Welch

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Information about Welch

Published on February 17, 2009

Author: yashbajaj7

Source: slideshare.net

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Presentation given in Strategic Management.

Jack Welch and the General Electric Management System Presentation for MGT4133 Momchil Metodiev – M00237116 Yash K. Bajaj – M00241969 Masood Junaid Bin– M00236383

Introduction – History of GE GE was founded in 1892 – merger of Electric Light Company and the Thomas Houston Company; GE became one of the largest industrial corporations in the 20 th century; constant growth and profits; The only company that has remained a member of the Dow Jones index since its creation in 1896; By 1981 it consisted of 33 different business groups.

GE was founded in 1892 – merger of Electric Light Company and the Thomas Houston Company;

GE became one of the largest industrial corporations in the 20 th century; constant growth and profits;

The only company that has remained a member of the Dow Jones index since its creation in 1896;

By 1981 it consisted of 33 different business groups.

Introduction – Jack Welch’s Career Joined GE in 1960; Spent time in several of the conglomerate’s business sectors; Appointed CEO in 1981 – the choice surprised many people; Retired in 2001; Welch was revered as possibly the greatest manager in history.

Joined GE in 1960;

Spent time in several of the conglomerate’s business sectors;

Appointed CEO in 1981 – the choice surprised many people;

Retired in 2001;

Welch was revered as possibly the greatest manager in history.

Welch’s Philosophy & Actions Some of Welch’s ideas countered what was held as common sense at the time, which was why many considered him a “maverick”; Believed in constructive conflict, acknowledging disagreement and confronting reality – that led to open arguments with high-ranked managers; His goal – to have his managers convince him, as well as themselves, that their approach would work; this makes them more confident and determined to succeed.

Some of Welch’s ideas countered what was held as common sense at the time, which was why many considered him a “maverick”;

Believed in constructive conflict, acknowledging disagreement and confronting reality – that led to open arguments with high-ranked managers;

His goal – to have his managers convince him, as well as themselves, that their approach would work; this makes them more confident and determined to succeed.

Welch’s Philosophy & Actions (Continued) Real world achievements Self-confidence Simplicity Speed Winner

Real world achievements

Self-confidence



Simplicity



Speed

Winner

Welch’s Philosophy & Actions (Continued) Annual planning meetings with the heads of the business units – Welch gave them 5 questions they had to answer What are your market dynamics globally today, and where are they going over the next several years? What actions have your competitors taken in the last three years to upset those global dynamics? What have you done in the last three years to affect these dynamics? What are the most dangerous things your competitor could do in the next three days to upset those dynamics? What are the most effective things you could do to bring your desired impact on those dynamics?

Annual planning meetings with the heads of the business units – Welch gave them 5 questions they had to answer

What are your market dynamics globally today, and where are they going over the next several years?

What actions have your competitors taken in the last three years to upset those global dynamics?

What have you done in the last three years to affect these dynamics?

What are the most dangerous things your competitor could do in the next three days to upset those dynamics?

What are the most effective things you could do to bring your desired impact on those dynamics?

Welch’s Philosophy & Actions (Continued) ‘ Stretching’ meant using dreams to set business targets; Welch saw good business leaders as visionaries who would be able to suit their visions to their companies and would be relentless in driving the vision to completion; Those who did not share that vision could not last long in the company; “ They wanted to sit back, to keep things the way they were. And that’s just what they did – until they and most of their staff had to go.”

‘ Stretching’ meant using dreams to set business targets;

Welch saw good business leaders as visionaries who would be able to suit their visions to their companies and would be relentless in driving the vision to completion;

Those who did not share that vision could not last long in the company;

“ They wanted to sit back, to keep things the way they were. And that’s just what they did – until they and most of their staff had to go.”

Welch’s Philosophy & Actions (Continued) Welch was opposed to the bureaucratic system that had taken over business; that is why he eliminated several layers of management positions; “ When layers are taken out, the managers are exposed to more pressure”. He believed managers should have 10-15 people reporting to them, instead of 6-7; As a result, the number of employees in the conglomerate was reduced – from 404,000 in 1981 to 221,000 in 1994 By 2001, the number had grown to 310,000 due to foreign expansion – employees in the US only grew from 156,000 to 158,000

Welch was opposed to the bureaucratic system that had taken over business; that is why he eliminated several layers of management positions;

“ When layers are taken out, the managers are exposed to more pressure”.

