General Electric (GE) is a multinational conglomerate that has undergone significant change management in recent years.
Facing financial decline and a need for cultural transformation, GE has implemented a number of strategies to revitalize the company.
This case study examines the change management efforts of GE, including the challenges faced, strategies implemented, and the resulting impact.
By examining the success of GE’s change management, we can gain valuable insights into the importance of leadership, cultural transformation, and ongoing evaluation in managing change within an organization.
Brief Background on General Electric
General Electric (GE) is a multinational conglomerate that was founded in 1892 by Thomas Edison.
Originally focused on electrical power and lighting, GE has expanded over the years to become a leader in a variety of industries including aviation, healthcare, renewable energy, and more.
With over 200,000 employees worldwide, GE has a significant impact on the global economy.
However, in recent years, the company has faced a number of challenges including financial decline and a need for cultural transformation.
These challenges have required significant change management efforts to revitalize the company and ensure its continued success.
Challenges faced by General Electric
There are 03 major challenges faced by General Electric that pushed it to implement changes at organization level.
1. Deteriorating financial performance
One of the major challenges faced by General Electric was deteriorating financial performance. After years of success, the company began to experience declining revenues and profits in the late 2010s.
This was due in part to a decline in demand for some of GE’s products, as well as increased competition in certain markets. In addition, GE faced significant debt and liquidity challenges, which further impacted its financial performance.
These challenges necessitated significant changes in the company’s operations, including a focus on simplification and operational excellence, as well as divestitures of non-core businesses to improve cash flow.
2. Need for cultural shift
General Electric also faced a need for cultural shift. For many years, GE had a reputation for being a highly centralized and hierarchical organization, with a focus on efficiency and control.
However, as the business landscape changed, GE recognized the need to shift its culture to be more innovative, agile, and customer-centric.
This required a shift away from a “command and control” culture, towards one that valued collaboration, risk-taking, and continuous improvement.
3. Leadership succession issues
Another challenge faced by General Electric was leadership succession issues. GE had a long-standing tradition of grooming internal candidates for leadership positions, and had a history of successful CEO transitions.
However, in the early 2010s, the company faced a number of high-profile leadership challenges, including the resignation of CEO Jeff Immelt in 2017, and the subsequent replacement of his successor, John Flannery, after just 14 months on the job.
These leadership challenges created uncertainty and instability within the organization, and highlighted the need for better succession planning and talent development.
Change management strategies implemented
Following are the key change management strategies implemented by General Electric to address the challenges it faced:
1. Reorganization of its business units
To address the financial challenges faced by the company, GE undertook a significant restructuring effort, which included the consolidation and divestiture of a number of non-core businesses.
This allowed the company to focus on its core competencies and improve its overall operational efficiency. Specifically, GE reorganized its business units into three core segments: Aviation, Power, and Renewable Energy.
Each segment was given more autonomy and responsibility for its own operations, which allowed for greater agility and innovation within the organization.
The reorganization also included the sale of GE’s transportation, lighting, and healthcare businesses, which generated significant cash flow and allowed the company to focus on its core competencies.
2. Focus on simplification and operational excellence
GE recognized the need to streamline its operations and improve its overall efficiency. This required a focus on simplification and standardization, as well as a commitment to operational excellence across all areas of the organization.
To achieve this, GE implemented a number of initiatives, including the use of lean principles, the adoption of digital technologies, and the development of new processes and procedures.
These efforts allowed the company to reduce costs, improve quality, and enhance its overall competitiveness in the market.
3. Cultural transformation through leadership development programs
To address the need for a cultural shift towards innovation, agility, and customer-centricity, GE recognized the importance of developing its leaders to embody these values.
This required a focus on leadership development, which included the implementation of new leadership development programs, as well as the enhancement of existing programs.
These efforts focused on developing leaders who were able to drive innovation, foster collaboration, and embrace risk-taking. In addition, GE also implemented a number of diversity and inclusion initiatives to foster a more inclusive and supportive culture.
4. Succession planning and talent development
To address the leadership succession issues faced by the company, GE recognized the need to enhance its talent development efforts and improve its succession planning processes.
This required a focus on identifying and developing high-potential employees, as well as enhancing the company’s recruitment and retention strategies.
To achieve this, GE implemented a number of initiatives, including talent development programs, career development plans, and leadership development opportunities. These efforts allowed the company to develop a pipeline of talent to fill key leadership positions, and to ensure continuity in the company’s leadership over the long term.
Results and Impact of change
The change management strategies implemented by General Electric had a significant impact on the organization, resulting in improved financial performance, employee engagement and culture, and reputation and stakeholder confidence.
Firstly, the reorganization of business units allowed the company to focus on its core competencies, leading to improved financial performance. This was evident in the company’s financial results, with GE reporting stronger earnings and cash flows following the implementation of the reorganization.
Secondly, the focus on simplification and operational excellence allowed GE to streamline its operations and reduce costs, which in turn led to greater employee engagement and culture. By enhancing its operational efficiency, GE was able to create a more collaborative and innovative work environment, which resulted in greater employee satisfaction and engagement.
Finally, the cultural transformation through leadership development programs and succession planning and talent development efforts enhanced GE’s reputation and stakeholder confidence. By building a stronger leadership bench and fostering a more innovative and customer-centric culture, GE was able to enhance its reputation as a leading industrial company and rebuild stakeholder confidence.
General Electric’s journey through change management provides a valuable case study for organizations facing similar challenges. The company’s successful implementation of change initiatives can be attributed to several key factors, including a clear vision and strategy, effective communication, and strong leadership support.
Through the reorganization of business units, a focus on simplification and operational excellence, and a cultural transformation through leadership development and talent management initiatives, GE was able to transform its business, enhance its capabilities, and rebuild its reputation and stakeholder confidence.
Furthermore, the role of leadership in driving and supporting the change effort cannot be overstated. The leadership team at GE played a critical role in setting the direction and vision for the company, communicating the need for change, and ensuring that the organization was aligned and committed to the change effort.