Heaps of paper are overwritten with the stories of this great manager’s success. The scope of changes initiated by him and the results achieved, multiplied by the GE scale, is literally stunning. Hence, the resonance, circles on water, which still cover many of us all over. I’m no exception. But it seems to me that, in attempts to get down to bed-rock, we have missed something important, perhaps, the most important.
Based on numerous assessments and conclusions of experts and analysts, several principles, allegedly followed by Jack Welch, were determined. By combining them, we will obtain a list of several dozen points. It is not clear what practicing managers should do with this list. Where to start? And, finally, what was Jack Welch’s secret?
I suggest looking at this story from a different angle: to consider not the process mechanics, but the person and everything related to it: spirit, temper, moral and ethical component – the comprehensive inner “self.” Passing by some blind beggar, we put a dollar bill into his hat, not because we are all familiar with the process, but because our inner “self” tells us to do so. And due to the mentioned inner self, we can change the sequence of actions: take the dollar out of the hat (the blind man won’t notice it anyway) and put it into our pocket. At first glance, the analysis of the changed process allows us obtaining a comprehensive idea of the essence of what is happening: the personality traits, goals (helping the blind man, i.e., yourself), the personality actions (taking — giving) and the result (the amount of cash in the hat). But just until one of us, having put a dollar bill into the hat, takes out a 10-dollar bill with a deft hand movement. This is the weak point of the process approach: one cannot always understand the essence of what is happening from the person’s actions. But some of us still give a dollar bill with one purpose only – for a specially hired paparazzi to capture this “generous” gesture and tell the world about it.
Jack Welch ― “Neutron Jack”, “America’s most cruel boss”
First of all, we should pay attention to the conditions under which Jack Welch initiated the large-scale transformations. In the early 1980s, GE was no worse than any other company. And none of Wall street analysts could call it problematic. But Jack Welch “has got the fidgets”, and he started turning out and shaking up the huge mechanism of 400-thousand GE. What was the trigger? Why did he initiate this process?
The second is the essence of the changes, during the implementation of which Jack Welch received the nicknames given in the subheading. After all, at first, all the changes were reduced to the largest clearance in corporate history. Of 118,000 employees who were fired by 1985, only 37,000 worked in the sold departments, and the rest were simply fired, including the guys who held 20 levels of GE management out of 29.
And the third question is where does such a fierce reluctance to join the “friendly team” of colleagues in the Central Office come from? In 1973, having been duly appointed, Jack Welch was supposed to receive his office in the Central Office in Fairfield, but he persuaded Herm Weiss and stayed in Pittsfield, having postponed the “pleasant communication” with the TSO guys for five years more. Jack Welch answers these questions in his book as follows, “…I tried not to challenge the bureaucratic system, but due to my behavior, some managers in the Central Office saw me as a threat… I held prejudice against many employees in the Central Office. I felt something in them that I gave a name of “bastard good nature” in my thoughts: the mask of courtesy concealed distrust and cruelty. Typical behavior of bureaucrats: they smile in your face, but will never miss an opportunity to stab you in the back… I treated the rules of conduct in the company without decent respect, and often demonstrated intolerance, especially to people who failed to achieve the desired results.”
And this is a fundamental point. Intolerance. Intolerance to the thoughts and goals of subordinates and colleagues; intolerance to the certain moral and ethical values and abilities of the colleagues. It should be noted here that the very word “intolerance” is only a politically correct cover for our rage (affect). We pick up a cigarette butt lying next to a butt bin, not because it is “intolerant”, but because it simply drives us mad! Mad so much that some people even wash their car every day: both in the rain, and in the slush. Well, you know such people.
But there is more to come. So many things drive us mad that we don’t have enough fingers to count them all. Bob, who spends all day lazing about offices and having sweet-talk with their inhabitants, drives us mad. And the only reason why it drives us mad is because everyone in the office knows: three times a week, Bob plays tennis with the Boss. John, who fails to achieve the desired result, drives us mad. And it’s not his “impotence” that drives us mad but the fact that he is Bob’s protégé. The height of our rage falls on the next meeting, when the Boss gangs up on us. Not on Bob or John “the impotent” but on us! Our rage reaches its boiling point: we are ready to pull everything to pieces and scream our heads off! And we yell. At home. And then, having carefully winded our “rage” on the fist, we tie it with a string and obediently put it into the inner pocket. We should be at the office tomorrow at 9 AM. We are not interested in this kind of “rage”. We are only interested in what we are unable to suppress or don’t want to suppress under no pretext. Even in the teeth of death.
