Jack Welch - Neutron Jack. Jack Welch

Jack Welch is such a figure in the business world that some speak very well and others do not. Why did it happen, what did this manager do, why was he named "Neutron Jack"..? You will get answers to these and other questions in today's article.

Let's start from the very beginning.

Brief biography of Jack

Jack Francis Welch was born in Salem, Massachusetts, USA. November 19, 1935. His father - John Welch, Conductor On The Railroad. His mother - Grace Welch, housewife.

Study period

After graduating from Salem High School, Jack entered a higher educational institution - University of Massachusetts Amherst. His specialization was chemistry in mechanical engineering. At the University, he received a bachelor's degree in this specialization.

In 1957, Welch decided to go to graduate school. University of Illinois. In 1960, he defended his doctoral dissertation and was awarded a degree.

Work at General Electric

After receiving his degree, Jack Welch got a job as a simple engineer in a company founded by Thomas Edison.

Failed dismissal

It is noteworthy that already after the first year of work, Welch was determined to be fired “from this bureaucratic company”, which, moreover, paid little for his work.

He was held back by one of the GE executives - Ruben Guttof. He arranged a dinner for Jack and his wife, and for 4 hours "sold" him the future of the company with minimal flaws that Welch did not like. And, of course, he promised that the engineer's wages would be raised.

Jack stayed and not in vain. After all, soon he himself, climbing the career ladder, began to restore order and get rid of bureaucracy: first in individual divisions in the field, and then in the entire company.

It was at this moment that the future "Manager No. 1" set himself the goal of becoming the CEO of General Electric.

Career advancement

Thanks to a clear understanding of the technological process and his managerial talent, Welch moved up the career ladder to the very top:

• In 1969, Jack became general manager of the plastics division at GE.
• In 1971 - the head of the chemical and metallurgical division.
• In 1973, he succeeded Robert Guttoff as executive director of this division. The latter received a promotion.
• In 1977, Jack Welch runs the entire GE Consumer Products division.

Company executive director

In April 1981, Jack Francis Welch became executive director General Electric. He held this position until 2001, transferring his post Geoffrey Immelt.

"Neutron Jack"

Having received a position at the very top of the management apparatus, Welch began to rebuild the company in his own way. The biggest changes affected the TOPs of the company.

His style of horizontal control system paid off, and also permanently attached the nickname - "Neutron Jack"(by analogy with a neutron bomb, which destroys only the living, without touching the building).

Welch optimized the management apparatus so that the number of employees at GE decreased annually on 10%. At the same time, the company's profit grew.

Debureaucratization

The extreme degree of "debureaucratization" of Jack Welch meant removal of extra "floors" and links in the vertical management system of the company. To ensure rapid decision making in the most complex situations, control systems had to be made simpler and more mobile.

The restructuring of assets led to mass layoffs of superfluous workers, both managers and workers, and the liquidation of entire structural divisions.

Manager #1

At the end of the second millennium, Fortune magazine named Jack Welch "Manager No. 1". During the years of his reign in the corporation, he managed to increase turnover from $26.8bn. dollars to $130bn. At the same time, he significantly reduced the company's costs and the speed of decision-making by modernizing the company's management system.

If you ask who you consider the most outstanding manager, young people will certainly say Steve Jobs. Older and professionally trained people will use a different last name: Jack Welch. The man who turned a small company into a global giant. In no way do I want to underestimate the merits of Jobs, but you must agree that developing a company on the crest of a growing (literally created by you) market is much easier than working in an established situation, with a divided market, clear leaders, etc. Either way, Jack Welch is considered one of the greatest management gurus.

Some of Welch's accomplishments:
– share price from $4 in 1988 to $133 in 1999 (including 4 splits);
– since then, the average return on shares is 27%;
– the company has gained more than 100 consecutive quarterly profits;
– GE sales increased from $27.7 billion to $173.22 billion;
– profit increased from 1.6 to 10.7 billion dollars;
– in 1999, the company was the second most profitable company in the world.

So, in this article we will look at 10 management principles that Jack Welch adhered to in his work.

