The article is from WeChat public account: Human Resources (ID: ruchrmldc) , author: Liusong Bo (School of labor professor at Renmin University of China), head Figure from: IC photo

On March 2, 84-year-old Jack Welch died at his New York home. The legendary CEO has taken GE’s market value from $ 14 billion to a staggering $ 410 billion during his 20-year tenure, and is known as the “world’s number one CEO.” His story has always been a classic case in the MBA class of the business school. After his death, you have also seen various media sharing his management ideas.

But on the other hand, after he retired, GE, under the leadership of his successor Immelt, declined completely, slipped all the way down the Fortune 500 rankings, and even got kicked out of the Dow Jones Index. The best Immelt left the class. Even today, the once great GE is still struggling.

Because of GE ’s predicament, you will also see some articles questioning Welch. The two big ones are: First, Welch is too short-term behavior, such as focusing on the development of the financial industry, One of the best strategies looks financially beautiful, but it only caters to Wall Street ’s expectations of stock prices, which actually lays the foundation for the development behind GE. Second, Welch’s selection level is too poor, and Immelt is a successor. error. So some articles suggest that Welch was deified in China. So, how should we view the questioning of Welch?

My answer to this question is: First, Welch is indeed a great CEO; second, no one is perfect, and it makes sense to question Welch; third, yes Welch’s questioning needs to be recognized again, to realize that this is the fundamental flaw of the company’s system.

First of all, we need to clarify the criteria for judging whether a CEO is great. At least the “three standoffs” must be achieved. You can also use this “Sanli” model to determine whether the CEO you know or whether you are a great CEO. Let’s look at Welch. Needless to say, Li Gong has surpassed during his term The performance of the generation of entrepreneurs is the first company in history to exceed 200 billion market value. The CEO can already be called excellence, but it ’s not enough to speak of greatness, but also to speak up.

Establishment does not mean that you must write a book. Of course, Welch did write a best-selling book that integrates his ideas after his retirement. More importantly, he said that his management wisdom has a huge impact on the United States and the world. According to the New York Times Evaluation, Welch has not only changed GE, but also changed the overall concept of American companies. Since he started, American companies have begun to promote agility and speed.

Many Welch fans in China are corporate bigwigs you know, such as Zhang Ruimin, Ding Lei, and Liu Chuanzhi. Ning Gaoning wrote a special article recalling the interaction with Welch and expressed his respect for him. In the management of Mr. Ning, sometimes we can see Welch’s shadow and say a detail. I am at Zhongliang College of COFCO During the lecture, I saw that the English name of the Academy is leadership development center, and we can see that this is also a tribute to Mr. Ning to GE’s Welch Leadership Development Center. In his early years, Ma Yun relied on Guan Mingsheng, who has worked at GE for many years, and introduced a set of management ideas on values ​​and corporate culture from GE. Our Chinese enterprises are learning Ali, and Ma Yun is Welch.

The emphasis on corporate culture actually reflects Welch’s third criterion as a great CEO, which is to establish a framework, that is, to ensure that the organization can continue to innovate and build businesses in the future through its institutional, cultural, and strategic framework. Evergreen, as Collins said, the CEO should make the clock, not the clock.

In this regard, Welch has actually done a lot of work, and some commented that it was Welch that returned the matter of management to orthodoxy, and made other companies realize that management is really valuable. For example, he attaches great importance to human resource management, and even says that in any enterprise, the person in charge of human resources should be the second-best. You can have doubts about whether his vitality curve is suitable for his company, but you must acknowledge that his retention, training, and motivation of outstanding talents, as well as management systems such as brainstorming and borderless organization, are all valuable assets left to GE.

In addition, many articles now criticize his number one strategy. In fact, this strategy was abandoned by the prospective Welch back in 1995 to deal with the booming Internet economy at the time. No doubt this is also a long-term framework. . Well, with the standards of meritorious service, rhetoric, and framework, Welch is a great CEO. This evaluation is well deserved.

Let’s look at those questions again. After Welch retired, in fact, the personal relationship between Welch and Immelt was very bad. At some informal gatherings, the two will deliberately not appear at the same time to avoid embarrassment. Both sides have complained publicly or privately. Immelt said Welch’s legacy was a problem and was a mess, and Welch directly said that Immelt did not have the ability to run GE. You see, the complaints from both sides reflect exactly two questions about Welch, which are too catering to Wall Street and poor selection.

