GE transformation under CEO Jeffrey R. Immelt

Discuss about the Lenovo and a Case Study Company GE.

General Electric (GE)

The major change that took place in ‘GE’ was the transformation or remaking of GE to an iconic and historic company. The change was made by the CEO of the company, Jeffrey R. Immelt, during extremely challenging and volatile times. The change had faced all sorts of circumstances such as recessions, geopolitical risk and bubbles. During the entire period of change, new competitors kept on emerging and the fact had required considering a makeover of business model every single time. CEO of modern ages is explored to a variety of challenges where they are tested for their leadership skills in relation to decision making and the operation management. The best part of the transformation in GE was its CEO’s decision to identify the sectors to put into the change. The CEO did not include the entire portfolio in the transformation process. The CEO rather separated out the low-tech and slower-growing sectors (Hbr.org 2018). Additionally, the CEO had the clear vision to reinvent GE as the leading name in technological solution. The technological advancement was tried for with the transformation process.

Lenovo

The biggest transformation in Lenovo has been its transition into a technological solution which stepped into the place of IBM and successfully led the new responsibilities. The transformation is one of the biggest in the last 10 years. IBM due to the average performance of its PC unit had sold this to Lenovo in 2005 (Forbes.com 2018). The move was full of challenge for Lenovo due to many things such as the cultural differences between Lenovo and IBM. There are indeed huge cultural differences between a Chinese and an American company. The transformation had required employees in the PC unit of IBM to move to the Chinese company Lenovo. This was not an easy task especially due to the cultural differences. Top officials in particular could have resisted form leaving their existing company and moving to a culturally different company. However, the leadership in Lenovo had worked at this point in time. They were able to convince employees that everything will remain the same. The feat had worked and employees were convinced to move. There were few initial hiccups also like the one when the US government had denied access to government contracts or data to a Chinese company. Lenovo success can be credited to the leadership formed in the company due to the merging of IBM and Lenovo. The success of the venture needs to be credited to the hard works of the American and Chinese leaders. The two cultures have surprisingly worked together. The trust of Chinese leaders in the American leadership is a point to wonder. The leaders at Lenovo did not hesitate in working together with Steve Ward who worked as the architect of the deal from IBM (Fortune 2018).

Lenovo’s biggest transformation in the last 10 years

GE

Strengths: General Electric has a highly diversified portfolio ranging from energy infrastructure, NBCU, consumer & industrial to technology infrastructure. It has a long history of acquisition which helped it to attain a global presence. They have been able to perform even during the recessions and economic downturns. Strong and inspiring leadership is one of the key assets of GE. The culture in the company is fuelled with desires and skills to support the innovation and technology (Hbr.org 2018).

Weaknesses: The industrial division of the company has not worked. It has struggled to perform well in developing and Asian markets. Inability to control the market shares have become evident on quite a few occasions in past. One of the biggest mistakes was to step into the financial business at the time when the industry had struggled due to the housing and banking crash in between 2007 and 2009 (Hbr.org 2018).

Opportunities: The new CEO Mr. Immelt in 2001 had sensed that the company can reach a dominating position and also become the leading technological solution. The opportunity was grabbed by effective leadership and strategic plans of the CEO of GE. The CEO was able to identify that digital technology was the vision for the company (Hbr.org 2018).

Threats: The execution of the change management was one of the biggest threats to the CEO of GE. Additionally, they had the challenge to face the current competition while also heading towards the set vision. The threats were for successfully passing through during the recession & the economic challenges and becoming a gainer all the time (Hbr.org 2018).  

Internal and external drivers for change

• Ability to perform during recessions and economic downturn
• Organisational leadership in the form of CEO Mr. Immelt
• Organisational culture
• Opportunities for digital technology

Lenovo

Strengths: Lenovo is very good at delivering and identifying the leadership acts. A profound existence in the Chinese market is another worthy point for Lenovo. Lenovo has a strong patents portfolio. They are competent with regards to mergers & acquisitions. Knowledge management and diverse workforce is another good thing to note down (Forbes.com 2018).

