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This shift in organizational structure also required the entire corporation to shift from centralized to decentralized decision making. The approaches GE took to ensure the shift in structure and decision making would work included putting output and behavioral controls into place for each business unit. The output and behavioral controls were specifically designed to ensure each independently operating business unit shared accountability for corporate results yet also had the accountability to define their own unique business plans and strategies. In using output controls and behavioral controls, GE was able to successfully transition to a decentralized organizational structure.
Often when organizations choose to deploy a decentralized structure, there is an uneven, politically unbalanced and highly competitive approach each business unit takes to getting resources. It is assured that there is never a perfect, utilitarian-based approach to the distribution of resources throughout any decentralized organization. Even GE with its excellent management and leadership programs and initiatives, there will be unequal distribution of resources. To overcome these limitations of a decentralized organizational structure, GE relies on coordination synergy through knowledge sharing and extensive cross-functional teams. These approaches provide for the levels of resource sharing and asset use that are found in a centralized provision of resources, yet still retain the advantage of a decentralized organizational structure. GE continues to be successful with this strategy using a coordinated synergy approach to resource balancing across its decentralized organizational structure.
What is your evaluation of Welch's approach to leading change?
Jack Welch brought a transformational style of management to GE, creating a decentralized organizational structure while also re-aligning planning and control systems, human resources processes and programs and also completely redefining the organizational culture as well. He was a disruptive innovator who also had an innate ability to transform organizational structures and the value chains they relied on at the same time. While creating a highly decentralized organizational structure within GE, he was able to attain a high level of synergy and shared mission and values by using a wide spectrum of techniques including lean manufacturing, Six Sigma and intensive use of process improvement to align the company better to customer expectations and needs.
Jack Welch also showed an exceptionally high level of emotional intelligence (EI) as well, in that he orchestrated entire divisions to collaborate and communicate more effectively even in a decentralized organizational structure. His approach to created a coordination synergy or shared purpose also indicates strong transformational leadership and EI-based skills, which are both essential for a leader to excel in such a large, diverse corporation.
Jack Welch also challenged the status quo of the company often, forcing the previous management teams to question their assumptions regarding strategy implementation, organizational structure and how planning and control systems could be used to better manage risk and capitalize on emerging opportunities.
Throughout the many training programs and initiatives he also sought the high performers who would be completely and passionately committed to his vision of what GE could become. Jack Welch was so thorough in his changes to the management and organizational structures of GE that the very nature of what management excellence was changed. No longer confined to the traditional planning, organizing, leading and controlling role, Jack Welch defined leadership as the ability to completely re-align a business to the customer, measure results, aggressively fight to be number one or two in a market, while staying profitable. As these are very difficult changes to bring within an organization at the same time, Jack Welch realized he had to have managers, leaders and employees who would be so completely committed to the program they would not let it fail.
Equipping these managers and leaders to attain their individual, decentralized business unit objectives while also contributing to the corporate-wide strategies of GE, Jack Welch instituted 360-degree feedback and the use of peer and superior ranking of performance as well. What this did was bring a new level of accountability to each manager while aloso underscoring how critical it was to see the totality of their roles in a highly decentralized organization. No longer could a manager or senior executive rely just on his division for feedback and often control the perception of performance and management skill. With the 360-degree feedback, output control and behavior control aspects of decentralized decision-making, every manager and leader in every division was accountable for their performance and their…[continue]
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