Learning from Group Dynamics at General Electric

Paper Summary:

This paper gives a full account of Jack Welch's successful restructuring of General electric. It accounts the laying off of 10,000 staff and his focus on team work in small groups of jobs shifting workers. Also mentioned are the successful merger with Borg-Warner Chemicals and the alleviation of inter division rivalry which led to gross inefficiencies. A very full and informative essay.

From the paper:

"In April, 1981, Jack Welch, now the most famous CEO in America, succeeded Reg Jones at General Electric. Jones had led GE to 26 consecutive quarters of improved earnings through two recessions. Welch did him one better: during his tenure at GE the company outperformed 93% of the Fortune 500 in total return on investment. GE has become one of the most valuable companies on the globe.

Welch did this by restructuring General Electric in a revolutionary way and by being committed to that restructuring. He ripped apart the company, laid off over 100,00 people (earning him the nickname "Neutron Jack") and created a company where teamwork was rewarded in many different ways. Through innovative restructuring, Welch was able to bring out the best in GE employees, so that they worked productively in small, high-performing groups, with incentives to not only perform well, but to help the company itself perform better. Competition between individuals and groups was often circumvented. The experiment in teamwork, or group behavior, is a fascinating one. "

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