Winning - Jack Welch [119]
It’s not as if the developed economies of the world are in shambles. The developed world has large consumer and industrial markets, all thirsting for products, with great brands and distribution mechanisms to serve them. Its economies have open and mature legal systems. They are transparent societies, with democratic governments and good education and social systems. Its businesses have fully developed management processes. The United States has the added advantage of a large, thriving venture capital market with the capability to provide seed capital for just about any good idea.
The list of the developed world’s competitive advantages could go on and on.
So think positively. At the very least, a can-do attitude is a place to start.
Remember my description of the Japanese threat in the early ’80s? At times it felt like we were dying, and everyone seemed to agree. Journalists and political pundits predicted the imminent demise of industrial companies like GE, and you couldn’t blame them, given the circumstances. Inflation was double digit, and the prime rate peaked at more than 20 percent. In Syracuse, we were making TV sets that cost more coming out of the factory than the Japanese were selling them for in a mall less than two miles away.
It sure felt like the worst of times.
But that’s the point, really. In the heat of battle, it always feels like the worst of times. Low-cost competitors are not new. Hong Kong and Taiwan have been in the game for over forty years, and Mexico, the Philippines, India, and Eastern Europe have been a factor for some time. Even in the late ’90s, when the wind was at everyone’s back and making money was easier than it had been in decades, work felt really hard. Big companies were labeled dinosaurs, and it became conventional wisdom that technology start-ups would soon rule the world. In fact, it was said whole industries were going to be obliterated by the Internet.
Then the bubble burst. Many of those little companies that were going to rule the world disappeared. Others, like eBay and Amazon, not only survived, they thrived. But so did the so-called dinosaurs—because they changed. They grabbed the new technology and transformed themselves, emerging stronger than ever.
And change is what China demands of us now.
How?
First and most obvious, bring out the three old warhorses of competition—cost, quality, and service—and drive them to new levels, making every person in the organization see them for what they are, a matter of survival.
Take costs. Everyone needs to be searching everywhere, inside the company and out, for best practices. Hard calls need to be made about where and how every single process should be performed to ratchet up productivity. Don’t think about reducing costs by 5 to 10 percent. You have to find the ways to take out 30 to 40 percent. In most cases, that’s what it will take to be competitive in the China world.*
On quality, you just can’t have a ship-and-fix mentality. Getting it right 95 percent of the time is not good enough. Use Six Sigma or any methodology you like. But get rid of defects.
Service is the easiest advantage to exploit. China is thousands of miles away from most developed markets. Remember Gary Drug, the tiny pharmacy in our neighborhood where not only do they know your name, they deliver to your house within an hour? It’s standing strong against its China—the big, shiny chain-store pharmacy three blocks away. And think about the Mexican CEO who asked this question to start with. His country’s proximity to the United States gives it a huge advantage in response time.
Again, your challenge is not just to improve. It is to break the service paradigm in your industry or market so that customers aren’t just satisfied, they’re so shocked that they tell strangers on the street how good you are. FedEx and Dell come to mind as examples of this.
While you have to innovate to improve cost, quality, and service, go beyond that. Take a new, hard look at your