He believed managers should have 10-15 people reporting to them, instead of 6-7;

As a result, the number of employees in the conglomerate was reduced – from 404,000 in 1981 to 221,000 in 1994

By 2001, the number had grown to 310,000 due to foreign expansion – employees in the US only grew from 156,000 to 158,000

HR Management According to Welch, GE’s core competency was its people; therefore, performance assessment had to be strict; 20-70-10% principle; The bottom 10% were to be removed from the company every year.

According to Welch, GE’s core competency was its people; therefore, performance assessment had to be strict;

20-70-10% principle;

The bottom 10% were to be removed from the company every year.

Changes in GE’s Portfolio He only wanted to keep companies who had the largest or second largest market share in their global markets – he sold off a lot of the companies in the conglomerate; Acquired many large companies, such as RCA, NBC, Kidder Peabody, CGR; Some of his acquisitions were considered to be mistakes – Kidder Peabody, Montgomery Ward; The acquisition of Honeywell, which was going to be his last major deal was stopped by the European Commission on antitrust grounds.

He only wanted to keep companies who had the largest or second largest market share in their global markets – he sold off a lot of the companies in the conglomerate;

Acquired many large companies, such as RCA, NBC, Kidder Peabody, CGR;

Some of his acquisitions were considered to be mistakes – Kidder Peabody, Montgomery Ward;

The acquisition of Honeywell, which was going to be his last major deal was stopped by the European Commission on antitrust grounds.

A More Detailed Look at GE’s Company Culture Research on following aspects of the company: Everyday realities (Soft): Routines Rituals Stories Symbols Top-executive realities (Hard): Power Structure Control Systems Organizational Structure Methodology – desk research .

Research on following aspects of the company:

Everyday realities (Soft):

Routines

Rituals

Stories

Symbols

Top-executive realities (Hard):

Power Structure

Control Systems

Organizational Structure

Methodology – desk research .

GE’s Operating System Consisted of company initiatives that Welch introduced once every two years: Work-Out, Boundarylessness, Globalization, Six Sigma, Digitization; The most important aims were to contribute to improving employees’ performance by incorporating the best practices from other businesses around the world; It worked rapidly – all the initiatives became operational within one month of launch and have produced positive results within their first cycle.

Consisted of company initiatives that Welch introduced once every two years: Work-Out, Boundarylessness, Globalization, Six Sigma, Digitization;

The most important aims were to contribute to improving employees’ performance by incorporating the best practices from other businesses around the world;

It worked rapidly – all the initiatives became operational within one month of launch and have produced positive results within their first cycle.

Impact of the GE Operating System on Other Companies Have other large companies followed the example of Welch and used the Operating System or another system derived from it? Was it successful? Is it feasible to incorporate GE’s Operating System for a different company – e.g., smaller in size or one that is not a conglomerate? Methodology – desk research, perhaps in-depth interviews; comparison between the position of the companies before and after the incorporation of the system.

Have other large companies followed the example of Welch and used the Operating System or another system derived from it?

Was it successful?

Is it feasible to incorporate GE’s Operating System for a different company – e.g., smaller in size or one that is not a conglomerate?

Methodology – desk research, perhaps in-depth interviews; comparison between the position of the companies before and after the incorporation of the system.

Conclusion Welch’s management style and the innovations he brought to GE’s company culture became an example for other executives; Instilled the company’s values – trust, informality, simplicity, boundary-less behaviour and love of change; Considered “a living legend” and “best manager of the past half-century” by his successor Jeff Immelt – for these reasons it is important to study Welch’s ideas and achievements.

Welch’s management style and the innovations he brought to GE’s company culture became an example for other executives;

Instilled the company’s values – trust, informality, simplicity, boundary-less behaviour and love of change;

Considered “a living legend” and “best manager of the past half-century” by his successor Jeff Immelt – for these reasons it is important to study Welch’s ideas and achievements.

WE HOPE YOU DON’T HAVE ANY QUESTIONS… THE END!

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