Introduction to the Stone: There is a paradox in the choice of successors, that is, the more outstanding the previous generation of entrepreneurs, the more difficult it is for successors to choose, and the greater the probability of "messing up".
Diego | wen
In GE's more than 140-year history, two people are well-known in China, one is the founder Edison, and the other is Jack Welch. Around the dawn of the new century, Jack Welch was revered by China's elite as the creator of the world's greatest enterprise. After his retirement, he expounded his management ideas, "Win", which sold millions of copies in Chinese editions, including piracy, which can be called a myth that there is no one in the economic management book before and after the ancients.
Time passed, and in the next 20 years, the news of GE's decline continued. In early November, GE announced that it would usher in a bone scraping and healing-style change, and in the next few years, GE would be dismembered and split into three listed companies, one medical, one energy, and one aviation, of which aero engines would inherit the GE brand.
Some argue that GM's dismemberment means that it is terminally ill; others argue that GM has found a solution to its own problems.
Reflecting on the reasons for GE's decline, some people believe that it is due to the short-sighted behavior of meritorious CEO Jack Welch, who cut out the business that may be responsible for the company's future, such as semiconductors, in the slimming plan of that year. Others believe that he is excessively profit-seeking, financializing the company, and letting the company lose the gene of technological innovation, which is the most valuable thing for GE.
In recent years, there have been many remarks that have made Welch "back the pot" for GE's decline. Even when Welch died in 2020, many of the comments in the American media commemorated him were not admiration and nostalgia for him. Some criticized his last-place elimination system, while others attributed GE's decline to his pursuit of maximizing shareholder interests, thus missing the opportunity for companies to achieve timely iteration through early R&D and layout. Some people even put the decline of American manufacturing on his head, because it is said that at the most, more than 100 CEOs of the Fortune 500 came out of GE, so they brought the "virus" to the entire American business.
This so-called reflection dilutes the brilliant achievements created during Welch's administration of GE. In 20 years, he brought GE to the top of the global corporate market capitalization, from $12 billion to $410 billion, annual turnover from $25 billion to $140 billion, and profit from $1.5 billion to $12.7 billion.
It is not difficult to see from Welch that although "the winner does not accept criticism", for the enterprise, handing over the baton when the enterprise is brilliant does not mean that the coffin is decided. Whether the successor can catch and go far is also one of the criteria for people to evaluate entrepreneurs.
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It is no exaggeration to say that geelectric's history is the history of industrial innovation in the United States. After Edison invented the light bulb and DC power supply system, General Electric built the world's largest electric locomotive in 1895, designed the world's first commercial X-ray machine in 1896, invented the world's first fluorescent lamp in 1938, successfully built the first jet aircraft engine in the United States in 1942, invented the world's first two-door refrigerator in 1947, and established the world's first nuclear power plant in 1957.
From Edison's establishment of the company in 1878 to Welch's promotion to CEO in 1981, GE has gone through nearly 100 years of history and handed over the head seven times.
Between the Great Depression and the mid-industrialized U.S. golden years of the 1970s, GE blossomed into a giant company that spanned a wide range of fields. In the 1970s, the dual pressures of the oil crisis and the transition of the U.S. economy from mid-industrialization to late industrialization plunged the U.S. economy into a quagmire. Beginning in the 1980s, the United States successfully transitioned into a late industrialization period. GE led by Welch found this beat in time and became the leading big brother of this transformation by stripping off non-profit businesses and drastically slimming down employees.
If ge's decline is related to Jack Welch, it can only be said that the successor will not be able to take over Welch's very personal and diversified business empire, although the successor Immelt was carefully selected and cultivated by Welch over eight years.
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Welch began looking for a successor in 1993, and after a series of screenings, 23 people were selected in 1994. The men were between the ages of 36 and 58, and they were evaluated twice a year by the board. There are also other talent development events that Welch attends every time. By 1998, Welch had identified three candidates, and when he stepped down in 2001, Welch finally chose Immelt.
