DOCSLIB.ORG

Jack Welch and the Ge Way

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Jack Welch and the Ge Way Vol. 21, No. 1 (3 parts) Part 1, January 1999 © 1999 Soundview Executive Book Summaries* Order # 21-01 FILE: MANAGEMENT STRATEGIC ® Key Management Techniques of General Electric’s CEO JACK WELCH AND THE GE WAY By Robert Slater THE SUMMARY IN BRIEF Jack Welch had his eye on the horizon when he took over GE in 1981. What he saw there concerned him. The previous decade’s high inflation rate and encroaching competition from Japan were changing the rules of the game. Welch knew that while GE looked healthy enough to outsiders, it had to “get a lot better, faster.” That meant change — a lot of change. Welch slashed the size of the work force, delayered management, and reduced the number of business units. For this, he earned the name Neutron Jack. Welch also tore down internal boundaries, improving communication and speeding up operations. He implemented programs that cultivated ideas and rewarded quality. He expanded the corporation’s global reach. For this, Fortune magazine voted GE the most admired company in America in 1998 and credited Welch for having “rewritten the book on management while keeping GE huge, nimble, and immensely profitable.” Management guru Warren Bennis added that Welch raised GE from “big and good” to “big and great.” INSIDE . Welch molded GE into the powerhouse it is today, raising its revenues Understand Your Role to record levels by the late 1990s. And he did it his way. As Leader 2 By understanding his role as a leader. By unloading the bureaucracy that weighed it down. Decide What You Do Best By looking for new ideas inside and outside GE. And Do It Better 3 By driving quality throughout the organization. Get Rid of Boundaries 4 The style may be quintessential Welch, but your company can follow his example. You can — and should — speed up your business processes, Assemble Type “A” Workers 5 constantly focus on innovation, and make sure you put only your best Find and Grow Ideas players on the field. Above all, says Welch, you should never forget that In a Learning Culture 6 business isn’t rocket science; it’s simple. Make Quality a Priority 7 Want to know more? Read on. Focus on Services 8 Published by Soundview Executive Book Summaries, 23 Pond Lane, Middlebury, VT 05753 USA *All rights reserved. Reproduction in whole or part is prohibited. LEAD Understand Your Role as a Leader Promote Your Values “I don’t run GE,” says Jack same message.“I don’t say one thing Values are such an integral part Welch. “I lead GE.” to outsiders and another to insiders,” of GE’s culture that Jack Welch Leaders inspire employees by cre- he notes. had them inscribed on wallet-size ating a vision of how things can be The CEO expects GE employees cards and gave every worker one done better. They get people to per- at every level to be able to identify, of these “Values Guides.” form at levels they didn’t think as well as to commit to, the compa- The cards say that GE leaders, possible. ny’s values, for example. always with unyielding integrity, Then they get out of the way. have a passion for excel- Get Real lence and hate bureaucracy, Simplify Welch believes leaders must face are open to ideas from any- When it comes to visions, Welch reality about situations, products, where and committed to Work- keeps them simple. He advocates and people, then act quickly and de- Out (see page 5), having what he calls an overarching cisively on that reality. live quality and drive cost message: “something big but simple Facing reality means acting on the and speed for competitive and understandable. knowledge that the world is becom- advantage, “Every idea you present must be ing increasingly competitive. It have the self-confidence to something you could get across easi- means understanding that no job is involve everyone and behave in a ly at a cocktail party with strangers,” guaranteed for life. It means reject- boundaryless fashion, he says. “If only aficionados of your ing the bureaucratic approach to create a clear, simple, reali- industry can understand what you’re management. And it means acknowl- ty-based vision and communicate saying, you’ve blown it.” edging that business is simple. it to all constituencies, One of Welch’s visions, for exam- Facing reality means making some have enormous energy and ple, was to have every GE business hard decisions sometimes. But Welch the ability to energize others, be number one or two in its market. is convinced that most mistakes come stretch, set aggressive goals, Clear and simple. from not facing reality and then act- reward progress, yet understand ing on it. He says his biggest mistake accountability and commitment, Spread the Word was not acting fast enough to imple- see change as opportunity, Welch takes advantage of every ment some major changes at General not threat, opportunity to promote his vision. Electric, for instance. have global brains and build He drives home his message in his More specifically, he regrets not diverse and global teams. annual Letter to Share Owners, in buying a food company early in his his speeches to the GE board, and in tenure as CEO — an investment he When you make a mistake, admit talks with financial analysts. believes would have paid off. But he it, advises Welch. Better yet, learn He makes sure everyone gets the was too slow to make a decision. from it.