Change Management

Assignment No. 09

Change Management in an Organisation

Submitted to: G Malik

Submitted by: M U Nawazish

Submission Date: 09th June 2010

Course: PGD Strategic Business Management

Subject: Leadership and Change Management

1 | P a g e L e a d e r s h i p & C h a n g e M n g m t B y M U N a w a z i s h

Table of Contents

PARTICULARS PAGE NO.

INTRODUCTION 04

COMPANY’S HISTORY 06

WHAT IS CHANGE MANAGEMENT 08

Types of Change Management 09

WHAT CHANGE REQUIRED 10

Forcefield Analysis 10

MAJOR CHANGES IN GE 11

Merger & Acquisition 12

Restructuring 16

Reconfiguring the Business Portfolio 18

Changing the Structure 19

Changing Management System & Processes 20

Corporate Initiatives 20

The Boundary-less Organization 21

Globalization 21

Six Sigma 21

WHY CHANGE REQUIRED IN AN ORGANIZATION 22


NEED AND FORCES FOR CHANGES IN GE 23

Controlling Bureaucracy 23

Lack of Sharing Information 23

Winning Competitive Advantage 23

For Expanding the Business 24

Advancement of Technology 24

HOW TO MANAGE CHANGE 24

Styles of Managing Change 25

Roles in Managing Change 26

ROLE OF LEADERSHIP IN GE 27

GE as an Executive Farm Club 28

Key Lessons for Developing Leadership 28

WHY DO PEOPLE RESIST CHANGE 29

Barriers that Occurs during the Change in GE 30

HOW TO AVOID RESISTANCE TO CHANGE 32

CONCLUSION 33

REFERENCES 34


INTRODUCTION

The history of General Electric Company is a significant part of the history

of technology in the United States. General Electric (GE) has evolved from

Thomas Edison's home laboratory into one of the largest companies in the

world, following the evolution of electrical technology from the simplest

early applications into the high-tech wizardry of the early 21st century. The

company has also evolved into a conglomerate, with an increasing shift

from technology to services, and with 11 main operating units: GE

Advanced Materials, a specialist in high-performance engineered

thermoplastics, silicon-based products, and fused quartz and ceramics

used in a wide variety of industries; GE Consumer & Industrial, which is

one of the world's leading appliance manufacturers, stands as a

preeminent global maker of lighting products for consumer, commercial,

and industrial customers, and also provides integrated industrial

equipment, systems, and services; GE Energy, one of the largest

technology suppliers to the energy industry; http://en.wikipedia.org/wiki/General_Electric

GE Equipment Services, which offers leases, loans, and other services to

medium and large businesses around the world to help them manage their

business equipment; GE Healthcare, a world leader in medical diagnostic

and interventional imaging technology and services; GE Infrastructure,

which is involved in high-technology protective and productivity solutions in

such areas as water purification, facility safety, plant automation, and

automatic environmental controls; GE Transportation, the largest producer


http://en.wikipedia.org/wiki/General_Electric

of small and large jet engines for commercial and military aircraft in the

world, as well as the number one maker of diesel freight locomotives in

North America; NBC Universal (80 percent owned by GE), a global media

and entertainment giant with a wide range of assets, including the NBC and

Telemundo television networks, several cable channels, and the Universal

Pictures film studio. http://www.ge.com/products_services/media_entertainment.html

GE Commercial Finance, which provides businesses, particularly in the

mid-market segment, with an array of financial services and products,

including loans, operating leases, and financing programs; GE Consumer

Finance, a leading financial services provider, serving consumers, retailers,

and auto dealer in about three dozen countries; and GE Insurance, which is

involved in such areas as life insurance, asset management, mortgage

insurance, and reinsurance. The staggering size of General Electric, which

ranked fifth in the Fortune 500 in 2003, becomes even more evident

through the revelation that each of the company's 11 operating units, if

listed separately, would qualify as a Fortune 500 company. GE operates in

more than 100 countries worldwide and generates approximately 45

percent of its revenues outside the United States. Over the course of its

110-plus years of innovation, General Electric has amassed more than

67,500 patents, and the firm's scientists have been awarded two Nobel

Prizes and numerous other honours. http://www.ge.com/company/worldwide_activities/index.html


http://www.ge.com/company/worldwide_activities/index.html

http://www.ge.com/products_services/media_entertainment.html

Company’s History

The General Electric Company, or GE (NYSE: GE), is an American

multinational conglomerate corporation incorporated in the State of New

York. In 2009, Forbes ranked GE as the world's largest company. The

company has 304,000 employees around the world.

By 1890, Thomas Edison had brought together several of his business

interests under one corporation to form Edison General Electric. At about

the same time, Thomson-Houston Company, under the leadership of

Charles A. Coffin, gained access to a number of key patents through the

acquisition of a number of competitors. Subsequently, General Electric was

formed by the 1892 merger of Edison General Electric of Schenectady,

New York and Thomson-Houston Company of Lynn, Massachusetts, and

both plants remain in operation under the GE banner to this day. The

company was incorporated in New York, with the Schenectady plant as

headquarters for many years thereafter.