Weaknesses: They have a very poor perception of brands in developed economies. They had no significant existence in the computer hardware sector until the deal between Lenovo and IBM was finalized (Forbes.com 2018).

Opportunities:  Portfolio enhancement is one of the opportunities for Lenovo. The growing Smartphone market in the Asian countries especially in India was an opportunity which Lenovo had grabbed by successfully merging with Motorola (Fortune, 2018). The collaboration with IBM to enhance its product portfolio was a potential opportunity (Forbes.com 2018).  

Strengths and weaknesses of GE and Lenovo

Threats: Saturated smartphone market in developed countries is a threat to Lenovo. Rapid technological advancement is also a threat as this would require a more execution of transformation into the digital technology. Intense competition both in the PC and smartphone units is a potential threat for a continued growth in market shares (Forbes.com 2018).  

Drivers for change

• Identifying the leadership acts
• Expertise in mergers & acquisitions
• Profound knowledge base and diverse workforce
• Portfolio enhancement

Comparing and analyzing the impact of changes in strategy and operations of each firm 

The changes highlighted in relation to GE and Lenovo were the potential challenges for both of the companies. This section of the study will show how the changes or the transformation process had impacted the operation strategy & the decision making in both GE and Lenovo.

GE

The newly appointed CEO in 2001, Mr. Immelt, had identified the needs to undergo the transformation process. The transformation process is always a challenge to execute as because more than 60% of the transformations have failed so far. Additionally, transformation requires the fulfillment of two most important things such as leadership and the culture of change (Cummings, Bridgman and Brown 2016). This can be said that GE was able to attain and maintain both the identified variables. It had the leadership management in the form of the CEO. It also had the contribution from other members as well. These were the reasons that had supported and flourished the transformation even during the challenging times. The leadership was evident when the CEO had identified the product line to put into the transformation process. The leadership at GE and employees had helped the company to sustain the transformation even during recessions. The CEO had continuously allowed thoughts to frequently come in. Recruitments were done to make an impact on each of the departments (Van der Voet 2014).

Decision making and strategic management of operation had both helped the transformation in GE. There had been the few bold decisions which require a leadership personality to lead. It was a bold decision to discontinue the entire portfolio that GE had. This was also a good decision when the CEO had decided to focus on incepting a culture for change in the workforce. Focussing a lot on becoming the world’s leading name in technology is itself a very bold decision. Such decisions require the utmost commitments from leaders, employees and the other members in organizations (Lines et al. 2015). GE had delivered on this account which is mainly due to the leadership in the CEO Mr. Immelt.

Opportunities and threats for GE and Lenovo

Operations were also conducted differently than it used to be before the new CEO had stepped in 2001. The transformation was supported with disciplined leaders and employees. The CEO was never a quick absorber of new trends. The leader rather waited and made extensive observations before adopting the trend. It is indeed advisable to identify the organization’s needs and accordingly select the best feasible technologies & trends for the company. The changed leadership had also affected the cultural values of GE. The entire team had actually worked as a unit and had delivered the results (Matos Marques Simoes and Esposito 2014).        

Lenovo

At the time when Lenovo had sent a panel of executives to the US to discuss the deal with the IBM’s executives, there were only one out of the panel of five as well versed with English proficiency. That one person was the chief financial officer of Lenovo. There had existed huge cultural differences between the two companies; however, Lenovo was able to convince the executives of IBM. Lenovo assured that there will be the similar working experience for IBM’s professionals joining the Lenovo in China.