1. Invest in people.

The first principle of management is that people are everything. And this is not just a beautiful slogan or an inscription in the personnel department. Welch, like no one else, understood that the strength of the company is in its employees. Moreover, he was aware of the importance of the contribution of each employee: whether it be an engineer developing new technologies, or a worker at a machine tool, or a sales assistant in a store.

All major companies in the US have their own universities for staff development and training. In addition, almost every major university has recruiting departments that select the best students in their first years of study, offering them tuition fees and good jobs at the end. "We are the best company because we have the best people working for us."

Of course, many are outraged that this is unfair. After all, work in a large company is more prestigious, it has social benefits, and they can offer higher pay. It turns out that all the best employees are captured while still studying, and what remains for other companies? But who said business is fair?

Basically, invest in people. These are the safest investments.

2. Dominate the market or leave.

The second principle says: if you cannot be a leader in the market, then this is not your market. Here Jack says he doesn't have time to do the fourth or fifth thing. Only one thing - the first place suits him.

Of course, this should not be understood in such a way that if someone bypasses you, you should immediately close. But the idea is that you should strive for leadership. The strategy of taking a bite out of the pie is not for him. He does not work to make money, or to achieve stability. A good manager is ALWAYS thinking about the unconditional surrender of competitors.

3. Never stop.

The next principle of GE management is always forward. Many large companies have collapsed precisely because they believed that their position was invincible, and their business was not unsinkable. But things are completely different. If you are not moving forward, then you are running backwards.

Jack Welch underwent heart surgery but never stopped working. Moreover, he filled the whole company with his unbridled energy, changed it, revised his views, forced others to change and become better.

4. Think service.

When Welch came to GE, it was a classic manufacturing company. Its goal was to produce something, and then sell it to intermediaries. The company had practically no direct connection with the end consumer. Welch radically revised this approach.

Now General Electric not only manufactures products, but also provides services in completely different areas. For example, they have a consulting company, a financial company. Not to mention service centers directly related to electrical appliances.

It is very important for any company to understand in time that no matter what it does, its product without service is incomplete. In addition, service centers are a great way to get feedback from the end user.

This principle says that whatever your achievements in the past, you will not go far on them alone. Of course, it's nice when your company has many years of experience, a large number of awards and other privileges and stories. However, what will it cost when your company goes bust or is taken over by a competitor?

The world is changing. It changes quickly and ruthlessly. New technologies are changing even the most traditional industries. And whether you like it or not, the Internet, plastics, new management methods - all this affects absolutely any company. You must be ready for such changes. You must anticipate them and rejoice in them. After all, this is your opportunity to become even better!

6. Learn and lead.

Jack Welch reasonably believes that knowledge and experience are something without which a modern leader cannot exist. The time for dictatorship is over. If your management methods are wrong, if employees think that your orders are ridiculous, they will simply leave for another campaign.
And if they don’t leave, then you yourself will ruin your company.
That is why every manager must constantly learn, take an active part in decision-making, delve into problems, and not leave at the expense of his director's chair.

The experience of failure is just as important (and often more so) than making the right decision right away.

7. Don't over complicate things.

Well, just in the previous article I described the basic principles of simplicity. Here Welch fully supports this approach. He was a direct person, he said to his face what he thought, he communicated with workers and with consultants and with financial bigwigs in about the same way.
You should call a spade a spade, you should not complicate anything, just to show that you know something more than others.

8. Destroy the bureaucracy.

Everything is simple here. Bureaucracy must be fought mercilessly. During his first year at GE, Jack saw how much time was spent making decisions due to bureaucracy - he wanted to leave the company. Not to mention how many people are busy with unnecessary work, how much time employees spend on useless cases and reports.

As soon as he became a leader, he greatly simplified everything and fought to the last with any manifestation of the bureaucratic system.

9. Corporate person.

Now quite a lot of articles are devoted to career growth and self-development. It is recommended to change jobs and activities every 5-7 years. In addition, working in different campaigns makes a person more versatile and creative.

Jack Welch worked for 45 years in the same company, while he constantly made various extraordinary decisions and creatively approached problem solving.
The fact is that having worked for so many years, he knew almost everything about the market, and about his company, and about the industry as a whole. This gave him a significant advantage in managing such a large campaign.

