After taking over GE in 1981, under the circumstances that the company's development is still very good, the company's business scope, scale, management system, machine settings and other aspects have undergone drastic changes, and proposed that GE enterprises are not the world's first and second. The slogan on reform, sale or closure has re-established the company's development strategy. Since then, the “one-to-two†strategy has become the guiding principle for GE's business development. However, few people know that as early as 1995, Welch has adjusted this strategy that makes all GE people proud.
The origin of the story is actually related to the US military. Every year, GE sends a group of potential middle managers to investigate and study around the world. In the spring of 1995, a team of 50 people was awarded a one-month reporting project. Their mission is to visit and analyze other companies, and then report on how to make a mature, large, and complex company like GE grow up like a small, emerging company.
Undoubtedly, this is a tricky issue. And time is so tight. Which industry and which company should I start with? No one expected that the members of the investigation team did not go to the enterprise, but came to the site of the famous Battle of Gettysburg in the American Civil War. Here they first learned how the commander of the Allied Forces commanded the army in a foggy day with insufficient intelligence. At first glance, their investigations seem to have nothing to do with their tasks. Think carefully, the burgeoning Internet economy in 1995 made the emerging SMEs flourish. For GE, the future business strategy of competitors and rivals is not clear. Isn't GE fighting against potential business rivals in the fog?
Then they went to the nearby US Army Academy to communicate with the captains. This is a seminar for a new ruling. What do businessmen and military personnel have in common? GE is a large company that wants to grow faster in the increasingly fierce competition. Although the same huge army is suffering from the contraction caused by the reduction of military spending after the end of the Cold War, it is determined to maintain the effectiveness of the military. In this regard, merchants and military personnel quickly found an interoperability point in their way of thinking. What followed was a fierce and novel discussion. At that time, one of the attending monks asked with a loud voice: "If GE adheres to the 'one-two-two' business strategy, will it give up many good business opportunities?"
This drink asked the managers who attended the meeting. Previously, they have been bound by the "one of the best" mindset, just because they do not want to rank third in the market share and gave up many excellent ideas. This makes it difficult for the company's performance to jump beyond the slow increase. In Welch’s own words, GE was like a coffee table manufacturer that boasted its market share. It should only be afraid of the huge market opportunities for fear of falling market share.
After the investigation came back, the managers found Welch and expressed their doubts about his "one of the best" strategy. At this time, Welch is facing unprecedented doubts. Isn't the business strategy that has been quite successful for more than a decade not applied? Do you need to adjust your current strategy to adapt to new challenges? Welch had to think carefully about the previous strategy and the current situation.
In 1995, the Internet began to spread, and e-commerce began to sprout. These give small companies that only have a few people the ability to challenge industry giants, not to mention the powerful GE. The popularity of the Internet has provided new opportunities for development. How to compete with emerging SMEs within GE's business? How to compete with emerging SMEs in other industries? How to compete with other industry leaders? Still only staying in one of the best areas to conduct business? Do not! Welch decided to expand GE's business areas in all aspects. At the same time, Welch did not completely give up "one of the best." His intention was to make GE more open-minded and more courageous in the smaller business areas at the beginning. Perhaps his ultimate goal is to make GE "one of the best" in more fields!
For six years, Welch has not mentioned such a major adjustment. People only learned about the inside story in his last letter to shareholders. However, GE's 64% annual revenue growth in the past six years is the best proof of Welch's vision.
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