FLAME UNIVERSITY

Transformation at General
Electric
Group 11
Armin Chopra
Ketan Kush
Sahil Pandit
Sumiran Kulkarni

19
Q1. Describe the possible forces which made Jack Welch initiate change in strategy,
structure and culture of General Electric.

There are two types of forces which made Jack Welch initiate change in General Electric. These
changes are external and internal change.

A. External forces:

 Globalization :

Globalizing an organization means rethinking the most efficient ways to use resources,
disseminate and gather information and develop people. Jack Welch called for a borderless
company in which there are no mental distinctions between domestic and foreign operations or
between managers and employees. General Electric has locations in many different countries in
the world.

 Technological change:

Rapid technological innovation is another force for change in General Electric. Technological
innovations bring about profound changes because the innovation process promotes associated
changes in work relationships and organizational structures. The team approach adopted by
General Electric lead to flatter structures, decentralized decision making and more open
communication between leaders and members.

 Competition for efficient production:

Welch’s priority also eventually was projected towards the need to have a local presence. With
competition on a rise factors like excess cost, administrative inefficiency and complacency had
to be eliminated to minimize cost and maximize production that would win market share and
grow their local presence.

 Customer Demands:

Customers are what eventually guide the path that any company chooses, to cater to their
demand and keeping them loyal to stay in business. Welch realized that with changing times and
change in demand, the company is required to be able to utilize all its resources to the best of
their ability and hence programs like The Workout Program was introduced to use every single
employee from top to the bottom level in bringing efficiency to work.

B. Internal forces:

 Human Resources

A need to remove excessive management layers and increase in productivity was felt. Also
maximum utilization of human resource can only be achieved when every employee contributes
and does not have a laid back attitude. Hence a competitive work environment was required to be
created. Employees with exceptional work to be rewarded and employees with no work to be
removed. This risk-reward tension environment was then implemented to increases productivity
hence human resource acted as an internal force for change.

 Capital Resources

To get the maximum outcome from a limited capital Welch had to come up with a change in the
company. No company can survive without having capital resources. Once a company has
enough budgets, they can easily launch their projects and expand its scale. There are also several
ways for an enterprise to maintain stable budgets by some resources such as investment
opportunities, funding, and annual income. This acted as an internal force for change in the
company.

 Operational Efficiency

A need to eliminate unnecessary work was strongly required in General Electric to improve
efficiency. The business owners need to fully understand how their products manufactured, how
it is consumed and favorable by consumers, how their employees perform their tasks, what
improvements need to be made, etc. this where The Work-out Program came in, to foster
transformation characterized by trust, empowerment, elimination of unnecessary work, and
boundary less organization to improve business performance.

 Organizational Structure

The power to generate revenue in any business is in the hands of the employees. Excessive
management layers and corporate staffs would only invest more pressure that would reduce
productivity. Hence organizational structure acted as a force to remove unnecessary employees
and management levels which substantially reduced reporting, paper generation and increase in
individual decision making resulting in enormous improvements.

 Business portfolio

General Electric changed its business portfolio by focusing on three broad areas: Core, High
technology and service business. Hence the company maintained tie ups and joint ventures with
the top companies in the business and sold and closed businesses which did not fulfill the
criteria.

 Bottom up approach

The company followed a bottom up process, the aim of which was to empower the employees to
freely challenge their leaders without the fear of retribution. This was done because Jack Welch
thought that people doing the work are the best people to recommend improvements in how their
work should be managed.

 Soft skills

Jack Welch emphasized upon commitment to values. He insured that individuals start taking
responsibilities for decisions and actions. And hence, their performance will lead to leadership.
He created a new attitude in his employees.
Q2. How did the work-out program facilitate the process of change?

Work-out program is the initial step taken by GE as the central idea to create a forum where a
cross-section of employee in each business could speak their minds about how their business was
managed without the fear of getting punished. It is so because the employees who are actually
doing work were generally the best among the rest people to advice improvement in how their
work should be managed. This action was seen as the initial sub step in taking actions to remove
unnecessary work and improving the business processes. This thing was lacking in the company
before the Work-Out program and thus it was restricting the thought process of the individual as
the ideas were generating from the lower hierarchy but were not reaching to the senior leaders.
So the Work-Out program have bridge the gap between innovative thinking of ideas by talented
managers who were full of energy, enthusiasm and loyalty with respect to their actual
implementation in the reality. GE’s work-out program was a response to the desire to speed the
process of the organizational change in General Electric.