✰ Jack Welch and the GE Way by Robert Slater Selected by Soundview as an Outstanding Book for Business People The author: Robert Slater has over twenty-five years’ experi- To subscribe: Send your name and address to the address listed ence with Time, Newsweek, and UPI. He has written several business below or call us. Prices also listed below. books, including two others about Jack Welch. To buy multiple copies of this summary: Soundview offers Copyright © 1999 by The McGraw-Hill Companies, Inc. Sum- substantial discounts for quantity purchases of its summaries. Please marized by permission of the publisher, McGraw-Hill, Inc., 11 West 19th call or write for details. Street, New York, NY 10011. 328 pages. $24.95. ISBN 0-07-058104-5. To pay for books or Soundview publications: If paying by To buy the book: Call Soundview, 1-800-521-1227 (outside the check, use U.S. funds drawn on a U.S. bank. We also accept USA and Canada, 1-802-388-8910) or fax 1-800-453-5062 (outside American Express, MasterCard, Visa, Diners Club, and Discover. the USA and Canada, 1-802-388-8939) and charge to your credit Published by Soundview Executive Book Summaries (ISSN card. E-mail: [email protected]. Internet: 0747-2196), 23 Pond Lane, Middlebury, VT 05753-1164 USA, a di- http://www.summary.com. Send mail orders to Soundview, 23 Pond vision of Concentrated Knowledge Corporation. Publisher, Cynthia Lane, Middlebury, VT 05753-1164 USA. Please include the book Langley Folino. Editor, Roger Griffith. Published monthly. Subscrip- price plus $4.00 shipping and handling for the first book and $1.50 tion, $89.50 per year in the United States and Canada; and, by airmail, for each additional book; in Canada, $5.00 for the first book and $95 in Mexico, $139 to all other countries. Periodicals postage paid at $3.00 for each additional book, and add GST/HST (12521 8826 RT); Middlebury, VT and additional offices. POSTMASTER: Send address in Mexico, $5.00 for each book; all other countries, $11.00 for each changes to Soundview, 23 Pond Lane, Middlebury, VT 05753-1164. book, shipped airmail. Copyright © 1999 by Soundview Executive Book Summaries. 2 RESTRUCTURE The company also bought assets Decide What You Do Best and Do It Better worth $16 billion. These new acqui- Jack Welch believes only the sharpen GE’s purpose and focus. He sitions did fit the three categories. strongest survive. Weak businesses chose to keep and nourish business- For example, the purchase of RCA, don’t have the resources, muscle, es that concentrated on at least one which owned NBC, and investment and power to compete globally. of the following three functions: bank Kidder Peabody enhanced Early in his tenure as CEO, he core functions such as light- GE’s services function. made it his mission to strengthen GE ing, major appliances, motors, trans- Broader Markets by weeding out its weak businesses. portation, turbines, and contractor By the late 1980s, Welch had Number One, Number Two equipment high-technology, including achieved strategic dominance at In the early 1980s, GE boasted industrial electronics, medical sys- home and turned his attention to the 350 GE businesses in forty-three tems, materials, aerospace, and air- global arena. strategic business units. Only three craft engines He told business unit managers to GE products — plastics, gas tur- services like GE Capital as redefine or broaden their target mar- bines, and aircraft engines — had a well as information, construction and kets. This set the bar a little higher, respectable share of the export mar- engineering, and nuclear services forcing unit leaders to reevaluate the ket. And just one of these, gas tur- One hundred seventeen business- business of their businesses. bines, was a market leader abroad. es and product sectors that did not The result: By fall 1997, many Welch believed GE could, and GE businesses attained first or sec- fit these categories — from toasters should, do better. ond status in their markets world- to coal mines — were either sold or He developed a “number one, wide.✰ number two” plan to boost GE’s shut down.
