How important was he to GE’s success? What are the implications for his replacement? Prior to stepping down as the CEO of General Electric (GE) on September 7, 2001, Jack Welch led many initiates that restructured the company to maintain its title as the world’s largest multi-business company. Welch was eager to implement changes that increased the productivity and quality of the company. He embraced change and encouraged his managers to do the same. He challenged his executives to be “better than the best”.
Welch was very open about his vision for the company and encouraged an open communication corporate culture. He believed that General Electric could be the #1 or #2 competitor in its industry; therefore, he pushed his managers to meet that standard. One of Welch’s first priorities was to build a team of managers with “a strong commitment to the new management values, a willingness to break with the old GE culture, and most of all, the ability to take charge and bring about change” (p. 3). Welch was confidence in his vision of the company and took many bold steps to make his vision reality.
He performed drastic restructuring by downsizing, de-staffing and delaying the organization. His goal was to make GE more “lean and agile”. Welch eliminated the sector level of the business, reduced the number of hierarchical levels, and eliminated approximately one hundred and twenty three GE employees. The “lean and agile” approach allowed Welch to develop a strong team that shared his values. Welch did not stop at restructuring, he wanted to ensure that his new team of managers was able to adapt to the cultural changes that he was implementing.
According to Bartlett (2000), “Welch articulated the management style he hoped to make GE’s norm an approach based on openness, candor, and facing reality” (p. 4). As a result, Welch launched the “Work-Out” and “Best Practices” program. The objective of the “Work-Out” program was to create a culture where all employees had a voice and could speak their minds on how they felt the business could be run more effectively. He encouraged immediate responses to ideas and proposals made by employees.
The objective of the “Best Practices” program was to encourage his employees to learn from other companies that were achieving higher productivity than GE. The employees studies best practices implemented by companies such as Ford, Xerox, and Toshiba. Welch’s innovative ideas, programs, confidence, and his push for cultural change were significant to GE’s success. He took bold actions that made the company more productive and he provided his managers with the tools to work as a team with their employees, to be forward thinkers, and to be confident in taking charge.
His initiatives developed his managers into strong leaders who tested boundaries and were continuously looking for ways to improve processes. Using the notion of “stretch”, to set performance targets, Welch changed the way performance targets were measured. He wanted his managers to set them based on how good they thought they could be (Bartlett, p. 9). According to Bartlett (2000), shortly after Welch introduced the concept of “stretch”, GE was showing progress in operations. Welch’s restructuring of GE, changes to the corporate culture, confident and no boundaries approach took GE performance to another level.
GE become more successful and was able to sustain its productivity and success in the long run. Welch was able to keep his managers and employees engaged. He was constantly developing new ideas and initiatives to increase productivity and success. His replacement would have to be eager and confident and would need to continue to promote and develop the different programs that Welch implemented in addition to developing new ideas corresponding to the changes in the industry and economy.
Welch’s successor would need to establish himself as a strong leader as soon as he takes the position in the effort to continue motivating the managers and employees. He/she will need to earn the trust of the employees that appeared to be very loyal to Welch and his values. Reference: Bartlett, Christopher & Wozne, Meg (2000). GE’s Two Decade Transformation: Jack Welch’sLeadership. Harvard Business School Press. HBS 9-399-150 (Custom Textbook (2012),Managing Strategy in the Global Marketplace. Chapter 18 pp 429-452. )