Yes, death it is. In corporate life, “death” means dismissal. As in everyday life, there are different ways to “die” in corporate life. Natural “death” is retirement. “Murder” means that you are fired or removed. “Suicide” means that you leave by your own will, as a rule, without any complaints from the management.
Our concern is the last type of “death”, i.e., the “suicide”. The rarest type of it, and the most mysterious one. And we took “death” for a reason, because it’s only in the face of death when a man can clearly realize the extent to which something drives him mad, and the extent to which he’s unready to be reconciled with it.
We know from Jack Welch’s book that before he became CEO in 1981, he “pulled the trigger” at least twice. And we are also aware of at least one “suicide” who was personally stopped by Jack Welch ― Larry Bossidy. Are you sure that you won’t remember these “suicides”? Those whom you were giving a sympathetic glance, and your colleague asked then, “Is that why he’s leaving? He’s a great specialist and an excellent leader…”
Let’s go back to the reasons of the changes initiated by Jack Welch. Now it’s a bit easier to assess his actions. What was the trigger? The known intolerance: something made him crazy, he really disliked someone. Now you know that it was driving him mad so much that he could not or would not suppress this rage. On the contrary, he used to let it out, “…I am the first to admit that at the early stage of my career, I sometimes got rid of employees, driven by impulse.”
So, why did he initiate the changes? We understand that Jack Welch is not an idiot, and that he was aware of all the risks related to the radical redesign of the huge GE mechanism. He also knew what was waiting for him in case of failure: “death” (dismissal). Can a “suicide” who has already pulled the trigger stop the fear of death? Stupid question, isn’t it?
Only one point remains unclear: who were the guys Jack Welch was getting rid of? After all, he didn’t just cut the cost, he carried out pre-selection, sorting people by classes: “No one likes to play the role of God Almighty, sorting people by classes…” And if we recall not the only case with Larry Bossidy, whom “Neutron Jack” was persuading (!) to stay, we’ll get at least two classes of people: those who must definitely stay in the company, and those who must definitely leave it.
Larry Bossidy and Jack Welch are birds of a feather. And their actions are like two peas in a pod. It can be easily checked. In 1991, Larry Bossidy took over the dying AlliedSignal. And what did he do first and foremost, beside firing 27,000 (!) employees? “Of course, there were managers who, in my opinion, had to stay… they had good ideas, and they knew how to present them, but they weren’t ready to fulfillment. So we tried to help them get back on their feet by paying them generous termination payments… The next step was the active involvement of more capable people ― hundreds of them ― not only to manage our business, but also to ensure that we can further develop talented leaders… In the first two years, I dedicated from 30% to 40% of my working time to hiring and developing leaders… I am convinced that the success of AlliedSignal was largely conditioned by the amount of time and emotional commitment that I devoted to developing leadership skills.”
By the way, Larry Bossidy went further than Jack Welch in defining the “personality traits” of those guys who should have been fired. While Jack Welch characterized them as “…saw me as a threat…”, “… smile in your face, but will never miss an opportunity to stab you in the back…”, “…failed to achieve the desired results…”, Larry Bossidy used somewhat different words, “Some of our employees who came from the automotive industry failed to manage profitable business units. One needs to understand the environment from which employees are being hired; some types of companies are better in developing leaders than the others.” That is, Larry Bossidy, being one of the most outspoken and successful American CEOs, unwittingly hinted at entire industries packed with second-class managers.
Developing Larry Bossidy’s idea, I will go even further. GE and AlliedSignal are incredibly bright and, at the same time, extremely rare flashes against the overall corporate background. And if we subtract all the “bright flashes” from the S&P500 list, what will remain? S&P498 or S&P480 … S&P450? How many “bright flashes” do you remember?
Hence the questions arise: why didn’t hundreds of companies become “bright flashes”? What and who prevented them to do this? In 2001, GE paid Jack Welch $417 million! Is it possible that in 19 years, no one of thousands of top managers even dared to make a bet of almost half a billion dollars?! The Russians have a proverb, “Better a tomtit in your hand than a crane in the sky.”
Guys from GM and Toyota Corolla
Let’s travel to the 1960ies to GM. This is a story that has already become a talk of the town. Starting in the 60ies, it ended miserably in 2018, when, following Chrysler and Ford, the GM guys announced the end of sedan production. Without these guys, nothing would probably be left to learn in the world business schools.