Load more

Recommended publications
  • The Board's Role in Monitoring Strategy – Lessons Learned from GE
    The Board’s Role in Monitoring Strategy: Lessons Learned from General Electric By Michael J. Berthelot, Natasha Lasensky, and Paul Somers January 14, 2019 THE BOARD’S ROLE IN MONITORING STRATEGY The Board’s Role in Monitoring Strategy: Lessons Learned from General Electric Michael J. Berthelot, Natasha Lasensky, and Paul Somers Rady School of Management University of California, San Diego Author Note Natasha Lasensky and Paul Somers are M.B.A. candidates in the Rady School of Management, University of California, San Diego. Natasha Lasensky is a Project Manager in Software and Web Development at PINT Inc. Paul Somers is the Head of Programs for GKN Aerospace EPW, and responsible for program performance, profits and losses, customer satisfaction, and commercial function. Michael J. Berthelot is a lecturer in the M.B.A. program at the Rady School of Management, where he teaches the course, “The Board, the CEO, and Corporate Governance.” Berthelot has served as chief executive officer for two publicly-traded companies and on more than thirty boards over the course of his career. He currently serves on the board of a New York Stock Exchange-listed consumer products company. Correspondence concerning this article should be addressed to Michael J. Berthelot, Cito Capital Corporation, P O Box 5005 PMB #5, Rancho Santa Fe CA 92067. E-mail: [email protected]. THE BOARD’S ROLE IN MONITORING STRATEGY 1 History Thomas Edison founded General Electric (GE) in 1878. During its early years, GE primarily focused on the generation and application of electricity, expanding into plastics and radio broadcasting in the early 1900s.
    [Show full text]
  • GE's Talent Machine: the Making of a CEO
    9-304-049 REV: NOVEMBER 3, 2006 CHRISTOPHER A. BARTLETT ANDREW N. McLEAN GE's Talent Machine: The Making of a CEO For more than a century, General Electric (GE) had been recognized as one of the world’s leading diversified businesses, and regularly found itself at or near the top of America’s and the world’s most admired corporations. From its founding in 1878 by Thomas Edison, the company grew to be a titan in the world of electrical generation, distribution, and use—and a widely followed model of modern management practice. GE was a pioneer of centralized corporate control in the 1930s, an exemplar of the decentralized multidivisional organization form in the 1950s, a leader in strategic planning in the 1970s, and a model of the lean and agile global competitor of the 1990s. Throughout its history, GE always promoted its top leaders from its own ranks. The company’s much admired executive development practices were rooted in the cultural values put in place by Charles Coffin, the CEO who succeeded Edison in 1892. Over the next 20 years, Coffin’s commitment to creating a meritocracy based on measured performance became the foundation for a culture that was to make GE “a CEO factory” as one observer called it.1 Throughout the 20th century, this machine produced a pool of skilled managers that not only met the company’s own needs, but also became a major source of CEO talent for corporate America. So powerfully enduring was Coffin’s accomplishment that a 2003 Fortune Magazine article named him “the greatest CEO of all time.”2 On September 7, 2001, when 44-year-old Jeff Immelt was named the company’s twelfth leader after Edison, he faced a daunting challenge.
