The so-called "big enterprise disease" refers to a chronic comprehensive disease that unconsciously breeds various disadvantages that hinder the sustainable development of enterprises in terms of enterprise management mechanism and management functions after the enterprises develop to a certain scale, which makes enterprises gradually retrogress or even decline.
The symptoms of large enterprise diseases are generally as follows: poor information, stiff body and huge organization "obesity"; "Chronic disease" with unclear responsibilities, complicated decision-making and slow action; Selfish departmentalism breeds, contradictions increase and coordination is difficult. "rigid thinking" that is content with the status quo and stick to the rules.
There are four main reasons for the illness of large enterprises: First, the innovation spirit of the top leaders of large enterprises has declined. After the enterprise expands to a certain scale, the business policy of "focusing on attack" will be unconsciously replaced by "focusing on defense".
Second, the corporate governance structure is not perfect. At the peak of enterprise development, if there is no perfect governance structure, it will lead to decline.
Third, the decision-making mechanism of enterprises has failed. After the scale of the enterprise is large, the matters that need to be decided increase and the decision-making process is complicated.
Fourth, the organization is bloated and overstaffed. The bigger the enterprise, the more employees want to work in the head office. The enterprise breeds the phenomenon of setting things for people and most people doing nothing, so it is difficult for enterprises to adapt to the changes in the market.
In 1980s, General Electric Company of the United States appeared a typical big enterprise disease. At that time, General Electric Company had developed into an "economic dinosaur" with 12 management levels and 400,000 employees, and its business scope covered more than 40 countries and regions around the world. However, the symptoms of large enterprises are increasingly prominent: with the expansion of business, although sales have increased substantially, earnings per share and return on investment have decreased; General electric company faces many difficulties such as declining competitiveness, dissatisfaction of shareholders and board of directors.
At this time, Welch became the CEO of General Electric Company, and began to carry out drastic reforms on the organizational structure and business of the company. Welch clearly saw that the bloated management structure was the crux of General Electric Company, so he began to streamline and merge a lot of departments, reducing the original 43 "strategic business departments" to 14, and separating some uncompetitive business departments of the company. Welch recovered GE from the depression with an iron fist and made himself a leader in the industry again.