I also studied it, spending many years in conversations with the GM guys, observing them, sometimes even admiring their talent. No, not in GM but in Russia: for any company in the world has its own “GM guys”. And I was always haunted by two questions after “pleasant communication” with them, what’s wrong with them, and what drives them? There are some difficulties with the first question (personality traits) ― one article won’t be enough for an answer. So, we are going to study out the answer to the second question. Evaluating the individual’s actions/lack of actions (take — give) and the result (the amount of cash in the hat), we will try to identify the individual’s real objectives (help the blind man — help himself/herself).
Actually, this is the difficulty here: to believe that people who receive seven-digit salaries for the company growth and prosperity, don’t actually about this “growth and prosperity”. That is why the lion’s share of the paper dealing with Jack Welch’s affairs is dedicated to the GM guys. For easier perception of the news about the absence of any concern for the company “growth and prosperity” of the company in the GM guys, I will formulate their true goal, “to sit in the chair as long as possible.”
So, in the 60s, a problem in the form of small, economical and reliable “Japanese” and “Germans” emerged. I would like to remind you that Jack Welch had no problems in 1981, but he started shaking up the 400-thousand company. And the GM guys faced a real problem. So what did they do? Started developing new models? Hurled all effort to quality improvement and efficiency increase? No! What for?
The GM guys took a briefcase with cash and zipped down to Washington by corporate plane. After kicking around with Washington guys, the problem was fixed: the Washington guys “explained” to the Japanese how many cars they can import to the USA. And the Germans were pinned down with the “chicken” tax. Did the GM guys know that this was not a solution, but just a delay? Of course they did, for, like all of us, they graduated from the same business schools. Did they use this delay to reorganize, to regroup the company? No! What for? After all, it will allow them to retire safely in 5-10 years.
However, stupid customers (like you and I), instead of buying such wonderful GM–Ford–Chrysler, signed up for two-year (!) queues to buy the same old “Japanese”. The years went by. Car import to the USA from 1960 to 1970 increased from 5% to 23%, and GM’s share fell from 50% to 40%. The same problem was no longer quietly knocking on the GM guys’ window, it broke into their house through a destroyed wall like special forces armored car does, and forced them to solve it in accordance with the requirements of the economy laws.
In 1968, the GM guys stood upright and announced to the whole world: “We are not afraid of a fair and open fight with competitors, we will make an import-killer, a car cheaper than $ 1800 and lighter than 900 kg!” Gwynn Guilford describes what happened next (a blotchy defeat) in her article. Certainly, hindsight is always twenty-twenty, but, say yes, the GM guys didn’t face a challenge to create a rocket to fly to Mars, they only had to do what the whole world was doing! Something that the same Koreans started to do from scratch at that time, without any knowledge or experience. But the GM guys didn’t bother. What for? After all, GM will not disappear from the corporate map of the world because of some Vega.
Problems didn’t come knocking at Jack Welch’s window; he couldn’t afford it. He just hated the idea of some cheesy problem hanging around his house, and even banging the windows, threatening him. So every evening, he would take a lantern and a rifle, and would go out to the yard: “…in 1993. I traveled around the country and visited major GE customers. GE Medical customers complained about the short service life of the tubes, but in all other aspects, our CT technology was considered the best in the world. I found out that our tubes hold approximately 25,000 scans in average, half as many as our competitors’.”
Five (!) years of hard work gave the desired result: the tube service life was increased from 25 thousand to 200 thousand scans. For the record, unlike the other GM guys, the GE guys did something that no one in the world has ever done before, and, respectively, found themselves with their product where no one has ever been before. In other words, we know for a fact that the GE guys achieved their goal. The hell with it! These are the GE guys. If someone shoots at them from a revolver, they take out the Thompson submachine gun and pull the trigger until there are no bullets left in the magazine. After all, business is fun. Two years later, these guys built a tube that can hold 500 thousand scans!
By the 2000s, GM’s share reduced from 50% to 28% (The Big Three closed more than 20 plants), and car import (foreigners built more than 14 plants in the USA) increased to 34%. In 1991, Toyota Corolla received its first award from ADAC as the most reliable car. Koreans started from scratch and achieved their goals by the 2000s. And the American analog of Corolla was never created. The GM guys were having fun for all this period – almost 40 years! Of course, not for free, for seven-digit salaries are still in force.
Even after the creation of the NUMMI joint venture with Toyota in 1983 and gaining access to all the main competitor’s secrets, the GM guys were still having fun. They had no thought of doing something about the GM reducing share. Steve Berra, one of the 16 “NUMMI commandos” who learned all the secrets of Toyota, noted, “We were ready to apply this experience at other GM plants. But no one from GM management has ever asked us questions like, “There’s some secret sauce here, what is it? How can we use it to our benefit?” The frustration at GM was so great that Steve Berra dismissed after 20 (!) years of employment.
