Sustainable Growth:

Institutional Excellence

Case Study:  General Electric (GE)

Creating an Extraordinary Organization

By: Vadim Kotelnikov

Founder, Ten3 Business e-Coach Inspiration and Innovation Unlimited!

 

"The idea flow from the human spirit is absolutely unlimited. All you have to do is tap into that well."

Jack Welch

 

  25 Lessons from Jack Welch

 

 

Managerial Leadership Jack Welch - case study Develop a Vision GE Values Guide Eliminate Bureacracy Employee Empowerment Efficiency Improvement Eliminate Boundaries GE - case study 25 Lessons from Jack Welch GE (case study)

GE's Ways

Building Effective Top Management Team

  1. Selecting superior managers, dedicated to eliminating bureaucracy and building businesses, to run GE's operating units in entrepreneurial fashion.

  2. Creating a transparent financial reporting structure that enables CEO to monitor the manager's individual performance by the numbers. Under the CEO's watch, managers have wide latitude in building their GE units, as long as the numbers demonstrate the wisdom of their ways.

Redefining Relationships between Management and Employees

 The Four Key Goals of GE's Work-Out Meetings

  1. Encourage employees to share their views in a collaborative culture

  2. Vest greater responsibility, power, and accountability with front-line employees

  3. Eliminate wasteful, irrational, and repetitive steps in the work process (which would come to light through employee feedback)

  4. Dismantle the boundaries that prevent the cross-pollination of ideas and efforts.

Leading Change through the GE's Organization

The Jack Welch's Way

  • Redesigning the role of the leader in the new economy: creating followers through communicating a vision, and establishing open, caring relations with every employee.

  • Creating an open, collaborative workplace where everyone's opinion is welcome.

  • Empowering senior executives to run far-flung businesses in entrepreneurial fashion.

  • Liberating the workforce; making everybody a participant through improving vertical communication and employee empowerment....More

 

 

3Ss of Winning

Jack Welch summed up his prescription for winning in three words:

 

 

The Need for Change

The revolutionary massive changes introduced by Jack Welch worked. By the mid-1990s GE had become the strongest company in the United States and the most valuable company in the world, as measured in market capitalization. Today, General Electric succeeds in dozens of diverse businesses, and is continuously at the vanguard of change. Some years ago however, in locations throughout GE, local managers were operating in an insulated environment with walls separating them, both horizontally and vertically, from other departments and their workforce. Employee questions, initiatives, and feedback were discouraged.

 

In the new knowledge-driven economy, Jack Welch, the then CEO, General Electric, "viewed this as anathema. He believed in creating an open collaborative workplace where everyone's opinion was welcome."1 He wrote in a letter to shareholders: "If you want to get the benefit of everything employees have, you've got to free them make everybody a participant. Everybody has to know everything, so they can make the right decisions by themselves."1

9 Signs of a Losing Organization

The Revolution that Began from the Top

Jack Welch planned to launch a revolution at GE from the day he took over the company and wasted no time in executing his plan. No one in American business had the vision to transform a basically healthy major company, to fix something that wasn't broken.

Welch's revolution began from the top. He made GE leaner, tougher, faster more competitive with fewer people, fewer business units, few managers, and more leaders. Though to many GE had been an icon, a sacred institution that could not be tampered with, Welch applied a kind of "survival of the fittest" rule of thumb to GE businesses and to GE personnel; those who survived were the ones who were needed.5 For twenty years he led a series of revolutions at GE, seeking to recast a highly bureaucratic, labor-intensive and slow corporate giant into a highly productive entrepreneurial organization that would function with speed, simplicity and passion of a small company. Given GE's size and complexity, it was a heroic task, but Welch knew that to make GE the world's competitive enterprise, transformational change was essential.

Entrepreneurial Leader: 4 Attributes

Change Acceleration Program (CAP)

CAP was implemented by Jack Welch to help drive change throughout the organization. "Although he started with senior managers, he also provided other managers with the tools and training the needed to engineer and drive change throughout the company."4

GE Values

GE's values are so important to the company, that Jack Welch had them inscribed and distributed to all GE employees, at every level of the company. But before the cards were furnished to the staff, GE had come to consensus on which core values it wanted to cultivate in its employees. Many hours were spent at GE's Leadership Institute and elsewhere deciding on exactly what those values should be.

Integrity

In 1987 GE issued companywide guidelines. It was an 80-page booklet called Integrity: The Spirit and the Letter of Our Commitment. Every employee was required to read the booklet and sign a card that they had read it.

In that booklet, Jack Welch wrote in his Statement of Integrity:

Integrity is a rock upon which we build our business success and our quality products and services, our forthright relations with customers and suppliers, and ultimately, our winning competitive record. GE's quest for competitive excellence begins and ends with our commitments to ethical conduct.

GE Values Statement says:

While GE has always performed with integrity and values, each business generation expresses those values according to the circumstances of the times. Now more than ever the expression and adherence to values is vital...

They are our words and our values... in our own voice.

Passionate
Curious
Resourceful
Accountable
Teamwork
Committed
Open
Energizing

Always With Unyielding Integrity.

Improving Connectivity

Creating a Seamless Link between Strategy, Management, and Employees

Determined to harness the collective power of GE employees, create a free flow of ideas, and redefine relationships between boss and subordinates, Welch developed Work-Out: a series of town hall meetings conducted by GE management and designed to encourage employee feedback, cross-pollination of ideas, and employee empowerment. "In the Welch-led GE culture, traditional barriers dividing employees, co-workers, and management give way to tethers of interdisciplinary and interdepartmental cooperation."1

Reassessing Performance and Benchmarking Employees Continuously

Jack Welch does a good job of illustrating the need for proactive change management and constant reassessment when he says, "If the rate of change inside an organization is less that the rate of change outside... their end is in sight". One of the tools used by Welch to ensure constant reassessment and benchmarking is the annual review undertaken by every GE executive and staff member. Once a year, every employee's performance evaluated and awarded a numerical ranking of between 1 and 5. "The implicit understanding is that both the individual and his or her score are moving up or it's time to leave the company."2

 

 

References:

  1. "Venture Catalyst", Donald L. Laurie

  2. "It's not the BIG and eats the SMALL... it's the FAST that eats the SLOW", J. Jennings and L.Haughton

  3. "The GE Work-Out", Dave Ulrich, Steve Kerr, Ron Ashkenas

  4. "The Welch Way", Jeffrey A. Krames

  5. "Jack Welch and the GE Way," Robert Slater

  6. "Winning," Jack Welch and Suzy Welch

  7. "Jack Welch on Leadership," Robert Slater

  8. 25 Lessons from Jack Welch, Vadim Kotelnikov

  9. 3 Strategies of Market Leaders, Vadim Kotelnikov

  10. Synergistic Organization, Vadim Kotelnikov

  11. Inspiring Corporate Culture, Vadim Kotelnikov

Jack Welch, CEO, GE a Corporate Leader

25 Lessons from Jack Welch

Jack Welch's 3Ss of Winning: Self-confidence, Simplicity, Speed

Redesigning Organization

GE Work-Out

General Electric (GE) Leadership Effectiveness Survey (LES)

Using the Best Practice at GE: The Trotter Scorecard

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GE Digital X-Ray Project

GE Equity Investing in External Ventures

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