    [Show full text]
  • Jack Welch, Former GE CEO, Is Dead - CNN
    3/3/2020 Jack Welch, former GE CEO, is dead - CNN LIVE T V Jack Welch, former GE CEO, is dead By Chris Isidore, CNN Business Updated 2:49 PM ET, Mon March 2, 2020 New York (CNN Business) — Jack Welch, who led General Electric through 20 years of its greatest financial success, has died. He was 84. Welch became CEO of GE in 1981 and led it until his retirement in 2001. "Today is a sad day for the entire GE family," GE CEO Larry Culp said in a statement. "Jack was larger than life and the heart of GE for half a century. He reshaped the face of our company and the business world. Jack was a strong and constant influence throughout my career despite never having worked directly for him." Welch, who was named "Manager of the Century" by Fortune magazine in 1999, massively increased the scope and financial might of GE (GE) during his time at the top of the company. The market value of the stock rose from $14 billion to more than $400 billion, an increase of more than 2,700%, during those 20 years. "He had a tremendous focus on shareholder value," said Je Sonnenfeld, a Yale business professor and founder and president of the Chief Executive Leadership Institute, who taught Welch in the early 1980s. Sonnenfeld noted that Welch also pushed GE into new lines of businesses, with mixed results. For instance, Welch presided over GE's 1986 takeover of NBC-owner RCA. GE sold the business to Comcast (CMCSA) in 2013.
    [Show full text]
  • Essay 6 Unemployment: the Jack Welch Tweet & Fake Jobs Numbers
    Essay 6 Unemployment: The Jack Welch Tweet & Fake Jobs Numbers Please open, read, and refer to the following articles: Jack Welch https://twitter.com/jack_welch/status/254198154260525057 October 5, 2012 Jack Welch sets Twitter Ablaze with Obama Job Jab https://www.reuters.com/article/us-usa-economy-jackwelch/jack-welch-sets-twitter-ablaze-with- obama-job-jab-idUSBRE8941CR20121005 https://unemploymentdata.com/employment/jack-welch-unemployment-twitter/ October 10, 2012 Jack Welch defends his jobs report comments (again) http://www.cnbc.com/id/49358414 Was Jack Welch right on Twitter? https://unemploymentdata.com/employment/jack-welch-unemployment-twitter/ Donald Trump March 10, 2017 19 Times Trump called jobs numbers ‘fake’ before they made him look good https://www.washingtonpost.com/news/wonk/wp/2017/03/10/19-times-trump-called-the-jobs- numbers-fake-before-they-made-him-look-good/ Sean Spicer, Former White House Press Secretary March 10, 2017 https://www.cnbc.com/2017/03/10/white-houses-spicer-trump-says-jobs-report-may-have-been- phony-in-the-past-but-its-very-real-now.html Management of individual companies and of the broad economy requires data upon which to base decisions and plan a course of action. It is vitally important, then, that this data is consistent, reliable, and unbiased. One of the more closely watched and most relevant sets of data is that regarding the labor market. The Congress is interested in this data because it is responsible for the fiscal policy that can help or hinder the labor force in finding or keeping a job and in receiving rising or stagnant wages.
    [Show full text]
  • GE Mini-Case
    Firms and Markets Mini-Case Jack Welch and General Electric Revised: August 31, 2001 Jack Welch and General Electric have garnered almost cult-like followings on Wall Street, illustrated by Welch’s $7.1 million book deal. But what has made GE so successful under Welch? Why has its performance been so consistently good over more than a century? A Short History of Leadership at GE General Electric was incorporated in 1892 as a combination of three existing companies. It was an original member of the Dow – in fact, the only one still in existence. Its stock has consistently outperformed the market for a century and its leaders have been routinely praised for their insight and ability. See Exhibits 1 and 2. James Surowiecki in The New Yorker (December 18, 2000) notes: In the twentieth century, GE was the industrial equivalent of the New York Yankees. Regardless of who ran the team, it just kept on winning. … Charles Coffin kept GE afloat during one of the worst depressions in American history. … [H]e essentially created the country’s electricity infrastructure and outmaneuvered a competitor, Westinghouse, whose technology was superior early on. Gerald Swope and Owen Young reinvented GE as a consumer-goods powerhouse, then had to find a way to make money during the Great Depression. Ralph Cordiner made GE a space-age giant and masterminded its widely imitated decentralization. GE is also well known as a source of successful leaders at other companies. GE Under Welch In December 1980, Jack Welch was announced as the successor to Reginald Jones, himself a highly regarded executive, after an extensive internal search.
