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• strengthe

n its corporate staff and develop sophisticated planning systemsGE –a Bellwether of American Management

Practices

Reg Jones – 1970’sStrategy-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

What is Welch’s reaction to these Challenges?

“Better than the Best”

“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 - ObjectiveWork Out

Best Practices

Going Global

Developing Leaders

Second Wave

Software Iniatives

Iniatives - ObjectiveBoundaryless Behavior

Service Businesses

Six Sigma

E-Business

Third Wave

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

destoryyourbusiness.com (www.dyb.com)

E-Business Iniative

“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"

Result

Conclusion

• GE’s Restructuring

First Wave

• Cultural Changes

Second

Wave• Boundaryless

nessThird Wave

Work OutBest Practices

#1 or #2 – fix, sell, or close

1981 1988 1990

Terima Kasih