A collective result of the Work-out program reveals three interrelated purposes: to ignite a
process of continuous future improvement and changing the old approaches, to encourage
cultural transformation characterized by trust, empowerment, and withdrawal of unnecessary
work and lastly no boundaries in an organization with respect to improvement in business
performance.

The Key Elements Of Work-Out Were:

 Work-Out was held as a forum and in order to get away from the company’s environment
and not merely like old traditional way where the employees have to generate ideas and
talk about the topics within the working environment. So for two to three days Work-Out
events were held off the site of the company’s environment in order to have different
refreshed feeling.
 Work-Out Program focuses on main issues of organization and the key processes to it.
There was a critical biasness towards action-oriented sessions and the in the initial work-
out events tends to focus on removing the unnecessary sessions which will reduce the
workload. This was named as “low-hanging fruit”, further as the program started to
develop the work-out started focusing on more complex business processes. It was clear
 indictor that the work-out program was so much needed as its absenteeism lead to
unnecessary work in the organization and it removes many slack and unproductive
processes in the initial year hence it resulted in the performance improvement of General
Electric.

 Cross sectional participation in General Electric’s Work-Out program was a good sign
that between 50 to 100 employees drawn from all levels and all functions of a business.
The diverse people of various ideas were endless which helped the company in
improving the work processes. The critical part of the process was that the presence of
the top management of the particular business was also there which resulted that the
senior leaders were to listen the truth and reality with criticism along with the suggestion
from their own employees.
 Small Groups or Town Meetings were the part of the Work-Out program, it was
comprised with a series of small group meetings that used to begin with a good
brainstorming session which was further followed by the town meeting in which the
suggestions developed by the prior small groups were put in front of the senior managers
and then openly debated just to ensure that there is rational approach and no means of
biasness. At the end of each discussion the leader is required to make an immediate
decision at the very moment from the three options: To Adopt, To Reject or Defer for the
further study.
 Follow up comes as the last part of the structure of the Work-Out Program as it was the
critical element in order to ensure that what has been decided before and the same was
being implemented in actual process in present or in coming future.

The Results (Representative Examples)

In the wake of embracing Work-Out as a progressing action over a multi-year time frame,
Superabrasives division expanded gainful limit of activities by around 33% on resource base of
$750MM, as a result, including a virtual $250MM plant at no expense.
Utilizing Work-Out over a twelve-to eighteen-month time span, a Plastics division fabricating
site enhanced first pass yield from 95% to 98.3%, each point increment speaking to millions in
investment funds/productivity. What's more, in a similar division, different Work-Outs retouched
associations with a key decay/client and spared a $50MM deal whose misfortune had been an
inevitable end product.

A Silicones division with a sorry 40% to half achievement rate in meeting submit dates for item
conveyance enhanced to 75% because of arrangements recognized in Work-Out sessions. In one
year's time, Silicones, as a division, credited $8 to 10MM moreover direct to the main concern
(on a base of $40MM) because of escalated and across the board utilization of Work-Out.

GE Work-Out Implementation: How It Works

Unlike conventional methods of teaming, whereby problem-solving or “task” teams meet for
short periods over several weeks or even months, the heart of General Electric Work-Out is its
efficient, focused, multiple-day work sessions. These are carefully designed and closely
facilitated by one or more of our GE Work-Out-experienced Senior Associates.

In these high-performance work sessions, teams composed of internal “experts” who are closest
to the challenge – as well as representatives of customers, suppliers or other business partners,
where appropriate – thoroughly analyze a critical business issue and develop recommendations
for improvement.

Before the Work-Out session can be adjourned, relevant executive decision-makers must enter
the forum and render judgment on all team recommendations clearly, publicly and “on the spot.”
This kind of accelerated decision-making, along with unambiguous, public leadership
endorsement, serves as a solid foundation for Work-Out teams as they launch into Work-Out’s
accelerated implementation phase.