In 1896, General Electric was one of the original 12 companies listed on

the newly-formed Dow Jones Industrial Average and still remains after 114

years, the only one remaining on the Dow (though it has not continuously

been in the DOW index).

In 1911 the National Electric Lamp Association (NELA) was absorbed into

General Electric's existing lighting business. GE then established its lighting


division headquarters at Nela Park in East Cleveland, Ohio. Nela Park is

still the headquarters for GE's lighting business.

RCA

The Radio Corporation of America (RCA) was founded by GE in 1919 to

further international radio. GE used RCA as its retail arm for radio sales

from 1919, when GE began production, until separation in 1930. RCA

would quickly grow into an industrial giant of its own.

Power Generation

GE's long history of working with turbines in the power generation field

gave them the engineering know-how to move into the new field of aircraft

turbo superchargers. Led by Sanford Moss, GE introduced the first

superchargers during WWI, and continued to develop them during the

Interwar period. They became indispensable in the years immediately prior

to WWII, and GE was the world leader in exhaust-driven supercharging

when the war started. This experience, in turn, made GE a natural selection

to develop the Whittle W.1 jet engine that was demonstrated in the US in

1941. Although their early work with Whittle's designs was later handed to

Allison Engine Company, GE Aviation emerged as one of the world's

largest engine manufacturers second only to the well founded, and older,

British company; Rolls-Royce plc, who led the way in innovative, reliable,

and efficient high performance heavy duty jet engine design and

manufacture.

Computing

GE was one of the eight major computer companies through all of the

1960s — with IBM, the largest, called "Snow White" followed by the "Seven

Dwarfs": Burroughs, NCR, Control Data Corporation, Honeywell, RCA,


UNIVAC and GE. GE had an extensive line of general purpose and special

purpose computers. Among them were the GE 200, GE 400, and GE 600

series general purpose computers, the GE 4010, GE 4020, and GE 4060

real time process control computers, and the Data net 30 message

switching computer. A Data net 600 computer was designed, but never

sold. It has been said that GE got into computer manufacturing because in

the 1950s they were the largest user of computers outside of the United

States federal government. In 1970 GE sold its computer division to

Honeywell. This group, including Burroughs, UNIVAC, NCR, Control Data

Corporation and Honeywell, were usually, within the industry itself, referred

to as the "BUNCH", not as the "Seven Dwarfs", whereas IBM has always,

within the industry itself, been referred to as "Big Blue", and still is. http://en.wikipedia.org/wiki/General_Electric

What is Change Management???

“Change management is a structured approach to transitioning individuals, teams, and organisations from a current state to a desired

future state”.

Change management (or change control) is the process during which the

changes of a system are implemented in a controlled manner by following a

pre-defined framework/model with, to some extent, reasonable

modifications.

The field of change management grew from the recognition that

organisations are composed of people. And the behaviours of people make


http://en.wikipedia.org/wiki/General_Electric

up the outputs of an organisation.

(http://en.wikipedia.org/wiki/Change_management)

We can define change management in the following categories:

(Strategy into Action Page No. 506)

Adaptation:

Adaptation is change which can be accommodated within the current paradigm and occur incrementally. It is the most common form of change in the organisations.

Reconstruction:

Reconstruction is the type of change which may be rapid and could involve a good deal of upheaval in an organisation, but which does not fundamentally change the paradigm. It could be a turnaround situation where there is need for major structural changes or major cost-cutting programme to deal with a decline in financial performance or difficult or changing market conditions.

Evolution:


Scope of Change

Nature of Change

Realignment Transformation

Incremental Adaptation Evolution

Big Bang Reconstruction Revolution

http://en.wikipedia.org/wiki/Change_management

Evolution is the change in strategy which requires paradigm change, but over time. It may be that managers anticipate the need for transformational change, perhaps through the sort of analytical technique. They may then be in a position of planned evolutionary change, with time in which to achieve it. Another way in which evolution can be explained is by conceiving of organisation as ‘learning system’, continually adjusting their strategies as their environment changes.

Revolution:

Revolution is a change which requires rapid and major strategic and paradigm change. This could be in circumstance where the strategy has been so bounded by the existing paradigm and established ways of doing things in the organisation that, even when environmental or competitive pressures might require fundamental change, the organisation has failed to respond. This might have occurred in many years and resulted in circumstances where pressures for change are extreme –for example, a take over threatens the continued existence of a firm.

It is therefore helpful to have a view that what type of change is required.

What Change is Required???

First of all this fact is very important that what change is required in the organisation, what problems need to be tackled what kind of things enforcing the change and what factors are apposing the change process.

Forcefield Analysis:

Forcefield analysis is a technique that used in the organisations to know what are the forces in favour of change and forces blocking the change process.


“A Forcefield Analysis provides an initial view of Change problems that need to be tackled, by identifying Forces for and against

Change”.

