Ge's Two-Decade Transformation Jack Welch's Lea

11469 Words Apr 28th, 2011 46 Pages
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REV: MAY 3, 2005

CHRISTOPHER A. BARTLETT MEG WOZNY

GE 's Two-Decade Transformation: Jack Welch 's Leadership
On September 7, 2001, Jack Welch stepped down as CEO of General Electric. The sense of pride he felt about the company 's performance during the previous two decades seemed justified judging by the many accolades GE was receiving. For the third consecutive year, it had not only been named Fortune 's "Most Admired Company in the United States," but also Financial Times ' "Most Admired Company in the World." And, on the eve of his retirement, Fortune had named Welch "Manager of the Century" in recognition of his personal contribution to GE 's outstanding 20 year record. Yet while the mood at GE 's 2001 annual meeting
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In addition to his focus on strategic planning, Jones spent a great deal of time on government relations, becoming the country’s leading business statesman. During the 1970s, he was voted CEO of the Year three times by his peers, with one leading business journal dubbing him CEO of the Decade in 1979. When he retired in 1981, The Wall Street Journal proclaimed Jones a “management legend,” adding that by handing the reins to Welch, GE had “replaced a legend with a live wire.”

Welch 's Early Priorities: GE’s Restructuring
When the 45-year-old Welch became CEO in April 1981, the U.S. economy was in a recession. High interest rates and a strong dollar exacerbated the problem, resulting in the country’s highest unemployment rates since the Depression. To leverage performance in GE’s diverse portfolio of businesses, the new CEO challenged each to be “better than the best” and set in motion a series of changes that were to radically restructure the company over the next five years.

#1 or #2: Fix, Sell, or Close
Soon after taking charge, Welch set the standard for each business to become the #1 or #2 competitor in its industry—or to disengage. Asked whether this simple notion represented GE’s strategy, Welch responded, “You can’t set an overall theme or a single strategy for a corporation as broad as GE.” By 1983, however, Welch had elaborated this general “#1 or #2” objective into a “three circle concept” of his vision for GE. (See Exhibit 2.)
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