There’s no question. Channels will be different. Commerce will be different. People will communicate differently.
Convinced that yet another business revolution was underway, Jack Welch moved aggressively toward the Internet in 1999.
Welch wanted every senior executive at GE to share his passion for this new form of commerce, and he took steps to make that happen. He instructed each of GE’s 12 businesses to select an e-commerce leader. He told the teaching staff at Crotonville to make sure that every class taught at the Leadership Institute in the coming year focused intensively on some aspect of e-business.
Welch also encouraged younger GE staffers to serve as Internet “mentors” to senior GE executives. These mentors were asked to work with their older colleagues for 3 to 4 hours a week, surfing the Web and evaluating competitors’ sites. In short, the older executives were learning to organize their computers, and their minds, for work on the Internet.
Welch had his own mentor. He admitted that he was at best a C or C-minus student: “I’m not the fastest gun in town.” But, he said, the process worked:
It was this mentor-mentee interaction . . . that helped overcome the only real hurdle some of us had: fear of the unknown. Having overcome that fear, and experiencing the transformational effects of e-business, we find that digitizing a company and developing e-business models are a lot easier—not harder—than we had ever imagined.
BREAKING THE GLASS
There was much more to be done.
By June 1999, the e-business initiative had affected the 1000 or so individuals who made up the e-business teams as well as some 500 senior executives at GE.
But what about the other 340,000 GE employees, to whom Welch wanted to convey his excitement about the Internet, preferably in “Internet time”? By June 1999, fully 70 percent of GE employees were using e-mail, and there seemed no reason not to take advantage of that medium to reach employees instantaneously. Welch decided to use the Internet to brief employees on each quarterly senior management meeting.
In his first “e-brief,” issued on June 7, 1999, Welch observed:
We must have a “break-the-glass” mentality to get on top of this fast-moving subject. You will see fanatical commitment from the Business CEOs and from me on this subject.
The response to this first e-brief was remarkable. Energized by the opportunity to communicate with Welch directly for the first time, 6000 employees fired off e-mails to the boss within 2 days.
Of course, Welch couldn’t respond to each and every message in this mountain, and as the novelty wore off, the flow subsided. But something fundamental had changed. Formerly, Welch’s direct contacts often were limited to his two dozen or so direct reports. But after the implementation of e-mail, he regularly received between 40 and 50 e-mails a day from all corners of the GE empire.
And of course, people were e-mailing each other across the company.
And they were e-mailing customers, suppliers, and everyone else in the GE extended network. Welch loved it:
It puts a small-company soul into that big-company body and gives it the transparency, excitement, and buzz of a start-up.
It is truly the elixir for GE and others who relish excitement and change. E-business is the final nail in the coffin for bureaucracy at GE. The utter transparency it brings about is a perfect fit for our boundaryless culture and means everyone in the organization has total access to everything worth knowing.
PART OF A BIGGER PICTURE
The first effect of GE’s Internet effort, Welch said, was to further energize and refresh the company’s previous initiatives:
For 20 years, we’ve been driving to get the soul of a small company into this sometimes muscle-bound, big-company body. We described the contribution of Work-Out, and there was more. We delayered in the ’80s, eliminating many of the filters and gatekeepers. We got faster by reducing corporate staff. . . . And we ridiculed and removed bureaucrats until they became as rare around GE as whooping cranes.
Every year we got better, faster, hungrier, and more customer-focused—until the day this elixir, this tonic, this e-business came along and changed the DNA of GE forever by energizing and revitalizing every corner of this company.
The Internet enabled GE to use the huge databases it had compiled on customer processes in ways that directly benefited those customers. In the future, said Welch, these benefits would only increase:
What we are rapidly moving toward is the day when “Dr. Jones,” in Radiology, can go to her home page in the morning and find a comparison of the number, and clarity, of scans her CT machines performed in the last day, or week, to more than 10,000 other machines across the world. She will then be able to click and order software solutions that will bring her performance up to world-class levels. And the performance of her machines might have been improved, online, the previous night, by a GE engineer in Milwaukee, Tokyo, Paris, or Bangalore.
Welch looked forward to the day when the chief engineer at a local utility could check the heat rate and fuel burn of his turbines—before he had coffee in the morning—to learn how he stacked up against 100 other utilities.
And with a few mouse clicks, that same engineer could review all the services that GE could provide to increase his facility’s competitiveness.
With the advent of the Internet, Welch noted, amazing new things became possible.
WELCH ON THE NET
GE, argued Welch, was well positioned to exploit the Internet. It already possessed the nuts-and-bolts skills and strengths that other companies sorely lacked:
We already have that! We already have the hard stuff— over 100 years of a well-recognized brand, leading edge technology in both product and financial services, and a Six Sigma–based fulfillment capability. The opportunities e-business creates for large companies like GE are unlimited.
In particular, it was the speed of e-business that got Welch’s adrenaline flowing:
The speed that is the essence of “e” has accelerated the metabolism of the company, with people laughing out loud at presentations of business plans for “the third quarter of next year” and other tortoiselike projections of action. Time in GE today is measured in days and weeks.
And yet, Welch told shareholders in April 2000, some things were constant:
You have undoubtedly read about the ongoing debate about New Economy companies versus Old Economy companies and the advantages, or penalties, for being one or the other.
The fact is the Old Economy/New Economy scenarios are just trendy buzzwords. There is now and will be in the future only one global economy. Commerce hasn’t changed. There is, however, a new Internet technology that is fundamentally changing how business operates.
One area in which Internet technologies were having a profound impact, Welch noted, was the measurement of progress. Like most traditional companies, GE had measured things like revenues, net income, cashflow, and so on. In the Internet world, of course, these would continue to be measured, but they would now be measured far more frequently. In addition, new things would be measured, and these measures would be grouped into four “buckets”: buy, make, sell, and strategic:
On our “buy” side, we now measure the number of auctions on-line, the percentage of the total buy on-line, and the dollars saved.
On the “make” portion, the Internet is all about getting information from its source to the user without intermediaries.
The new measurement is how fast information gets from its origin to users and how much unproductive data gathering, expediting, tracking orders, and the like can be eliminated.
This tedious work in a typical big company is the last bastion—the Alamo—of functionalism and bureaucracy. Taking it out improves both productivity and employee morale.
On the “sell” side, the new measurements are number of visitors, sales on-line, percentage of sales on-line, new customers, share, span, and the like.
Welch noted that if GE got the components right (e.g., number of on-line visitors, percentage of sales on-line, etc.), traditional sales and net and cashflow measurements would follow.
In the end, all of this going on at GE is about using this transformational new technology to better serve customers and to be so good and so fast we become the global supplier of choice.
WELCH RULES
- Manage in Internet time, using the latest technologies. The Internet, in combination with intranets, allows managers to communicate instantly with employees.
- Reinvent the company to compete in Internet time. Think in terms of days and weeks rather than years. Exploiting Internet time will change the fundamentals of your business.
- Build on strengths. Success on the Internet in part grows out of being a fundamentally strong company.