Ge Case Study
GE's Two Decade Transformation Case Analysis
1. How difficult a challenge did Welch face in 1981? How effectively did he take charge? In 1981, Jack Welch became the CEO of GE, following on the heels of a well-respected leader whom the industry heralded as “CEO of the year” several years in a row. Welch needed to find a strategy for GE to succeed in this economy to avoid being the CEO that broke what Reg Jones had built. In fact, when Reg announced his retirement, The Wall Street Journal wrote that Jones was a “management legend,” and that by handing the reins to Welch, GE had “replaced a legend with a live wire.” (Bartlett & Wozny, 2005, pg. 2). Welch had many of his own ideas of how things should be run at GE and had to figure out how to implement those changes without losing respect in the industry and losing the faith of his employees or customers. As with any leadership change, one of the largest challenges is determining how much change the company can sustain and at what pace to implement that change. As if it there these expectations were not enough to deal with, Welch also took over GE while the U.S. economy was in a recession and had the highest unemployment rate since the Great Depression. At the same time, GE was dealing with a new level of competition on the global scale, with many competitors from Japan working their way into GE’s market share. Welch was expected to provide a strategy for GE to grow and succeed in this challenging economy and develop a way to keep GE profitable. Jones was known for his strategic leadership and his implementation of “sectors” in the management structure of GE. This overhead was needed to manage the massive amount of strategic planning that was occurring in the company, but Welch saw potential in changing this hierarchical structure to a more simple structure. Welch saw Jones’ structure was inefficient and was quoted as saying “We don’t need the questioners and checkers, the nitpickers who bog down the
1. How difficult a challenge did Welch face in 1981? How effectively did he take charge? In 1981, Jack Welch became the CEO of GE, following on the heels of a well-respected leader whom the industry heralded as “CEO of the year” several years in a row. Welch needed to find a strategy for GE to succeed in this economy to avoid being the CEO that broke what Reg Jones had built. In fact, when Reg announced his retirement, The Wall Street Journal wrote that Jones was a “management legend,” and that by handing the reins to Welch, GE had “replaced a legend with a live wire.” (Bartlett & Wozny, 2005, pg. 2). Welch had many of his own ideas of how things should be run at GE and had to figure out how to implement those changes without losing respect in the industry and losing the faith of his employees or customers. As with any leadership change, one of the largest challenges is determining how much change the company can sustain and at what pace to implement that change. As if it there these expectations were not enough to deal with, Welch also took over GE while the U.S. economy was in a recession and had the highest unemployment rate since the Great Depression. At the same time, GE was dealing with a new level of competition on the global scale, with many competitors from Japan working their way into GE’s market share. Welch was expected to provide a strategy for GE to grow and succeed in this challenging economy and develop a way to keep GE profitable. Jones was known for his strategic leadership and his implementation of “sectors” in the management structure of GE. This overhead was needed to manage the massive amount of strategic planning that was occurring in the company, but Welch saw potential in changing this hierarchical structure to a more simple structure. Welch saw Jones’ structure was inefficient and was quoted as saying “We don’t need the questioners and checkers, the nitpickers who bog down the