Jack Welchs: Effective Strategic Leadership The year 1981 was a turning one in the career of Jack Welch. He succeeded Reg Jones and from now on Welch was the head of the General Electrics. From somebodys point of view Jack Welch was not the best candidate to be the new CEO of one of the leading and greatest companies. For many people it was inappropriate to see such a young (45 years old) man as a CEO. There were those who saw him as a playboy and those who thought of him as of a very aggressive man. But he was probably the best known CEO of GE who was on the top for the longest period.
That was his achievement that management became a profession. Welch behaved very sure in this position realizing that although everything looked good, there were changes needed. People disappeared, buildings vanished. Welch said that every GE business unit should be number one or number two in its market, or else. Or else what? “Fix it, sell it or close it. (1) His principal concern was a strategic planning that was integrated into the business units as well as made a line function of the company.
He was declared the meanest manager of the era by Forbes, and later on – the most effective one, too. His aggression let GE build its stock valuation far faster than most companies. (2) His aggressive strategy that led to the outstanding success of the company was based on the following three principles: 1. Aggressive weeding out of low-growth and low-market-share business units from its portfolio. Meaning that CEO wanted the company to have those business that let the company to be an absolute leader in the markets. 2. Aggressive acquisition of leading or up-and-coming stars.
The Essay on Problems in Setting Up and Running a Business Unit
A business unit, sometimes called a strategic business unit or SBU, is a segmented group or department within a company that focuses on reaching a specific market or client. It may also focus on achieving a specific goal for the organization. While some businesses find success with this strategy, there are concerns and potential problems to consider before trying it at your company. Finances In ...
(2) Welch was quick enough to make smart purchases of those business that were really strong. 3. Aggressive cost management. (2) There was a severe cost control and really fast sales growth. The managers were obsessed with bringing respective figures down, but not to be shown the door. His biggest change according to Welch himself was the move to a boundaryless company.
We got rid of the corner offices, the bureaucracy, the `not-invented-here’ syndrome. Instead, we got every mind in the game, got the best out of all our people.” (2) It is know that the work of CEO is thought as a strategic one. Strategy means actions one does again and again to raise long term profitability as well as long term competitive advantage. Profitability is built by delivering value meaning that a CEO should develop programs, processes, portfolios and put those in the places where these are designed to deliver value over the necessary long term. The Work Out program (which was aimed at involving all the companys employees into problem solving and innovation) and Six Sigma program (which resulted in reduction of defects to 3.4 per pillion operations) do meet this criterion. The long term competitive advantage can be increased by building on strengths. It is considered that the best strengths are culture and people. Welch dedicated much of his time to companys staff teaching the managers, reviewing yearly assessments of top 3,000 managers, writing personal notes to many of the people.
We learn a really valuable lesson from the Welchs strategy: You’ve got to be very tough when it comes to business strategy. (2) He was a cruel strategist but always tried to bring his company to the right place at the right time with the right offers. His work will still look great even in ten years after his retirement, especially if he picked up the right successor. The time will show. This is probably the toughest final test for every CEO – pick a successor, who is good enough to keep the good things you’ve left behind, and jettison the rest. That’s what Welch did to Jones, and it’s what Immelt will have to do to Welch.
The Term Paper on Time Management 2
Time Management skills are essential for successful people – these are the practical techniques which have helped the leading people in business, sport and public service reach the pinnacles of their careers. The 80:20 Rule This is neatly summed up in the Pareto Principle, or the “80:20 Rule”. This argues that typically 80% of unfocussed effort generates only 20% of results. The ...
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Bibliography:
1. Assessing Jack Welch. Published September 10, 2001. Retrieved from the Web December 13, 2004, http://www.mondaymemo.net/010910feature.htm 2. Hiam, Alex. When and How to Be Tough. What you can learn from GE’s Jack Welch, the toughest leader around.
Published November 05, 2001. Retrieved from the Web December 13, 2004, http://www.entrepreneur.com/article/0,4621,294309, 00.html.