As a traditional industrial company, when GE stepped down from Welch in 2001, the profit of the financial business had exceeded 50% of the overall profit. Under the background of the sluggish American industry at that time, GE’s strategy of combining production and finance was rejected by Wall Street. Seen as a pen from God, it is highly sought after.

But with the impact of 9/11 and the financial crisis in 2008, especially in 2008 when the US government strengthened financial supervision, financial business became a heavy burden for the company. In April 2015, GE announced the divestiture of financial business, and the stock price rose 11% on the day. . Looking at it this way, the financial business is really a drag on GE. Of course, the original creator is Welch, and Immelt is also a complainant as an offerer. However, analysts also complained that Welch was a bit “stood without back pain.” .

This logic is actually the same as criticizing Liu Chuanzhi ’s early implementation of “trade and industry technology” which caused Lenovo ’s failure to develop a chip business today. It is certainly true, but according to this logic, can it be traced back to Kodak ’s bankruptcy protection? Because Eastman has entered the film industry, each generation of entrepreneurs has their own responsibilities and missions, do what they should do, and the rest should be left to the next generation of entrepreneurs.

Welch picked up a real mess in 1981, but he pushed for fruitful change. You see, Welch retired in 2001, encountered a financial crisis in 2008, and divested the financial business in 15 years. Most of the financial critics believe that the divestiture was late. Immelt was unlucky, and caught up with several major shocks in the external environment. However, it is indeed not enough to deal with these shocks. Forbes published an article titled A Total Leadership Failure, which is simply a failure of leadership.

In 2009, Jack Ma and a group of senior executives visited GE with the same pilgrimage, but they were very disappointed. The mission vision was not mentioned, and the assessment was not rigorous. At that time, Ma Yun said that after another ten years, GE will not be the GE of the year. In fact, it will not be used for ten years. After learning lessons, Ma Yun returned to pay more attention to cultural construction, human resources management, and successor training.

In this sense, Immelt is indeed not well qualified.However, the problem came out. The process of GE’s selection of CEOs is very famous. It is introduced as a classic case in the MBA class, from nominations to heavy business tests, to well-known cabin interviews, to the final election. The elite of the elite, the entire successor plan to go down for at least six or seven years, very rigorous and very boring, Welch believes that the most painful and difficult decision of his entire career is to choose a successor.

Even so, he recalled in his autobiography that he didn’t know why he chose Immelt. If he had to find a reason, it was three words, intuitively. You see, it took so much effort, it seems almost like patting your head. Welch admitted in the end that he had made the wrong choice.

The problem of inheritance is actually a well-known problem in corporate governance. Microsoft is the same. Ballmer’s successor, Ballmer, must have been well-tested. Gates’s old comrades have a long track record and outstanding leadership skills, and they also highly recognize the company’s values. From all aspects, they are the best candidates. But performance is not good. Had it not been for Satya, the next successor, to turn things around, Microsoft could be worse than GE. Look at it this way, does it depend on luck to choose a successor?

You can understand it this way. The invention of this system of the company has inherent defects, such as incomplete contracts and asymmetric information. Therefore, the company will most likely fail in the end. In order to hedge the risks brought by these defects, the company invented various management and governance Mechanism, one more good mechanism can reduce the probability of the company’s failure a bit, but has not yet invented a mechanism that can completely make up for the company’s shortcomings.

The incomplete contract theory reminds us that people and the environment have many unpredictable and uncontrollable factors, and the impact mechanism is particularly complicated and difficult to sort out. In the end, there is no way to make up for the mechanism. In real life, we will attribute it to luck, which is a random error in this complex world. This is even more the case of choosing a successor. It is difficult to avoid incomplete contracts and asymmetric information. Welch did what he could do, but luck was worse. GE’s succession plan has actually reduced the failure. Probability.

Finding a successor is very similar to finding the other half of the marriage. Some people have exhausted all kinds of assessment methods. The seven aunts and eight aunts have also used various assessment subjects. They have even lived together for many years. It is equivalent to entering the marriage after the probation period of the company has passed, and there is still a high probability of divorce. Taking it a step further, successful people often feel that they are particularly powerful, but they may just be a bit luckier than others.

We can say that Welch has limitations, but this is also the whole