As CEO of General Electric (GE) between 1981 and 2001, he transformed the company from one known for its TVs and lightbulbs into a global leader in financial services, aircraft engines and medical imaging. To revamp GE, he empowered managers and slashed bureaucracy. His focus on creating efficient and effective systems was a sharp break from the management styles of the 1970s with its excess of middle managers and large planning departments. More importantly, embracing change and Six Sigma became corporate values against which every manager in the company was measured.

Welch realized how critical change was to success. He said, “Don’t manage! Lead change before you have to.” Perhaps more prophetically, Welch understood, “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.” Today’s challenge is that business leaders face an unprecedented and exponential pace of change that would’ve tested even the heralded Jack Welch. Being in front of change will determine the winners and losers of this era.

The beginnings — the quality revolution

Dr. W. Edwards Deming’s framework of statistical process control, what became Total Quality Management (TQM), was born in the 1960s. It was eventually shaped as Six Sigma. The first to embrace TQM were Japanese manufacturing firms seeking to change what it meant to be “Made in Japan.” This transformation was quite dramatic for Toyota. Leaders created the “Toyota Way,” and Toyota is still a global leader in quality today.

So began the quality revolution of the 1980s led by Welch’s GE. Aside from the work of statistical process control, leading companies made quality everyone’s job and installed quality into the culture as a core value. It became a “way of doing things” rather than a “thing you do.”



In just five years, GE delivered a massive $12 billion per year of savings. This was not a one-time boost but a new level of performance that investors and shareholders could see and take to the bank.

Quality is now embedded into all large organizations, principally because those companies that didn’t embrace quality don’t exist anymore. Quality was a competitive differentiator, and as more companies embraced it and delivered the benefits to customers and shareholders, it became a matter of survival. These radical new ideas championed in the 1980s for minimizing manufacturing defects became a herald of a company’s ability to lead change. These ideas are now core constructs of enterprise architecture and are used to build a performance business.

Change is changing

From foraging to harvesting, handmade to factory-made, generalist to specialist, manual to electronic — change is changing. The nature of labor has evolved on an exponential scale for a few hundred years. Like all exponentials, things get interesting on the right side of the curve, and that’s where we are.

In recent times, labor has experienced a dramatic transformation, often referred to as globalization that began with India and China. China was the dominant driver in the globalization of manufacturing, and India led the way in the services sectors. This change was brought about by a set of political, economic and educational factors that created competent production capacity, along with the availability of network access. In the 1980s, again led by pioneer GE, offshoring work was proven to succeed and produce great value. The 1990s were punctuated by a massive wave of offshoring and outsourcing led by banking and airlines sending back-office work to India. Soon after, IT companies followed. It’s worth noting that initially, offshoring was viewed with skepticism, and failures were massively publicized. But this quickly changed. To remain competitive, it was outsource or die. Today, more than 80% of large U.S. companies declare that outsourcing is a part of their business. Business Process Outsourcing (BPO) has become a “way of doing business” rather than a thing companies do.

Initially, the primary objective of offshoring and outsourcing was labor savings through arbitrage. Over time, this has changed. Now, BPO is about access to global talent and forging critical partnerships for core capabilities. Yes, the economics of labor arbitrage remains attractive (although global labor rate equalization is happening), but for most companies, outsourcing is a critical capability and central to business architecture.

*This post is the first part of a blog post originally published at Blueprism website as "Automation is the Catalyst for Change".