Upon being appointed to CEO of GE in 1981, Jack Welch had big plans for GE. Jack wanted to cut out all of the red tape bureaucracy and run GE like a local grocery store. He started with redefining the businesses portfolio at GE. He insisted that every business under GE's control be either the number 1 or 2 leanest, lowest-cost, worldwide producers of quality goods and services. Welch's strategy was fix it, sell it, or close it. Within two years GE sold 71 businesses and product lines and completed 118 other deals, including acquisitions, joint ventures and minority investments. The income acquired form the businesses sold was used to improve GE's competitiveness. Welch also dismantled the strategic planning system and delayered the hierarchy of management from nine to four. He wanted general managers talking to general managers about their strategies rather than planners talking to planners. He changed the roles of staff at headquarters and widened the spans of control while removing several layers of management. He also drastically reduced the documentation and made the planning review more informal. Through leveling out management and corporate staff from 1981-1990, GE's sales more than doubled while their number of employees fell. Welch continually emphasized the importance of the company's "software" (values, motivation, and commitment) over its "hardware" (business and management structure).
Welch created a program to get rid of thousands of bad habits accumulated since the creation of GE; the Work-Out Program. The program's purpose was to continuously improve and change, foster cultural transformation through empowerment, eliminating unnecessary work and communication, and improve business performance. He wanted employees to feel free to challenge their leaders and wanted management to perpetuate the program and implement the decisions in a timely matter.
The Work-Out Program consisted of five key elements; off-site meetings, focus on issues and key processes, cross-sectional participation, small groups and follow-up.