Part 1
Decision was made to lay off more than 100,000 people while investing $50 million in an executive education centre. ‘’We were downsizing the company, and I needed a place where people could congregate and get the message straight from the horse’s mouth, says Jack Welch, the former CEO of General Electric (quoted from p.85 of the book).”
Jack Welch became the youngest chairman and CEO at General Electric (GE) in early 1981. By deciding to lay off 100,000 people and restructure the company, he transformed the GE. He also improved the internal business school for GE managers, which is known as Crotonville due to its location in a hamlet of the same name in the New York suburbs north of Manhattan.
Crotonville was founded by former CEO Ralph Cordiner in 1956 initially. Welch said in his memoir, Jack: Straight from the Gut, that GEM managers were taught based on GE’s Blue Books regarding do’s and don’ts in their business operation. And by the time Welch took over at GE, anybody was able to attend the programmes and Welch thought that Crotonville was tiring. He wanted to make the courses at Crotonville to be more at a world-class level.
He met Kim Baughman, a former professor from the Harvard Business School who was running Crotonville. They aimed for breaking through the hierarchy and making radical change at Crotonville. The first step was to upgrade the physical plant. Welch put nearly $50 million to modernise Crotonville – a new residential area, a new ‘’Pit’’, and so on. In order to do this, Baughman gave Welch a preview of his presentation to the GE board – Welch replaced the specific payback analysis figure with the word INFINITE to underscore Welch’s belief in the limitless return on investment for Crotonville.