    [Show full text]
  • GE Case Study
    GENERAL ELECTRIC, NEW YORK Case Study : Succession Planning at GE M.S.Ramaiah Management Institute, Bangalore | MBA (PRIST-A) | HRM Case Study Presented By : Team Members Introduction : Succession Planning Succession Planning is the process of insuring a suitable supply of successor for current and future senior or key jobs arising from business strategy, so that the career of individual can be planned and managed to optimize the organizationǯs needs and individual aspirations. It encourages DzHiring From Withindz. Introduction : General Electric Established in 1892, Thomas Alva Edison merged his EELC with Thomson-Houston Electric Company to form General Electric. Business Structure of GE at a glance: Commercial Health Energy Transportation Infrastructure Finance Care Forbes ranked GE as the world's largest company. The company has 323,000 employees around the world. In Fortune Magazine's 2005 "Global Most Admired Companies" list, GE ranked first overall. By June,2010 The Ecomagination Revenue of GE will reach upto $25 Billion Case Study : Succession Chart at GE Thomas Alva Edition (1892) Charles Coffin (1894) Gerard Swope (1922) Charles Wilson (1940) Ralph Cordiner (1950) Fred Borch (1964) Reginald Jones (1972) Jack Welch (1981) Jeff R Immelt (2001) Case Study : Summary Succession Planning Process at GE ȂThe leading diversified business in the world Growth of GE from inception and GEǯs commitment to succession planning It explains succession planning and leadership development at GE It examine CEOǯs succession planning under Jack Welch (GEǯs CEO 1981-2001) It shows differences between management style and ideologies of Immelt and Welch Finally, the future of GE under the leadership of Immelt Case Study : Discussion Session Question:1 Critically examine the importance of leadership development and succession planning at GE and explain how it is undertaken at the company.
    [Show full text]
  • Welch-Winning-Engl-Orig.Pdf
    CONTENTS Original Version in PM Bücherei Nr =O-4011 und auf INTRODUCTION P:\ALLE\LITERAT\FREMDLIT\Eingelesen\Welch\Winning Englisch\Welch- Winning-engl-orig.doc "Every Day, There Is a New Question" 1 UNDERNEATH IT ALL ONLY FOR INTERNAL USE! 1. MISSION AND VALUES So Much Hot Air About Something So Real 13 2.CANDOR The Biggest Dirty Little Secret in Business 25 3. DIFFERENTIATION Cruel and Darwinian? Try Fair and Effective 37 4. VOICE AND DIGNITY Every Brain in the Game 53 Jack Welch YOUR COMPANY with Suzy Welch 5. LEADERSHIP It's Not Just About You 61 To the thousands of men and women 6. HIRING who cared about business to raise their hands What Winners Are Made Of 81 7. PEOPLE MANAGEMENT You've Got the Right Players. Now What? 97 WINNING 8. PARTING WAYS ISBN: 0-06-075394-3 (hard-cover) Letting Go Is Hard to Do 119 ISBN: 0-06-079742-8 (soft-cover/Taschenbuch) 9. CHANGE 2005 Harper Collins Publishers New York Mountains Do Move 133 The authors’ profits from this book are being donated to charity. 10.CRISIS MANAGEMENT From Oh-God-No to Yes-We're-Fine 147 YOUR COMPETITION Introduction 11. STRATEGY It's All in the Sauce 165 "EVERY DAY, THERE IS A NEW 12. BUDGETING QUESTION" Reinventing the Ritual 189 AF T E R I F I N I S H E D my autobiography-a fun but crazily intense 13. ORGANIC GROWTH grind that I wedged into the corners of my real job at the time-I swore So You Want to Start Something New 205 I'd never write another book again.