10. Run a shop.

And the last principle of management from the head of GE is to run the company the way you would run a grocery store. And it doesn't matter what you sell: light bulbs or Boeings.

The idea of ​​the store is that you personally communicate with each customer. Not only do you know what is bothering them, but you personally help solve their problems. Besides, you have everything in view. You know exactly what it costs. How much money do you have in the cash register, how much is in the account. You do not need to conduct a semi-annual audit to assess your financial condition. Etc. and so on.

The problem with large campaigns is that they greatly overestimate their size. And this is their main brake in development. If they had run their businesses the same as the little shops on the corner, many problems would have been avoided.

Well, that's all the basic principles of Jack Welch. Of course, you should not canonize him - this is a rather tough person who began his activity by dismissing a huge number of employees. And it’s not always pleasant to hear a direct text about what the leader thinks about you. But nevertheless, this is the greatest leader of the 20th century, and his person is worth studying.

This is a series of materials that will help you develop leadership qualities and become a real leader for those around you. Every day we will publish a new lesson for the future leader and accompany it with a story about an outstanding leader. Also at the end of each article you will find exercises that will help you develop your leadership skills!

Jack Welch is one of the greatest businessmen of the 20th century. For 20 years, from 1981 to 2001, Jack was chairman of the board and CEO of General Electric.

During the two decades of his reign, the total value of the corporation has increased 30 times - from 14 to almost 400 billion dollars. General Electric became the second most profitable company in the world. Welch's fortune is estimated at $720 million.

During his leadership of the company, Welch continuously worked to modernize the company and improve efficiency. He completely destroyed the bureaucratic system that irritated him, closed unprofitable factories and divisions, reduced wages, and even earned the nickname Neutron Jack, because, like a neutron bomb, he got rid of people without damaging buildings.

Jack not only worked efficiently; All his life he developed as a person and specialist. Welch joined General Electrics at the age of 25 as an engineer and rose through the ranks to lead the company after 21 years. His career lacks the inertia of middle age. He continued to study, constantly adding more and more new knowledge to the already existing impressive baggage. Jack was constantly changing, not paying attention to social stereotypes.

In 1999, he was named "Manager of the Century" by Fortune magazine.

After leaving GE in 2001, Welch wrote an autobiography, JACK: Straight From The Gut, which became a bestseller. By the way, upon his dismissal on September 6, 2001, Welch received a record-breaking "golden parachute" of $417 million.

Jack Welch's 25 Lessons for Today's Business Leaders:

I. Be more of a leader and less of a manager

• Be a leader
• Manage Less
• Articulate your vision
• Simplify
• Be less formal
• Energize others
• See reality in the eye
• See change as an opportunity
• Look for good ideas everywhere
• Finish what you started

II. Create a champion organization

• Destroy the bureaucracy
• Break the boundaries
• Put values ​​first
• Grow Leaders
• Create a culture focused on continuous learning

III. Unleash the potential of your people

• Get everyone involved
• Make everyone a team player
• Dare
• Give people confidence
• Turn work into pleasure

IV. Turn your company into a market leader

• Be No. 1 or No. 2
• Make quality a lifestyle
• Constantly innovate
• Get your speed back on track
• Infuse the spirit of a small company into your company

Qualities:

Jack Welch from childhood was distinguished by great perseverance, which only intensified with age. Smart, proactive, able to predict events well. He always focuses on strategic issues, understands the "essential" in each issue. He does not like to delve into the little things.

He knows how to captivate people with his personal example, many people consider the principles of his work to be the most ingenious and effective. He has great energy and charges others with it. Purposefulness, the ability to bring any matter to the end distinguish Jack Welch.

He is very confident in himself, knows how to take risks, make mistakes, learn from his mistakes. Jack Welch knows how to enjoy his work, loves simplicity in everything. He has a good sense of humor, he is kind, but fair and even sometimes a tough leader. Always demonstrates integrity, the ability to learn anytime and anywhere, He is friendly with everyone, but knows the boundaries in communicating with any person.

Jack Welch Rules of Life:

• "An overworked, overstressed leader is the best leader because he doesn't have time to get involved and bother people over trifles."
• Any change brings with it new opportunities. Therefore, the organization's response to change should not be waiting, but increasing activity.
• If you want to get what you never had, become what you never had.