When we apply Forcefield analysis on any organisation it allows following questions to be asked:

What aspects of the current situation might aid change in the desired direction and how might these be reinforced?

What aspects of the current situation would block such change, how can these be overcome?

What needs to be introduced or developed to aid change?

MAJOR CHANGES IN GENERAL ELECTRIC

GE's economic problems were mirrored by its managerial reshuffling. When

John F. (Jack) Welch, Jr., became chairman and CEO in 1981, General

Electric entered a period of radical change. Over the next several years,

GE bought 338 businesses and product lines for $11.1 billion and sold 232

for $5.9 billion. But Welch's first order of business was to return much of the

control of the company to the periphery. Although he decentralized

management, he retained predecessor Reginald Jones's system of

classifying divisions according to their performance. His goal was to make

GE number one or two in every field of operation.

One branch of GE's operations that came into its own during this period

was the General Electric Credit Corporation, founded in 1943. Between

1979 and 1984, its assets doubled, to $16 billion, primarily because of


expansion into such markets as the leasing and selling of heavy industrial

goods, inventories, real estate, and insurance. In addition, the leasing

operations provided the parent company with tax shelters from accelerated

depreciation on equipment developed by GE and then leased by the credit

corporation. http://www.ge.com/investors/investing/index.html

1. Merger & Acquisition

Factory automation became a major activity at GE during the early 1980s.

GE's acquisitions of Calma and Intersil were essential to this program. In

addition, GE entered into an agreement with Japan's Hitachi, Ltd. to

manufacture and market Hitachi's industrial robots in the United States. GE

itself spent $300 million to robotize its locomotive plant in Erie,

Pennsylvania. Two years later GE's aircraft engine business also

participated in an air force plant-modernization program and GE later

manufactured the engines for the controversial B-1B bomber.

In 1986 General Electric made several extremely important purchases. The

largest--in fact, the largest for the company to that date--was the $6.4

billion purchase of the Radio Corporation of American (RCA), the company

GE had helped to found in 1919. RCA's National Broadcasting Company

(NBC), the leading U.S. television network, brought GE into the

broadcasting business in full force. Although both RCA and GE were

heavily involved in consumer electronics, the match was regarded by

industry analysts as beneficial, because GE had been shifting from

manufacturing into service and high technology. After the merger, almost

80 percent of GE's earnings came from services and high technology,

compared to 50 percent six years earlier. GE divested itself of RCA's

famous David Sarnoff Research Centre, because GE's labs made it


http://www.ge.com/investors/investing/index.html

redundant. In 1987 GE also sold its own and RCA's television

manufacturing businesses to the French company Thomson in exchange

for Thomson's medical diagnostics business.

GE justified the merger by citing the need for size to compete effectively

with large Japanese conglomerates. Critics, however, claimed that GE was

running from foreign competition by increasing its defence contracts (to

almost 20 percent of its total business) and its service business, both of

which were insulated from foreign competition.

In 1986 GE also purchased the Employers Reinsurance Corporation, a

financial services company, from Texaco, for $1.1 billion, and an 80

percent interest in Kidder Peabody and Company, an investment banking

firm, for $600 million, greatly broadening its financial services division.

Although Employer's Reinsurance contributed steadily to GE's bottom line

following its purchase, Kidder Peabody lost $48 million in 1987, in part

because of the settlement of insider trading charges. Kidder Peabody did

come back in 1988 to contribute $46 million in earnings, but the acquisition

still troubled some analysts. GE owned 100 percent of Kidder Peabody by

1990.

General Electric's operations were divided into three business groups in the

early 1990s: technology, service, and manufacturing. Its manufacturing

operations, traditionally the core of the company, accounted for roughly

one-third of the company's earnings. Still, GE continued to pour more than

$1 billion annually into research and development of manufactured goods.

Much of that investment was directed at energy conservation--more

efficient light bulbs, jet engines, and electrical power transmission methods,

for example.


In 1992 GE signalled its intent to step up overseas activity with the

purchase of 50 percent of the European appliance business of Britain's

General Electric Company (GEC). The two companies also made

agreements related to their medical, power systems, and electrical

distribution businesses. Welch said that his aim was to make GE the

nation's largest company. To that end, General Electric continued to

restructure its existing operations in an effort to become more competitive

in all of its businesses. Most importantly, the company launched an

aggressive campaign to become dominant in the growing financial services

sector.

GE's aggressive initiatives related to financial services reflected the fact

that the service sector represented more than three-quarters of the U.S.

economy going into the mid-1990s. Furthermore, several service industries,

including financial, were growing rapidly. GE's revenues from its giant NBC

and GE Capital divisions, for example, rose more than 12 percent annually

from about $14.3 billion in 1988 to more than $25 billion in 1994.

