GE has been constantly undergoing change in 20th century. In the 1930s, GE was centralized and had a tightly controlled corporate form. In the 1950s, decentralization occurred through delegation of responsibility to department managers. In the 1960s, profitless growth was experienced and sophisticated strategic planning systems were implemented. And in the 1970s, the corporation was divided into strategic business units (SBUs) and then to business sectors.
Early GE Restructuring Efforts
When Jack Welch became CEO of GE, he implemented a new set of standards throughout the organization. Accordingly, each business had to become #1 or #2 in its industry or disengage. Thus, a "fix, sell or close" strategy was put in place. In Welch's words, GE needed to become lean and agile in order to compete effectively in the market. Therefore, between 1981 and 1990, 200 businesses were divested, 370 were acquired and destaffing of employees took place.
In order to chip away the bureaucracy that is slowing down the processes of GE, Welch scrapped the laborious strategic planning system and instead he argued for a real-time planning system.
In accordance, simple one-page playbooks were introduced to the employees to speed up the processes. Moreover, the budgeting system was radically redefined so that the focus was now external rather than internal. Welch also delayered the hierarchy and eliminated titles between him and the businesses so that they report to him directly.
Furthermore, "Neutron Jack" formed his top management team from kind of people who had a strong commitment to the new management values, had willingness to break with the old GE culture, and had the ability to take charge and bring about change.
2nd Wave: Cultural Change
Welch was certain that the hardware of the organization was radically changed however the software was still in need of change in terms...