Case Study: Work-Out At General Electric, Where It All Began . . .
This Case Study provides a concise overview of Gagnon Associates’ multiple-year engagement in helping GE to implement the GE Work-Out Process:
The Company
At the time Work-Out began: A global, diversified technology and services company that manufactured such products as aircraft engines and plastics and offered such varied services as power generation, financial services, medical imaging and television programming. One of America’s oldest companies, considered a leader in business management practices and methods.
The Problem
In the late ‘80s and early ‘90s, then visionary CEO Jack Welch recognizes the imperative of transforming one of business’s oldest companies from a bureaucratic, top-down-driven enterprise to “a big company that acts small,” in order to meet the challenges of the next decade.
The Approach
Work-Out, in Welch’s words “a decade-long, soul-transforming cultural initiative,” is launched with the support from a consortium of outside experts. As part of this consortium, Gagnon Associates supports, designs and leads scores of Work-Outs in numerous GE businesses, including, Plastics, Electromaterials, Silicones, Appliances, Superabrasives and GE Capital.
These results-focused business improvement sessions, facilitated by Gagnon Associates consultants, involve employees from all walks of GE life, from the executive suite to the shop floor.
The Results (Representative Examples)
- After adopting Work-Out as an ongoing activity over a two to three-year period, Superabrasives division increased productive capacity of operations by approximately one third on asset base of $750MM, in effect, adding a virtual $250MM plant at no cost.
- Using Work-Out over a twelve- to eighteen-month period, a Plastics division manufacturing site improved first pass yield from 95% to 98.3%, each point increase representing millions in savings/profitability. And in the same division, multiple Work-Outs mended relationships with a key molder/customer and saved a $50MM sale whose loss had been a foregone conclusion.
- A Silicones division with a sorry 40% to 50% success rate in meeting commit dates for product delivery improved to 75% as a result of solutions identified in Work-Out sessions. In one year’s time, Silicones, as a division, ascribed $8 to 10MM additionally direct to the bottom line (on a base of $40MM) as a result of intensive and widespread use of Work-Out.
Making GE Self-Sufficient: Work-Out Training
In addition to Work-Out implementation described above, Gagnon Associates played an important role in making GE self-sufficient in the use of the Work-Out methodology. From 1992 to 1997 Gagnon Associates’ Work-Out training program was a pre-requisite in the management development curriculum of two GE businesses, Plastics and Silicones, and was consistently judged by participants as “one of GE’s most effective programs.”
Later in the decade Gagnon Associates introduced Work-Out training into GE Capital Modular Space, one of GE’s newest and fastest-growing businesses at that time.
GE Work-Out: The Legacy
By the end of the ‘90s, Jack Welch testifies to the results of the long-term commitment to Work-Out across the entire GE company: “After a decade of Work-Out, most of the old bureaucracy and the boundaries among us have been demolished. … At GE today – and we are obviously proud of this – finding a better way, the best idea, from whomever will share it with us, has become our central focus.” — From letter to “Share Owners and Employees,” GE Annual Report