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This is one question but has 3 parts. Can you help me with this by this evening? If not let, me know and I do something else.
Here is the question.
Clearly identify and BRIEFLY describe 3 important functions, that based on analysis of our case studies and class discussions on these 3 topics are important. (NOTE: The 3 are establish a strong CULTURE, Teams that are effective, and motivation and performance management). The 4 cases are
GE: We bring good things to life, Henry Tam, Merck (A) & (B), and Raleigh & Rosse. The Attachment below only let me attach one case.
GE...We bring good things to life. (A).pdf

For the exclusive use of K. LYNCH
Harvard Business School

Rev. February 9, 2000

GE ... We bring good things to life. (A) *
In June 1995, the Corporate Executive Council (CEC) of General Electric Company (GE),
comprising 25 of the most senior executives in the company, had just heard a presentation from Larry
Bossidy, CEO of AlliedSignal, on the topic of six sigma quality. “GE is a great company,” Bossidy
said. “I know. I worked there for 34 years. But there is a lot you can do to become greater.” The
presentation at the Council’s regular two-day quarterly meeting had been prompted, among other
things, by the results of an April survey in which GE employees expressed concerns about the quality
of the company’s products and processes. One member of the CEC, CFO Dennis Dammerman,
commented that the presentation “had a real ring of substance to it, not just posters, but real
The presentation added fuel to the debate about whether GE should launch a formal quality
improvement effort and how. There were many arguments for and against it. CEC members knew
that this would not be the last meeting at which the issue of a formal quality improvement effort for
GE would be raised. CEO Jack Welch, who convened CEC meetings, had a great deal of respect for
Bossidy even though he had been a skeptic along with many of his colleagues on the issue.

History ➁
Since its founding in 1878 as the Edison Electric Light Company by Thomas Alva Edison,
with the early financial help of J.P. Morgan, General Electric had become one of the most successful,
most valued (by the world’s stock markets), and most-watched companies in the world. By 1995, it
was the only remaining member of the original list of Dow Jones Index companies that had preserved
its identity over the entire 100-year history of the list. It had been recognized for decades for its
periodic development of important, influential management practices, as shown in the time-line in
Exhibit 1. A highly diversified company comprising at times everything from appliance
manufacturing to coal mining, like the bumble-bee it had defied those who maintained there was no
reason for it to “fly.” Given its diversity, the most relevant benchmark of GE’s performance—in the
minds of many of its senior managers—was how it performed in relation to the gross national
product of the United States.

* “We bring good things to life.” is a registered word mark of the General Electric Company.
1 This case is based on published sources which are listed at the end of the case and referred to by number

throughout the document. For example, this quote is from source number ➀.
Professor James L. Heskett prepared this case as the basis for class discussion rather than to illustrate either effective or
ineffective handling of an administrative situation.
Copyright © 1999 by the President and Fellows of Harvard College. To order copies or request permission to
reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to No part of this publication may be reproduced, stored in a retrieval system,
used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying,
recording, or otherwise—without the permission of Harvard Business School.
This document is authorized for use only by Kathy Lynch in RBUS 401 - 2012 - Term A taught by Rick Marolt from
August 2012 to October 2012.

For the exclusive use of K. LYNCH

GE ... We bring good things to life. (A)

