Chapter 10 09. Jack Welch: A Hundred Years' Conspiracy in a Crisis

Jack Welch, the former CEO of General Electric in the United States, is known as "the most respected CEO", "the world's number one CEO", "the most successful and greatest entrepreneur in the United States", but he was also known as "the most respected CEO in China". Jack" and "America's Toughest Boss" because in the early days of his administration of General Electric, in order to resolve the crisis, he fired 118,000 people, closed many of General Electric's divisions, and survived the crisis in the enterprise At that time, he himself experienced a crisis of credit, and for a long time, he was worried about those two titles. However, it was the outstanding and outstanding performance during that period that gave him his later All honors, and make GM a great company in the world.

On the other hand, Jack Welch seems to be a man born for general use. He was born in Salem, Massachusetts, in November 1935. In 1960, he joined the Plastics Division of General Electric; in April 1981, he became the youngest chairman and CEO in the history of General Electric.In just 20 years since then, he has built a company full of bureaucracy into a vibrant and vibrant corporate giant. Under his leadership, the market value of General Electric has risen from $13 billion when he took office to $13 billion. 480 billion U.S. dollars, and the ranking has also developed from the tenth among listed companies in the United States to the first in the world in terms of profitability.The second largest world-class company in the world. In September 2001, Welch retired.

Today, 12 divisions of General Electric have become leaders in their respective markets, and 9 divisions can be selected into the "Fortune" 500 list.Welch led General Electric to transform from a manufacturing giant to a service industry and e-commerce-oriented corporate giant, making the century-old General Electric a true industry leader. Viewpoint: If we do not have an effective solution to the long-term competitiveness of a business, it is only a matter of time when the business will eventually struggle. When the environment changes, it is dangerous to rely on inertia to formulate a plan.Jack Welch's transformation of GE's nuclear industry division in the early 1980s is cited as a classic because he could see a change in the path to the future.The most successful entrepreneurs often see the future.

background of the crisis General Electric launched three ventures in the 1960s, namely the computer, aircraft engine and nuclear reactor businesses.After 20 years of development, the engine business grew stronger and stronger, but the computer business was sold, and the nuclear business was seen as a "promising" industry by the 1970s, because in the early 1970s, they maintained annual Good track record of selling three or four nuclear reactors. But in 1979, just as Sudan red and melamine changed the structure of China's catering and milk industries, an accident changed the fate of the industry.In the early morning of March 28, 1979, the red light of the Three Mile Island Nuclear Power Plant in Pennsylvania, USA was flashing, and the whistle siren was deafening - the nuclear leak, and the core temperature of the core components at the site continued to rise, and a large number of steam bubbles appeared. Means there is a local danger of a hydrogen explosion.It was not until 6 days later that the threat of hydrogen explosion was eliminated. Although the 100 tons of uranium fuel was not melted, 60% of the uranium rods were damaged, and the reactor was finally paralyzed.After the accident, the entire United States was shocked, residents near the nuclear power plant were terrified, and about 200,000 people evacuated the area.Large-scale demonstrations broke out in major cities in the United States, especially in cities where nuclear power plants are being built, demanding that the construction of nuclear power plants be stopped or shut down.The incident has also prompted the governments of the United States and some countries in Western Europe to re-examine their plans for nuclear power.

When Jack Welch took office as CEO of General Electric in 1981, he was faced with a bloated organization with prevailing bureaucracy. As Jack Welch himself said, at that time, no one inside or outside the company could feel the crisis 's arrivalRegardless of asset size or stock market value, GE is one of the top ten large companies in the United States and an idol in the hearts of Americans, including its nuclear business sector. In the spring of 1981, when Jack Welch went to inspect the work of the department, in the plan they submitted to Welch, there was also a sales plan for three nuclear reactors per year. In the past two years, they Not a single reactor was sold.In fact, because of the Three Mile Island accident, the entire industry atmosphere has quietly changed, and the proud and huge General Electric nuclear department is the last person to know this change.

When Welch arrived, the first thing he said was: "You don't expect to get three orders a year. In my opinion, you will never get any more in the United States." The proud department was overwhelmed, and even on the first visit to the new CEO, they fired back bluntly: "Jack, you really don't understand this industry." Nevertheless, Welch insisted on letting the department work. The direction is adjusted to "Re-establish the plan based on the premise that there is no order." In fact, the result was exactly as Welch expected. In the 20 years since his visit, GE's nuclear division has received only four new business orders, and none of them came from the United States.However, after the transformation of the business of this department, the net income increased sharply: it was 14 million U.S. dollars in 1981, 78 million U.S. dollars in 1982, and 116 million U.S. dollars in 1983... The general nuclear reactor business module became one of its A saga of change.

The main content of the change requested by Welch is to make a future-oriented business adjustment under the crisis.Because a major incident occurred, which affected the trajectory of the entire industry, based on past experience (sales of 3 reactors per year) is no longer feasible, this is Welch's most intuitive judgment, he is very confident in his prediction, so he The nuclear department is required to make strategic adjustments based on the direction of no new business.At that time, General Electric had 72 reactors in operation, and after the nuclear leak, the safety of nuclear power plants was a priority for the public sector. Therefore, General Electric's strategy of turning to provide safe operation will be forward-looking and future-proof.