    [Show full text]
  • Jack Welch's Leadership Style
    Jack Welch’s Leadership Style KBS Kumar * Needless to introduce a person of the stature of Jack Welch, but certainly, there is a need to share the contributions of his leadership and versatility to the organization, General Electric Corp. Jack Welch transformed a $13 bn company into a $280 bn multinational conglomerate by the dint of his unique leadership traits. This case discusses the leadership qualities of Jack Welch that made him the world's most admired CEO, who made General Electric the most admired corporate. Introduction Dr. John H Welch, better known as Jack Welch, was the Chairman of the General Electric Corp. from 1981 to 2000. Jack was adjudged as the most admired CEO in US by the Fortune. In an Industry Week survey, his peers rated him the most admired CEO three times in four years. In two decades of his Chairmanship, Jack elevated the market value of GE from US$13 bn in 1981 to a US$280 bn in 2001 by the dint of his leadership qualities (Exhibit 1) and innovative strategies. Under his leadership, GE delivered more wealth to shareholders than any other company. Value Based Management said “Whatever his tactics, the fact that Welch is one of the most successful business leaders of all-time is indisputable. He has swelled the market value of the company to a degree unmatched by any other CEO, an accomplishment not even Bill Gates, Michael D Eisner or Warren Buffett could lay claim to”. GE was the only company in which Jack Welch worked for his entire life.
    [Show full text]
  • GE Annual Report 1999 Financial Highlights
    e GE Annual Report 1999 Financial Highlights General Electric Company and consolidated affiliates (Dollar amounts in millions; per-share amounts in dollars) 1999 1998 1997 Revenues $111,630 $ 100,469 $ 90,840 Net earnings 10,717 9,296 8,203 Dividends declared 4,786 4,081 3,535 Per share Net earnings 3.22 2.80 2.46 Dividends declared 1.46 1.25 1.08 GE ongoing operating margin rate (a) 17.8% 16.7% 15.7% (a) “Ongoing operating margin” here and elsewhere in this report excludes unusual charges in 1999 and 1997. Contents 1 Letter to Share Owners 8 Introduction to GE Businesses 10 Business Reports 27 Community Service 28 Board of Directors 30 Management 33 Financial Section 77 Corporate Information This entire Annual Report is printed on recycled paper. To Our Share Owners, Customers and Employees The final year of the century was our finest, as 340,000 GE people around the globe posted the strongest results in the Company’s 122-year history. ▪ Revenues rose 11% to $112 billion, a record. ▪ Earnings increased 15% to $10.7 billion, the first time GE has broken the $10 billion mark in earnings from operations. ▪ Earnings per share were up 15%. ▪ Free cash flow was a strong $11.8 billion, up 17%. Chairman and Chief Executive Officer John F. Welch, Jr. (center) ▪ Our ongoing operating margin rate grew to 17.8%, and Vice Chairmen and Executive Officers John D. Opie (left) and Dennis D. Dammerman (right) form GE’s Corporate Executive Office. a gain of more than a full point from ’98 and the third straight year of more than a full point improvement.