Throughout its history, each of GE’s eight CEOs had made major contributions to the
development of the company and its culture. Each had had distinctively different backgrounds, a
fact that was considered by observers to be both remarkable and important to the company’s
continual revitalization over the years. Thomas Alva Edison, the great inventor, had given it a basis
for early growth through the invention and distribution of direct current (DC) electricity. His
immediate successor, Charles Coffin, had the foresight to conclude that GE’s major competitor,
Westinghouse, had a better technology in the form of alternating current (AC) electricity, and
changed its strategy to adopt the superior technology.
More recently, after a period of highly centralized management in the 1930s and 1940s, Ralph
Cordiner led a move to a market- and product-focused decentralization and attendant growth of GE’s
business units in the 1950s, breaking the company down into profit-centered departments that, as he
would say, “were a size that a man could get his arms around.” In a little-recognized corollary move
as one means of bringing managers in the decentralized GE together, the company acquired a large
plot of land in Crotonville, New York, on which it constructed what was to become a model for
management training facilities in the world. Cordiner’s approach not only grew the company, but it
introduced an important “go for it” attitude in management ranks, with the number of market
segments in which GE competed increasing 20-fold under Cordiner’s leadership. However, it
produced a period of what came to be known as “profitless growth” with attendant lack of control
and coordinated direction.
Despite efforts by Fred Borch, who succeeded Cordiner as CEO in 1963, profitless growth
continued. Borch’s GE Growth Council identified nine growth sectors in the U.S. economy and
decided to “beat the GNP” by solidifying GE’s position in all of them. By 1968 GE was widely
diversified, competing in 23 of the 26 two-digit SIC industry categories, and was decentralized into 10
groups, 46 divisions, and over 190 departments. In an effort to try to understand and provide
support to such a wide array of businesses, large, functionally organized staff groups had been
created at headquarters. As Reg Jones, Borch’s successor, put it, “Under the existing structure with
functional staff units at the corporate level, business plans only received functional reviews. They
were not given a business evaluation.”
Realizing the problem, Borch commissioned a McKinsey study in 1969 which recommended
that GE be organized into Strategic Business Units, a term first coined within GE in 1957, with each of
35 or 40 SBUs reporting directly to the CEO. Instead of eliminating other organizational entities such
as groups, divisions, and departments, however, in an effort to avoid a total disruption of the
organization yet again, the SBU structure was superimposed over the existing structure. In addition,
corporate staff units were split into those providing advice to the field and those responsible for longrange planning activities. At the same time, SBUs went about building their own staff support
groups. Long-range planning received major emphasis under Borch, with the result that a “9-block”
matrix built upon assessments of industry attractiveness and business unit position was developed to
help management determine whether businesses should be built, held, or “harvested.” As a result of
this, one of Borch’s major contributions, in the eyes of many, was his willingness to lead GE’s exit
from the mainframe computer business in 1970, which played a pivotal role in legitimizing
divestitures. He had put in place strategic planning practices that had restored profitability to the
growth that continue apace at GE under his successor. (See Exhibit 2 for trends in key financial
By the time Reginald (Reg) Jones—a suave, English-born graduate in economics from the
University of Pennsylvania, who had begun his career at GE in 1939 as an auditor and controller and
who grew to become, in the eyes of many, the leading statesman among American businessmen in
the 1970s—assumed the reins from Fred Borch in 1973, 43 SBUs had been created. This created a
severe burden on top management of having to review and intelligently respond to plans produced
by SBUs. Worse, it was thought to contribute to a lack of integration and cohesiveness of plans being
undertaken by each. As a result, a new level of management, comprising five “sectors,” representing
This document is authorized for use only by Kathy Lynch in RBUS 401 - 2012 - Term A taught by Rick Marolt from
August 2012 to October 2012.

For the exclusive use of K. LYNCH
GE ... We bring good things to life. (A)


“macrobusinesses” (consumer products and services, industrial products and components, power
systems, technical systems and materials, and international), was established. Over time, this led to
the company shifting the major sources of its earnings, for example, from power systems to technical
systems and materials. Sensing a long-term need for sources of energy, Jones engineered a deal in
1976 to acquire a large coking-coal producer, thereby moving GE into a sixth major endeavor. At the
same time, he spent a great deal of his time building and maintaining an effective dialogue between
business and government.
Given his background and manner, Jones surprised many by recommending to the board as
his successor John F. (Jack) Welch, a bright (Ph.D.), scrappy, confrontational chemical engineer who
had made a mark as an operating manager in the Plastics Division, who was at the time senior vice
president and sector executive for Consumer Products and Services, and who was thought by many
to be the antithesis of Reg Jones. (In a 1973 appraisal, it was agreed that Welch needed
“improvement in handling socio-political relationships” and that he had a tendency to operate
“outside the dots,” i.e., outside bureaucratic norms.)➂ One analysis of Welch’s management style
compared to elements of Alfred Sloan’s classic concept of scientific management is presented in
Exhibit 3.

