1. Jack Welch launched a number of initiatives on taking charge of GE in 1981. Was there a strategy that was the driving force behind the initiatives? Were the initiatives effective in accomplishing what Welch was aiming for?

When Welch became the CEO of GE in 1981, the US economy was reeling under recession. The challenge lied before the Welch to set a strategy to remain profitable through the recession and continue to be so. Welch responded by employing a strong strategy supplemented by the necessary structural changes. Welch followed the strategy of “as a unique, high spirited, entrepreneurial enterprise…… the most profitable, highly diversified company on earth with world quality leadership in every one of its product lines.” Clearly, Welch wanted the GE to be entrepreneurial, most profitable, diversified and quality leader this was the driving force behind the initiatives.

Welch took the following initiatives, their effectives is tested below:
a) Sell of Close – To be most profitable, GE needed to be in the business in which they had leadership and earning profits. And to come out of the businesses which were not profitable. Welch clearly articulated this by guiding to be either #1 of #2 in business of get out of it. As a result, GE sold more than 200 businesses. This initiatives was in perfect line with the strategy. Only by remaining #1 or #2, GE could remain most profitable.

b) Diversification – GE made over 370 acquisitions, clearly moving on its strategy of diversification. Acquisitions made were in diversified fields.

c) Lean and Agile – Profitability also arise from the internal efficiency. An envisioned in the strategy, to be quality leader of world, GE needed to have a lean and agile workforce. Value addition test brought to the individual level by making each individual to thick how did he add value. Major lay offs were made.

d) Chip away bureaucracy – Welch scrapped the GE’s laborious strategic planning system and replaced real time planning. This in sync with the strategy of unique, high spirited enterprise.

e) Revamping budgeting process – The budgeting process was radically changed from documenting internally focused comparisons with past performance to then evaluated against external competitively based criteria.

f) Sector level removed – Hierarchical levels reduced from 9 to 4, a right move to have a high spirited entrepreneurial enterprise.

The above initiatives driven by the strategy proved very effective and achieved their desired results.

2. In the late 1980s and early 1990s, Welch launched a new set of initiatives. Again, what was Welch trying to accomplish? How strong was the fit between strategy and the initiatives selected to implement the strategy?

The major structural changes in the first phase set the foundation for the more higher level changes “Software changes” that followed in late 1980s. The right hardware was then in place and the productivity was to be achieved by “Cultural change”. Then Welch followed the strategy of “a place to work where people have freedom to be creative and bring out their best and where a sense of accomplishment is rewarded by pocketbook and soul” Clearly, Welch wanted the GE to leverage its structural changes through soft initiatives.

Welch took the following initiatives, their effectives is tested below:
a) “Work Out” – It was a process designed to get unnecessary bureaucratic work out of the system while providing a forum in which employees and their bosses would work out new ways of dealing with each other. By 1992, over 2,00,000 GE employees – over two-third of the workforce- had participated in the work out. Work outs opened up a new culture of openness, reality facing, open discussion. It was perfectly aligned with the strategy by building up the culture. Work outs proved to be great success.
b) Going global – The criteria of #1 or #2 was raised a bar up by comparing this position in the world market then.
c) HR practices – Employees were considered company resource. Their compensation packages were revised by bonuses based on business performance, stock options became primary component of management compensation. Steps were taken to create an environment where people brought out their best and rewarded accordingly.
d) Leadership – Special attention was given to developing the leadership bench. A very apt move to create and sustain the superior cultural changes.

The above initiatives driven by the strategy proved very effective and achieved their desired results.

3. By the mid 1990s, most conglomerates (unrelated diversified companies) were being broken up. How did GE escape this trend under Welch? Can the Welch model be sustained up to year 2020? Why or why not?

The GE escaped the trend by developing “boundary less behavior”. Welch moved to develop the “Integrated diversity” to give a feeling of integration among the diversified businesses. Each business was to learn from other through the concept of “Best Practices”. The concept brought the integration in the company, increased efficiency by employing best practices.

Welch model is suited to the contemporary environment and challenges. However, the challenges upto year 2020 would be very different.
a) E-business challenge – GE has made the right move towards e-business which are expected to be grown in importance in the years to come.

b) Cultural change – The cultural change for the year 2020 would be very different. The work force is undergoing fundamental changes. To provide them an atmosphere of creativity and to bring best out of them, a cultural change would be needed. The GE would have to move towards a culture driven by social networks, work from home etc. concepts. GE need to rise to these challenge.

c) Service sector – Service sector will grow immensely in importance. GE is already taken firm steps in services sector and is moving towards it. They are rightly poised to take advantage of this development.