By the way, doesn’t this dismissal (“suicide”) remind you of anything? It is a torture to watch as everything around gets covered with ooze of standstill. This is especially depressing when you know exactly what to do and how to stop your company from losing its market share. It’s like a cigarette butt thrown by someone past a butt bin: you are trying to pick it up, and two huge GM guys hold your hands, preventing you from moving. God only knows how many GE guys went through the GM swamp over these years. And how many of them were unable to realize their potential, which they were so richly rewarded by the same God?..
This may be news to some, but money is not everything in the corporate life of the most capitalist country in the world! Numerous facts of “suicides” speak for themselves: some of us need something else. Something that can’t be measured with a dollar or reimbursed in monetary terms.
Korean episode is a revenge for Lordstown
I’m not going to pinpoint the beginning of this episode: Daewoo was bought for $ 250 million at a time when other buyers were offering from four to six billion. And I’m not going to mention the debt of $ 17 billion, which, of course, was voluntarily assumed by the Seoul guys. Maybe our old friends in Washington asked them to do it. Does not matter! The GM guys did their best and applied all their talents to swing a good deal.
My attention was attracted not by this but by something that happened next. Do you remember a case when, following a car company acquisition (takeover, merger), a buyer tore off the logo of the purchased company and placed its own logo instead? Yes, such cases must have occurred, and perhaps there is nothing wrong with it ― the winner gets everything! But I was amused by the objective for which the GM guys started all this.
Having done nothing (for 40 (!) years), what could be offered to the Europeans, the GM guys still solved this problem, unsolvable for them. A problem that poor Koreans have been solving all these years. The plan was, simple as anything ingenious: to buy swift Koreans, to stick the logo on the cars and to bring this product to the European market. That is, “make receive a car cheaper than $ 1800 and lighter than 900 kg.” And it worked! For several years, GM Korea kept consistently solving more than 800 thousand cars a year.
Not for long, though. One has to work with the product, improve and upgrade it, and develop a new one. And if you couldn’t (didn’t want to) work with a bunch of products at home in the USA and around the world for 40 years, why would something change in Korea? Therefore, in 2017, after just 16 years of smooth, unencumbered fall paid by seven-digit salaries, GM Korea closed one of its four plants, reducing sales by the end of 2019 to 417,226 cars.
But the most important thing that the Korean episode gave us is this unique opportunity to evaluate just the GM guys! After all, Korea had the other car manufacturers, Hyundai-Kia. That is, in the very beginning of the 2000s, the GM guys and the Hyundai-Kia guys had identical objects: plants located in Korea, with Korean workers and unions, with Korean taxes and legislation, with Korean technology, etc. And we are not going to take into account the global 90-years experience and the same global financial and market opportunities of the GM guys and the complete lack of such in the Hyundai-Kia guys.
Hyundai–Kia and GM Korea (Daewoo) sales in 1999-2018.
The Hyundai-Kia guys chose a simple and world-old strategy to improve the product quality, having offered a five-year warranty on their cars to the market. In fact, in the 2000s, they did what the Japanese did in the 1970s, and what the Chinese guys are doing now. And if the Korean guys from Hyundai-Kia are so good, then it will not be ungrounded to assume that the Korean guys from Daewoo (GM Korea) are no worse. After all, after the acquisition of Daewoo by the GM guys, neither Korean hard work, nor Korean diligence, nor Korean quality, nor the cost of Korean labor, etc. have changed. Only one thing has changed ― the “padding between the steering wheel and the pedals”.
By the way, of all the talents the GM guys have, this one is the brightest. Self-indulgence (inactivity), seasoned with poetic stories about global economic shocks, whirlwinds of “unfair” competition, consumer variability, etc. In 2017, the GM guys sold the European Opel department, which was incurring losses for 20 years in a row! And already one year later, managed by Peugeot–Citroen guys, Opel demonstrated the profit! Do you think that the guys from Peugeot-Citroen are so tough, or these are the GM guys who were so passionate about achieving their only goal for almost 20 years?
