GEs TwoDecade Transformation: Jack Welchs Leadership

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GEs Two-Decade Transformation Jack Welchs
Leadership

• Amanda Rodriguez
• Patricia Robledo
• Brittany Culberson
• Yue Jiang

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Leader or Manager?

• 1. TRUE or FALSE  I think more about immediate
  results than I do about mentoring others.   
• 2. TRUE or FALSE  People will be motivated if
  you pay them enough.
• 3. TRUE or FALSE  Its nice to know about
  peoples long-term goals, but not necessary to
  get the job done.
• 4. TRUE or FALSE  If you have a consistent
  recognition system that rewards everyone in the
  same way, then that is enough.
• 5. TRUE or FALSE  The best way to build a team
  is to set a group goal that is highly
  challenging, maybe even crazy.
• 6. TRUE or FALSE  My greatest pleasure in my job
  comes from making the work process more
  effective.
• 7. TRUE or FALSE  I spend more of my time and
  attention on my weaker performers than I do on my
  top performers, who basically take care of
  themselves.
• 8. TRUE or FALSE  Its better not to know
  anything about the personal lives and interests
  of the people who report to me.
• 9. TRUE or FALSE  Sometimes, its almost as if
  Im a collector of people because Im always
  recruiting and getting to know new people.
• 10.  TRUE or FALSE  I like to surround myself
  with people who are better at what they do than I
  am.
• 11.  TRUE or FALSE  I am a lifelong student of
  what makes other people tick.
• 12.  TRUE or FALSE  People talk about mission
  too much its best just to let people do their
  work and not try to bring values into the
  conversation.
• 13.  TRUE or FALSE  Its my job to know
  everything that goes on in my area.

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What it takes to be a Leader

• Drive
• Leadership motivation
• Integrity
• Self-Confidence
• Knowledge of the business
• Ability to perceive the needs and goals of others
  and to adjust ones personal leadership approach
  accordingly

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Leaders Managers
Key Behaviors

• Challenge the process

• Dont rock the boat

• Inspire a shared vision

• Deal with ongoing day-to-day

• Enable others act

• Monitoring activities

• Model the way

• Planning and budgeting routines

• Encourage the heart

• Short-term profits

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Followers

• Capable of independent thinking
• Are actively committed to organizational goals
  instead of their own interests
• Willingness to tell the truth
• Hold performance standards higher than required

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Leaders, Managers, Followers

• An individual can exemplify both processes
  (leadership, management), one or the other or
  neither
• It is vital for a company to have both, leaders
  and effective managers
• How well followers follow is also key for success

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InnovationImagination
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Six businesses, each with a number of business
units aligned for growth

Infrastructure

Commercial Finance
Industrial
Healthcare
NBC Universal
Consumer Finance
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GE Global Research First Industrial
Lab in the U.S.

• Began in Schenectady, New York in 1900
• Founded with the focus to improve businesses
  through technology
• One of the worlds most diverse industries
• Cornerstone of GEs commitment to technology

1900
2006
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A History of Innovation
1909 Ductile Tungsten 1913 Medical
X-Ray 1932 Langmuir Nobel Prize in
Chemistry 1942 First US Jet Engine 1952 LEXANTM
Polycarbonate 1955 Man-Made Diamonds 1973 Giaever
Nobel Prize in Physics 1983 Magnetic Resonance
Imaging 1995 GE90, The Worlds Most Powerful
Jet Engine 1999 Digital X-Ray 2003 H Turbine
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Innovation-Key of GE culture

• At GE, we consider our culture to be among our
  innovations. Over decades our leaders have built
  GEs culture into what it is today a place for
  creating and bringing big ideas to life. Today,
  that culture is the unifying force for our many
  business units around the world-GE
• How important is innovation for leadership? If
  leaders dont have innovation, what happens to
  the company?

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GE a Bellwether of American Management Practices

• 1930s, highly centralized, tightly controlled
  corporate form
• 1950s, decentralization
• 1960s, strengthen its corporate staff and develop
  sophisticated planning systems
• 1970s, SBU-based structure and sophisticated
  planning processes
• 1980s-2001, three waves in Welchs period

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Reg Jones -1970s

• 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

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Questions

• Shareholders What are your concerns regarding
  the new leadership and the financial success of
  GE?
• Employees What are your concerns regarding the
  culture, benefits, work environment under a new
  leader?
• Potential CEO What challenges do you see coming
  into a successful corporation?

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Who is Jack Welch?