The deal or the transformation into the world’s leading name in the PCs unit has impacted the decision making and the operational strategies at Lenovo. The current decision making at Lenovo which demands fealty based on seniority had changed into a combination of China’s long-term strategy and West’s sheer focus on meeting the quarterly targets. China is worldwide famous for autocratic leadership style. However, the CEO at Lenovo who is just 49 has been found as different from the traditional Chinese managers. The CEO has fresh thinking and likes to work as a team which is like rolling on the Western tracks. Decision making for branding has also changed. Lenovo is different to other Chinese companies such as Haier in appliances, Geely & BYD in autos and Huawei & ZTE in telecommunications (Forbes.com 2018).

The transformation process has improved the supply chain operation of Lenovo. The strategies were being changed. Initially, the supply chain operation had a lot of key performance indicators to meet. It was not flexible also. The current CEO had reduced the key performance indicators to just five. Top 50 managers were being assigned with responsibilities to train employees on how to effectively handle the supply chain operation. The CEO, Smith, had also adopted Workout to implement the group-based improvement techniques. It was originally being developed by General Electric (GE). The move had allowed the inclusion of all decision-makers in one room. The change in strategy making has also impacted the innovation in Lenovo. Today, Lenovo holds a huge 40% of the US market with respect to laptops being sold over $900 or more (Forbes.com 2018). One of the biggest changes was towards the different direction than other Chinese firms do. The brand image had rarely been a key factor for Chinese firms; however, to Lenovo, it matters the most. The transformation at Lenovo had infused a new blood into the operation and consequently, the company started focussing on its brand image. Lenovo now believes that premium products should also be produced. The brand image will help the premium products to get sold.

Impact on operation strategy and decision-making process in GE

Evaluating the impact of internal & external drivers of change in leadership, individuals and team behavior

There were few internal and external drivers which have influenced the change into GE. General Electric has had this reputation to perform with the utmost challenge. GE is known for performing even during recessions and economic downturn. The superiority had reached another level with the inception of new CEO Mr. Immelt. The CEO had identified the potential in GE and the possibility to exploit the opportunities. Consequently, the remarkable journey of change had then taken off. The leadership of GE was more dynamic with Mr. Immelt. The changed leadership at GE had changed everything from operational strategies to decision making. The new CEO was able to identify the future and prospects for the digital technology. Consequently, the big transformation that nearly took 16 long years to accomplish was introduced. The transformation process was tested on most occasions; however, the changed leadership and the workforce were able to see through it (Smollan 2015). The CEO had helped to redefine the team behavior at GE. The company had faced attrition also during such a long period of transformation. However, it managed it effectively with superior leadership in the form of Mr. Immelt and the talented & integrated workforce.

Lenovo had this reputation to identify the leadership required to lead a team to a never-attained feat. Such feat was responsible for the earlier success that Lenovo had from other sectors such as the smartphone industry. Lenovo does identify the potential deals well and collaborate accordingly to leverage the benefits. This is also why there have been quite a few mergers & acquisitions in the Lenovo’s history. They are good at managing the knowledge base which always gives a feeling that the diverse workforce which Lenovo has can help to attain the difficult feats as well. The desire to enhance the portfolio has always motivated Lenovo to act differently than other Chinese firms. Consequently, Lenovo had entered the Smartphone industry and performed exceptionally well. Portfolio enhancement had also resulted in collaborating with IBM for its PCs unit. The team formed after due to collaborating with IBM was indeed very unique for a Chinese company. Consequently, the workforce was a mixture of both Chinese and American professionals. Top professionals from IBM had comfortably worked with Chinese professionals in China. It really affected the strategy making which was initially centered just to the long-term strategy had afterward collaborated with quarterly based target meeting (Kreimeier et al. 2014).   

