Question

Case Study

When Jack Welch assumed the top position at General Electric in 1981, he inherited a company that had a market value of $12 billion — certainly a modest number, by today’s standards. By the time he left in 1998, GE was worth $280 billion.While leading GE, Welch was charged with the task of making the conglomerate better by any means necessary. With his gut telling him that his company was due for a complete overhaul, Welch decided to implement Six Sigma at GE in 1995.

Six-Sigma is a methodology that aims to reduce defects and errors in all processes, including transactional processes and manufacturing processes. Organizations that use Six Sigma test their processes again and again to make sure that they are as close to perfect as possible.Five years after Welch’s decision to implement Six Sigma, GE had saved a mind-blowing $10 billion.

Welch claimed to have spent as much as half of his time working on people issues.By assembling the right team and ingraining them with the right management philosophies, Welch successfully oversaw the transformation of GE from a relatively strong company to a true international juggernaut.

Questions:

1. Explain the possible key concepts behind the change methodology in General Electric Company? Do you agree with the change methodology introduced in the General Electric Company by its leader? Give logical reasons to defend your answer

Important Points:

• The Case study background/introduction must be written before answering the questions
• Proper referencing needed if the student uses any resources to answer the questions

Answer 1

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Jack Welch took over General Electrics in 1981. He was charged with the task of making the conglomerate even better than it was at the time. By the time he left the company in 1998, the market value of the company rose from $12 billion (1981) to $280 USD billion. This dramatic growth is attributed to the change in methodology used by Jack Welch. He instilled ‘Six Sigma’ which is the reason behind the success of the organization. It enhanced the performance of the organization and transformed the organization completely and lead it to even greater heights. The case study talks about six-sigma and how it can provide a positive contribution to an organization. The prime concept behind the change methodology is six sigma. It was responsible for reduction in defects and errors in all processes. It has control over all the processes. It does so by setting process limits, 3 standard deviations above the process mean and 3 standard deviations below the process mean(average). It uses a DMAIC(Define, Measure,Analyze,Improve and Control) approach which starts with defining a problem and ends with coming up solutions and implementing them. The DMAIC approach uses techniques such as SPC (Statistical process controls), FMEA (Failure mode and effects Analysis as well as control charts and process mapping). These tools helps in monitoring and controlling processes statistically (SPC), identifying the stage where failure occurs and analysing their impact (FMEA). The methodology implemented was justified, because it helped the organization gain greater efficiency than it had before. During those times efficiency was valued by the corporate world and it was understandable. Six sigma was implemented in Motorola before and it was a huge success. It helped the company eliminate waste and helped it unleash its true potential as he felt that the company was holding back till that point. This explains the $10 billion savings the company made. It also saved the company a lot of time which the company used on solving people issues. Different leaders will have different leadership styles. There is no guarantee that a given leadership style will be effective and promise growth and prosperity. Some leadership styles are aggressive and does not take into consideration the needs of the organization and people. This will not lead to productivity and efficiency. Some leadership styles does not suit certain organizations, even though they have been effective in some other organizations. On the other hand, some leadership styles work effectively as they take into consideration the needs of the organization and the problems they face. The success and prosperity as well as limiting the chances of failure will depend on the organization choosing the right leadership style. So, yes, it can limit the chances of failure as well as contribute to it. People should buy into the selected leadership style and it should help in increasing the overall efficiency and effectiveness of the organisation. The moral behind the success of GE is that picking the right team and aligning them with the right management philosophies can contribute to success. Jack Welsh identified that the company required an overhaul as he felt the company could do better. He identified that to do so, they will have to improve the efficiency of the organization. For this, he selected a methodology that aims in improving the efficiency, six-sigma, and it was very instrumental in the success the company had later on. Six-sigma helped in removing defects and errors in all the processes to a great extent and helped the company achieve huge savings. Thus, it proves that the right leadership and the correct strategies can transform an organization completely.