However, the legend is difficult to copy, nor can it be copied, and the so-called master of management is only the best in his time and his position. As one person put it bluntly, "Many times, Welch has excellent leadership, but unfortunately he does not know where his leadership excellence is, so he has not found a successor who is as good as himself."
When Immelt took over in 2001, GE had become a relatively mature, financially driven, diversified company focused on short-term profits. Immelt was a step-by-step successor, doing exactly what Welch and the board expected. Although he made some changes, he failed to reverse GE's overall tendency of emphasizing finance and light manufacturing, but instead intensified and continued the previous practice.
According to this inertia, in 2015, GE spent 12.35 billion euros to acquire Alstom of France, and in July 2017, GE acquired Baker Hughes, the world's third largest oil service company, with a total investment of more than $30 billion. However, these two mergers and acquisitions accelerated GE's decline, because the world had entered an era of energy change. Renewable energy is booming, and oil and gas prices are in a downward trend for a long time.
GE did not make quick money due to mergers and acquisitions, but brought huge risks and potential trust crises to itself, and soon fell into the business quagmire.
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Zhang Ruimin, the former helmsman of Haier, who has just successfully handed over the shift, once said a well-known sentence: "There is no successful enterprise, only the enterprise of the times", perhaps it is Zhang Ruimin who has insight into this, he proposed the "Rendanheyi" management model in line with the development strategy of the company in the Internet era in 2005, and used 16 years to practice and continuously iterate, until this year, Haier's various data indicators appeared at the highlight moment, he officially stepped down. To this end, Zhang Ruimin's shift did not cause any opposition, and presumably there will be no Immelt-style troubles after the successor Zhou Yunjie takes office.
Up to now, among the three major domestic white goods giants, the heads of Haier and Midea have all achieved smooth shifts, only Dong Mingzhu, chairman of Gree Electric Appliances, is still in office, and she has clearly stated in 2018: "Gree cannot operate better, I will never hand over the shift." "The reality is that since the beginning of this year, Gree's performance has not been satisfactory, and its market value has lagged behind Haier and Midea. Therefore, Dong Mingzhu should not retire immediately.
As we all know, Dong Mingzhu is also a legend. Under her leadership, Gree Electric Appliances has developed from a local enterprise to one of the leaders in the domestic home appliance industry, and has been diversifying and developing, successively involved in mobile phones, automobiles and other fields. However, due to her personal influence on the enterprise is too large, the precipitation in management over the years is lackluster, and she is now 67 years old, but she still faces many challenges, making the shift a "big difficulty" problem.
Recently, she claimed to be grooming her 22-year-old beautiful secretary, as if responding to succession questions. However, the clear-eyed people know that this is a new marketing trick she has used to bring goods. What should not be ignored is that in August 2020, WangJingdong, vice president and secretary of the board of directors of Gree, resigned, and in February 2021, Huang Hui, ceo of Gree, resigned. These two people, who were once regarded by the outside world as potential "successors" of Dong Mingzhu, have been out at a critical moment, which makes us sweat against Dong Mingzhu's future shift.
GE's decline stemmed from Immelt's lack of insight and the side effects of short-sighted and utilitarian culture brought about by the super-success of Welch's era. Years later, when GE was finally stripped of its doors by the Dow Jones, many saw the decline as a hidden danger buried by Welch. Looking back at the process and results of Welch's shift, it is impossible to help but sigh that entrepreneurs should be able to establish a management system and let the successors be able to control the entire enterprise. If the successor is handed over to a company with a complex system that mainly relies on the individual ability and resources of the entrepreneur to control, even if the enterprise is in full swing at that time, it is difficult to control over a long time.
Welch's transition experience also made us realize that there is a paradox in the choice of successors, that is, the more outstanding the previous generation of entrepreneurs, the more difficult it is to choose a successor, and the greater the probability of "messing up". If this outstanding entrepreneur does not attach importance to the construction of the mechanism and does not consider the long term, even if he finds a successor in advance and painstakingly cultivates it, he will only be able to do half the work in the end.