Jack Welch & GE

Question 1

List some characteristics of GE Prior to Welch’s tenure as CEO

Answer 1

• Formed from the merger of two firms, one of which was founded by Thomas Edison.
• GE’s history of innovation includes the lightbulb, electric locomotive, X-ray technology,
  improvements in vacuum tubes, key components of radios, television broadcasts, etc.
• Since 1890, GE has had only about a dozen CEOs.
• Before Jack Welch became CEO in 1981, GE had 43 (mostly unrelated) business units.
• The stock price was $1.25 per share.

Question 2

List personal traits of Jack Welch

Answer 2

1. Charismatic
2. Aggressive
3. Initimidating
4. Impulsive
5. Never Satisfied

Question 3

List ways Welch restructured GE

Answer 3

1. Fix-sell-close policy (top 1 - 2 performing firms)
2. Reinvestments of restructuring proceeds into more businesses
3. Reduced size of corporate functions, decentralized to the division level
4. WFRs by 75k people
5. 5-year profit increase of 50%

Question 4

List Management Innovations

Answer 4

1. Work-out (process improvement by lower level employees)
2. 4E
3. Stretch goals
4. Crotonville education center

Question 5

Describe 20-70-10

Answer 5

Reward top 20%, train top 70%, exit bottom 10%

Question 6

Describe a pitfall of 20-70-10

Answer 6

eliminated human and social capital, can create a culture of fear and risk aversion, and can generate negative public relations

Question 7

Describe Six Sigma

Answer 7

1. Most manufacturing and service processes follow a normal distribution.
2. 67% of output falls within one standard deviation of the mean; 95% falls within
   two standard deviations; 99% within three; only 3.4 of 1 million fall beyond six.
3. Thus, by reducing the standard deviation of processes (e.g., manufacturing lines),
   firms can reduce the incidence of errors and quality problems that hurt performance.

Question 8

Describe 360º feedback

Answer 8

1. Multiple people (e.g., subordinates, superior, and peers) evaluate each employee.
2. Provides comprehensive evaluations; encourages performance in multiple areas.

Question 9

List Diversifications Welch created

Answer 9

1. Made over 600 aquisitions
2. Expanded into Services
3. Expanded GE’s international presence

Question 10

GE performed poorly for 2 decades after Welch’s departure

Answer 10

true

Question 11

DOW Jones IA dropped GE in 2018

Answer 11

true

Question 12

List restructuring GE has undergone in the last several years

Answer 12

• Sold GE Advanced Materials in 2006.
• Sold GE Plastics in 2007.
• Completed the sale of NBC Universal to Comcast in 2013.
• Sold most of its appliance business in 2016.
• Sold most of GE Capital by 2021.
• Spun-off GE Healthcare in 2023.
• Spun-off GE Vernova (its energy business) in 2024.
• GE Aerospace (formerly GE Aviation) is the only remaining business.