Tasks-exercises for future leaders

1. Apply SWOT analysis to analyze your business or case. Evaluate 4 parameters - weaknesses, strengths, opportunities and threats

Draw a square with 4 cells and enter there at least 5 points for each of the 4 indicators. Do an analysis.

Write next to each parameter at least 3 actions that improve the situation.

Also write next to each parameter at least 3 actions that you are ready to do in the near future, write down the deadlines.

These tasks are prepared by the coach, you can ask your questions in the comments.

American chemical engineer, businessman and writer He was chairman and CEO of General Electric from 1981 to 2001. Welch's fortune is estimated at 720 million US dollars.

Jack Welch was born November 19, 1935 in Salem, Massachusetts (Salem, Massachusetts), the son of railroad conductor John Welch (John Welch) and his wife Grace (Grace Welch), a housewife. Jack attended Salem High School and graduated from the University of Massachusetts Amherst in 1957 with a bachelor's degree in chemistry. At university, he became a member of the student fraternity "Phi Sigma Kappa fraternity". After receiving a master's degree, in 1960 he defended his doctoral dissertation at the University of Illinois (the University of Illinois) in Urbana-Champaign (Urbana-Champaign).

In the same year, Welch became an employee of General Electric. He worked as a junior chemical engineer in Pittsfield, Massachusetts (Pittsfield, Massachusetts), with a salary of 10.5 thousand dollars a year. After his first year on the job, he received a $1,000-a-year promotion, and was dissatisfied with the modest promotion and bureaucracy that reigned in the company. Welch was about to move on to another job at International Minerals & Chemicals in Skokie, Illinois, but Reuben Gutoff, a young executive who stood two rungs higher up the local corporate ladder than Jack himself, decided that it would be a crime to let such a valuable employee go to competitors. He invited Jack and his first wife Carolyn (Carolyn Welch) to dinner and spent four hours persuading the engineer to stay. Guthoff promised to change the status quo and create a friendlier environment for small companies. As he himself later admitted, this was one of the best marketing decisions he ever made. Twelve years later, Welch, now a vice president of General Electric, wrote in his annual review that his goal was to be the company's CEO. In 1977 he became senior vice president and vice chairman in 1979. Two years later, 46-year-old John Francis Welch became the youngest chairman of the

and CEO in the history of "General Electric", having inherited this post from Reginald Jones (Reginald H. Jones). During the year of his activity, Welch replaced most of the company's management team with younger and more energetic managers.

During the 20 years that Welch led General Electric, he continuously worked to modernize the company and increase efficiency. He completely destroyed the bureaucratic system that irritated him so much in his youth, closed factories, reduced wages (and after that increased bonuses and distributed shares not only among management, but also among ordinary employees), reduced obsolete divisions, and even earned the nickname Neutron Jack, because, like the neutron bomb, it got rid of people without damaging buildings. Welch believed that the company should be number one or number two in a certain industry, or switch to something else. Many American business leaders followed suit. If in 1980, the year before he took over the company, its turnover was 26.8 billion dollars a year, then in 2000, the year before Welch left his post, this figure came close to 130 billion . In 1999, he was named "Manager of the Century" by Fortune magazine.

Currently, Jack Welch is married for the third time, he raised four children in his first marriage, which lasted 28 years, after which he and his wife divorced by mutual agreement. The second wife, lawyer Jane Beasley, according to the marriage contract, received an amount estimated at $ 180 million during the divorce. For the third time, Suzy Wetlaufer, commentator, journalist and co-author of Jack's bestselling books, has become the chosen one of one of the most effective managers of the last century.

He has been teaching at the MIT Sloan School of Management since September 2006 and remains an avid golfer despite a back injury.

Jack Welch is an American business legend. For twenty years - from 1981 to 2001 - he was the CEO of General Electric, during which time he managed to turn a hulking industrial company into a global global player in the financial and innovation fields. Welch's autobiography, The Manager's Story, is published by Ivanov, Mann & Ferber. Forbes publishes an excerpt from the book in which the charismatic leader talks about how he came up with his main business method - "improve, sell or close" - and what the first attempts to implement it led to.

