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DONOTCOPYHarvardBusinessSchool5-300-019Rev.June5,2000ThisnotewaspreparedbyProfessorChristopherA.BartlettforthesolepurposeofaidingclassroominstructorsintheuseofGE'sTwo-DecadeTransformation:JackWelch'sLeadership,HBSNo.399-150.Itprovidesanalysisandquestionsthatareintendedtopresentalternativeapproachestodeepeningstudents'comprehensionofbusinessissuesandenergizingclassroomdiscussion.Copyright©1999bythePresidentandFellowsofHarvardCollege.Toordercopiesorrequestpermissiontoreproducematerials,call1-800-545-7685,writeHarvardBusinessSchoolPublishing,Boston,MA02163,orgoto—electronic,mechanical,photocopying,recording,orotherwise—withoutthepermissionofHarvardBusinessSchool.1GE'sTwo-DecadeTransformation:JackWelch'sLeadershipTeachingNotePartI:Overview,ObjectivesandAssignmentsCaseDescriptionOverviewThiscase,thelatestinaseriesthathavefollowedJackWelch’stenureasCEOofGeneralElectric(GE),providesanoverviewofthekeyactionshehastakenandinitiativeshehaslaunchedaimedatrevitalizingandeventuallytransformingthishighlydiversifiedcompany.1Beginningin1981,thecaseoutlineshisradicalrestructuringofthecompanyinthefirstpartofthedecade.Itthendescribeshisshiftinfocusinthelatterpartofthe1980sasheemphasizestheneedtochangeculturalvaluesandmanagementmindsetsthroughprogramssuchasWork-Out.Simultaneously,hestartsexpandingthecompanyonitsnewlyrestructuredbasethroughstrategicinitiativessuchashisglobalizationprogram.ThecasefollowsWelch’sinitiativesintothe1990sashecontinuestochallengeoldmanagementnormsbyemphasizingboundarylessbehaviorandstretchtargets,whilealsopushingnewstrategicagendassuchasthegrowingemphasisonservices.Finally,itdescribeshisactionintheclosingyearsofthedecadeashecontinuestoworkonGE’smanagementdevelopmentwhilelaunchinghisSixSigmaande-businessinitiatives.Throughout,thecasefocusesonthestrategic,organizationalandmanagerialleversthatWelchengagesasheleadsatwo-decadeprocessoftransformationalchange.Beyonddescribinghis1OtherearliercasesincludeGeneralElectric:StrategicPosition1981,HBSNo.381-174;GeneralElectric,1984,HBSNo.385-315;GeneralElectric:RegJonesandJackWelch,HBSNo.391-144;andGeneralElectric:JackWelch’sSecondWave(A),HBSNo.391-248and(B),HBSNo.392-113.DONOTCOPY300-019GE'sTwo-DecadeTransformation:JackWelch'sLeadership2broadimplementationapproach,thecasealsodocumentstheimpacthisactionshaveonthecompany’ssourcesofcompetitiveadvantage.Whenusedwithavideotapeofhisevolvingviewsandemphasisoverthetwo-decadeperiod,thecasebecomesapowerfulvehicleforstudyingavarietyofissuesincludingleadership,strategyimplementation,organizationalchange,andcorporatetransformation.TeachingObjectives/PurposeThecasecanbeusedformultiplepurposesinavarietyofcourses,includingbusinesspolicy,leadership,strategy,generalmanagement,organizationalbehavior,andchangemanagement.Becauseofthetopmanagementperspective,thelongtimeperiodofchange,andthecomplexityofthecompany,itisprobablymoreappropriatelyplacedneartheendofacoursethanthebeginning.Indeed,itstraditionalpositioninmanycourseshasbeenastheconcludingcapstonecase.IthasbeenusedsuccessfullywithbothMBAandexecutiveeducationaudiences.Dependingoncoursedesign,theinstructormaywishtoemphasizeoneormoreofthefollowingmanagerial,organizational,andstrategicteachingthemes:TheroleoftopmanagementinleadingchangeTheprocessofstrategicandorganizationaltransformationThecorporateroleinadiversifiedcompanyAssignmentQuestionsAssignmentquestionswillvarydependingontheteachingpurpose,butthisnoteisdesignedtohighlighttheroleoftopmanagementinleadingcorporatetransformationandrenewal.Thefollowingassignmentquestionsaresuggested:1.HowdifficultachallengedidWelchfacein1981?Howeffectivelydidhetakecharge?2.WhatisWelch’sobjectiveintheseriesofinitiativeshelaunchedinthelate1980sandearly1990s?Whatishetryingtoachieveintheroundofchangesheputinmotioninthatperiod?Istherealogicorrationalesupportingthechangeprocess?3.Howdoessuchalarge,complexdiversifiedconglomeratedefythecriticsandcontinuetogrowsoprofitably?HaveWelch’svariousinitiativesaddedvalue?Ifso,how?4.WhatisyourevaluationofWelch’sapproachtoleadingchange?HowimportantishetoGE’ssuccess?Whatimplicationsforhisreplacement?RelatedReadingsandVideoTheteachingnoteisdesignedtohighlightsomeoftheconclusionsfromamulti-companyresearchprojectreportedindetailedinSumantraGhoshalandChristopherA.Bartlett,TheIndividualizedCorporation(HarperBusiness,1997).InparticularthecasehighlightslessonsontransformationalchangedrawnoutindetailinChapter9,“ManagingtheTransformationProcess.”Thischapterisalsoadaptedasthefollowingarticles(whichIprefertodistributeafterclassdiscussiontoallowstudentstodeveloptheirownmodelandconclusions):BartlettandGhoshal,DONOTCOPYGE'sTwo-DecadeTransformation:JackWelch'sLeadership300-0193“RebuildingBehavioralContext,”Parts1and2,SloanManagementReview,Vol.37,No.’s1and2(Fall95andWinter96).Otherappropriatearticlesthatmightbeassignedwiththiscaseorusedtodeveloprelatedlecturematerialwouldinclude:Campbell,An