Encouraged by those gains, GE's merger and acquisition activity

intensified. For example, in 1994 the company offered a $2.2 billion bid for

Kemper Corp., a diversified insurance and financial services company (it

retracted the bid in 1995). GE's sales from services as a percentage of total

revenues increased from 30 percent in 1988 to nearly 45 percent in 1994,

and neared 60 percent by 1996. The troubled Kidder Peabody unit

remained a drag on GE's services operations, leading to the company's

late 1994 decision to liquidate the unit. As part of the liquidation, GE sold

some Kidder Peabody assets and operations to Paine Webber Group Inc.

for $657 million.


In contrast to its service businesses, GE's total manufacturing receipts

remained stagnant at about $35 billion. Nevertheless, restructuring was

paying off in the form of fat profit margins in many of its major product

divisions. Importantly, GE made significant strides with its Aircraft Engine

Group. Sales fell from $8 billion in 1991 to less than $6 billion in 1995, but

profit margins rose past 18 percent after dipping to just 12 percent in 1993.

Reflective of restructuring efforts in other GE divisions, the company

accomplished the profit growth by slashing the engineering workforce from

10,000 to 4,000 and reducing its overall Aircraft Engine Group payroll by

about 50 percent, among other cost-cutting moves.

Despite a global economic downturn in the early 1990s, GE managed to

keep aggregate sales from its technology, service, and manufacturing

operations stable at about $60 billion annually. More importantly, net

income surged steadily from $3.9 billion in 1989 to $5.9 billion in 1994,

excluding losses in the latter year from Kidder Peabody operations. In

1994, in fact, General Electric was the most profitable of the largest 900

U.S. corporations, and was trailed by General Motors, Ford, and Exxon.

Revenues reached $70 billion by 1995, the same year that the company's

market value exceeded $100 billion for the first time.

The late 1990s saw General Electric reach a number of milestones. In 1996

the company celebrated its 100th year as part of the Dow Jones Index; GE

was the only company remaining from the original list. That year, NBC

joined with Microsoft Corporation in launching MSNBC, a 24-hour cable

television news channel and Internet news service. Overall revenues

exceeded the $100 billion mark for the first time in 1998, while the

continuing stellar growth at GE Capital led that unit to generate nearly half

of GE's revenues by the end of the decade.


Acquisitions in the late 1990s centred on two of the company's growth

initiatives: services and globalization. In 1996 the GE Appliances division

acquired a 73 percent interest in DAKO S.A., the leading manufacturer of

gas ranges in Brazil. GE Capital Services expanded in Japan through the

1996 purchase of an 80 percent stake in Marubeni Car System Co., an

auto leasing firm; the 1998 acquisitions of Koei Credit and the consumer

finance business of Lake Corporation; and the 1998 formation of GE

Edison Life following the purchase of the sales operations of Toho Mutual

Life Insurance, which made GE Capital the first foreign company involved

in the Japanese life insurance market. In early 1999 GE Capital made its

largest deal in Japan to date with the purchase of the leasing business of

Japan Leasing Corporation, a business with $7 billion in leasing assets.

Then in late 1999 GE Capital agreed to purchase the remaining assets of

Toho Mutual for ¥240 billion ($2.33 billion); Toho had collapsed during

1999 after suffering huge losses from the thousands of old, unprofitable

policies in its portfolio, and a large portion of its liabilities were to be

covered by Japan's life insurance association. Expansion also continued in

Europe for GE Capital, highlighted by the 1997 acquisition of Wood

Chester, one of the largest financial services companies in Ireland. Overall,

GE spent some $30 billion during the 1990s in completing more than 130

European acquisitions.

2. Restructuring

Under Welch's leadership, General Electric in the late 1990s also adopted

"six sigma," a quality control and improvement initiative pioneered by

Motorola, Inc. and AlliedSignal Inc. The program aimed to cut costs by

reducing errors or defects. GE claimed that by 1998 six sigma was yielding

$1 billion in annual savings. The company also continued to restructure as


necessary, including taking a $2.3 billion charge in late 1997 to close

redundant facilities and shift production to cheaper labour markets. During

1999 General Electric adopted a fourth growth initiative, e-business

(globalization, services, and six sigma being the other three). Like many

longstanding companies, GE reacted cautiously when the Internet began

its late 1990s explosion. But once he was convinced of the new medium's

potential, Welch quickly adopted e-commerce as a key to the company's

future growth. Among the early ventures was a plan to begin selling

appliances through Home Depot, Inc.'s web site, a move aimed at

revitalizing lagging appliance sales.

In late 1999 Welch announced that he planned to retire in April 2001, but

he did not name a successor. At the time, General Electric was one of the

world's fastest growing and most profitable companies, and boasted a

market capitalization of $505 billion, second only to Microsoft Corporation.

Revenues for 1999 increased 11 percent to $111.63 billion while net

income rose 15 percent to $10.72 billion. These figures also represented

huge gains since Welch took over in 1981, when the company posted

profits of $1.6 billion on sales of $27.2 billion.