    [Show full text]
  • Jack Welch and the 4E's of Leadership EXECUTIVE
    JackEXECUTIVE Welch and BOOK the 4E’s SUMMARIES of Leadership convenenow.com/executive-summaries Jack Welch and the 4E’s of Leadership THE Summary McGraw Hill 2005 Introduction In his 20-plus years at the helm of General Electric, Welch transformed a mature manufacturing company into an outstanding products-and- services juggernaut. He increased the value of the company more than ABOUT THE 30 times over. He achieved all of this by defying some of GE’s most AUTHOR venerated traditions (for example, by making hundreds of acquisitions), by making the “tough calls” (he laid off more than 100,000 workers), and Jeffrey Krames by transforming GE’s insular, hidebound culture (he fired the strategic Jeffrey Krames is a bestselling author and frequent guest on CNN, CNBC, planners and made sure that managers listened to workers). and Fox News Channel. He has written for the New York Times, the Wall Street Journal, and The Los But most of all, Welch selected and developed leaders. During his tenure Angeles Times. at the helm, GE turned out more Fortune 500 CEOs than any other company in history. He once said, “The smartest people in the world hire the smartest people in the world,” but the truth is that he looked for far more than smarts. The discipline of the 4E’s helped him to find and develop leaders who would fit into GE’s high-octane, performance-based culture. Those who scored high on all four “E” categories were the ones who ultimately helped him fulfill his goal of building the world’s most competitive organization.
    [Show full text]
  • Case 18 Jeff Immelt at General Electric, 2001–2006
    CTAC18 4/17/07 14:04 Page 313 case 18 Jeff Immelt at General Electric, 2001–2006 When Jeff Immelt took over as chairman and CEO of General Electric on Septem- ber 7, 2001, he had no doubts that his predecessor, Jack Welch – “living legend,” “best manager of the past half-century” – would be a tough act to follow. But little did he realize just how tough it would be. A few days after occupying the chairman’s suite, two hijacked airliners ploughed into New York’s World Trade Center, setting off a train of events that would profoundly affect GE’s business environment. A month later, Enron’s collapse precipitated a crisis of confidence over corporate governance, executive morality, and financial reporting. The scandal at Tyco International – a company that had explicitly modeled itself on GE – reinforced suspicion of conglomerates and their management. It was not long before GE’s own financial structure and financial reporting were under fire. After being lauded by analysts for its smooth earnings growth, rumors of earnings manipulation by GE circulated among the investment community. More specific criticisms were directed at GE’s alleged dis- guising of the true risks of its businesses by consolidating the financial statements of its industrial businesses and its financial services business, GE Capital. In March 2002, Bill Gross, of the IPCO fund management group, argued that GE was primarily a financial services company but, with the support of GE’s industrial businesses, GE Capital had been able to operate on a narrow capital base while maintaining a triple-A credit rating.
    [Show full text]
  • Jack Welch: General Electric's Revolutionary
    Harvard Business School 9-394-065 Rev. April 12, 1994 y Jack Welch: General Electric's Revolutionary In 1993, Jack Welch might be satisfied that the ultimate arbiter of value, the stock market, seemed to appreciate GE’s achievements under his leadership. From a multiple of 7 in 1982, the price/earnings ratio had climbed to 16—a clear signal that the stock market was enamored with the changes Welch was making at GE. Over a period when the S&P 500 had risen 326%, GE market value had grown 498%. (See Exhibit 1.) If GE was not yet as “lean and agile” as Welch might want, it was surely a far more nimble giant than the company he had inherited from the “management legend” Reg Jones. In fact, as GE entered its twelfth year with Welch at the helm, the company was once again being studied widely as a model of how a giant corporation ought to be managed. Fundamentally, Welch appeared to be pulling off the impossible. He was making one of the largest, most complex companies in the world perform like a growthCop company. At first, the accomplishment was merely discounted. By 1993, however, Welch was being credited with a world-class achievement in management. Having concluded that Jack Welch had done the impossible and transformed giant GE, everyone interested in management wanted to know whether it was fluke of personality or whether generalizable principles, useful for all, underlay Welch’s achievement. Had Jack Welch presided over the invention of a new approach to managing a complex organization? GE as an Inventor Founded to exploit Thomas Edison’s patents, the company that later became GE soon assembled a range of businesses, wide for the time, dedicated to the generation, distribution, and use of electric power.
    [Show full text]