Leaders must look globally

Editor's Note: Outstanding business leaders know that they need to look globally, establish a global image, and implement a global development strategy to win the competition. Jack Welch personally experienced this process. What he gained was that he formed a team composed of elite talents from all over the world and achieved a substantial improvement in performance. In addition to customer needs and business culture, it is also necessary to understand the attitude of the government.

"The future of the U.S. economy depends on global markets" may sound like a cliché now, but it was absolutely true in 1981, when Welch was first at the helm of General Electric . In fact, from a global perspective, the decade before Welch took office was a brutal and frustrating one for the United States...

The 1973 Arab oil embargo sparked America's first energy Crisis, resulting in limited rationing of oil and energy. As consumers try to cope with the crisis by buying small, fuel-efficient vehicles, the Japanese auto industry (not the country's) is ready to meet their needs. The embargo and its far-reaching effects forced Americans to wake up like a dream, and they finally realized that after World War II, Americans could no longer have the wind and the rain; they would also be affected by foreign economic and political forces. constraints and coercion.

In 1975, the military's return from Vietnam was a blow to America's wounds.

In 1979, America was once again disgraced overseas. The radical new regime in Iran has arrested and detained the personnel of the US embassy in Tehran.

In the late 1970s, under the constraints of energy prices, deposit rates, taxes and various rules and regulations, the US economy suffered double damage: runaway inflation and high unemployment. Meanwhile, U.S. economic rivals Japan and Germany are growing rapidly. One wonders whether Japan and Germany will leave the United States far behind in a new era of global competition.

The 1970s were turbulent, and international events and the international economy had a profound impact on the United States. This is not the first time for the United States. In fact, international trade has an important place in American history. America was discovered and built by European nations that sought to extract raw materials and ship them home. In the first half of the 19th century, regional differences in tariffs intensified (or "replaced," some historians say) differences over slavery between the North and South, leading to the outbreak of the Civil War. After the Civil War, as its industrial power and international influence increased, the United States began to implement its own commercial policies, seeking overseas markets, minerals, raw materials, and colonies.

When the stock market crashed in 1929, Congress' response (many believed) contributed to the severe economic contraction that turned into the Great Depression - Congress passed the Smoot-Hawley Tariff Act of 1930, setting the record for American history the highest tariffs and strictest trade restrictions. After World War II, the United States became active on the international stage and assumed global responsibilities; the United States assumed a leadership role not only in rebuilding the economies of its enemies and allies, but also in establishing the General Agreement on Tariffs and Trade, an international commercial law agreement. After the Bretton Woods Conference in New Hampshire, the World Bank, the International Monetary Fund and the exchange rate system were established one after another.

The United States, however, is once again complacent after helping to rebuild World War II allies as well as foes. We tax our country's economy heavily and strictly regulate it. Our company is bloated with bureaucracy in a protected domestic market. While emerging industrial nations focused on modernizing their economies and developing markets for their products around the world, we focused on fighting the Cold War and paid dearly for it.

We bring foreign companies into the domestic market while allowing the country to close the market to us. We are often clumsy in taking advantage of the markets that are open to us. As the Japanese incursion into the auto industry shows, American companies and workers often learn hard lessons from their competitors that ultimately benefit us.

Entering the 1980s, Jack Welch and other business leaders had a different understanding of the international potential of the United States and its place in the world economy, but they were well aware that the new situation in the postwar world (plus tourism and traffic industry, and the strength of U.S. industry, intellectual property, technology, and services) provides U.S. companies with many global business opportunities.

GE builds a global image

It's not what it used to be. During the last three decades of the 20th century, U.S. international trade soared. In 2000, U.S. exports totaled $1.068 trillion, triple the amount in 1990 and more than the total U.S. economy 30 years ago. Today, the revenue and new business expansion of old American companies such as McDonald's and Amway mainly come from abroad.

U.S. companies invested $1.13 trillion abroad, including $581 billion in the European Union, $186 billion in Asia, and $110 billion in Canada. Our company also lays a solid foundation for the economic development of other countries or regions. For example, in Hong Kong SAR, China, 10% of employees are employed by American companies.