The central idea for GE's business development came from my previous experience with good and bad lines of business. In the 1970s, at least some profitability of the direction was considered a sufficient reason to stick with it.

No one could even think of changing the rules of the game, abandoning slow-growing areas with low profitability, and using the freed up resources to develop areas with high profitability and opportunities for rapid growth.

No one - neither inside the company nor from outside - noticed the impending crisis. GE was a national idol, the tenth largest corporation in the United States in terms of size and market capitalization. But for many years now, Asian manufacturers have been on our heels, snatching off industry after industry: radios, cameras, televisions, steel, ships and, finally, cars. Our TV division was struggling to keep up. Competitors - including those from Japan - slowly but surely won back our profits. Several other areas, notably consumer electronics and appliances, were just as vulnerable.

But in those days, as I said, it was believed that if the division was profitable, then this was enough to not think about anything else. Even today it happens to hear: “You make a profit. What's bad about it?" Sometimes a lot. If a division does not have a long-term competitive advantage, sooner or later it will cease to exist.

Principle on a napkin

I have a habit that sometimes annoys my interlocutors. In almost all circumstances, I make notes and sketches on slips of paper. Once in a restaurant, while talking about my ideas to my wife, I took out a felt-tip pen and began to draw on a napkin that came to hand. I drew three circles and divided our lines of business into three categories: core manufacturing, technology, and services. In the first circle of the main production, I entered lighting fixtures, large household appliances, motors, turbines, transport and contract manufacturing of equipment.

Destinations outside of these three circles were either underperforming, or were operating in low-growth markets, or did not fit well with our strategy. Therefore, I told Carolyn, we will improve them, sell them or close them. This simple concept immediately sunk into my soul.

This diagram helped me a lot. I needed just a simple tool to convey my ideas to employees. I began to apply it everywhere, and as a result, it even got into Forbes magazine, in the cover story, published in March 1984.

The scheme inspired confidence and pride in people who worked in the directions inscribed in circles. But at the same time, it caused a strong reaction in areas that needed to be "improved, sold or closed." Particularly those that were at the core of the old GE, such as central air conditioning, small appliances, televisions, audio, and semiconductors.

In the first two years, the first or second place strategy required many actions, mostly on a small scale. We sold 71 of 412 branches and product lines for just over $500 million. We completed 118 other acquisitions, minority investments, and joint ventures for over $1 billion. Each deal was relatively small on its own. but their effects were felt throughout the company. The sale of central air conditioning systems caused a particularly great resonance.

This direction was not the largest in GE (three plants, 2300 employees) and not very profitable. Its market share of 10% paled in comparison to other GE businesses, and in mid-1982 we sold it to Trane for $135 million. in Louisville.

I did not like air conditioners even when I first met them as the head of the sector. I felt that this direction does not control its destiny. We sold GE-branded air conditioners to a local distributor, our employees didn't install or service them. Customer opinion about GE depended on the quality of work of our partners. We often received complaints that had nothing to do with us. Our reputation was damaged by circumstances beyond our control. Competitors with large market shares worked with the best distributors and independent contractors.

From every point of view, there were many flaws in this business for GE. But his sale still shocked Louisville, as if something valuable had been lost.

The Trane deal strengthened my belief that all parties benefit from handing over a weak direction to a stronger company. Trane was one of the market leaders so our air conditioning specialists were part of the winning team. A month after the sale, I was convinced of the correctness of my decision when I called Stan Gorsky, the former general manager of air conditioning, who moved to Trane.

“Jack, I really like it here,” he said cheerfully. My boss thinks about air conditioners all day, he just loves them. And our conversations with you each time came down to customer complaints or to my profits. You hated air conditioners. Jack, today we are all winners and we feel it. And in Louisville I was an orphan.

Despite the storm of criticism, Stan's comments have strengthened my determination to implement a first or second place strategy under any circumstances. The deal with air conditioners helped to formulate another basic principle. The $135 million received as a result of the sale went to the restructuring of other areas.

With subsequent sales of destinations, we acted in the same way: we never attributed the received funds to net profit, but immediately directed them to improve the company's competitiveness. In 20 years, we have never once allowed ourselves or our divisions to use one-time restructuring costs as an excuse to miss our profit targets. We paid for everything ourselves.

