General Electric Case Studies
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A company often cited for its innovative corporate culture is General Electric when it was run by Jack Welch. When Welch took over the company in the 1980’s, it was doing well. But Welch noted that the culture at GE emphasized adherence to rules and procedures. Systems were formal, nit-picking, and convoluted. A company founded by Thomas Edison to exploit his innovations was now mired in its own bureaucratic culture in which innovation was stifled and punished. Welch knew that if GE was going to continue to be successful, that the corporate culture would have to change and that innovation would have to be encouraged.
First, he streamlined the company and made it leaner. This cause much consternation as people were laid off and entire business units were sold or closed. Resistance was massive. Welch plunged ahead. He decided that nibbling away at the status quo and making small incremental changes was not going to work. As Welch said later, “If your change isn’t big enough, revolutionary enough, the bureaucracy can beat you… (the key is) big, bold changes, forcefully articulated”. Welch encouraged the change in culture by rewarding people who took risks and developed innovations.
General Electric's Goals
Even if they fell short of their original goals, Welch rewarded them if they made any improvements at all. Thus innovation became embedded in the GE corporate culture. Of course, much of the change itself was painful.
- Over 170,000 people lost their jobs.
- People were held strictly accountable for their performance.
- Welch instituted a system whereby employees are ranked relative to their peers each year.
- The bottom 10 percent of people being eliminated.