And I’m discovering anything ― it’s so obvious to any attentive observer. The Opel guys caught a break in 2017 ― they were sold. Unlike unlucky Daewoo guys. They will have to live with the “padding between the steering wheel and the pedals” for at least three more years. Under the terms of that glorious deal, GM has no right to sell Daewoo (GM Korea) until 2023…
GMAC, cows, dogs, and the hellrising GM guys
The GMAC sales in 2006 caused a mixed response among analysts and experts. Some argued that the deal was a mistake: selling the fattest cash cow is inherently the wrong move. Others argued that this transaction was the catalyst of the subsequent bankruptcy in 2009. And others said that it was the last, desperate attempt to save GM. The fourth group was convinced that GMAC could bring not $ 13 billion, but as much as $15-18 billion. I would add for myself that at the modern car market, up to 80% of customers buy cars on credit. If you don’t have a “court bank”, you lose the ability to manage relations with these customers, lose financial flexibility in work with distributors, and give billions of dollars of profits to bankers. And GM confirmed the error of selling GMAC itself. Immediately after its reincarnation in 2009, GM spent five years (2010-2015) purposefully recreating GMAC (now GM Financial) at multibillion-dollar costs. In any case, it was a bad deal! And yet, respected analysts and experts were wrong. And the source of this error was their belief that the goal of the GM guys was the growth and prosperity of the company by which they were employed.
But we know their real purpose. And the GM guys never make mistakes in such situations! They know exactly what they want, and achieve it by fair means or foul. Therefore, the sale of the fattest cash cow, when a pack of hungry rabid “dogs” already reached the company bones, was and remains the only correct solution for them. They made no mistakes at all! This deal did not solve GM’s problems in any way, on the contrary, it made them worse! And the GM guys knew about it. But this deal gave several years of delay. A few more wonderful years with seven-digit salaries…
And the GM guys not only had a great time, they also managed to take their places in the world corporate history, registering a couple of unique achievements. The first deals with the range of powers and responsibilities that are known to be indivisible: wherever authority is granted, responsibility appears. But the GM guys are really talented: not everyone has a gift to break the laws of creation and to divide the indivisible. But they did it! They released themselves of all responsibility and preserved their powers, and, of course, with their seven-digit salaries, at the same time. Here, I mean $ 50 billion paid by taxpayers in the USA.
The second achievement is pure mathematics. Five years in a row to fix losses totaling $ 88 billion! I don’t even know what to distinguish here: either the process duration and stability, five years in a row (!), or the total amount of losses, $ 88 billion. Anyway, when adding up these two components, neither Enron, nor WorldCom, nor Lehman Brothers fall short of the bar set by the GM guys!
The third achievement is highly specialized, relating only to the GM guys. After the corporate death in 2009, the GM guys, first of all, gave an unambiguously positive answer to the burning question “Is there any life after death?” Secondly, new records of this “life after death” duration were made daily. Now, the weirdest thing is that we still do not know the final result! After all, if we visit the GM Central Office today, we will surely find there a representative of that “glorious” cohort — the most talented, the most firmly seated in his chair and with the same seven-digit salary…
GM guys and Toyоta Prius ― story 2.0
If the lore of ages long gone by is suspect to someone, I suggest to track the lore of the last two decades. In 1997, the first Toyota Prius Was released. Ten years have passed. Many governments actively subsidized hybrid car sales. In 2008, Toyotta reported the sale of the millionth Prius. For ten years, a new market has been formed, and by 2007, it started “biting” hundreds of thousands of customers from the traditional car market.
In the same year, 1997, after creating an electric EV1, the GM guys, unexpectedly for everyone and, first of all, for themselves, found themselves in a place where no one has been before (ahead of the curve!). In 2003, after six years of pangs and a billion-dollar investment, they decided to leave the uncharted territory. The place where no one has been before is uncomfortable and dreadful, and one has to work hard and to risk in order to survive. Just in case, in the same year in 2003, the GM guys started providing the fleet with brand new hybrid cars, Chevrolet Silverado and GMC Sierra.
Alongside this, and together with all of us, the GM guys observed some “fools” from Tesla, who were telling everyone about their main “secret” in the same 2003 on numerous presentations: “It will be easier to make your way a the relatively small sports car market. And after the Roadster destroys the myth of the unattractiveness of e-cars, Tesla will be able to move towards more affordable cars.” And the GM guys knew about this “secret” (the cost of a small EV1 sedan was $ 80 thousand). And they told everyone about it as well, “The only way a company can take the additional cost of a hybrid system is mounting it on a more expensive, higher-margin vehicle like a pick-up or a sports/utility vehicle” and stated at the same time, “Hybrids are amusing, and we will make some of them. But is it reasonable at $ 1.5 per gallon?“
When Prius sales rose beyond 107 thousand in 2005, the GM guys at GM started fussing: the ” amusing incident” appeared to be not so amusing. In 2006, the GM guys stood upright and announced to the whole world, “We are not afraid of a fair and open fight with competitors, we will make the Chevrolet Volt!” And 40 years after the GM 512 Hybrid, ten years after the Toyota, 4 years after the hybrid Chevrolet Silverado and GMC Sierra, the GM guys “started” making hybrids.