Welch was not done yet, however. In October 2000 he swooped in to break

up a planned $40 billion merger of United Technologies Corporation and

Honeywell International Inc. The Honeywell board accepted GE's $45

billion bid, which was set to be the largest acquisition in the company's

history. Honeywell was coveted for its aerospace unit, a $9.9 billion

business involved in flight-control systems, onboard environmental

controls, and repair services. The addition of this unit was expected to

significantly boost the GE Aircraft Engines unit, creating a global aerospace

giant. Welch agreed to stay on at General Electric through the end of 2001


in order to see the acquisition through to fruition. He did, however, name a

successor soon after this deal was announced. In November 2000 Jeffrey

R. Immelt won the succession battle and was named president and

chairman-elect. Immelt, who joined GE in 1982, had most recently served

as president and CEO of GE Medical Systems, a unit with revenues of $12

billion. Immelt's two chief rivals in the race to become only the ninth CEO in

GE's long history, W. James McNerney Jr., head of GE Aircraft Engines,

and Robert L. Nardelli, head of GE Power Systems, soon left the company

to become CEOs of 3M Company and Home Depot, respectively.

Rather than serving as a capstone for a much admired reign of leadership,

the Honeywell deal instead provided a sour ending for the Welch era. In the

summer of 2001 the European Commission blocked the deal on antitrust

grounds as 11th-hour negotiations between the European regulators and

GE executives broke down.

3. Reconfiguring the business portfolio

Although Welch was resolutely determined to retain GE’s identify as a

broadly diversified corporation, he was clear that GE’s business portfolio

should, first, be focused around a limited number of sectors and, second,

these sectors should be attractive in terms of their potential for profitability

and growth. During the early part of his chairmanship, Welch announced

his intention only to retain businesses that held number one or number two

positions within their global markets. His intention was to focus GE’s

resources on its best opportunities: “My biggest challenge will be to put

enough money on the right gambles and no money on the wrong ones. But

I don’t want to sprinkle money over everything.” This involved increasing

GE’s emphasis upon technology-based businesses and service


businesses. Welch sold off its consumer electronics business, mining

interests (notably Utah International), small household appliances division,

semiconductors, and radio stations.

GE’s acquisitions included a few major ones such as RCA, NBC, Kidder

Peabody, and CGR, and a host of smaller companies. During 1997–2001,

GE made over a hundred acquisitions in each year. By far the largest

sector for acquisition was financial services.

During the 1990s, GE Capital’s phenomenal growth was built upon

continuous acquisition of businesses in leasing, consumer and commercial

credit, insurance, and other areas of finance. The result was the

emergence of GE Capital as one of the world’s biggest financial services

companies. For all GE’s expertise in identifying acquisition targets and then

integrating them into GE’s structure and systems, not all were successful.

Kidder Peabody was a disaster for GE, and the acquisition of Montgomery

Ward was viewed by some outsiders as a

mistake. Most recently, GE’s biggest takeover, Honeywell, was

unconsummated because of opposition from the European Commission on

antitrust grounds.

4. Changing the structure

The changes in the portfolio transformed the product-market face of GE

and increased its growth potential. However, to realize this potential

required revitalizing the management systems and management style in

order to generate drive and ambition. Achieving this required changes to

GE’s structure. Under Welch, GE eliminated several layers of management

and large numbers of administrative positions. In particular, Welch


disbanded GE’s sectors, requiring the leaders of GE’s 13 businesses to

report directly to the CEO. The office of the CEO was expanded, and a

Corporate Executive Council (CEC) was created to provide a forum for

GE’s business-level chiefs and senior corporate officers. Further

organizational layers were eliminated both at headquarters and within the

businesses.

Decision making was pushed down to the operating units. now down in

some businesses to four layers from the top to the bottom. Welch’s ruthless

attack on bureaucracy and administrative costs earned him the nickname

“Neutron Jack” – the building remained, but the people had gone.

5. Changing management systems and processes

The changes in GE’s structure were aimed at creating a more flexible and

responsive corporation. This goal also necessitated changes in GE’s highly

developed management systems. In particular, Welch led a major overhaul

of GE’s much celebrated and widely emulated strategic planning system.

The framework of an annual planning cycle was retained, but the staff-led,

document-driven process was replaced by a less formal, more personal

process.

6. Corporate initiatives

One of the distinctive characteristics of Welch’s system of management

was his use of periodic new corporate initiatives as mechanisms to drive

particular aspects of company-wide performance. Thus, while strategic

planning, financial control, and human resource management provided the

basic systems for managing GE, about every two years, Welch would

announce a major new initiative designed to energize the company and


drive its performance in a particular direction. Over time these initiatives

would become absorbed into the ongoing management systems of GE.

7. The Boundary-less Organization

Welch reacted strongly to descriptions of GE as a conglomerate. But for

GE to be greater than the sum of its parts required utilizing its product and

geographical diversity to improve performance within each business. The

key to transforming diversity into strength, believed Welch, was the

frictionless transfer of best practices and other forms of learning within GE.

