How difficult a challenge did Welch face in 1981? How effectively did he take charge?
In 1981, Welch faced a difficult challenge faced by Reg Jones in 1973 when he had just completed a reorganization of the entire company. The challenge was of taking up the responsibility of the previous GE’s CEO position. Welch responsibilities as CEO begun during recessional period of the US economy. With all economic odds against him, Welch had to pull up his socks to prevent GE from becoming another bankrupt company through strategic management.
Developing the preventive strategy was not a bed of roses; having this in mind, Welch develop clear 10-year goal which would see GE become the most highly diversified and profitable company on earth. Achieving it would need managers and executives who would add positive value to the company. He, therefore, developed varsity team to help him. In addition, he went against the 6-7 management phrases and brought 10 to 15 managers during his restructuring. Other strategies he used were inclusive of downsizing, de-staffing, and de-layering he also sold over 200 businesses and reinvested in over 270 businesses.
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2 . What was Welch’s objective in the series of initiative he launched in the late 1980’s and early 1990’s? What is he trying to achieve in the round of changes he put in motion in that period? Is there a logic or rationale supporting the change process?
His first priority was to elevate the company culture to create a productivity culture amongst employees. With the help of the Directors and Management team in the late 1980’s, he implemented “Work-Out” process. The GE managers were allowed by the session to openly express their challenges as the changes were taking place. Consequently, the forum was one of great ways to engage employees and make their voices heard and also a forum for interaction with the employees.
He had objective to learn how successful companies operated in terms of their best practices and effective processes. With the help of his management team, he rolled out the “Best Practices” movement to help GE be successful after studying nine successful organizations.
Another objective was international operation. To globalize the company, he hired Pablo Fresco as the head of International Operations, within few years GE had doubled international revenues which also expounded rapidly.
3. How does such a large, complex diversified conglomerate defy the critics and continue to grow so profitably? Have Welch's various initiatives added value? If so, how?
Welch inherited the GE during economic recession when the company was financially crippled. He was able to see that the company needed re-evaluation from a strategic point of view to come back to normality. He believed that poor human resource strategy was main issue. He also had an eye in the global operation as an opportunity which could be utilize to provide stability for the company. With all these issues in mind, Welch develops strategies that created foundation for the organization success. His strategies were inclusive of giving the employees freedom and creation of culture which enhanced engagement and sharing of policies. He also played a major apart in the production processes using the six stigma quality program. As part of the strategy, he develops “Fix, Sell, or Close to help in discarding and only retaining necessary business. He sieved the staff to remain with only productive staff. The remaining employees underwent quality development under his strategies which made them even productive.
4. What is your evaluation of Welch's approach to leading change? How important was he to GE's success? What are the implications for his replacement?
Welch was very successful in his management tenure with GE. He initiated a change and guided everyone who was involved to success. His main goal of leading the GE became a success to the organization was achieved. He created a culture of success among the employees and reinforced his team through training and development which made them successful. The programs and sessions he launched all contributed to positive results such as increases in revenues and profits. His successor must be an individual with integrity and capability to face challenges since it needs honesty and hard work to fit into the shoes of Welch.
