GENERAL ELECTRICGENERAL ELECTRIC

THE MOST ADMIRED CORPORATION

Jack Welch, Chief Executive Officer

Became CEO 18 1/2 years ago at age 45Youngest chief in GE’s historyRaised market value to $300 billionBuilds talentEncourages Mergers & AcquisitionsChanges corporate cultureResponds rapidly and creatively to

change

MOTORS & INDUSTRIALMOTORS & INDUSTRIAL

INFORMATION SERVICESINFORMATION SERVICES

MEDICAL SYSTEMSMEDICAL SYSTEMS

PLASTICSPLASTICS

NBC

ELECTRICA L DISTN& CON TROL

POWERSYSTEMS

LIGHTI NGAPPLIANCES

GE CAPITALSERVICES

AIRCRAFTENGINES

TRANSPORTATIONTRANSPORTATIONSYSTEMSSYSTEMS

Why is GE a successful and admired corporation

Jack Welch, CEOOutward thinkingSense of PurposeInformalityWork OutCompetitive

advantage

Reward SystemCandorAgilitySix SigmaChoice of New CEOKnow how to

measure success

GE Thinks Outside Itself

Bureaucracy is focused inward

Designed a culture and reward system to encourage people to look outside the company

Sense of Purpose

Employees have incentive to do well because of stock options

Employees gain personal satisfaction through their work

Plane CrashNew Light-Speed CT

20 Second Body Scans

Pride in Product

Advantages of Informality

People do not take themselves too seriously

The ability to make decisions quickly

People are self-confident enough to have real exchanges of ideas

Work OutWork Out Changing from old to new Series of meeting with employees of all

levels Discussing ideas of change Process of building self confidence

Work OutWork OutTown MeetingsEmployees & SupervisorsExchange of Ideas85% of Issues Resolved Immediately

Organization’s Biggest Organization’s Biggest AdvantageAdvantage

Ability to learnShare that

learningAct on that

learning

Avoid “NIH” Syndrome

Learn EverydayFind a Better

WayLearn from Other

Companies- Toyota

- Wal-Mart

The Reward System

Align the reward system with the values that you want

Arrange the system so that everyone is motivated to do the best job possible

Get everyone to cooperate, help, and share their talent

Reward team work

CANDORBe informalBuild TrustCandor comes naturally

AGILITYAGILITYAgility must be present in your

thinking and in your actionsCompanies strengths must be used Weaknesses have to be reducedA company has to be able to make

changes

Six SigmaSix SigmaManagement policy designed to get

people to do their best

Designed to ensure quality work

People are trained to do their best

Gives employees something to strive for

If you played 100 rounds of golf per year, and played at:

2 sigma - you'd miss 6 putts per round

3 sigma - you'd miss 1 putt per round

4 sigma - you'd miss 1 putt every 9 rounds

5 sigma - you'd miss 1 putt every 2.33 years

6 sigma - you'd miss 1 putt every 163 years!

SIX SIGMA IMPROVES YOUR SCORE

How to determine the company’s success

Are the customers satisfied?

Are the employees satisfied?

How good is your cash flow?

Keys to Success

!Energy!Sense of Purpose!Informality!Work-Out!Value System!Culture

Things to Remember

OAlignment of Values & RewardOCustomer SatisfactionOEmployee SatisfactionOCash FlowOSpeedOSimplicityOSelf-Confidence

                          

GlobalizationNot only to grow by selling and servicing the global markets

Globalizing every activity of the company– sourcing of raw materials, components, and products

Attracting the best people from the world

ServicesInvest in businesses to improve the Performance of installed base and the wayit is actually serviced

Go beyond servicing to reengineer the installed base by using higher technology

Dramatically improve customers’ competitive positions

e-BusinessInternet explosion has brought about anIncredible change in the way things can be done

Rapidly change dealings with vendors, partners, and customers

Represents the greatest opportunity for growth that the company has ever seen

Six SigmaDisciplined methodology of defining, Measuring, analyzing, improving, & controlling every aspect of the company

Ultimate goal of virtually eliminating allDefects – changed the DNA of GE

The way they work, in everything they doAnd in every product they design

Are passionately focused on driving customer success

Live Six Sigma Quality . . . ensure that the customer is always its first beneficiary . . . and use it to accelerate growth

Insist on excellence and are intolerant of bureaucracy

Act in a boundaryless fashion . . .always search for and apply the best ideas regardless of their source

GE Leaders...Always with unyielding integrity

Prize global intellectual capital and the people that provide it . . . build diverse teams to maximize it

. . . the "4-E's" of GE leadership: the personal Energy to welcome and deal with the speed of change . . . the ability to create an atmosphere that Energizes others . . . the Edge to make difficult decisions . . . and the ability to consistently Execute

See change for the growth opportunities it brings . . . i.e., "e-Business"

Create a clear, simple, customer-centered vision . . . and continually renew and refresh its execution

Create an environment of "stretch," excitement, informality and trust . . . reward improvements . . . and celebrate results

•Revenues rose 11% to $112 billion, a record.

•Earnings increased 15% to $10.7 billion, the first time GE has broken the $10 billion mark in earnings from operations.

•Earnings per share were up 15%.

•Free cash flow was a strong $11.8 billion, up 17%.

•Our ongoing operating margin rate grew to 17.8%, a gain of more than a full point from '98 and the third straight year of more than a full point improvement.

GE Facts Reported in CEO’s Annual Address in 2000

•Working capital turns hit an all-time high of 11.5 — an improvement of 2.3 turns. The 80% improvement in this key performance measure over the past three years has added $4 billion to cash flow.

•GE made 134 acquisitions in 1999, worth almost $17 billion. This marks the Company's third year in a row with over 100 acquisitions, totaling over $51 billion.

GE Facts Reported in CEO’s Annual Address in 2000

GE’s Stellar Performance Record

Summary

The company must have a positive, forward-looking chief executive.

It must look outside itself for ideas and inspiration.

The people must have a sense of purpose.The people should remain informal.The company must be willing and able to

change.

Summary Continued

The employees must be able to work together.

Maintain a competitive advantage.The reward system must be designed

to achieve the company’s goals.The company must be agile.A quality process should drive

everything they do.