In 2007, Chevrolet Volt was released, and sales of “amusing” Prius exceeded 181 thousand. Oops, the market increased, and it had an iconic sound steward, Toyota. Toyota (GE) guys are fearless. Work hard and take risks, moreover, on the uncharted territory – ain’t it fun! Their actions, in contrast to the GM guys’ fuss, were outrageously “boring” and predictable. Without waiting for the peak of Prius sales, the Toyota guys started expanding the hybrid line and entering new markets. So when the GM guys reached their peak of 31,400 Chevrolet Volt sold worldwide in 2012, Toyota sold 529,674 Prius and 689,426 other hybrids in 90 countries, totaling 1,219,100 hybrids! 38 times more! Funny, isn’t it? Having left one-on-one against their huge peak, the GM guys still laugh at the three percent share of “curiosity” in the USA market. Meanwhile, the Toyota guys are counting the profits from the 12 percent share of hybrids in their global sales.
In 2017, 792 thousand fully electric cars were sold worldwide. Toyota, Volvo, and Jaguar announced their transfer to hybrid or fully electric models. Having really estimated their huge peak at the global hybrid market, the GM guys announced the termination of their production and the transfer to fully electric models. An inspiring, strategic decision! And how turgidly it sounds 15 years after EV1 and 10 years after Tesla.
This stunning “consistency” and “opportuneness”, accompanied by an unprecedented waste of corporate resources, is conditioned by one feature distinguishing the GM guys – fear. When all actions and lack of action serve one goal, “to stay in the chair as long as possible”, this becomes the meaning of life – corporate life, of course. And the longer time you spend and the bigger efforts you take to achieve this goal, the more terrifying it becomes for you to lose your chair. For this reason, the GM guys never go all the way to a place where no one has been before: it’s scary, and what if they fail? This is where all these fuss and hoopla come from. It’s hilarious!
GM guys: Now You See Me
All this three-ring circus with hybrid cars, EV1 and Tesla concealed one nuance from our attention. In 2007, a hybrid Lexus GS 450h with a capacity of 350 hp was released. The “Sacred cow” of the American automobile industry – a pick-up truck, according to the same GM guys, has only one demerit – huge gasoline consumption: “…prices for fuel in the USA suddenly jumped from $ 2.10 to $ 4.50 per gallon… this hit GM hard. GM was (and still is, although it holds a smaller market share) the dominant manufacturer of full-size sport-utility vehicles with a V-shaped eight-cylinder engine — this is 50% of the market.”
The power of 90% of pickups falls in the range from 300 to 400 hp. It is clear why the GM guys do not make a hybrid pick-up, but why the Toyota guys do nothing?! From that very Toyota that sold more than 10 million hybrid cars by 2017! From that very Toyotta that has 34 hybrid models in all classes, starting from the legendary Prius and ending with HINO trucks with the total weight of 6.5 tons! That is, the guys from Toyota, who spent decades for conducting a purposeful, consistent hybridization of the entire released line of cars, “forgot” about the most gluttonous pick-ups?!
Did the guys from Washington “explain” to the Japanese what pickups they should make again, at the GM guys’ request? Did the GM guys again decide everything for the “blunt” representatives of such professions as plumbers, carpenters, and electricians?..
And all this is happening with the updated General Motors, risen from the ashes at the expense of these very plumbers, carpenters, and electricians! And remember the circus tricks from 2003 with deliveries of hybrid pick-ups to the fleet, or from 2016 — with seven hundred Silverado, fifteen hundred Hybrid and GMC Sierra and the same amount of hybrids only for California and only with “soft” hybrids. Exactly like a movie “Now You See Me!” Hybrid pick-ups seem to be available, and at the same time, just try to buy one. Marvies! Or a trick? The simultaneous retreat of GM, Ford, Chrysler in the sedan segment and the same simultaneous refusal of Toyota-Honda-Nissan from the e-progress in the pick-up segment?..
GM guys today – an insightful future outlook
It is notorious that the lion’s share of today’s GM profits is concentrated in two segments of the USA market – sport-utility vehicles/crossover utility vehicles and pick-ups. This is the real reason why any events in these segments become critical for GM. In 2020, several companies with fully electric pick-ups will enter the market (Tesla, Lordstown Motors, Rivian, Nicola Motors, Bollinger Motors).