Any drastic change will bring great pain, but being confident about the future and having a clear conscience for all will reduce the pain.General Electric's nuclear division, at the behest of Jack Welch, has undergone massive infrastructure dismantling and layoffs, and the personnel changes have been huge. In 1980, the nuclear department had 2,410 salaried employees, but by 1985, this number had become 160. However, because of the transformation of General Electric, the nuclear department was transformed from a sales company to a Future-oriented company for advanced reactor research, thereby establishing his future leadership in this field.Jack Welch said: If we do not have an effective solution to the long-term competitiveness of a business, it is only a matter of time before the business will fail.Indeed, it was because he saw the future direction of the industry in the crisis that he firmly decided to change.After the successful transformation of the nuclear sector, Jack Welch set his sights on more sectors and a longer future. His transformation pointed to a core concept: first principle second.

Viewpoint: We must be able to gain insight into those industries that are truly promising and join them, and insist on being one of the best in every industry we enter, no matter in terms of leanness, efficiency, cost control, and global operations. It's one of the best... It is frustrating to fire employees at any time, but if it is the only way to save oneself, the operator must also make up his mind.Still, layoffs in order to survive are always a bad idea.Jack Welch's experience is: downsizing must be based on future competitiveness. background of the crisis In the second half of the 20th century, although the smoke of World War II had cleared away long ago, in the field of business, the competition between the United States and Japan remained stalemate.After World War II, the United States single-handedly supported the rise of Japan's modern industry, hoping to curb the rise of the Soviet Union and China, but never imagined that this move would bring nightmares to American business. By the 1980s, many American businesses The market is occupied by industrial products from Japan: including radios, cameras, televisions, steel, ships, and automobiles... The founders of many industries here are Americans, but on a certain morning, the Americans wake up. I found that "made in Japan" was printed on all the products - the scene back then was just like today, but the protagonist has become China.

When Jack Welch took over General Electric, the situation had not yet reached the worst. It was not until the mid-1980s, when the memory giant Intel was driven out of the memory field by Japanese companies, that the Americans realized it deeply. It was not until the end of the century, after the discovery of the Internet industry in Silicon Valley, that the center of commerce gradually returned to the United States.Therefore, Jack Welch discovered this feature immediately after taking over GM. He said: "At that time, if you wanted to stay in a certain company, the reason why the company was profitable was enough, and even made a decision on the direction of the business. Adjusting, leaving those low-margin, slow-growing businesses and moving into high-margin, high-growth global industries was not at all a priority at the time.” At that time, many of GE’s industries were having problems, such as television Machine manufacturing business - due to competition from Japanese companies, profits have begun to shrink significantly.Other businesses, including appliances and consumer electronics, are weak.

Therefore, Jack Welch was determined to change this situation. He proposed the later famous "first and second" principle as a yardstick for dealing with potential crises. Jack Welch said: "We must be able to gain insight into those who really Promising industries and join them, and insist on being one of the best in every industry you enter, no matter in terms of leanness, efficiency, cost control, global operation, etc...." That is to say, In all the industries in which it enters, GE must be number one or number two, or it will be closed or sold.It was a bold and risky decision, one that carries enormous risks even today, because it would have meant making large numbers of workers unemployed and offending many government officials and corporate veterans. Welch also encountered the same problem, and during that period, Jack Welch got two titles: "Neutron Jack" and "America's Toughest Boss", the former being the most influential magazine in the United States "Business Week" bestowed, and the latter was judged by "Fortune" magazine - in this field, Welch himself also achieved "first, second"!The focus of the media is not unreasonable, because in just four or five years, Jack Welch laid off a total of 118,000 employees in order to realize the "first and second" principles, that is, from 411,000 at the end of 1980 to 1985. With 299,000 people in 2019, General Electric’s behavior was in stark contrast to that of IBM, another giant at the time. At that time, IBM implemented a lifetime employment system. Under the gap, General Electric became a business machine where “profits are more important than employees”, and the first to bear the brunt was Jack Welch. Public opinion and public pressure kept Welch in a kind of controversy. What supported him to stand still were two words from two women.One comes from his wife Caroline. Every night when Welch comes home, she will say to him: Jack, this is what you think is right for everyone, and you must do it.So Welch thought of a way to decompress—ask yourself in the mirror every day: Would you like others to treat you like this?Are you doing it fairly and reasonably?Can you answer yes to all of these questions? ... The other was his mother—who had taught him the power of faith as a young man.In Welch's senior year of high school, he represented the school in a series of ice hockey games. They won three games in a row, then lost six games in a row. Scored two goals, and when victory was in sight, the opponent scored 3 goals in a row and ended up.Welch threw his club angrily and rushed into the dugout. The entire team was under the shadow of failure.At this time, his mother appeared, grabbed him by the collar, and shouted at him: "If you don't know what failure is, you will never know how to be successful. If you really don't know, then you It’s best not to come to the competition!” Public humiliation is Welch’s rare experience in childhood, but it left a deep impression on him, and it was even the source of his constant rushing out of crises and failures throughout his life. Therefore, in his autobiography published in 2001, when Welch recalled this "Neutron Years", he said: "Downsizing has always been a problem that business leaders are least willing to face. Anyone, if he is willing to If layoffs, he should be fired; on the contrary, if he can't layoffs, then he should be fired. What I need to do is to face the reality, believe that I am right, and at the same time be truly fair and just." Driven by the philosophy and goals of General Electric, under the hands of Jack Welch, General Electric completed the plan of a century-old foundation.