Professional Documents
Culture Documents
Core
Support “reinventing in Outside
Ladd petroleum production & quality” Housewares
Semiconductor Central AC
GE trading co Lighting TV & audio
Utah Mining Major appliances Cable
Motor transportation Mobile
Venture Turbine construction Power delivery
Calma Equipment Radio stations
Welch’s Early Priorities : GE’s Restructuring
• April 1981 : 45-year-old Welch became GE’s CEO
– US economy was in a recession : high interest rate, strong dollar , highest unemployment rate since
the depression
– To leverage performance in GE’s diverse portfolio of business, the new CEO challenged each to be
“better than the best” and set “radical restructuring”
• 1981 – 1990 : Fix –Sell-Close
– freed up over &11 bio of capital by selling off more than 200 businesses (25% of 180 sales)
– 370 acquisitions
– investing $21 bio to purchase Westinghouse’s lighting business, employers insurance, RCA, Kidder
Peabody, Thompson/CGR, the French Medical imaging company
• Internal restructuring : Hardware restructuring
– “Lean and agile” : highly discipline destaffing proces (50% reduction of 200 person strategic planning
staff)
– De-bureaucracy & downsizing
– Real time planning with “five-page strategy playbook” : current market dynamic, competitor’s key
recent activities, GE business response, the greatest competitive threat over next 3 years, GE
business’s planned response
– Redefined budgeting response evaluating againt external competitively based
– Delayering in organization structure
– result of downsizing, destaffing, and delayering :
1981-1988 : eliminated 59,290 salaries & 64,160 hourly positions
Divestiture : eliminate 122,700
Declining number employee
The Late 1980s : 2nd Stage of the Rocket
• Mid 1980s - Hardware Restructuring : to boost productivity by restructuring, de-
bureaucracy, and downsizing
• 1989 : Software Restructuring – Cultural Change
– Articulate the management style : openness, candor, & facing reality
– Culture : speed, simplicity, and self-confidence
– The software initiative : Work-out & best practices
• Late 1988 : Work-out
– A process designed to get unnecessary bureaucratic work out the system, while
providing a forum in which employees and their bosses could work out new ways of
dealing with each other
– Result :
• Mid 1992 : over 200.000 GE employees (2/3 total) had participated in Work-Out
• Increased productivity : 2% (1981-1987) to 4% (1988 – 1992)
• Summer 1988 : Best Practices
– Focused : effective processes, customer satisfaction, threated supplier as partner, emphasizing
the need for a constant stream of high quality new product
– New training program
GE Performance in Three Eras (mio-$)
Borch Jones Welch
1961 1970 1971 1980 1981 1990 1998
Sales 4.666,6 8.726,7 9.557 24.950 27.240 52.619 100.469
84
63
42
21
0
1987 1991 1995 1996 1997 1998
15
45 45 33 33
55 55
85 62 75
Product
Service
Six Sigma Result : 1996 - 1999
2500
2000
1500
1000
500
0
1996 1997 1998 1999
Cost benefit