But to achieve this required eliminating – or at least making permeable –

GE’s internal boundaries, as well as increasing openness to external

learning. By 1990, Welch was developing the vision of a new GE

organization that would be a truly “boundary-less” company. Unbounding

GE required changes in structures, attitudes, and behaviours that would

permit the “integrated diversity” that Welch envisaged.

8. Globalization

All of GE’s businesses were given global responsibility, which meant

exploiting international growth opportunities and exploiting the advantages

of global reach in terms of exploiting global-level economies of scale and

increased learning opportunities. Global diversity played an important role

in allowing GE to cope with economic problems that affected particular

countries or regions, and take advantage of the opportunities that such

downturns offered.

9. Six Sigma


From 1998 to 2000, Welch’s Six Sigma program was its dominant

corporate initiative and primary driver of organizational change and

performance improvement. Welch described it as his next “soul-

transforming cultural initiative.” The methodology of defining, measuring,

analyzing, improving, and then controlling every process that touches a

company’s customers until it reduces defects to 3.4 per million was

borrowed from Motorola. However, at GE it was with unprecedented

fervour across an unprecedentedly broad front. In four years some 100,000

people were trained in its science and methodology, and by 2001, GE was

able to report: “Now Six Sigma is the way we work. We all speak a

common language of CTQs (critical-to-quality), DPMOs (defects per million

opportunities), FMEAs (failure mode effect analysis), and Needs

Assessment Maps (to name just a few).” Across every one of GE’s

businesses major gains in performance ranking from reduced waste and

lower operating costs to faster customer service and improved financial

management.

Why Change Required in an Organisation???

There are some important factors which lead to change management in any organisation:

1. Speed of Adoption: - how quickly change is adopted in the organisation and how well the projects stay on schedule.

2. Utilization Rate: - the overall participation and ultimate utilization of the new processes, tools and job changes.


3. Proficiency: - how employees perform in the new environment –are they achieving the expected performance level?

NEED AND FORCES FOR CHANGE IN GE

1. Controlling bureaucracy

One of Welch’s signature concepts and the one term most closely

associated with the GE leader. To spark productivity and break down the

walls that he felt were killing the company, Welch sought to topple every

barrier: internal barriers, such as those between functions (sales and

manufacturing), and external barriers, such as anything that got between

GE and its customers and suppliers. Any wall was a bad one, insisted

Welch. In a boundary less organization, information flows easily. There is

nothing to impede the seamless transfer of decisions, Ideas, people, etc.

Boundary less behaviour helped GE to rid itself of its century-old bad habits

of rigid hierarchy and bloated bureaucracy. Anything that limited the free

flow of ideas and learning was destructive, Welch said, and he spent two

decades taking aim at GE’s bureaucratic ways.

2. Lack of sharing information

There was the communication gap between top management and lower

management. They did not talk with each other, the goal was not clear to

them. So there was a need arise to adapt the change so that every one

understand the goal and objective of organization.


3. Winning competitive advantage

As the competition was growing day by day and GE was lacking behind, so

there was a need arise to adapt the changing has to minimize the

disturbance when this transition occurs not only at the top but throughout

the entire organization.

4. For expanding the business

As for competitive advantage jack has to expand his business, so for it he

globalize his business With more than 350 businesses, many faring poorly,

his first task was to attack the problems plaguing weaker domestic

businesses (i.e., the hardware phase: restructuring, delivering, downsizing,

etc.). Once the hardware phase was behind them, Welch could focus on

making GE a truly global organization.

5. Advancement of Technology:

As the tech. was growing day by day, so for retaining itself in competitive

world, they have to adapt the change. Welch used internet initiative. As part

of GE’s e- Initiative, Welch recommended that every process be digitized.

The GE CEO sees this as yet another important step in making the

company faster and more agile.

http://www.gereports.com/?s=need+for+change&submit.x=0&submit.y=0

How to Manage Change???


http://www.gereports.com/?s=need+for+change&submit.x=0&submit.y=0

This is the next step after the implementation of change that how to manage/ maintain this change.

Here we can see different styles of managing change and different roles in change management that who is responsible for what job.

Styles of Managing Change:

Whoever is the position of managing change needs to consider the style of management they adopt. Different styles are likely to be more of less appropriate according to the organisational context. Detail of these styles is as follow:

Styles Means/Context Benefits ProblemsCircumstances of Effectiveness

Education & Communication

group Briefings assume internalisation of strategic logic and management

overcoming lack of (or miss)information

Time consuming Direction or progress may be unclear Incremental change

or long time horizontal

transformational changecollaboration/

Participation

involvement in setting the strategy agenda and/ or resolving strategic issues by taskforces or groups

increasing ownership of a decision or process May improve quality of decision

Time Consuming Solutions/ outcomes within existing paradigm

Intervention

change agent retain co-ordination/control: delegates elements of change

process is guided/controlled but involvement takes place

Risk of perceived manipulation

incremental of non-crises transformational change

Direction use of authority to set direction and means of change

clarity and speed risk of lack of acceptance and ill-conceived strategy

Transformational change

Coercion/ Edict

Explicit use of power through edict

may be successful in crises or state of confusion

Least successful unless crises

Crises, rapid transformational change or change in established autocratic cultures


Chapter 10 Managing Strategic Change page 516

Roles in Managing Change:

When it comes to considering strategic change, there is too often an over-emphasis on individuals at the top of an organisation. It is useful to think of change agency more broadly. A change agent is the individual or group that helps effect strategic change in an organisation.