Try to think distantly and to make a sober estimate of this inspiring historical decision with hand on heart. What is it?
Distant eyes of a fierce warrior, looking for new foes, fearing “death in bed”? Or what, a gang of young unarmed hooligans (Tesla, Lordstown Motors, Rivian, Nicola Motors) bent down a muscleman from GM, poking his face into a thrown cigarette butt and kicking him in the ass for acceleration? How are you going to assess the fact that your highly competitive market with a huge entry threshold (hundreds of millions of dollars) is attacked by several guys off the street without any knowledge, experience, know-hows, and, receiving funding (hundreds of millions of dollars) from your customers, these guys start making a product that you and any participant of your market can produce in the snap of a finger for six or twelve months maximum. For there is no know-how in this product! At least since 2014, when Tesla opened its patents.
Is this a natural continuation of the leader’s fierce energy, flowing into the same natural desire to be No.1 always, in everything? Or is it the loud wordage of a fearful outsider about leadership and a fierce fight on the front line? Who didn’t let the GM guys make an fully electric pick-up in 2003, 2008, 2010, 2017, a year after Chevrolet Bolt, finally, instead of or along with Chevrolet Bolt? Does the development of an ordinary car model take five years? This is the exact amount of time to pass before Hummer is released since the guys from the “new” GM suddenly “saw the fully electric future.”
Is this a strategic vision and a future outlook? Nicola Motors announced the release of a new Badger pick-up truck in 2020. This news is interesting due to the combination of power units ― it’s a hybrid of a fully electric engine and a hydrogen-powered engine. This combination shows the variability in the application of the latest technologies in the field of zero CO2 emissions. After all, guys from Paris, London, Delhi, Berlin, Beijing, Oslo, Amsterdam, Copenhagen, Madrid, Stockholm and Brussels did not write in their laws banning petrol/diesel engines that they should be replaced by electric models. So far, no one can say exactly what our future is going to be ― electric, hydrogen, hydrogen-electric, or else. That’s why some car companies have been producing hybrids for decades, and mass-producing fully electric and hydrogen vehicles. That is, these guys already had all the known zero-emission technologies yesterday. And they are already winning their shares of the real future right now. And for the GM guys, the future is just “getting clearer”? Is it such strategic vision and promptness that they now pay seven-digit salaries for?!
In Anyway, all we can do is wait. The Big Three’s omerta was destroyed by a “gang of hooligans”, and the “sacred cow” of the American car industry will finally turn its face to its loyal, whatever happens, plumbers, carpenters, electricians. Agree, indeed, that the GM guys really rock! After all, their waiting, unlike ours, is paid with seven-digit salaries. And this is despite the fact that the salaries of the GE guys (Tesla, Lordstown Motors, Rivian, Nicola Motors) who actually create the future, are far from seven-digit values, or even are zero or negative.
Talents and their admirers
Everyone hunts talents nowadays. The scrubbiest employee in the HR Department from an equally scrubby office dump calls himself a “Talent Sourcer.” The corporate world hastily re-glued signs on the HR specialist’ office doors. If you are still manage people, HR, or staff, you’re a loser! And, of course, every such manager keeps a book “Funky business: Talent makes capital dance” on his/her desk.
The idea itself is excellent: to enrich the company with talents and then use their skills for a leap, a breakthrough into the future. I’m all in favor! Although, this is awkward: for many years, the entire corporate world has been searching, selecting, and recruiting talents exclusively. Now, you cannot throw a stone without finding a talent. Only one little thing is missing, and it is the result. I’m going to ask once again. how many “bright flashes” were registered for the past two decades?
So strange! There are hundreds of GE-like objects in the corporate world. And over the years of search, selection, and recruiting exclusively talented people, nothing happened?! Maybe all these talents are talented in their own way and we keep selecting the wrong ones?
The global criminal history has a few cases emphasizing the difference in the talent potentials, expressed in the purpose of its application. Sometimes, the fact some famous artist’s painting imitation was revealed only due to a curious combination of circumstances: at some time point, a second copy of the famous work would suddenly surface. In addition, the authenticity of both copies was confirmed by world-renowned experts. And the experts were not involved in criminal activity. Actually, they couldn’t just determine which copy was an imitation because it was a very skilful one.
Now answer three questions:
- Whose talent is bigger: that of some famous artist, or of a person able to replicate the master’s work in exquisite detail, including his unique style of painting, as unique as our handwriting?
