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GEs Two-DecadeTransformation: Jack Welchs
LeadershipAmanda RodriguezAmanda Rodriguez
Patricia RobledoPatricia Robledo
Brittany CulbersonBrittany Culberson
Yue JiangYue Jiang
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Leader or Manager? 1. TRUE or FALSE: I think more about immediate results than I do about mentoring others.
2. TRUE or FALSE: People will be motivated if you pay them enough.
3. TRUE or FALSE: Its nice to know about peoples long-term goals, but not necessary to get the jobdone.
4. TRUE or FALSE: If you have a consistent recognition system that rewards everyone in the same
way, then that is enough. 5. TRUE or FALSE: The best way to build a team is to set a group goal that is highly challenging,
maybe even crazy. 6. TRUE or FALSE: My greatest pleasure in my job comes from making the work process more
effective. 7. TRUE or FALSE: I spend more of my time and attention on my weaker performers than I do on my
top performers, who basically take care of themselves. 8. TRUE or FALSE: Its better not to know anything about the personal lives and interests of the
people who report to me. 9. TRUE or FALSE: Sometimes, its almost as ifIm a collector of people because Im always
recruiting and getting to know new people. 10. TRUE or FALSE: I like to surround myself with people who are better at what they do than I am.
11. TRUE or FALSE: I am a lifelong student of what makes other people tick.
12. TRUE or FALSE: People talk about mission too much its best just to let people do their workand not try to bring values into the conversation.
13. TRUE or FALSE: Its my job to know everything that goes on in my area.
14. TRUE or FALSE: I pay close attention to how and where I spend my time, because the priorities Iput into action are the ones that other people will observe and follow.
15
. TRUE or FALSE: I
ve worked hard to get along with or understand people who are very differentfrom me.
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What it takes to be a Leader
Drive
Leadership motivation
Integrity
Self-Confidence
Knowledge of the business
Ability to perceive the needs and goals of othersand to adjust ones personal leadershipapproach accordingly
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Leaders & Managers
Challenge the process Dont rock the boat
Key Behaviors
Inspire a sharedvision
Enable others act
Model the way
Encourage the heart
Deal with ongoing day-to-day
Monitoring activities
Planning andbudgeting routines
Short-term profits
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Followers Capable of independent thinking
Are actively committed to organizational
goals instead of their own interests Willingness to tell the truth
Hold performance standards higher thanrequired
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Leaders, Managers, Followers An individual can exemplify both processes
(leadership, management), one or the other orneither
It is vital for a company to have both, leadersand effective managers
How well followers follow is also key for success
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Innovation=Imagination
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Six businesses, each with a number
of business units aligned for growth
Commercial
Finance
Healthcare
Infrastructure
NBC Universal
Consumer Finance
Industrial
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GE Global Research:
First Industrial Lab in the U.S.
Began in Schenectady,New York in 1900
Founded with the focus toimprove businesses throughtechnology
One of the worlds most diverseindustries
Cornerstone of GEs commitmentto technology
1900
2006
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A History ofInnovation1909 Ductile Tungsten
1913 Medical X-Ray
1932 Langmuir Nobel Prize in Chemistry
1942 First US Jet Engine
1952 LEXANTM Polycarbonate
1955 Man-Made Diamonds
1973 Giaever Nobel Prize in Physics
1983 Magnetic Resonance Imaging
1995 GE90, The Worlds Most Powerful
Jet Engine
1999 Digital X-Ray
2003 H Turbine
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Innovation-Key of GE culture At GE, we consider our culture
to be among our innovations.Over decades our leaders have
built GE
s culture into what it istoday a place for creating andbringing big ideas to life. Today,that culture is the unifying forcefor our many business unitsaround the world-GE
How important isinnovation for leadership?If leaders dont haveinnovation, what happensto the company?
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GE a Bellwether of American
Management Practices
1930s, highly centralized, tightlycontrolled corporate form
1950s, decentralization
1960s, strengthen its corporate staffand develop sophisticated planningsystems
1970s, SBU-based structure andsophisticated planning processes
1980s-2001, three waves in Welchsperiod
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Strategy-SBU based structure and planningprocesses
10 groups, 46 divisions, 190 departments, and 43 strategic
business units Develop a constructive business-government dialogue
Wall Street Journal proclaimed him as a management legend
Success Sales more than doubled ($10 billion to $22 billion) and earnings
grew even faster ($572 million to $1.4 billion)
A major thrust into international markets
Expansion of world trade and restoration of U.S.competitiveness
Reg Jones -1970s
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Questions Shareholders: What are your concerns
regarding the new leadership and the financial
success of GE? Employees: What are your concerns
regarding the culture, benefits, work
environment under a new leader?