During implementation, teams will reconvene with executive decision-makers to check progress
at 30, 60 and, finally, 90 days, by which time most if not all of their work must be completed.
This short-cycle implementation timetable creates focus and a sense of urgency, accelerating the
achievement of the teams’ “stretch” targets and improvements.

Conducted individually or as a strategically orchestrated and complementary series of initiatives,

Work-Out can be a powerful force for getting results – fast – and for helping any company,
regardless of size, act and feel like a smaller, nimbler and more resilient enterprise.

GE Work-Out Implementation: How It’s Done

Gagnon Associates consultants helped GE launch Work-Out initially during the early 1990’s and
are some of the most experienced practitioners available.

We can guide you successfully through the Work-Out Phases pictured below so that your
business can achieve the kind of results for which Work-Out is so well-known.
Q3. How did the work-out program possibly help in curtailing resistance to change?

The various factors which resisted General Electric are:

 Reducing the centralization and bureaucracy:

General Electric had a firm and inflexible authoritative structure as they had extremely
limited expert and confined freedom for advancement. They additionally had a high level
of convention in the entirety of their procedures, for example, in power, correspondence,
and so on. The Work-Out program helped the association in turning into an increasingly
open association as it expelled every one of its arrangements and directions. Welch
needed the association to be dynamic and adaptable with the goal that it can without
much of a stretch adjust to the adjustments in the outer condition, the program presented
by him was an approach to abrogate every one of these organizations.

 Productivity and effectiveness:

General Electric did not have an adaptable authoritative structure which prompted
deferral in basic leadership, which decreased the proficiency of the representatives. The
representatives were not roused or were given any state in the basic leadership process.
Work – out program gave different advantages to the hierarchical, for example, brisk
basic leadership, cross-utilitarian correspondence, proficient procedures, non - redundant
work, development, and so forth which all lead to the expansion in the viability and
profitability for GE.

 Making communication more fluid and flexible:

General Electric did not have adaptable hierarchical structure, in which stream of
correspondence was limited. Work-Out Program helped GE by breaking the
communicational obstructions. The program helped the subordinates express their
perspectives and thoughts to the troughs and the best heads. The subordinates through
this program could express their inventive thoughts which were likewise actualized in the
 business once the endorsement is done on moment premise. This program helped by
giving a free stream of correspondence to every one of the representatives.

 Innovation driven organization:

General Electric had creative group who used to give new thoughts which would be
endorsed by the senior chiefs yet could were slacking the execution. The program
included various sessions which had in excess of 300,000 members which included
workers, clients, providers and best dimension of the board, through which new thoughts
were presented and actualized for the advancement of the association. These innovative
thoughts were actualized once they had got endorsement from the best dimension
administrations. The program likewise had a key component called "Development" in
which the procedures and thoughts which are to be executed are followed up until the
point that it is effectively introduced in the association.

 Removing slack in processes:

The program helped the association in expanding the proficiency and efficiency as the
adequacy of procedures and helped them getting changed over from complex to easier
ones. New thoughts which were attainable prompted a disentanglement of the
hierarchical structure and the procedures. The procedure was disentangled to the degree
that creation times in Gas motor turbines was decreased by 80%. Further, Aircraft motors
producing process time was diminished from 30 weeks to about a month.

 Coordination and control:

GE had a few layers of progressive system and the choices which should be taken needed
to pursue the request. The range of control was less, which lead to postpone in basic
leadership as announcing, paper age, and so on must be finished. The subordinates had
next to zero specialist to take choices which lead likewise prompted this deferral. Work-
Out Program has helped the association by expanding the correspondence and
coordination among different offices. Work-Out Program was a discourse which included
 every one of the individuals from different offices, which helped them in unravelling the
cross-departmental issues and issues. This lead to increment in coordination among
various dimensions of workers just as among different cross-capacities offices. This
additionally driven successful stream of thoughts from lower level workers to senior
administration.

 Lean Organization:

The quantity of workers had additionally decreased because of this program because of
different enhancements in profitability and procedures. The organization had nearly laid-
off their representatives by practically 26%, despite the fact that the organization had
expanding profitability results.

 Making operations and processes unique in nature :

As the Work-Out Program helped the association by expelling the communicational

hindrances and expanding the coordination among the different offices, which prompted
the aversion of dreary work. At the end of the day, the garbage work or the measure of
work which was rehashed was diminished by practically 60%.