Ge and Jack Welch

HBR - GE's Two-Decade Transformation: Jack Welch's Leadership

Dawn Davis

California Baptist University

Professor Putulowski

18 October 2014

Summary of Backgrounds and Facts

Jack Welch introduced transformational leadership at General Electric (GE) with the aim of stretching the organization towards achieving global objectives. Welch took the helm of the organization in 1981, at a time when the US economy was overwhelmed by recession. In addition, his predecessor, Jones, had introduced a highly bureaucratic system of management that created divisions, departments, sectors, subsectors and units that were all headed by managerial staff. Welch was determined to facilitate the company to sail through the recession period focusing on the future of GE with a vision of unique, high-spirited entrepreneurial business organization. Through a series of changes in staff management such as downsizing administrative units, de-staffing of particular lines of operation and de-layering, Welch reduced the size of staff and operational costs.

Gradual restructuring of GE was aimed at streamlining operations so that each employee stretched to their limit in adding value to GE’s productivity. This implied introducing a lean and agile approach. By borrowing management ideas from better-performing organizations such as Motorola, Hewlett & Packard and Ford, Welch focused on improving how operations were run rather than what was done. Quality management approaches such as Six Sigma adopted from Motorola enabled the company to reduce defect products that lead to huge incremental costs for the company. Welch focused on improving quality by comparing their products with those of competitors. Quality assurance programs laid the base for global expansion with Welch’s slogan of #1 or #2 being stretched to global platforms. This was a long-term process that would see GE extend its local market dominance to global spans and raising the bar on quality standards and business...