Let’s have a look on different roles of change agent in an organisation:

There are three types of roles in a change management system:

i. Strategic Leadership

ii. Middle Managers

iii. Outsiders

Strategic Leadership: The management of change is, however, often directly linked to the role of a strategic leader. A leader is not necessarily someone at the top of an organisation, but rather someone who is in a position to have influence. They are often categorised in two ways:

Charismatic Leaders, who are mainly concerned with building a vision for the organisation and energising people to achieve it, and are therefore usually associated with managing change.

Instrumental or Transactional Leaders, who focus more on designing systems and controlling the organisation’s activities, and are more likely to be associated with improving the current situation.

Middle Managers: A top-down approach to managing strategy and strategic change sees middle managers as implementers of strategy. Their


role is to put into effect the directly established by top management by making sure that resources are allocated and controlled appropriately, monitoring performance and behaviour of staff and, where necessary, explaining the strategy to those reporting to them.

Outsiders: whilst existing managers have important roles to play, ‘outsiders’ are importance in the change process. Outsiders may take different forms.

A new Chief Executive from outside the organisation may be introduced into a business to enhance the capability for change. This is especially so in turnaround situation.

The introduction or arrival of new management from outside the organisation can also increase the diversity of ideas, views and assumptions which can help break down cultural barriers to change; and they may help increase the experience of and capability for change.

Consultants are often used in change processes. This may be to help formulate the strategy of to plan the change process. However consultants are increasingly used as facilitators of change processes.

It should also be remembered that there are likely to be key influencers of change external to an organisation within its stakeholder network. Government, investors, customers, suppliers and business analysts all have the potential to act as change agents on organisations.

ROLE OF LEADERSHIP IN GE

Welch has a very specific vision of the ideal leader. Unlike the “command

and control style” of autocratic leadership, Welch’s leadership ideal

encompasses a wide range of qualities closely associated with a learning

organization. Early on, Welch looked for customer-focused leaders who


had “head,” “heart, “and “guts.” Later he spoke of a leader’s ability to

embrace change, think globally, and deliver results. He also articulated

ideal leaders as those who had the “Four E’s”: Energy Energizer (can

excite others), Edge (competitive types who moved quickly), and Execution

(delivered in the form of results).

GE as an executive farm club

GE’s ability to nurture managerial talent, the company became a “farm club” for

executives. Over the years, many of Welch’s key managers became CEO of other

Fortune 500 companies. Examples include Larry Bossidy, who became head of

AlliedSignal, Robert Nardelli, who became CEO of The Home Depot, and James

McNerney, who took the top spot at 3M. (Nardelli and McNerney left GE within

weeks of learning that they would not succeed Welch as GE CEO.)

Key lessons for developing leadership

1. Nurture only those leaders who share the company’s vision:

Welch said that one of the more difficult decisions was to fire Type C’s,

those managers who made their numbers but did not subscribe to the

company’s values.

2. Look for leaders who harness the power of change: Welch embraced

change, never afraid of staring reality in the face. Look for leaders who will

see things as they are, those unafraid of making the really difficult

decisions.

3. Look for the “Four E’s”: Welch sought out managers who were strong

on all four traits.


4. Search out confident managers: Welch believed that “instilling

confidence” was one of his key tasks. He also felt that genuine confidence

was a rare trait, and a quality he sought out in GE managers.

5. Look for managers who put customers first: Customers and

customer focus became a more prominent part of the company’s values. In

the most recent version of GE’s values (the version in place in Welch’s final

year at GE), one-third of the statements involved the customer

http://www.ge.com/company/leadership/executives.html

Why do people resist change???

A. Generally people resist change due to inertia, timing, surprise and peer pressure.

B. Change specific reason for resistance: Resistance may arise from the very nature of a proposed change. It may arise from what people perceive as the personal consequences of the change.

a) Self-interest: most people care less about the organization’s best interest than they do about their own interests.


http://www.ge.com/company/leadership/executives.html

b) Misunderstanding: even when management proposes a change that may benefit everyone, people may resist because they do not fully understand its purpose.

c) Different assessment: employees receive different and usually less information than management receives.

BARRIERS THAT OCCURS DURING THE CHANGE IN GE

Anything that hampered performance or open communication was to be

torn down. Welch’s initiatives were designed to erase the barriers that

proliferate in large organizations: horizontal barriers, vertical barriers, and

external barriers. Welch urged employees to “blow up” bureaucracy and

knock down every boundary. Much of what he did in the 1980s, from delay

ring to Work-Out, was explicitly designed to remove debilitating barriers.