Impact on operation strategy and decision-making process in Lenovo

Using the change management theories & models to identify how negative impacts of change on the businesses were minimized 

            There are ample numbers of change management theories and models which can be used to identify how negative impacts during the change processes were minimized. Lewin’s change management model is one of those. Lewin says that to transform into a set vision it is important to follow three steps as mentioned below:

• Unfreeze
• Make changes
• Refreeze

It specifies that it is important to identify the areas of changes and then preparing those for it. It is followed by implementing the changes. Once the feat is attained, Lewin says to refreeze back into the attained state to leverage the benefits of change. One of the setbacks during the change process in GE was investing in the financial services. It was done at the time when the industry met with banking and housing crash. The company according to Lewin failed to unfreeze properly as it could not identify the potential industry to step into (Grant 2014).

The McKinsey 7-S model is another very important model to identify whether the change is coherent. It says that if seven parameters of the model are fulfilled then the change would be held a rational move. According to McKinsey, GE during its journey to become a digital company failed on quite a few occasions. Few of such instances are GE’s inability to understand the threats of investing in the financial services and also in oil & gas equipment. Financial investments have been made when the industry had suffered from housing and banking crash. Investments were made for oil related equipment when the prices of oil had reduced drastically. These circumstances as according to McKinsey just denote a failure to understand the appropriate strategy. Hence, these were the few of negative aspects of the transformation process in GE (Delmatoff and Lazarus 2014).

The change process in Lenovo is full of challenges or the negative aspects that really tested the progress. Lenovo had initially faced challenges from the US government as the company was denied from accessing the government data. There were huge cultural issues once the union with IBM was officially announced. Employees especially the top professionals had wanted to be with IBM only. According to Lewin, the change process had failed to identify the requirements to unfreeze. It is important to identify the areas of improvement and the resources required for it. Lenovo failed to identify that there will be difficulties due to the cultural differences (Fuchs and Prouska 2014). According to McKinsey, Lenovo had no strategies to counter the cultural differences. The first meeting of a panel of the executive from Lenovo with executives of IBM in the United States had only one the CFO as an English speaking person. The meeting was full of doubts. It shows a gap in strategy to approach a culturally different country. Moreover, if a firm fails to deliver on any of the 7 strategies listed in the model the change would not be held in a coherent move (Petrou, Demerouti and Schaufeli 2018).

A critical evaluation of responses thereafter 

An irrelevant strategy making by GE when it invested in financial services had crashed with struggling business of the industry. GE had to quit its financial services. The decision would be held rational as it was creating worries for the company and was also resisting the transformation into a digital technology. However, the company also had no other ways to head for. GE had also sold its troubled industrial solutions which is rational also. The company had no other ways to head for. Interestingly, the portfolio of GE includes everything from jet engines, to locomotives and medical equipment. These are just a few products line. However, the long history of the transformation process is also associated with setbacks (Klonek, Lehmann-Willenbrock and Kauffeld 2014).

Lenovo was able to convince the top professionals of PCs unit in IBM. The CEO did ensure the top professionals and also the employees for the working conditions by assuring a similarity with what they have at IBM. The cultural differences were then sorted-out with a mixed workforce comprising of both Chinese and the American professionals. Not only this, strategies were also combined. The long-term focus of Chinese was combined with short-term targets of Americans. The combination shows a very rare example of a Chinese company (Hesselbarth and Schaltegger 2014).

Implementation along with misdiagnosis of the problem is the factor that causes the change process to fail. This would be recommended that once the need for change is being identified, the next step would be to identify the possible and the feasible areas for change. A wrong selection may also abandon the entire change process.  This is important also because leaders nowadays focus a lot on a stepwise execution of the change process.