• 1935 born in Salem, Massachusetts
• 1957 BS in Chemical Engineering
• 1960 MS and PhD in Chemical Engineering

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Jack Welch and GE

• 1960 Joined GE as a chemical engineer
• 1972 Elected GEs youngest VP
• 1979 Vice Chairman
• April 1, 1981 Became the 8th Chairman and CEO
  of General Electric

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Taking Over GE

• Challenges from outside of GE
• Economic recession
• High interest rates
• Highest unemployment rate since the depression
• Challenges from GE
• Massive information and inefficient
  macro-business
• What is Welchs reaction to these Challenges?

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Welchs Vision
A decade from now, I would like General Electric
to be perceived as a Unique, high-spirited,
Entrepreneurial enterprisethe most profitable,
highly diversified company on the earth, with
world quality leadership in every one of its
product lines. -- Jack Welch
Three-Circle Vision for GE
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Restructuring the Hard Drive

• Challenged everyone to be better than the best
• Sold more than 200 businesses and made over 370
  acquisitions
• Insisted 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

Willingness to change is a strength, even if it
means plunging part of the company into total
confusion for a while. Jack Welch
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Initiatives - Objective

• Work-Out
• Best Practices
• Going Global
• Boundaryless Behavior
• Six Sigma
• E-Business

We bring together the best ideas turning the
meetings of our top managers into intellectual
orgies. Jack Welch
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Did it work?

• Revenue

• Culture?

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Jack Welch

• 1999 Named Manager of the Century by Fortune
• named one of the three most admired business
  leaders in the world by Financial Times
• September 7, 2001 Retired as CEO
• Published autobiography, Jack, Straight from the
  Gut

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Leadership Styles

• Autocratic
• Makes decisions alone
• Yields higher performance
• Democratic
• Solicits input from group for decisions
• Yields positive attitude
• Laissez Fair
• Absence of managerial decision making
• Yields negative attitudes

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Type of Power

• Authority
• Legitimate Power
• Was CEO Position to tell others what to do
• Reward Power
• Control over Rewards
• Performance reviews, pay increases, bonus
• Coercive Power
• Control over punishment
• Implementation of policies and administration of
  disciplinary action
• Expert Power
• Has expertise or knowledge over the business
• Had been with the company for 20 years when he
  became CEO

-foxnews.com
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Followership

• Success depends on how
• well followers follow
• Not just Jacks Company

GEs 100-year-plus track record is simply about
having the very best people at every single
position. That is its number one core competency.
No one has better people. When you get the best
people, you dont have to worry about execution,
because they make it happen. -Larry Johnston,
CEO of Albertsons Former CEO of GE Appliances
(1991-2001)
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Passing the Torch

• Retirement September 2001
• Lengthy process of succession
• Internal candidates only
• Never named candidates
• No strategic vision
• No common measure for candidates
• Long list of candidates

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The New Guy

• Jeff Immelt
• GE Corporate Marketing - 1982
• Plastics, Appliance, Medical
• President CEO, GE Capital Board - 2000

-ge.com
GE hit a home run with Welch and wanted to try
again. More profoundly, Immelt demonstrated a
superior capacity to grow, which was the most
important criterion in the choiceThey just knew
he would have to rethink and reinvent GE
-Geoffrey Colvin
(Fortune)
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The End of an Era

• Reg Jones era (1981)
• Built up immense financial strength
• Saw profits and growth
• Jack Welch era (1981-2001)
• Superior leadership
• Profitable and immense growth

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Challenges for Immelt?
Jack Welch and Jeff Immelt -USA Today
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Whole New Levels

• New Values
• Imagine
• Solve
• Build
• Lead
• New Businesses
• Energy
• Customized Medicine

-rollingstone.com
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GE Now

• Operates in 100 countries worldwide
• 300,000 employees worldwide
• 2006 revenue - 163.4 billion
• 2006 earnings - 20.8 billion
• One of original six companies still listed on Dow
  Jones index

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Success Continues

• Continually finding ways to improve
• Accountability of managers
• Developing leaders
• Rewarding leaders

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Leadership Continues

• At the top, we dont run GE like a big
  company. We run it like a big partnership, where
  every leader can make a contribution not just to
  their job, but to the entire Company.
• -Jeff Immelt, CEO
• Letter to
  Investors
• 2005 Annual Report

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Bibliography

• http//www.schulersolutions.com/leadership_self_te
  st_answers.html
• http//money.cnn.com/magazines/fortune/fortune_arc
  hive/1989/03/27/7183/index.htm
• http//www.ge.com
• http//money.cnn.com/magazines/fortune/fortune_arc
  hive/2001/01/08/294478/index.htm
• http//www.cnnmoney.com
• http//www.nni.nikkei.co.jp/FR/TNKS/TNKSHM/welch/i
  ndex.html
• Abetti, P,(2006), Creativity and innovation
  Managerment, Case study Jack Welvhs Creative
  revolutionary Tranformation of General Electric
  and Thermidorea Reaction (1981-2004), V15 no.1,
  p74.