GE Transformation Case

Key Questions for Case Analysis

What was Welch’s challenge in
1981? How effectively did he take
charge?
How does such a large, complex
conglomerate defy critics and
continue to grow so profitably?
How have Welch’s initiatives
helped?
How do you rate Welch’s change
management initiatives? What are
Layoff Impacts
112,000 x $ 35,000 = $ 3.9
billion per annum
GE’s net profit in 1986 - $ 2.5
billion
Stages of change – Initial years
Strategy Structure Systems
# 1 or # 2: Fix, sell or Delayering Strategic
close Corporate planning:
staff detailed
Organizationa documents
l layers from to 5 page
playbooks
9-4
3 circles: Downsizing Operating
Services: Invest in Eliminate budgets:
people & acquisitions 123,450 Past
Technology: Invest in people @ comparisons
R&D $50,000 to external
standards
Core: Reinvest in Impact $ 6
productivity and billion on
Stages of change – Initial years
Workout People/ Value Added
Leadership
Developing new Changing Adding value at
processes, roles & mindsets & multiple levels
relationships management
style
-leverage productivity Commitment to -leveraging
Crotonville productivity
-model new roles-
frontline initiative, Co-opt “Session -pushing
C” HR Process
management coaching growth
CEO’s personal through
-operationalise culture role model –
- speed, simplicity, self globalisation
50% on people
confidence issues -building long-
Weed out “Type term capability
4”
Doctrine to philosophy
Strategy-the Purpose-the
company as an company also as a
economic entity social institution
Structure-the Process-the
organisation also as
organisation as a set of roles and
aggregation of tasks relationships
and responsibilities People-recognizing
Systems-managing people as
personnel as organisational assets
controllable costs and embodiers of
and replaceable knowledge
parts
Corporate Transformation
Restructuring tools change the
organizational anatomy : defining the
allocation of assets and distribution of
responsibilities
Reengineering exercises alter the
organizational physiology: developing
the organizational flows and
interpersonal relationships
But the key task is to transform the
organisational psychology: influencing
the behavioural context that frames
individual thought and action
Managing the transformation
process
Rationalization
Discipline
Support

Revitalization
Stretch
Trust

Renewal
The endless circle
Some Key Conclusions
A new management philosophy: beyond
strategy, structure and systems to
purpose, process, and people
A different concept of organisation:
from ‘organisation man’ to
‘individualized corporation’
A changing role for managers: beyond
allocators, controllers, and
implementers to leaders, developers,
and entrepreneurs