GE Two Decade Transformation
Case 1: GE’s Two Decade Transformation: Jack Welch’s Leadership-HBS # 9-399-150
1. How difficult a challenge did Welch face in 1981? How effectively did he take charge?
Jack Welch became the CEO of GE back in April of 1981 when the economy was in a recession. He faced the highest unemployment rate during that time due to the high interest rates during the depression. Several other challenges came along with this position from the increase in competition and also being overshadowed by a longtime predecessor that completely changed the face of the company. Jack also had to immediately face the increase in competition from foreign companies looking to grab hold of the market share in the industry.
After taking over, Jack felt that in order for the company to move forward that they need to set themselves apart from the competition and be the best in the business. He felt that in order for GE to accomplish this task that the company needed to make some adjustments and create its own identity and standards to abide by. With all of the challenges facing the company, his mission was to completely restructure the company within the next 5 years and the standard was to be either #1 or #2 competitor in the industry. He planned to accomplish this task by following the “three circle concept” of improving Service, Technology and the Core.
Jack implemented a new strategy of Fix, Sell or Close. If a business was able to be fixed, then it was capable of being #1 or #2 amongst its competition, and if not then the business was sold or closed. Jack decided to prepare for the competition by parting ways with 12 out of 14 of the hired business heads. He wanted individuals that fit the company’s standards; a strong commitment to management values, a willingness to break away from the old company standards and culture set by his predecessor, and also has the ability to take charge.
Although these changes did not increase revenue between 1981 and 1985, his philosophy and
1. How difficult a challenge did Welch face in 1981? How effectively did he take charge?
Jack Welch became the CEO of GE back in April of 1981 when the economy was in a recession. He faced the highest unemployment rate during that time due to the high interest rates during the depression. Several other challenges came along with this position from the increase in competition and also being overshadowed by a longtime predecessor that completely changed the face of the company. Jack also had to immediately face the increase in competition from foreign companies looking to grab hold of the market share in the industry.
After taking over, Jack felt that in order for the company to move forward that they need to set themselves apart from the competition and be the best in the business. He felt that in order for GE to accomplish this task that the company needed to make some adjustments and create its own identity and standards to abide by. With all of the challenges facing the company, his mission was to completely restructure the company within the next 5 years and the standard was to be either #1 or #2 competitor in the industry. He planned to accomplish this task by following the “three circle concept” of improving Service, Technology and the Core.
Jack implemented a new strategy of Fix, Sell or Close. If a business was able to be fixed, then it was capable of being #1 or #2 amongst its competition, and if not then the business was sold or closed. Jack decided to prepare for the competition by parting ways with 12 out of 14 of the hired business heads. He wanted individuals that fit the company’s standards; a strong commitment to management values, a willingness to break away from the old company standards and culture set by his predecessor, and also has the ability to take charge.
Although these changes did not increase revenue between 1981 and 1985, his philosophy and