“I don’t like the business of natural resources…”

The next deal was much more difficult for me - the sale of the mining company Utah International. My predecessor, Reg Jones, bought the company for $2.3 billion in 1977. Then it became the largest acquisition for GE and the entire US stock market. Utah International was a first class company; the supply of coking coal to the Japanese steel industry brought good profits. She also owned a small US oil and gas company and large undeveloped copper reserves in Chile. Reg bought the company to keep GE safe from the high inflation of the 1970s.

In my time, inflation began to decline, and Utah was no longer in line with the strategy of consistently improving financial performance. It brought in uneven returns, which went against my goal of making everyone feel the importance of their personal contribution. And the head of the Utah division, without knowing it, nullified all these efforts.

He could say: "We had a strike at the mine, and we will not have enough $ 50 million to meet the targets." The amount was huge - we just couldn't believe our ears. And just as easily, he could say at a meeting: "The price of coal has increased by ten dollars, so I will please you with an extra 50 million." In any case, against the background of Utah, our efforts to increase profits cent by cent seemed fruitless.

I didn't like the natural resources business: I thought it had little to do with management. Market conditions or the behavior of some kind of cartel deprives employees of the opportunity to prove themselves.

Incidentally, I think DuPont experienced something similar when it acquired the oil company Conoco in 1981. The goal was the same: to insure against rising oil prices. But Conoco was such a big company that the efforts of many DuPont divisions were wasted every now and then. The fluctuations in Conoco's profits discouraged DuPont employees and executives. In the end, the company's management had to spin off Conoco into a separate enterprise.

Still, the development of natural resources should be carried out by specialized companies.

A year after I became CEO, I met with Hugh Liedtke, head of Pennzoil, and suggested Utah to him; but he refused to buy it. He had other, bigger plans.

None of Utah's potential US buyers were interested in the deal.

Fortunately, my second in command, John Burlingame, had a better idea. He found a near-ideal buyer for Utah: Australian natural resource concern Broken Hill Proprietary (BHP) Co.

Discussions with the HHP lasted several months; they were complicated by the size and geography of the companies. Utah was headquartered in San Francisco with assets scattered around the world. And the BNR was controlled from Melbourne. Having overcome the usual obstacles for any major transaction, by mid-December 1982, representatives of the companies worked out a final protocol of intent.

We were thrilled to be able to sell the company for a good price, especially because buyers were so hard to find. The deal was a perfect match for our strategy. The same was considered in Hungary.

After Christmas, Burlingame, Doyle and Fresco resumed work on the deal. They took into account the financial constraints of Hungarian People's Republic, excluded several divisions from Utah, including the American oil and gas company Ladd Petroleum. All obstacles were overcome and BHP acquired the remainder of our subsidiary, Utah, for $2.4 billion by the end of the second quarter of 1984. It took another year to obtain all the necessary permits from the state. And six years later, in 1990, we sold the last part, Ladd, for $515 million.

After the sale of air conditioners, and now Utah, I no longer doubted the correctness of our strategy.

"Temples of Jack"

In the early 1980s, few people at GE understood what Jack Welch was doing and what his goal was. Discontent, anxiety and confusion reigned everywhere. In five years, every fourth employee was forced to leave GE - a total of 118,000 people were fired, including 37,000 in sold areas. Across the company, people had to contend with a sense of uncertainty.

And I added fuel to the fire, allocating millions of dollars for non-manufacturing expenses. I was building a fitness center, a guest house, a conference center at our headquarters, and planned a major upgrade to Crotonville, our executive development center. I believed that all these investments - almost $ 75 million - were in line with my strategy.

But the staff did not support me. They simply did not understand why all this was necessary. It didn't matter that the money I'd allocated for exercise equipment, conference rooms, and bedrooms was small change for a company that was spending $12 billion over the same period on new plants and equipment. No one paid attention to the $12 billion spent around the world. Such expenses were considered routine at GE. People could not put up with 75 million investments in the non-productive sphere.

