| The following is excerpted from the management letter to shareholder's of
the 1990 General Electric Annual Report. At a minimum it provides a
somewhat different perspective (a positive framing, at leas) on Stamp Out
Stovepipes.
While restructuring our Company in the 1980s, we spent much of our
time talking about the accelerating pace of change: in world politics, in
technology, in product introduction and in the increasing demands of
customers. We don't have to do that anymore. Change is in the air.
Newspapers and networks hammer it home daily. GE people today
understand the pace of change, THE NEED FOR SPEED, the absolute
necessity of moving more quickly in everything we do, from inventory
turnover, to product development cycles, to a faster response to
customer needs. They understand that slow-and-steady is a ticket to
the boneyard in the 1990s. What they need, and what we must provide,
are the power, the freedom and the tools that will allow them to
achieve that speed in everything we do.
From that pursuit of speed--from the understanding that it is the
indispensable ingredient of success in this decade--came our vision for
the 1990s: A BOUNDARYLESS COMPANY.
What that boundaryless vision means, and where we are headed with
it, is something we'd like to share with you.
"Boundaryless" is an uncommon word--perhaps even an awkward
one--but it has become a word we use constantly, one that describes a
whole set of behaviours we believe are necessary to achieve speed.
In a boundaryless company, suppliers aren't "outsiders." They are
drawn closer and become trusted partners in the total business
process. Customers are seen for what they are--the lifeblood of a
company. Customers' vision of their needs and the company's view
become identical, and every effort of every man and woman in the
company is focused on satisfying those needs.
In a boundaryless company, internal functions begin to blur.
Engineering doesn't design a product and then "hand it off" to
manufacturing. They form a team, along with marketing and sales,
finance and the rest. Customer service? It's not somebody's job. It's
everybody's job. Environmental protection in the plants? It's not the
concern of some manager or department. Everyone's an
environmentalist.
Perhaps the biggest stride we've made recently in boundary-busting
has been our progress in wringing out not-invented-here--NIH--from
our culture. Increasingly, GE people are now searching, around the
world, for better ways of doing things.
For example, two years ago one of our people spotted a truly
innovative method of compressing product cycle times in an appliance
company in New Zealand and tested it successfully in our Canadian
appliance affiliate.
The methodolgy has now been transferred to our largest appliance
complex in Louisville, Kentucky, where it is revolutionizing processes,
reducing the time it takes to produce products, increasing our
responsiveness to customers and reducing inventory levels by hundreds
of millions of dollars a year.
Teams from all of our manufacturing businesses are now living in
Louiville and learning these techniques in real time. The objective: to
take this New Zealand-to-Montreal-to-Lousville experience to every
business in GE and, by doing so, to raise the bar of excellence yet
another notch around this Company.
It is this elimination of boundaries between businesses and the
transferring of ideas from one place in the Company to another that is
at the heart of what we call INTEGRATED DIVERSITY. It is this concept
that we believe sets us apart from both single-product companies and
from conglomerates.
Integrated diversity, for us, means the drawing together of our 13
different businesses by sharing ideas, by finding multiple applications
for technological advancements and by moving people across businesses
to provide fresh perspectives and to develop broad-based experience.
Integrated diversity gives us a Company that is considerably greater
than the sum of its parts.
Integrating diversity only works when the elements of the
diversity--in our case our 13 global businesses--are strong in their
own right. A critical mass of competitive advantage connot be
achieved by leaning small businesses on large ones or weaklings on
winners. That is why our work of the 1980s--creating strong,
stand-alone businesses--was the indispensable forerunner of
integrating them in the 1990s.
But the walls that separate our businesses from one another are not
the only ones we are removing.
Even the barriers between GE work life and community life have
come down. The GE management society, whose chapters for 63 years
met and talked shop and discussed investment funds, has turned its
face outward to the needs of the community, and the results are
something of which we are more than proud. Hundreds of GE volunteers
from the society are serving as mentors and tutors in inner city and
rural school systems; and, as a result of their efforts, thousands of
underprivileged but promising young men and women will attend college
who otherwise would not have had the opportunity. Just a few months
ago, Harvard University presented its prestigious Dively Award for
Corporate Public Inititive to GE because of the efforts of these
volunteers.
So we have knocked down a few boundaries inside the Company and
around it, but the walls within a big, century-old Company don't come
down like Jericho's when management makes some organizational
changes--or gives a speech. There are too many persistent habits
propping them up. Parochialism, turf battles, status, "functionalitis,"
and, most important, the biggest sin of a bureaucracy, the focus on
itself and its inner workings, are always in the background. This is no
reflection on people but simply a product of the way large
organizations have evolved.
We've been pulling the dandelions of bureaucracy for a decade, but
they don't come up easily and they'll be back next week if you don't keep
after them. Yes, we've taken out a lot of structure--staff,
span-breakers, planners, checkers, approvers-- and yet we have by no
means removed it all. Those who have ever cleaned out an attic and
returned a year later are often shocked to see what they left as
"essential"--the pairs of old pants that would never be worn for the
painting that would never be done, the boxes of moldy National
Geographics that would never again be read.