Welch was fiercely committed to removing any speed bump that slowed the

company down. His strategy of boundarylessness was specifically

designed to remove the boundaries that separated GE workers from new

ideas, customers, and each other. He despised turf battles and other “silo

like” behaviours that kept GE mired in the past. Even in his final year as

CEO, Welch spoke of the importance of “blowing up” every boundary that

keeps individuals and organizations from reaching their full potential.

Organizations which have a balanced and harmonious combination of will,

focus and capability seems to fare best when faced with surprise and rapid

change. As an analogy, top players of golf, baseball or cricket seem toper

form even better after clearly focusing and carefully establishing a mental

“centre” The skills and capability to play the sport well are obvious


prerequisites. Some examples of imbalances which lead to learning

disabilities and barriers to proactive change are the following:

• Excessive will, drive and ambition can lead to dangerously distorted

perceptions of reality, or “blind spots”, and behaviour which may ultimately

destroy organizational capability. Kidder-Peabody is a major Wall Street

investment bank owned by General Electric. Driven by a culture

encouraging market leadership and aggressive deal-making, as well as

personal ambition, a top trader in Government bonds developed a $340

million fraudulent scheme of phantom trades. GE has had to make large

charges against 1994 income as a result. Top level embarrassment and

damage to Kidder-Peabody’s reputation are intangible but serious costs in

a business where trust is a vital success factor.

• The tremendous resources and capabilities of US steel-makers,

automobile companies and even IBM, may have led to a complacency and

lack of focus in those companies at critical turning-points in the markets. By

contrast, the lack of capabilities and degree of stress in many down-sized

and restructured corporations of the 1990s may endanger their ability to

develop market focus and morale.

• Some organizations and individual leaders, notably in the public sector,

may have an extremely good focus and sense of what needs to be done.

However, political constraints and the insecurities resulting from funding

cutbacks and adverse publicity may destroy their capability to act, and

prevent effective organizational learning needed for change. Learning

disabilities and barriers to change are well described by Senge, Argyris and

others. In many cases, learning disabilities and barriers to change are

either synonymous or very closely related. For instance, excessive

organizational stress may compromise individual personal mastery, and


systems-thinking may be discouraged by a lack of skills and resources for

training.

How to Avoid Resistance to Change???

There are several approaches to avoid resistance to change like:

A. Education and communication: Management should communicate not only the nature of the change but its logic.

B. Negotiation & rewards: rewards such as bonuses, wages, salaries and perks can be examined and restructured to reinforce the direction of the change.

C. Participation & involvement: it is important to listen to people who are affected by the change. They should be involved in the change’s design and implementation.

D. Facilitation & support: management should provide the support needed for the change to be effective. It should also facilitate the change by providing the training and resources that people need to carry out the change.


Conclusion

Jack Welch’s attitude towards management boils down to a few very simple

ideas: breaking down hierarchies, ensuring free information flows

throughout the organization, and encouraging people to talk, listen and be

open to new ideas. When he first became a GE vice president at the age of

36, he “stalked out on the plant floor, or picked up the telephone to deal

directly with anyone at any level when a problem came up”18 and that is

the organization Jack Welch has attempted to build in terms of

communication. Welch succeeded in transforming a complacent behemoth

into an energized company ready to face world competition. By flattening

the organization and by removing unnecessary layers of bureaucracy, he

liberated employees and empowered them to make decisions and effect

their jobs, as well as the company as a whole. At the same time, he relied

on stretch goals and the slope of satisfaction (as previously discussed) to

further push the company to new levels of achievement. An additional

sense of empowerment was relayed through various communication,

training and motivation mediums, such as the “Work-Out”, “the Pit”, “the

Corporate Executive Council” and other special project teams. Foremost he

underlined his words with accompanying actions and an exemplary


attitude, avoiding the well known saying that words by themselves are

empty. Through the use of 360- degree review processes, appropriate

bonus schemes and structural organizational changes, Welch created and

opened communication channels at GE, allowing for unprecedented

networking, teamwork, and openness to take place at GE. All of these

factors combined to form a motivating force for the employees of GE. This

motivation in turn has lead to a decade of outstanding performance by Jack

Welch and General Electric Corporation.

References:

Harvard Business Review, June 2010, http://hbr.org/

Strategy into Action

http://www.ge.com/index.html

http://en.wikipedia.org/wiki/Special:Search

http://ivythesis.typepad.com/term_paper_topics/

http://www.businessballs.com/changemanagement.htm

http://www.cipd.co.uk/subjects/corpstrtgy/changemmt/

http://www.jiscinfonet.ac.uk/infokits/change-management


http://www.jiscinfonet.ac.uk/infokits/change-management

http://www.cipd.co.uk/subjects/corpstrtgy/changemmt/

http://www.businessballs.com/changemanagement.htm

http://ivythesis.typepad.com/term_paper_topics/

http://en.wikipedia.org/wiki/Special:Search

http://www.ge.com/index.html

http://hbr.org/

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