I knew that many find it difficult to understand my motives. But I felt in my gut that I was doing the right thing. In early 1982, I began holding roundtable discussions every other week with groups of about 25 employees over coffee. All of them, both administrative assistants and managers, were asking the same thing: “You are closing factories and cutting staff. How can you justify the cost of equipment, bedrooms and conference centers?

I enjoyed these debates. Although I did not always win them, I had to try to convince people, one by one.

I wanted to change the rules: get more out of fewer people. I insisted that only the best should work for the company. And the best cannot be sent to study in the gray concrete cells of an outdated center of excellence. And you can't have central office guests staying at a third-rate motel. If we wanted to achieve the highest skill, then at least we had to provide the appropriate conditions.

During this debate, I explained that the fitness center serves the dual purpose of both promoting health and, just as importantly, helping people bond. Specialists in the central office do not produce or sell anything. This is very different from working in the field: all employees of a department may be eager to receive an order or enthusiastically work on the launch of a new product. And at GE headquarters, people would park their car in an underground garage, take the elevator to their floor, and work in their corner of the building for the rest of the day. The only meeting place was the cafeteria, but more often than not, people there sat down at tables with colleagues they worked with.

I decided that the gym would become a place for informal meetings of employees, like the back room of a store where salespeople relax. If this can be achieved by investing a little more than $ 1 million, it's worth it.

The same logic partly explained the decision to build a $25 million guest house and conference center. Fairfield and the surrounding area did not have a decent hotel for employees and guests who came from all over the world. And I wanted to create a first-class place for recreation, work and communication, where halls with fireplaces, a pub and a bar were provided, where everyone could meet and socialize.

The traditionalists were shocked. I insisted on my own, believing that this was the only way to create an informal family atmosphere in the company. I propagated everywhere the need for the highest craftsmanship and traditions of its transmission, and I had to back up these statements with actions.

A similar situation has developed in the corporate educational center in Crotonville. It was built a quarter of a century ago and is very outdated. Managers were housed in dreary quarters, four to a room; the rooms looked like a roadside motel. Meanwhile, visitors to Crotonville (both employees and customers) had to feel that their employer and partner was a world-class company. But some critics have begun to call this center "Jack's Temple".

In response to complaints in the early 1980s, I argued that business is really a series of paradoxes:

“We are spending millions on buildings where nothing is being produced, and in the process we are closing uncompetitive factories. These goals are in line with our ambition to become a world-class company. Without these costs and cutbacks, we won't be able to hire and retain the best people while delivering products and services at the lowest cost.

“We pay the highest wages at the lowest payroll costs. We need to attract the best people in the world and pay them accordingly. But we cannot keep unnecessary people at our place. To achieve more productivity with fewer employees, we need better people.

— We are focused on the long term, but do not forget the short term. I always thought that any fool could do one or the other. Cutting costs at the expense of the future is easy and can last a quarter, a year or even two. Dreaming about the future and not providing short-term results is even easier. But the real leader is known in how he manages to balance these two actions. For at least the first ten years of my work as CEO, I was objected to: "You pay too much attention to the short term." But in fact, this is just another excuse for inaction.

To be soft, you have to be hard. Hard decisions about people and plants are a prerequisite for earning the right to speak of "soft" values, such as "excellence" or "learning organization." "Soft" values ​​are ineffective if they do not follow the demonstration of rigidity. They can work only in an atmosphere of responsibility for the result.

But the logic underlying these paradoxes did not help much in the face of uncertainty. The dissatisfaction of the employees was so great that it began to spill over outside the company.

Abbreviation rules

By mid-1982, Newsweek magazine had picked up the offensive nickname "Neutron Jack". I was considered a leader who easily gets rid of people, leaving buildings intact.

I hated this nickname. But I hated bureaucracy and waste even more. I hated both the obsession with data at the headquarters and the low profitability of the turbine department.

Soon the "neutron" nickname was picked up by almost all the media. It seemed that reporters could not write a single story about GE without this nickname. For years, I've been considered wild, accused of being overzealous with growth, hiring, and building new buildings—in the plastics, medical technology, and GE Credit divisions. And now I have become "neutron".

The fact is that we were the first among large, profitable and well-known companies to take such measures to increase competitiveness. Chrysler had done something similar a few years earlier, but it was desperate to avoid bankruptcy and resorted to government help. Therefore, society was ready for the harsh measures taken by her.