Welch’s Inheritance
One of three finalists for the job of CEO, Jack Welch inherited in 1981 what was generally
regarded both externally and internally as a highly successful company. One of his first tasks was to
replace several of his competitors for the job who had left the company upon finding out that they
would not be selected. But more important, his first priority was to deal with the increasing
bureaucracy, evidenced by the number of signatures required for approval of any substantial
proposal, that he had experienced as an operating manager. The General Electric he saw was
overgrown, laden with too many layers of management and too many people duplicating work, with
too little effective internal communication and coordination, with too many “losers” among its
management ranks, and a company facing an uncertain future with competitors that could become
stronger than GE. Further, he felt that it was in too many businesses in which it was a relatively
minor player. In keeping with his nature, he felt that he and his team would have to act fast,
decisively, and consistently in ways that would send a clear and simple message to an organization
of 412,000 employees. Thus began an era at GE in which its CEO would speak in short, endlessly
repeated, and often memorable “sound bites” (albeit “sound bites” with a “bite”) in order to get his
message across to the huge organization. (See Exhibit 4 for a selection of favorite Welch “messages.”)
To many associates, this method of communication was sometimes regarded as the “message of the
month.” Over time, the cumulative effect of the messages, however, began to be felt.

New Initiatives
In response to questions from security analysts about GE’s future strategy, Welch
downplayed the idea of an elaborately crafted strategy, saying, “What will enhance the many
decentralized plans and initiatives of this company isn’t a central strategy, but a central idea—a
simple core concept that will guide General Electric in the eighties and govern our diverse plans and
One element of this central idea would involve drawing three circles, based on analyses
supplied by his staff, to describe the GE of the future. (In fact, by 1982 the corporate strategic
planning function would be disbanded in favor of planning groups in the respective businesses
working closely with managers responsible for profits.) They comprised groupings of businesses
This document is authorized for use only by Kathy Lynch in RBUS 401 - 2012 - Term A taught by Rick Marolt from
August 2012 to October 2012.

For the exclusive use of K. LYNCH

GE ... We bring good things to life. (A)

that were #1 or #2 in their respective industries and were labeled core manufacturing, technologyintensive, and service businesses. (Exhibit 5 is a reproduction of the drawing.) The message was
clear to managers of the other businesses outside the circles: become #1 or #2 or get ready to leave

#1 or #2; Fix, Close, or Sell
Among the first important businesses sold under this policy were Utah International (coking
coal production), consumer electronics, housewares, central air conditioning, and Family Financial
Services (a second mortgage issuer). At the same time, businesses that would reinforce existing
positions or create companies that were #1 or #2 in their industries were acquired. These included
the purchase of Thorn-EMI’s medical equipment sales and service business, AMIC Corporation
(mortgage insurance), Employers Reinsurance Corp., Borg-Warner Chemicals, and Roper
(appliances); the trade of GE’s consumer electronics business to France’s Thomson-CGR in return for
its medical-imaging unit; and the creation of several joint ventures designed to extend GE’s reach in
existing businesses beyond the United States. It also included the acquisition of RCA, by far the
largest in the company’s history, and one which was thought to provide the basis for establishing a
new business in broadcasting (through RCA’s NBC subsidiary). Yet another acquisition thought to
fit with the company’s strategy for financial services was the investment banking firm, Kidder
Peabody. (Clearly not #1 or #2 in its industry, this would prove to be what was generally
acknowledged as a mistake. After failing to turn it around, GE would sell it in 1994.)
The concept of being #1 or #2 was not without its problems for GE’s management. Business
managers were beginning to define their markets narrowly so that their companies, by definition,
dominated them. This had the potential effect of constraining new business opportunities rather than
broadening them. One of the important tasks of the members of the Office of the CEO in reviewing
plans became that of insuring that markets were being defined sufficiently broadly—a factor that was
taken into account in performance appraisal for the businesses.