American companies are looking abroad, not just to find markets and places to manufacture, but also to find services and product development. Since voice and data can be easily transmitted over the Internet, high-speed fiber optics, and satellite communication systems, why don't we take advantage of it? Computer programmers in India, customer service representatives in the Philippines, and credit card administrators in Ireland all now work for American companies and their clients.

96% of the world's consumers live outside the United States. This simple but indisputable fact explains why GE is so committed to globalization, which Welch calls "our positive action."

In April 2001, Welch told shareholders attending the annual meeting: "Globalization began with the search for new markets for our products and services. This search quickly expanded to include discovery Lowest prices and best origins for finished products, components and raw materials. The field of 'positive action' is now wider, but the focus is on talent, attracting intellectual capital around the world. Because we know that there are elites from all walks of life. Talented teams are invincible."

This passage shows that Welch believed in globalization that went far beyond successfully selling merchandise overseas. Marketing is important, but only one aspect of the problem. In fact, GE has a pretty good track record in globalization. In the early 1980s, only 20% of the company's revenue came from overseas; by the end of Welch's tenure, that proportion had risen to 40%; by 2010, it is expected to reach 50%. At the beginning of the 21st century, GE operated in more than 100 countries and employed 313,000 people worldwide.

Welch looked at the world and proposed the company's global development strategy. GE has seized the opportunity of a global logistics technology revolution that has enabled dramatic improvements in the speed and efficiency of shipping, transportation, inventory management, data transfer, financial transactions, and the assembly, sale, and delivery of goods. Companies like GE have the scale and intelligence to take advantage of these technological advancements to efficiently produce low-cost products by sourcing materials and parts from all over the world. With this global strategy, Welch and GE were able to reduce production costs and increase speed and quality (a product used by consumers may be assembled from parts from a dozen countries).

Searching for talent around the world

Welch insists on expanding the search for talent and ideas beyond the United States, because talent and ideas are closely related to the future of the US economy (and future leaders in almost all fields) . Welch said, "General Electric is going global, not only for sales and development, but also for intellectual capital - the world's best minds and greatest minds."

Part of Welch's ideas stemmed from his awareness of the changing demographics of the United States. U.S. companies are finding it increasingly difficult to recruit, develop and retain skilled workers of all skill levels. In fact, in order to maintain an average annual economic growth rate of 2.5%, the United States will need to add 300,000 workers a year over the next 15 years, which is more than the projected US population growth figure.

There are several reasons for the labor shortage. The U.S. population has been living longer and getting older, but most workers still retire at a certain age (around 65) as they did in the 1950s. At the same time, the birth rate has declined, and the labor force has been relatively reduced. Immigrants have eased the labor shortage in the United States to a certain extent, and will further ease the effect.

In this case, corporate America has to pay attention to other social classes that were once left out. GE, like many U.S. companies, has faced criticism in the past for hiring only men and not providing jobs to women and minorities. When Welch summed up his work in 2000, he proudly told shareholders: "In 2000, the company made significant progress in the diversity of leadership. 26% of the 3,900 company leaders were women and minorities. The company's 2000 year exceeded 30 billion US dollars. of the profits are earned by departments run by women or minority leaders."

Unfortunately, the people who can be recruited by the company are not literate enough for information age jobs. Welch devotes a great deal of resources and energy to developing talent, no doubt reflecting his passion for excellence. However, the low level of education in the United States (especially from kindergarten to 12th grade) makes training employees a natural necessity. As a result, American companies have become public schools that train many employees.

Under Welch's leadership, GE produced "the world's best people" for the world's talent market. That doesn't mean Welch wants all the talent to come to work in the U.S. or work under native American managers sent overseas. “Few of the company’s U.S. leaders are working overseas, as local leaders gradually replace U.S. leaders assigned by corporate headquarters. Local leaders have been trained in how the company operates, have a deep understanding of the company’s values, and have a strong understanding of its customers. Very familiar with enough market intelligence."

Critics say globalization violates workers' rights and destroys the environment for survival. Welch replied, "Not only does GE have a world-class company and working conditions, but its subsidiaries around the world are meticulous and strict with environmental requirements." He claimed: "We know that to be a truly multinational A company must first be a good American citizen."

The Challenge of Globalization

Welch's transformation of GE into a multinational corporation was full of challenges, difficulties and setbacks. There is no denying that globalization brings opportunities. At the same time, globalization also multiplies various factors, circumstances and risks that affect the development of companies.