But no one expected anything like this from us. It seemed to everyone that GE was such a strong and profitable company that it did not need any restructuring. In 1980, GE reached $25 billion in turnover and $1.5 billion in net income, making it the tenth-largest company in terms of turnover and the ninth-most profitable company on the Fortune 500 list.

But we were well aware of the real state of affairs. In the 1980s, the American economy experienced a period of recession and high inflation. Oil cost $30 per barrel, and according to forecasts, the price could rise to $100. Japanese companies, taking advantage of the weakness of the yen and advanced technology, pushed us in many areas that we considered central: from cars to consumer electronics.

I wanted the company's cost structure to become more competitive. That is exactly what I was doing.

We have never resorted to widespread staff cuts or pay freezes, two favorite tactics of managers seeking to reduce costs. Both of them are used under the pretense of "so that everyone shares this pain", but in reality this is done by those who are not willing to recognize reality and engage in differentiation.

Leadership here does not smell. Orders to cut by 10% of the staff or freeze all salaries are contrary to the need to care for the best employees. While some divisions (such as plastics, lighting, and home appliances) experienced layoffs in the spring of 2001, others (such as power turbines and medical technology) were not able to keep up with hiring.

Unfortunately, in the 1980s, the number of employees at GE generally fell. If at the end of 1980 the number of employees was 411,000, then by the end of 1985 this figure had dropped to 299,000. directions - lost their jobs for performance-related reasons.

The numbers clearly showed that the company really had too many extra jobs. But the “neutron” nickname still depressed me.

But there was still a lot of pressure on me to try to prevent some tough decisions. This lobbying was not only internal—I received calls from mayors, governors, state legislators, and federal legislators.

One day, during a scheduled visit to the Massachusetts Legislature in 1988, I met with Governor Michael Dukakis. I must say that on the eve of this meeting, our plant for the production of aircraft engines and industrial turbines in the city of Linn again distinguished itself: its union refused to sign our new national labor contract.

Dukakis said:

— It is very good that you visited our state. But it would be even better if you created more jobs here.

I answered:

“Mr. Governor, I will have to tell you this. Lynn is the last place on earth I would create jobs.

Dukakis' advisors were shocked. There was a long pause. Everyone was waiting for me to say something soothing about our commitment to keep jobs or maybe expand our facilities in Massachusetts.

- What do you have in mind? - he asked.

“Lynn is the only GE plant that refused to sign our nationwide union agreement. Why should I give jobs to those who cause trouble?

The governor understood my logic and sent his labor relations representative to Lynn to improve the situation.

I received another painful blow in early August 1984, when Fortune magazine placed me at the top of their list of "America's Toughest Bosses." Fortunately, the article was not only negative: one of our former employees said that before me “I have never met a person with so many creative ideas for a business. No one has ever stimulated the work of my thought so much before.” Another employee even praised me for "bringing to GE the passion and dedication of the best young companies in Silicon Valley."

I enjoyed all of this, but the positive reactions were overshadowed by comments from anonymous people who called me very harsh and stated that I could not stand answers that began with "I think." Another ex-employee, who wished to remain anonymous, stated: “Working with him, you feel like you are at war. Many are shot down, and the survivors face another battle." The article said that I almost physically attack people with questions, "criticizing, humiliating, ridiculing and insulting."

In truth, our meetings were really different from what employees were used to: we demanded a lot from them and forced them to prepare for speeches. Those who did not cope with the work tried to present themselves in a more favorable light.

Now I am sure that in fact I was procrastinating with drastic measures: I was not closing uncompetitive factories fast enough; in layoffs, kept economists, marketing consultants, strategic planners, and overt bureaucrats much longer than they should have been. I destroyed our sectoral structure only in 1986 - and it was necessary to get rid of it, having barely established itself as CEO, since it was just another "isolating" level of management. Our best employees worked as heads of sectors, but we did not use their potential, did not give them the opportunity to show their best qualities.

Once we got rid of the sector system, we were able to really see the leaders. In a matter of months, it became clear to us who met our requirements and who did not. In mid-1986, four senior vice presidents left the company. This was a significant breakthrough.