEconomic recessionHigh interest ratesHighest unemployment rate since the depression
Challenges from GE Massive information and inefficient macro-business
challenges in 1981
“A decade from now, I would like General Electric to be perceived as a Unique, high-spirited, Entrepreneurial enterprise…the most profitable, highly diversified company on the earth, with world quality leadership in every one of its product lines”. -- Jack Welch
Welch's VissionServices
GECC Information
Construction & Engineering
Nuclear Services
Technology
Industrial Electronics
Medical SystemsMaterial
AerospaceAircraft Engines
Core
LightingMajor Appliance
Motor Transportation
Turbine ConstructionEquipment
SupportLadd PetroleumSemi ConductorGE Trading Co.Utah Mining
VenturesCalma
OutsideHousewaresCentral Air-ConditioningTV&AudioCableMobilePower DeliveryRadio Stations
Three-Circle Vision for GE
Challenged everyone to be “better than the best”Sold more than 200 businesses and made over
370 acquisitionsInsisted GE become more “lean and agile”
resulting Delayering: elimination of the “sector” level Downsizing: elimination of about 123,450 jobs Divestiture: elimination of an additional 122,700 jobs
Replaced 12 of his 14 business heads
“Restructuring the Hard Drive”
Iniatives - Objective
Work Out
Best Practices
Going Global
Developing Leaders
Second Wave
Software Iniatives
A process designed to get unnecessary bureaucratic work out of the system while providing a forum in which employees and their bosses could work out new ways of dealing with each other.
Work Out
How to increase Productivity ?
Best Practices
Michael Fraizer of GE’s Business Development
• They focused more on developing effective processes than controlling individual activities.• Customer satisfaction was their main gauge of performance.• They treated their supplier as partners• They emphasized the need for a constant stream of high quality new products designed for efficient manufacturing
1989 – appointed Paulo Fresco as head international Operations.
Going Global
a key negotiator on the thompson swap Continued to broker numerous international deals a joint venture with German-based Robert Bosch a Partnership with Toshiba Acquisition of Sovac , the French Consumer credit Company
Loyal Creative
Strong People
Professional
Self-Confidence
Passion for Excellent
Aggressive
Capacity to develop
global brainChange
Developing Leaders
To strengthening GE’s Individual Businesses
Boundaryless Behavior
Integrated Diversity
Boundaryless Company
The Boundaryless company we envision
will remove the barriers among
engineering, manufacturing,
marketing, sales, and customer service; it will recognize no
distinctions between domestic and foreign
operation …..
1990 , Welch Introduced the notion of “stretch” to set performance targets and described it as “using dreams to set business targets, with no real idea of how to get there.”
Stretch Targets did not replace traditional forecasting and objectives-setting process.
Stretch : Achieving the Impossible
In 1994, Welch launched a new strategic initiative designed to reinforce one of his earliest goals: to reduce GE’s dependence on its traditional industrial products.
Service Business
185%
215%
1980
155%
245%
1990
145%
255%
1995
133%
267%
1998
Products Services
Issue When a 1995 Company Survey showed that GE
employees were dissatisfied with the quality of its products and processes.
Six Sigma (Motorola Inc and AlliedSignal)Improve QualityLower CostIncrease Productivity
Six Sigma Quality Initiative
1996 – Boca Raton- Welch announced a goal of reaching Six Sigma quality levels company – wide by the year 2000, describing the program as “the biggest opportunity for growth, increased profitability , and individual employee satisfaction in the history of our company.”
Six Sigma Quality Initiative
Green Belts
4 weeks training5 Months implementation
Black Belts
6 weeks of instruction in statistic , data analysis and other six sigma tools
Master Black Belts
Full time six sigma instructors – mentored the Black Belt candidates through the two –years process
“A – Players”Individuals with vision , leadership, energy and
courage“4 E’s”
Energy , Ability to Energize others ,Edge , the ability to make tough callsExecution , the consistent ability to turn vision
into results.
"A Players" With "Four E's"
Conclusion
• GE’s Restructuring
First Wave
• Cultural Changes
Second
Wave
• Boundarylessness
Third Wave
Work OutBest Practices
#1 or #2 – fix, sell, or close
1981 1988 1990