Potential CEO: What challenges do you seecoming into a successful corporation?
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Who is Jack Welch? 1935: born in Salem,
Massachusetts
1957: BS in Chemical Engineering
1960: MS and PhD in ChemicalEngineering
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Jack Welch and GE
1960: Joined GE as a chemical
engineer 1972: Elected GEs youngest VP
1979: Vice Chairman
April 1, 1981: Became the 8th
Chairman and CEO of GeneralElectric
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Taking Over GE Challenges from outside of GE
Economic recession High interest rates Highest unemployment rate since the
depression
Challenges from GEMassive information and inefficient macro-
business
What is Welchs reaction to theseChallenges?
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Welchs Vision
A decade from now, I wouldlike General Electric to be
perceived as a Unique, high-spirited, Entrepreneurialenterprisethe mostprofitable, highly diversifiedcompany on the earth, with
world quality leadership inevery one of its productlines. -- Jack Welch
Three-Circle Vision for GE
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Restructuring the Hard Drive Challenged everyone to be better than the best
Sold more than 200 businesses and made over370 acquisitions
Insisted GE become more lean and agileresulting Delayering: elimination of the sector level
Downsizing: elimination of about 123,450 jobs
Divestiture: elimination of an additional 122,700 jobs
Replaced 12 of his 14 business heads
Willingness to change is a strength, even if it means plunging part of thecompany into total confusion for a while. ~ Jack Welch
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Initiatives - Objective Work-Out
Best Practices
Going Global Boundaryless Behavior
Six Sigma
E-Business
We bring together the best ideas turning the meetings of our topmanagers into intellectual orgies. ~ Jack Welch
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Did it work? Revenue
Culture?
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Jack Welch 1999: Named Manager of
the Century by Fortune
named one of the three mostadmired business leaders inthe world by Financial Times
September 7, 2001: Retiredas CEO
Published autobiography,Jack, Straight from the Gut
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Leadership Styles Autocratic
Makes decisions alone
Yields higher performance
Democratic Solicits input from group for decisions
Yields positive attitude
Laissez Fair Absence of managerial decision making
Yields negative attitudes
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Type ofPower Authority
Legitimate Power Was CEO: Position to tell others what to do
Reward Power Control over Rewards:
Performance reviews, pay increases, bonus
Coercive Power Control over punishment
Implementation of policies and administration of disciplinaryaction
Expert Power Has expertise or knowledge over the business
Had been with the company for 20 years when he became CEO
-foxnews.com
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Followership Success depends on how
well followers follow
Not just Jacks Company
GEs 100-year-plus track record is simply about having the very
best people at every single position. That is its number one corecompetency. No one has better people. When you get the bestpeople, you dont have to worry about execution, because theymake it happen.
-Larry Johnston, CEO of AlbertsonsFormer CEO of GE Appliances (1991-2001)
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Passing the Torch Retirement September 2001
Lengthy process of succession Internal candidates only
Never named candidates
No strategic vision
No common measure for candidates
Long list of candidates
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The New Guy JeffImmelt
GE Corporate Marketing - 1982
Plastics, Appliance, Medical President & CEO, GE Capital
Board - 2000
GE hit a home run with Welch and wanted to try again.
More profoundly, [Immelt] demonstrated a superiorcapacity to grow, which was the most important criterionin the choiceThey just knew he would have to rethinkand reinvent GE
-Geoffrey Colvin (Fortune)
-ge.com
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The End of an Era Reg Jones era (1981)
Built up immense financial strength
Saw profits and growth
Jack Welch era (1981-2001)
Superior leadership Profitable and immense growth
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GE Now Operates in 100+ countries worldwide
300,000+ employees worldwide
2006 revenue - $163.4 billion
2006 earnings - $20.8 billion
One of original six companies still
listed on Dow Jones index
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Leadership Continues
At the top, we dont run GE like abig company. We run it like a bigpartnership, where every leadercan make a contribution not justto their job, but to the entire
Company.
-JeffImmelt, CEO
Letter to Investors
2005 Annual Report
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http://www.schulersolutions.com/leadership_self_test_answers.html
http://money.cnn.com/magazines/fortune/fortune_archive/1989/03/27/7183/index.htm
http://www.ge.com
http://money.cnn.com/magazines/fortune/fortune_archive/2001/01/08/294478/index.htm
http://www.cnnmoney.com
http://www.nni.nikkei.co.jp/FR/TNKS/TNKSHM/welch/index.html
Abetti, P,(2006), Creativity and innovation Managerment, Case study: Jack Welvhs Creative revolutionary
Tranformation of General Electric and Thermidorea Reaction (1981-2004), V15 no.1, p74.
Bibliography