Business practices, laws and cultures vary by region. What is acceptable in a business culture (such as giving a "kickback" to secure a contract) is considered unethical or illegal in the United States. Because of the different economic conditions of different countries, multinational companies like General Electric are very profitable in the United States, but have suffered heavy losses in Asia, Mexico, and Europe. Even in domestic economic conditions, making informed purchasing decisions and choosing the right business partner involves taking risks, and it is conceivably difficult for a multinational company like General Electric to be profitable in more than 100 countries.

In addition, governments also play a role in the process of globalization. No matter where they operate, American multinational corporations must not only obey the policies and rulings of the federal government, but also be at the mercy of politicians and bureaucrats.

In his quest for globalization, Welch was tested by the potential disadvantages of globalization. The trial of General Electric and its rival, South African diamond maker De Beers, sparked a price-fixing lawsuit over a poorly thought-out trial. Welch bought France's CGR, one of Europe's largest manufacturers of X-ray machines, in a case that critics later said had crippled GE.

The economic turmoil in the company's important international markets not only tested its endurance, but also strengthened Welch's conviction that there must be near-term worries without far-sightedness. When the Asian financial crisis occurred in 1997, 9% of GE's revenue came from Asia, which was a lesson and a test for the company.

“We, like everyone else, didn’t foresee these difficulties,” Welch admits, “but we quickly discovered that Asia and Europe in the early 1990s were similar in many ways—structural adjustments needed, but It was also full of opportunities. There were financial crises in Europe in the early 1990s and Mexico in the mid 1990s, and we acted decisively and achieved rapid and significant growth."

By 2001, Japan was still struggling Struggling, Asian countries have largely recovered from the crisis. In Welch's view, abandoning a market of the size and potential of Japan is like abandoning Mexico and Europe earlier. He emphasized that, in a sense, it was like giving up the home market of the United States!

He pointed out: "We have had a similar experience. In the early 80s, the United States was in a recession, experts were helpless, and people were disappointed with American manufacturing. We do not share this pessimism and spend huge sums of money on structuring. Adjust and develop new businesses. We'll be a more productive and competitive company when the U.S. economy recovers."

As Asia plunged into a sharp economic crisis, Welch remained open-minded as he did in Europe, Mexico, and the U.S. future. "Asia's brilliance is an irreversible trend," he claims. "GE will not pass up an opportunity like this."

In the last few months of Welch's upcoming retirement from leadership, he has tasted what lies behind globalization. of bitterness. EU officials have rejected a $45 billion merger between General Electric and Honeywell, claiming that the new company, with no major stake changes, would violate EU antitrust laws.

This incident just goes to show that in a global environment, it's not enough to just curry favor with one's own government. Observers have indeed pointed out that Welch should have foreseen the current rivalry and grievances between the US and Europe, and the EU's stubbornly left-wing stance. After all, the EU has tried to block the Boeing-Douglas merger, and it has successfully scuttled the MCI WorldCom-Sprint merger.

Fair or not, to survive in a new global environment, you need to be well versed in markets, customer needs and business culture, as well as government attitudes.

All trials have not shaken Welch's belief in "positive action." At the end of the day, the global perspective that Welch has repeatedly emphasized for large companies and for wise leaders is as much a selling, buying, and hiring strategy as it is an attitude and perception. It's an openness to new ideas, different races and exotic cultures, regardless of their origins. It is an intense intellectual curiosity that draws on the best ways, methods, styles and tastes in the world. It rejects the emotions of narrow-mindedness, self-preservation, self-isolation and foreign hostility, which occlude the mind and breed attitudes of complacency, arrogance and ignorance. Welch's personal experience and accomplishments have taught ambitious leaders in every field the importance of having a global perspective.

This global vision does not exclude patriotic sentiments. When Welch took the company to the world, he still marveled at the advantages of his homeland from others: "The United States has the freest corporate system in the world, and the United Kingdom is second," he said in an interview with Fortune. , "We have a liberal system that has made people like me a generational leader of GE, and has enabled the company to grow rapidly with its thriving and talented team of engineers."

This article is authorized by CITIC Publishing House , taken from the book "The Art of Welch's Leadership" by James W. Robinson, translated and published by the agency in May 2004.

Leaders must look globally

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