We feel the same way every time we revisit our management
system--our processes--and see the barriers that insulate us from
each other and from our only reason for existence as an
institution--serving customers and winning in the marketplace.
For decades, business has been rewarding people with not only
money and promotions--which is appropriate--but with titles as well,
the most common of which is "manager" of this or that. Managers,
logically enough, see their mandate as managing: controlling, measuring
and getting on top of things. Often, by doing so, they unconsciously
carve out fiefdoms and then feel compelled to defend them. By the end
of this decade we will have one-third fewer management positions than
we have today--not necessarily fewer people, but fewer titles with
their perceived mandates to "manage" rather than facilitate and
contribute.
But the root cause of many of bureaucracy's ills--the turf battles,
the parochialism and the rest--is deeper and more subtle. It is people's
insecurity. Insecurity makes people resist change because they see it
only as a threat, never an opportunity. It's that insecurity, that
resistance to change, that must be dealt with.
The antidote to insecurity is SELF-CONFIDENCE. Some people get it
at their mother's knee, others through scholastic, athletic or other
achievement. Some tiptoe through life without it. If we are to create
this boundaryless Company, we have to create an atmosphere where
self-confidence can grow in each of the 298,000 of us.
So how do we grow self-confidence not just at the top, or in the
middle, but everywhere in the Company?
We designed a process to give people a voice, a say, to get them
talking to one another and trusting one another, a process we believe
will eventually lead to widespread self-confidence across the Company.
"WORK-OUT" is the name of the process. As we've described it to
you before, Work-Out began around the Company with assemblies
patterned after the New England town meeting--the ultimate
boundaryless event. They are attended by a disparate group of
people--hourly, salaried, managers, union leaders--people who often
had no occasion to speak to one another during the workday.
The sessions quickly became a shooting gallery, with the more
egregious manifestations of bureaucracy as targets--10 signatures on
a minor requisition, nonsensical paperwork, wasteful work practices,
artificial dress codes, pomposity. Most of these were abolished or
reformed on the spot, not put "in channels."
For the first time in their work lives, people began seeing action
match rhetoric--their trust in the process grew--and the ideas began
to come in waves. People who had never been asked for anything other
than their time and their hands now saw their minds, their views
sought after. And in listening to their ideas, it became even more clear
to everyone that the people who are closest to the work really do know
it better.
Work-Out is two years old now and it's moving steadily up the
learning curve. Today, suppliers and customer are part of many of the
sessions, exploring new ways of working tuogether. Sessions are
becoming more complex as cross-functional teams map the most
complicated business processes and compare them with the very best
we can find from companies around the world. Work-Out, incidentally,
has proved indispensable to the implemenation of the revolutionary
cycle-time reduction effort in our appliance business.
Work-Out is building trust, teamwork and self-confidence around
this Company.
Now, as we write this, we are conscious that across the Company
there are still too many people for whom much of this bears little
resemblance to the reality of their lives--people who are still trapped
in the web of bureaucracy or work in a place where measurement and
reward systems wtill run counter to the very concept of
boundarylessness.
There are others as well who say, "You can talk all you want about
Work-Out and boundaryless, but the boss still calls the shots." And
they are right. Yes, after all the debate, priorities must be set,
resources allocated and final decisions made by the leadership at every
level. The difference--a very big difference--is that the input and
ideas upon which those decisions are based will come from many, not a
few.
Leaders in the 1990s must delegate more, facilitate more and listen
more. They must trust and be trusted. Leadership will always have
resonsibility for the final call, but it will have an equal responsibility
to make the decision rational to those who provided the input. The
successful leaders of the 1990s will be those whose decisions,
however difficult, will be understood, accepted and rallied around by a
highly involved work force.
Work-OUt is allowing self-confidence to flourish around our
Company. As that self-confidence grows, the boundaries are beginning
to fall; and as they fall, GE is picking up speed, and with that speed a
competitive advantage.
Some people are uncomfortable with the soft stuff and press us to
quantify it, to measure its progress. It would be easy to quote numbers
of Work-Out sessions, best-practice teams, suggestions implemented,
money spent on training, and the like; but we've resisted because the
last thing this effort needs is its own bureaucracy and measurement
systems. But we can tell you it is working. We see it working in
people's faces and we hear it in the confidence in their voices. And we
are beginning to see its results in some of those numbers we gave you
at the beginning of our letter: working capital turnover, operating
margins and, above all, productivity growth. [numbers were deleted]
These are numbers that couldn't be improved as significantly as they
have been by the actions of the top one hundred, or one thousand, or
even five thousand people in a company our size. They can only be move
dby the contributions of tens of thousands of people who are coming to
work every day looking for a better way.
We enter a year fraught with global uncertainty, but we do so
confidently, with 13 globally positioned businesses and an increasingly
clear vision of what we can become--a boundaryless Company with a
boundless future.
John F. Welch, Jr.
Lawrence A. Bossidy
Edward E. Hood, Jr.
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