Ge’s Two-Decade Transformation: Jack Welch’s Leadership Harvard Case Solution & Analysis


General Electric was founded in 1878 by Thomas Edison. The primary focus of the company was on generation, distribution and use of power which led the company to the peak of the success. After a century from its inception the business engaged into diversified products and services such as household appliances, lighting, aircraft engines, medical systems and diesel locomotives. In 1892 Edison merges with Thomas Houston Electrics.

The company has unremittingly transformed its leadership styles over the time period. In 1930’s the company has practiced highly centralized leadership style. Where all the decisions of the company were tightly controlled by a single management unit. The company has practiced this management style from 1930’s to 1950’s.

In early 1950’s GE has opted decentralized management style by delegating the responsibilities of the business to hundreds of department managers. In 1960’s the company strengthened its corporate staffs and developed refined and cultured strategic planning systems because the company went into profitless growth.

Jack Welch has done his Master of Science and Ph.D. degree from the University of Illinois. After finishing his education, General Electric Corporation (GE) hired Welch in the Plastics department as a chemical engineer. Because of regular promotions in his career he became the CEO of one of the chief diversified company (GE) General Electric in April 1981, when he was 45 years old.

He had made his back breaking efforts to run the company efficiently and effectively he took the operations of the company very seriously, he managed the affairs of the company by setting up effective strategies. This led the company to achieve the award of most admired company in the United States in the era when the US economy was plunged into recession.

During 1981 and 1990 Jack Welch freed up approximately $11 billion in capital by selling over 200 of its own businesses. He has done this to craft an exact emphasis on a corporate plan. On the other hand, Welch accomplished approximately 370 procurements which permitted the company additional emphasis their efforts. Welch has sold these businesses in order to downsize the corporate layers of the company.

Welch shaped a “lean and agile” business corporation. Welch, throughout his initial years, started to formulate the company’s corporate level to face the future competitive challenges efficiently and effectively and to stand strong even in the situation when the industry was plunged into recession. Keeping this in view, he sustained to eradicate bureaucracy by plummeting the figures of hierarchical stages from nine to four.

His main objective behind this is that he want to assure that all employees at all levels reports directly to him. In order to achieve this he had eliminated 123000 positions in order to downsize the company. This has also increased the overall effectiveness of the operations as well the motivational level of employees because of direct communication. Thus, it resulted in overall profitability of the company.

Welch thrived in transmuting General Electric and making energetic organizational culture. The motivational strategy implemented by him made a strong understanding of psychological contract. It assisted him in creating finest leaders as well as this has helped the company in becoming a worldwide forerunner.

The predecessor of Jack Welch was Reg Jones; he had served as a CEO of the company from 1973 to 1980. He became the CEO of the company when the company had just completed its reorganization. In the restructuring the company had overlaid it 10 groups, 46 divisions, and 190 departments with 43 strategic business units.

In his era, GE became benchmark for other companies as the other companies mock the hierarchical structure and planning process. During his time period he was unable to review and approve massive volumes of information generated by 43 SBU’s. He shaped a layer on GE’s departments, divisions, groups and SBU’s with sectors. He was awarded three times as the CEO of the year and CEO of the decade as well as management legend and leading business statesman.

The successor of Jack Welch is Jeffrey R Immelt. Immelt was born in 1956 in Ohio, he had joined GE’s marketing division after completing his MBA. He became the CEO of the company in 2001 just before the event of 9/11. Immelt yielded to investors demand to ensure pellucidity. He focused on excessive marketing than production, moreover, he also focused on innovation and creativity. He also make his back breaking efforts in reorganizing General Electric’s portfolio and equity packages............

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