Concurrent with “fixing, closing, or selling,” GE embarked on what was regarded internally
as an attack on bureaucracy but what later would be termed “downsizing.” As Reuben Gutoff,
former head of the Chemicals Group, put it, “The enemies were not just outside competitors but the
GE bureaucracy as well. We talked a lot about that—the bureaucracy-speak, the bureaucracy-babble.
We had met the enemy, and it was us.”➀
Acting on Welch’s belief, fostered under Gutoff, that “every layer is a bad layer. The world
is moving at such a pace that control has become a limitation. It slows you down,”➀ actions were
taken to eliminate organization layers and jobs contributing to the GE bureaucracy. Jobs involving
primarily supervision, approvals, and controls were cut. Jobs producing information that was not
absolutely necessary were cut. The entire notion of “sectors,” representing a layer of management,
was eliminated along with SBUs (strategic business units). Thirteen businesses replaced not only six
sectors but also the 27 businesses that existed in 1981, with each business head reporting to one
member of a four-member “Corporate Executive Office.” (Exhibit 6 contains comparative
organization charts for GE in 1981 and 1992.) In all, between 1981 and 1985, GE’s employment
dropped from 412,000 to 299,000 while revenues increased by 19.7% and net income increased by
37.8%. Corporate staff, regarded as the “police”—made up of professional nit-pickers and secondguessers on the strategic planning and finance staffs—took the biggest hit of all, with its ranks
reduced by nearly 60%, including 80% of strategic planners.➂ The number of management levels
between the chairman and managers in the field was reduced from nine to from four to six.

This document is authorized for use only by Kathy Lynch in RBUS 401 - 2012 - Term A taught by Rick Marolt from
August 2012 to October 2012.

For the exclusive use of K. LYNCH
GE ... We bring good things to life. (A)


Despite the care with which the company treated terminated employees, the combination of
downsizing and fix, close, or sell by 1984 had damaged the morale of those remaining in the company
and earned Jack Welch the nickname “Neutron Jack” (leaving in his wake buildings but no people) in
the business press that he would regret and dispute for years to come. Pockets of antagonism toward
him began to form among some managers in the organization which were alleviated only partly by
evidence that the idea seemed to be producing a leaner, stronger GE that was ready to step up its
pace of growth, both internally and through acquisition. Nevertheless, the spirit of openness and
candor that was encouraged among executives in the “new GE” helped to diffuse some of the fear
and bitterness among them. Noel Tichy, then head of GE’s training center at Crotonville, relates a
story from this era: “Late one night in 1985, I happened upon one of the many breakout rooms there.
In it was a group of young engineers and businesspeople, new hires to the company. Around the
table with sleeves rolled up and food wrappers and dirty plates littering the room, they were
feverishly debating two flip charts. One said, ‘Jack Welch is the greatest CEO GE has ever had.’ The
other said, ‘Jack Welch is an asshole.’“➃ Tichy didn’t say which flipchart was fullest.

“The GE Engine”... Self-Confidence, Simplicity, and Speed
During the period from 1981 to 1985, several management concepts were articulated and
constantly emphasized by members of the Corporate Executive Office. They were all intended to
break down the GE bureaucracy. Among them were the concepts of “ownership/entrepreneurship/
stewardship/excellence” (greater delegation and greater ability to act at lower levels in the
organization); a greater emphasis on benchmarking performance against competitors as opposed to
last year’s performance; “reality, candor, and open communications” (seeing the world as it is rather
than as one might wish it to be); and “integrated diversity” (in which ideas and resources would be
moved across and among businesses, best practices would be shared, and the success of the entire
company would be the responsibility of its parts). Incentives and recognition were given to
managers practicing each of these concepts.
A combination of values and administrative processes came to make up The GE Engine, in
which the office of the CEO allocated GE’s human, capital, and technical resources among the
businesses for productivity, volume growth, or other opportunities. Each GE business, in turn, was
rewarded for earnings growth and/or cash flow. The businesses, in turn, were highly differentiated
not only in activities but also in policies by which activities were carried out. For example, each had
its own reward and compensation system.
At the individual level, The Human Engine, the goal was to release creativity and feelings of
ownership at every level. For example, an effort was undertaken to increase “ownership” among GE
managers by enriching stock option programs and extending them from only the very top managers
to eventually 27,000 employees. The key characteristics of The Human Engine were self-confidence,
simplicity, and speed. The theory behind it was that self-confident people are able to be simple, not
clutter the organization with bureaucracy, and hence create speed.➂ These qualities—along with
others such as the ability to face reality, honesty of communication, candor, and integrity, and the
ability to create and add value vs. controlling or focusing on personal power—which would later be
articulated in a values statement, were then used as a basis, along with business results, for
evaluations of individual performance.

