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GENERAL ELECTRIC

GENERAL ELECTRIC. THE MOST ADMIRED CORPORATION. Jack Welch, Chief Executive Officer. Became CEO 18 1/2 years ago at age 45 Youngest chief in GE’s history Raised market value to $300 billion Builds talent Encourages Mergers & Acquisitions Changes corporate culture

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GENERAL ELECTRIC

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  1. GENERAL ELECTRIC THE MOST ADMIRED CORPORATION

  2. Jack Welch, Chief Executive Officer • Became CEO 18 1/2 years ago at age 45 • Youngest chief in GE’s history • Raised market value to $300 billion • Builds talent • Encourages Mergers & Acquisitions • Changes corporate culture • Responds rapidly and creatively to change

  3. Jack Welch, CEO Outward thinking Sense of Purpose Informality Work Out Competitive advantage Reward System Candor Agility Six Sigma Choice of New CEO Know how to measure success Why is GE a successful and admired corporation

  4. GE Thinks Outside Itself • Bureaucracy is focused inward • Designed a culture and reward system to encourage people to look outside the company

  5. Sense of Purpose • Employees have incentive to do well because of stock options • Employees gain personal satisfaction through their work • Plane Crash • New Light-Speed CT • 20 Second Body Scans • Pride in Product

  6. Advantages of Informality • People do not take themselves too seriously • The ability to make decisions quickly • People are self-confident enough to have real exchanges of ideas

  7. Work Out • Changing from old to new • Series of meeting with employees of all levels • Discussing ideas of change • Process of building self confidence

  8. Work Out • Town Meetings • Employees & Supervisors • Exchange of Ideas • 85% of Issues Resolved Immediately

  9. Organization’s Biggest Advantage • Ability to learn • Share that learning • Act on that learning

  10. Avoid “NIH” Syndrome • Learn Everyday • Find a Better Way • Learn from Other Companies - Toyota - Wal-Mart

  11. The Reward System • Align the reward system with the values that you want • Arrange the system so that everyone is motivated to do the best job possible • Get everyone to cooperate, help, and share their talent • Reward team work

  12. CANDOR • Be informal • Build Trust • Candor comes naturally

  13. AGILITY • Agility must be present in your thinking and in your actions • Companies strengths must be used • Weaknesses have to be reduced • A company has to be able to make changes

  14. Six Sigma • Management policy designed to get people to do their best • Designed to ensure quality work • People are trained to do their best • Gives employees something to strive for

  15. SIX SIGMA IMPROVES YOUR SCORE • If you played 100 rounds of golf per year, and played at: • 2 sigma - you'd miss 6 putts per round • 3 sigma - you'd miss 1 putt per round • 4 sigma - you'd miss 1 putt every 9 rounds • 5 sigma - you'd miss 1 putt every 2.33 years • 6 sigma - you'd miss 1 putt every 163 years!

  16. How to determine the company’s success • Are the customers satisfied? • Are the employees satisfied? • How good is your cash flow?

  17. Keys to Success • Energy • Sense of Purpose • Informality • Work-Out • Value System • Culture

  18. Things to Remember • Alignment of Values & Reward • Customer Satisfaction • Employee Satisfaction • Cash Flow • Speed • Simplicity • Self-Confidence

  19. Globalization • Not only to grow by selling and servicing • the global markets • Globalizing every activity of the company • – sourcing of raw materials, components, • and products • Attracting the best people from the world

  20. Services • Invest in businesses to improve the Performance of installed base and the way it is actually serviced • Go beyond servicing to reengineer the installed base by using higher technology • Dramatically improve customers’ competitive positions

  21. e-Business • Internet explosion has brought about an Incredible change in the way things can be done • Rapidly change dealings with vendors, partners, and customers • Represents the greatest opportunity for growth that the company has ever seen

  22. Six Sigma • Disciplined methodology of defining, Measuring, analyzing, improving, & controlling every aspect of the company • Ultimate goal of virtually eliminating all Defects – changed the DNA of GE • The way they work, in everything they do And in every product they design

  23. GE Leaders...Always with unyielding integrity Are passionately focused on driving customer success Live Six Sigma Quality . . . ensure that the customer is always its first beneficiary . . . and use it to accelerate growth • Insist on excellence and are intolerant of bureaucracy Act in a boundaryless fashion . . .always search for and apply the best ideas regardless of their source Prize global intellectual capital and the people that provide it . . . build diverse teams to maximize it

  24. See change for the growth opportunities it brings . . . i.e., "e-Business" Create an environment of "stretch," excitement, informality and trust . . . reward improvements . . . and celebrate results • . . . the "4-E's" of GE leadership: the personal Energy • to welcome and deal with the speed of change . . . the • ability to create an atmosphere that Energizes others • . . . the Edge to make difficult decisions . . . and the • ability to consistently Execute Create a clear, simple, customer-centered vision . . . and continually renew and refresh its execution

  25. GE Facts Reported in CEO’s Annual Address in 2000 • Revenues rose 11% to $112 billion, a record. • Earnings increased 15% to $10.7 billion, • the first time GE has broken the $10 billion mark in • earnings from operations. • Earnings per share were up 15%. • Free cash flow was a strong $11.8 billion, up 17%. • Our ongoing operating margin rate grew to 17.8%, • a gain of more than a full point from '98 and the • third straight year of more than a full point improvement.

  26. GE Facts Reported in CEO’s Annual Address in 2000 • Working capital turns hit an all-time high of 11.5 — an improvement of 2.3 turns. The 80% improvement in this key performance measure over the past three years has added $4 billion to cash flow. • GE made 134 acquisitions in 1999, worth almost $17 billion. This marks the Company's third year in a row with over 100 acquisitions, totaling over $51 billion.

  27. GE’s Stellar Performance Record

  28. Summary • The company must have a positive, forward-looking chief executive. • It must look outside itself for ideas and inspiration. • The people must have a sense of purpose. • The people should remain informal. • The company must be willing and able to change.

  29. Summary Continued • The employees must be able to work together. • Maintain a competitive advantage. • The reward system must be designed to achieve the company’s goals. • The company must be agile. • A quality process should drive everything they do.

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