Using the case: "G.E.'s Two-Decade Transformation..." (Harvard Business School case, no. 9-399-150) by Christopher A. Bartlett and Meg Wozny:
1. How difficult a challenge did Welch face in 1981. How effectively did he take charge?
2. What was Welch's objective in the series of initiative he launched in the late 1980?s and early 1990's.? What was he trying to achieve in the round of changes he put in motion in that period? Is there a logic or rational supporting the change process?
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?
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?
1 How difficult a challenge did Welch face in 1981. How effectively did he take charge?
Welch encountered a very difficult situation in 1981; the economy was in a recession, almost one of the worst recessions any organization has witnessed since the Great Depression of 1929. The strong dollar was losing value and the unemployment rate was at an all time high. Interest rates were consistently on the incline during the time Welch took over as CEO of GE. Jack Welch was both a transformational and transactional leader who displayed an aggressive competitive style of leadership. He did not let the recession deter him from maintaining a competitive advantage over the competition. His philosophy was to ensure that GE was either #1 or #2 in their current industry. His strategy was to "fix, sell or close", for example, when Welch took charge of the company his objective was to fix the problems hindering GE from operating to its fullest potential; sell the company if it is more of a liability than an asset; or close the organization altogether and start from scratch (Wozny and Bartlett, 2005). Welch entered the organization with a strategic methodology that consisted of undergoing a comprehensive restructuring process that would eliminate the deadweight or terminate low-performers that are unproductive or unprofitable. Unfortunately, Welch came into the realization that his current management staff was unable to lead the corporation to success, therefore he proceeded with organizational downsizing. In essence, Welch's methods were extremely effective, his decision to downsize, destaff and delayer has awarded GE increased levels of profitability and an increase in sales revenue. For the most part, Welch's focus was geared towards much needed change, innovation and a fresh perspective.
Wozny, M. & Bartlett, C.A. ...
Economic conditions may pose a negative threat to an organization. Welch discovers that strong leadership and determination creates climactic results.