- What is the difference between these two talented people, if not in the personality traits, and its objectives?
- How are you going to choose between these two artists when they come to you for an interview? Since the same word is written in their CVs, “artist”.
Imagine that you need to hire a CEO, and you have two candidates: the one is a short, baldish, slightly stuttering Jack Welch from 1981, and the second is an Enron guy from 1991. The same guy who has been skillfully deluding dozens of scarcely stupid people. The same guy who established an informal organization that carried out secret finance and law operations. The same guy who ensured the functioning of this organization and allowed not a single “leak” for all the years of its existence, unlike the annual “leaks” of much more serious guys from CIA, KGB, MI5. The same guy who, thanks to his rapier-like mind and sense of humor, fascinating eloquence and the art of diplomacy, more than once thwarted attempts by the most acute and inquisitive of us to come down to brass tacks ― to reveal the scheme. But such attempts were made both from inside and outside Enron!
So, these two guys are sitting outside your office waiting for the final interview. You have already read their CVs three times and realized that both contain the word “manager”. So who would you choose after the interview?..
The Big Bang theory and the Falling Broom theory
GE’s “Big Bang” and dot-com’s “bubble”: there is nothing more to compare…
How does the Big Bang work? Who plants explosives and lights the slow match? The answer is the same everywhere ― people. People of a certain breed (class), of course. Jack Welch kept relentlessly and mercilessly firing the GM guys and selecting for replacement people like himself, bursting with rage and energy. These people did the same, in their turn. The process is slow (faces fierce resistance from the GM guys), but inevitable. The process can only be started from the top hierarchy level. Over time, a critical point of no return is reached ― the weight of the GE guys’ authority exceeds the weight of the GM guys’ authority. The fierce energy of the GE guys bursts out, causing the Big Bang. In 1992, after ten (!) years and hundreds of thousands of hired employees, Jack Welch said, “Look around. There are fewer senior managers here compared to the last year. One of them was fired due to financial indicators, and four were asked to leave because they did not share our values.”
Take a broom and a pencil. Put them next to each other, and let them go. Look at the stopwatch. The pencil has fallen, and the broom is still free falling for a while. Repeat the experiment, but for this, you have to go to the felling site: Put a pencil next to a falling tree. Look at the stopwatch. The difference in the fall time increases significantly. Everything is simple: the larger (higher) is the object, the longer it is falling. We (some of us) have learned to create such tremendous objects that it takes years for them to fall.
GM Broom – 46 years of free fall (1963-2009)
Everyone knows about it: “In 1991, I was very concerned that I would bring the company to naught. But it is not going to happen. Companies are much more stable than you think” (Larry Bossidy). And the GM guys know this fact better than anyone, because they use it every day to implement their goal of “sitting in the seat as long as possible.” Only the theory of the falling broom allows setting such a goal. After becoming, for example, the CEO of a grocery store, you will witness an unpleasant surprise – the fallen broom – already in a couple of months. Hence, the simple issue rises: to ride the broom higher. And the GM guys solve this issue with flying colors. In all companies of the world. The process is permanent, chaotic, rapid, and inevitable: GM guys, like locusts, climb on your “broom” from all sides. The point of no return can be passed in just one day ― everything that is required is replacing the conditional CEO Jack Welch with a GM guy.
Only one thing is missing for a complete description of the current state of affairs ― a transitional condition of equilibrium. But we don’t have it! Letting go of the pencil, we fix the standstill for a moment. However, it’s impossible in real corporate life, if you take into account dozens of factors (windflaws) affecting the company (competitors, legislation, the general economic situation, etc.).
That’s why this unsophisticated model kills with its simplicity. If your company is not experiencing explosive growth and rapid changes, it means that you are falling. And if your “broom” falls, it means that you are surrounded by the GM guys who hold all power over the company. This model leaves only one question without an answer, what class of guys do you belong to?
GM’s Jack Welch!
I can imagine some of you now smiling like a brewer’s horse. No one will wish to miss the second episode of “Neutron Jack Welch”, since now no one will doubt its inevitability. And mind you, no one will cry over the graves of the GM guys, calling Jack Welch “America’s most violent boss.” Well, if you didn’t smile, and even more, if your palms are sweating ― don’t be afraid! Jack Welch retired, and he is not going to visit you.
Look around, look at the exalted faces of your colleagues, bosses and subordinates! How do you think, do the GE guys create, splashing energy around? Or is it a small group of the GM guys quietly makes way to their goal, wrapping everything in a cobweb of intrigues?..
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