In this section, the change process in GE and Lenovo has been discussed. GE had undergone a transformation under the leadership of the CEO Mr. Immelt. The transformation had lasted 16 long years and during the period the company had faced a lot of issues like a withdrawal from the financial and the industrial sectors. The change was though planned to become the global leader in technological solutions. Lenovo in collaboration with IBM stepped into the PCs industry. The plan was to lead the industry with unrivaled challenges. During the early days of the change process, Lenovo had faced a few challenges especially due to the cultural differences between Lenovo and IBM. However, the problem was sorted out and the CEO of the company was responsible for it. The CEO did not just convince the top professionals from IBM but had also combined the two companies in the context of strategy making

Different barriers to change and how these impact the leadership’s decision making 

Change processes are full of challenges which are why most companies fail to deliver it successfully. Based on the GE case study there are different barriers to change which are as listed below (Hesselbarth and Schaltegger 2014):

• Inability to identify the areas of change as this would just abandon the entire process
• Ineffective leadership as they play a major role during the entire process of change
• Debating on priorities such as which is to give the priority of the different circumstances during the change process
• Unshared goals as all need to contribute to the process
• Organisational culture is unfavorable to change
• Had it been in Lenovo, the company could not have been successful with IBM’s PCs unit

Applying Kurt Lewin’s force field analysis change model to determine opposition and support for changes in GE 

Kurt Lewin says that a company is in a state of equilibrium when driving forces for the change and the restraining forces is both equal. The change will happen when driving forces for the change are more powerful than the resisting forces. The equilibrium state according to Kurt Lewin will then get disturbed (Stephan et al. 2016). In the light of the facts governed by Kurt Lewin, there were following driving and resisting forces of change (Stephan et al. 2016):   

Driving forces

• Leadership
• Organisational culture
• Talent management
• Experienced top professionals
• Sustenance

Resisting forces

• Decision making in few areas such as financial services and oil & gas equipment
• Unnecessary investments during wrong times
• Strategy making was also challenged

A critical evaluation of how all these helped GE to fulfill its organizational objectives 

The supporting and resisting forces have both helped GE through its transformation process. Leadership in the form of Mr. Immelt was the main point of attraction. The CEO had carried the change process effectively even during the recessions. Organisational culture was another positive aspect that helped GE to see through both positive and negative aspects of the business. Talent management was also a key factor that produced a supportive culture to move with. Managers were experienced and skilled as well. They had helped the company through tough times by taking the most feasible decisions. Sustenance of the strategy execution was a key character from the CEO and the workforce. Decisions making were tested for financial services and the industrial solutions. However, sustenance was the key factor to get rid of the issue. Unnecessary investments had also caused to suffer for financial and industrial businesses; however, effective leadership and the ability to sustain with the decision have both helped through the tough faces (Georgalis et al. 2015). This is also justified as according to Kurt Lewin, change will be successfully achieved either by powering the driving forces of change or by weakening the resisting forces of change.  

Using change management and leadership theories and models to identify the advantages and disadvantages of different leadership approaches dealing with change 

Advantages and disadvantages of change

Lewin’s Change Management Model: Lewin’s model is specifically useful for a big change. It is advantageous for firms which intend to undergo major changes such as the case of GE. However, the absence of an in-depth analysis of the areas of change, this may certainly abandon the transformation. If analysis and execution are appropriately balanced, positive outcomes will appear (Grant 2014).

The McKinsey 7-S Model: It is effective in cases where organizations need a better strategy to change. Change attained with this model will have fewer chances of getting abandoned. Chances for positive outcomes will be higher. If any of its variables are missed, this would not allow the accomplishment of change and will simply abandon the change (Smollan 2015).

Applying different leadership approaches to deal with the change in GE 

Required leadership steps will be as followed (Delmatoff and Lazarus 2014):

• Identify the areas of change
• Design a strategy to foster the change process
• Identify whether there are enough resources to support the change
• Powering the driving forces of change
• Sustaining the execution process
• Ability to pass through barriers

Evaluating how leadership approaches did support the change and how successful was it 

Leadership at GE had been phenomenal as it was able to sustain the progress even during the challenging times. The leader was able to identify the areas of change; however, failed to deliver a timely execution in the financial and the industrial sections. The change was introduced to help GE become the leading name in the digital technology. The transformation process had lasted for 16 long years which is quite a feat. By the time the CEO Immelt had resigned from the position, GE was already making a triple earning. 

References

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