How to understand the "GE way"? Come on, everybody, 3Q.

The organizational structure of General Electric Company belongs to the Anglo-American model. Advantages and disadvantages: (1) The board of directors integrates decision-making power and supervision power, which is convenient for decision-making, implementation and supervision, but there is usually an inevitable contradiction between the personal interests of directors and the interests of all shareholders. Especially when the director himself holds a management position in the company, the interests between the two often conflict. (2) Highly decentralized ownership structure can reduce investment risk. (3) Stock option system has become the main means to motivate managers. 2. Why does GE constantly reform its organizational structure? There is a general view in organizational management that the more management levels, the worse the flexibility of the organization. However, we can see that the change of "strategic division of labor" in the history of organizational management of General Electric Company has not simplified the organizational level, but has greatly improved the organizational flexibility of General Electric Company, which has produced great benefits in that year. It can be seen that "the more management levels, the worse the flexibility of the organization" is a misunderstanding in organizational management. There is no inevitable correlation between organizational flexibility and management level, but the "decision point" in organizational structure is the inevitable correlation of organizational flexibility. Figure 1 Differences in organizational decision-making points The level of organizational flexibility lies not in how many management levels an organization has, but in how many levels of information it needs to go through before making decisions, so organizational flexibility is not necessarily related to the number of organizational management stages. Comparing Figure A and Figure B, we can clearly find the "real secret" of organizational flexibility: Organization A represented by Figure A is a traditional organization with many management levels; The organization B represented by Figure B is a new flat organization, but this does not mean that the latter is more flexible than the former. The decision-making power of organization A has been decentralized. Except for important matters, the "decision points" of other daily business decisions are all on the second floor, so although there are many management levels, organization A still has high flexibility. Although organization B has a flat organizational structure, the "decision point" is at the top, and external information has to go through more management levels to reach the "decision point". Naturally, its response speed to external information is far less than that of organization A. It can be seen that there is no inevitable relationship between organizational flexibility and flattening, and the level of organizational flexibility depends on the distance between "decision point" and information source. Based on this analysis, it is not difficult for us to understand why the first two CEOs of General Electric Company improved their efficiency by making General Electric Company "bloated". The "strategic organization" is a fully authorized independent combat unit, which has a high decision-making power of organizational resources and can respond quickly to the competitive environment, so these "field armies" of General Electric Company can make great contributions to General Electric Company in that year. In the organizational structure reform promoted by Jones, he added a new management level-executive department to General Electric Company. The erection of this new management stage has not increased the distance between "decision-making points" and information sources-Jones's reform policy clearly stipulates that the daily affairs of various business departments, as well as strategic decisions on markets, products, technologies and customers, must be reported to the top leadership of the company before, but now they only need to report to the executive department separately. From the continuous success of organization and management of General Electric Company, we can draw a clear conclusion: the effective means to improve organizational flexibility is not the flattening of organizational structure, but full authorization to shorten the distance between "decision point" and information source as much as possible.