The strategic leadership of GE CEO Jack Welch

The late former chairman and CEO of General Electric $($GE$),$ Jack Welch was heralded by many as the greatest leader of

his era. During his two decades at GE's helm, he transformed the organisation from a $$13$ billion $($USD$)$ maker of

appliances and lightbulbs into one of the most valuable companies in the world, while building a reputation for himself as

a management guru. What made Jack Welch so successful? What were the secrets and principles behind his approach

to work and life? Jack Welch became GE$$s CEO in $1981$ at the age of $45.$ Upon taking office, he initiated a series of

changes to improve the performance of GE$$s diversified business portfolio, with the hope of fundamentally reshaping the

company over the next five years.

Despite resistance to change within the company, Welch was aware that past performance could not define future

success, and an organisation would not go anywhere without a sense of crisis. Transformation and innovation are keys

for survival. Three months after taking over as CEO, Welch set a vision for each business unit that they had to be #$1$ or

#$2$ in their markets$$ if not, they had to fix, sell, or close the unit. This later became one of his most famous strategies.

Within the company, Welch sought to streamline GE with layoffs, eliminating the laborious strategic planning system,

dismantling the bureaucracy, and abolishing the nine$-$layer management hierarchy. As a result, GE$$s revenue expanded,

and operating profits soared to $$2\mathrm{.}4$ billion by $1985.$ In the late $1980$s$,$ following GE$$s massive restructuring effort, Welch

proposed to develop an approach to management characterized by speed, simplicity, and self$-$confidence. To this end, he

launched Work$-$Out and Best Practices, two closely linked initiatives that aimed at promoting aspired culture and

management approaches. At Welch$$s request, GE promoted the Work$-$Out programme throughout the company. It

consisted of a group of $20$ to $100$ employees who were selected and invited to a discussion to share views about their

own departments and how they could be$.$ After Work$-$Out was implemented, Welch sought out ideas that could raise GE$$s

productivity, and that led him to create Best Practices. This programme was designed to develop effective processes by

studying and analyzing the best practices of other high$-$performance companies.

To align GE$$s established human resources system with the company$$s strategic targets, Welch also radically overhauled

GE$$s compensation package by extending stock options to management compensation, and reengineering its bonus and

option allocation system in a more aggressive manner to ensure it was closely linked to the key strategies of the day. In

the $1990$s$,$ Welch created a new strategic concept called $$integrated diversity$$ and worked to make GE $$a boundary$-$less

company,$$ which he described as $$a company where we knock down the walls that separate us from each other on the

inside and from our key constituencies on the outside. $$The idea was aimed at encouraging employees to seek out and

share new ideas. To make this happen, he changed the way bonuses and options awards were delivered to honour

innovative and resource$-$sharing efforts. Moreover, Welch also introduced the notion of $$stretch$$ to set performance

targets to motivate higher levels of performance of managers, which he described as $$using dreams to set business

targets, with no real idea of how to get there. In late $1990$s$,$ before his retirement, Welch adopted Motorola$$s Six Sigma

quality programme to improve the company$$s products and production procedures. In $1996,$ he announced that GE aimed

to attain its Six Sigma goals within five years. Although Welch had previously built up a top$-$notched management team,

the closer he got to his planned retirement date, the more he wanted to enhance the GE$$s quality for his successor.

Therefore, he modified his four types of managers to describe GE as a company that needed only $$A players$$ managers

who had vision, leadership, energy and courage. Within only $20$ years, Jack Welch grew GE$$s market cap by over $30-$fold

to $$450$ billion, making it the most valuable company in the world. During his tenure, he not only developed GE$$s

business with strategic vision, but also championed the company$$s international operations amidst increasing global

trade and cultural exchange.

Jack Welch was an outstanding, legendary leader and strategist who took a fresh look at his work every day and made all

necessary and aggressive changes. In his two decades leading GE$,$ he recorded an average of $23\%$ annual total

shareholder return. Welch believed that an effective way to bring about forceful changes was to empower employees and

allow them to unleash their energy, intelligence, confidence, and productivity. Evidence has proved that employees have

become more creative and open$-$minded with more possibilities through GE$$s Boundary$-$less Company initiative