Shared Values
By 1986, the top management of the company was ready to articulate the values that they had
shared in recent years. The Corporate Executive Council (CEC), comprising the 13 business heads
and the senior corporate staff, assumed as one of its first tasks the articulation of shared values that
could be communicated throughout the company. The eventual result of this effort, which was
revisited from time to time and discussed by lower levels of management, was a set of statements
This document is authorized for use only by Kathy Lynch in RBUS 401 - 2012 - Term A taught by Rick Marolt from
August 2012 to October 2012.

For the exclusive use of K. LYNCH

GE ... We bring good things to life. (A)

which later would be printed on a small card, shown in Exhibit 7, to be carried by GE executives. In
order to emphasize the importance of these values, Jack Welch and other members of the corporate
executive office began giving more emphasis to the values than to performance numbers in their
meetings throughout the company. It was reflected too in the relatively short shrift given to the
numbers as opposed to what Welch termed the “soft stuff” in the letter to shareholders that he
personally crafted early each year (showing it to colleagues only when he had completed several
drafts) to appear in the company’s annual report, a letter that eventually would be circulated in more
than 1.3 million copies annually throughout the world. (Excerpts from the letter appearing in the
1995 annual report are shown in Exhibit 8.)
In order to drive home the importance of values, by 1987 managers were being evaluated
both on their ability to meet goals and produce numbers and on their adherence to the values, as
measured, among other things, by a 360-degree appraisal system. This was a first step toward an
eventual categorization of managers into four types comprising those who did or did not meet
numbers and those who did or did not live the values. Those who met numbers and lived the values
were rewarded handsomely. Those who did neither were dismissed. Those who couldn’t make
numbers but lived the values were given a second (or third or fourth) chance. Those who made the
numbers but didn’t live the values, however, presented the greatest challenge. Over time, the
message became clearer: They too would have to go.
By the early 1990s, the evaluation of managers was simplified into a categorization of A, B,
and C players. Again the message communicated to the organization became clear: “Don’t waste
time trying to develop C players into B players. Get rid of them (they will be happier somewhere
else) and concentrate on the development of A players.”

Barriers to action were thought to be the enemy of many of the things GE’s leadership was
trying to achieve. These took many forms, including “not invented here” attitudes, the unwillingness
to coordinate plans and actions between functions, the need to “sign off” on a decision proposed by
someone else, the need to supervise and control rather than allow employees latitude to make
decisions on their own, and even the lack of interest in becoming involved in community affairs. The
antidote to these barriers was something that came to be referred to by the somewhat awkward term
“boundarylessness.” It was added to the list of shared values although it was closely related to other
desired behaviors contained in the values statement.
For example, in order to become
“boundaryless,” a manager had to be candid, open, and self-confident. If it were achieved, simplicity
and speed were results. The end result would be a significant improvement in productivity.
The concept became a measure of individual performance. The biggest challenge for many
executives was the transition from commander and controller to coach and consultant that the
concept implied. Classes on boundarylessness were added to the curriculum at the Crotonville
Leadership Development Center to facilitate the process. Steve Kerr, head of Crotonville, described
an example class “lesson”: “We teach that ... you should ask, ‘What is keeping me from letting any
subordinate make that decision? ... How often have I reversed a decision or approval?’ If the answer
is seldom or never, why feel the need to sign off on it?”➀
Other examples of the application of boundarylessness were the increasing levels of
coordination between functions, businesses, and country organizations within GE; the involvement
of suppliers and customers as participants in GE’s design and manufacturing processes; and the
increasing frequency with which GE managers “benchmarked” other com...

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