GEC's failures

 Arnold Weinstock is one of Europe's most remarkable businessmen and the most important British industrialist of the post-war era, the architect and undisputed ruler of GEC. His character was complex and often contradictory, inspiring admiration, disparagement, and fear, especially within GEC. Here's a description of his character:

Tough and Ruthless Operator:

• Weinstock was known for his tough management methods. As a young business journalist, Stephen Aris was the first to reveal details of these methods.
• He was notoriously "tough" to deal with and played the part of a skeptic towards all requests for investment funds. He told the incoming CEO, "Don’t try to do good or save the world, just concentrate on making money".
• His cost-cutting measures and emphasis on financial performance led to a "climate of fear" within GEC. One manager described how strong men would go pale upon receiving a telephone call from "AW".
• He was willing to make tough decisions, including large-scale redundancies, to improve efficiency. Arthur Walsh recalled that Weinstock "stirred up managers, got rid of managers I personally would have got rid of, and he did it in what people call a ruthless fashion".
• The "Osram purge" in 1967, where many individuals were removed, further cemented his image as a ruthless operator.

Financially Acumen and Focus on Cash:

• Weinstock's business philosophy, fashioned at Radio and Allied, was essentially to "make a good product, and then cut costs and overheads as hard as you can to squeeze out the maximum profit".
• He instilled a relentless pressure on managers to squeeze as much cash out of their business as possible. Tombs recalled that Weinstock's solution for the parlous state of GEC was to "drive it as a cash business".
• His aversion to risk became legendary. He was reluctant to invest in anything until the market was clearly in his sights and regarded a negative cash flow as an attribute of the Devil.
• He famously built a large "cash mountain" at GEC, a testament to his financial conservatism, although it was also a point of criticism regarding the company's growth.

Detail-Oriented and Controlling:

• Weinstock had an insatiable interest in the minutiae of company affairs. He would immerse himself in the detail of running the business, even at a young age.
• His management style involved close monitoring through monthly reports and telephone calls. If something in a report caught his eye, he would immediately call the person responsible.
• He personally sanctioned salary increases for senior managers earning over £35,000 as late as 1986.
• He even paid attention to seemingly small details during factory visits, such as checking if telephones were made by GEC.

Skeptical and Pragmatic:

• Weinstock played the part of a skeptic to all requests for investment funds.
• He had a dislike of management consultants, dismissing McKinsey & Co. with a joke. He also had a low estimation of personnel officers.
• He was described as an "arch-pragmatist". Mike Bett said, "If you tried to be consistent, he would say, ‘Be relevant, for God’s sake’".

Complex Personal Life and Relationships:

• Despite his tough exterior, some found Weinstock to be considerate and courteous. Gwynneth Flower recalled him breaking into Yiddish during a meeting and then offering her a Yiddish lesson.
• He had a dry sense of humour. During a takeover, he famously produced a half-a-crown coin when the opposition suggested that amount would settle the deal.
• He was devoted to his wife, Netta, and remembered birthdays and anniversaries.
• His relationship with his son, Simon, was exceptionally close. He was ambitious for Simon and deeply affected by his death.
• While he could be brusque, those in his inner circle considered him a "tremendous friend and a very loyal man".

Contradictions and Paradoxes:

• He could be parsimonious beyond parody in public, yet his private tastes were expensive.
• He believed in giving his underlings almost untrammelled freedom, yet he maintained tight control through financial scrutiny.
• He was intellectually incredibly self-assured yet very vulnerable to criticism, and described as shy and easily hurt.
• His fierceness was sometimes seen as a pose put on for effect, and some believed he was a "rather soft human being" underneath.

In summary, Arnold Weinstock was a formidable figure characterised by his sharp intellect, unwavering focus on financial performance, and a management style that could be perceived as both ruthless and effective. While publicly appearing as a tough operator, he also possessed a complex personal life with instances of kindness and loyalty. His legacy is tied to the transformation of GEC, though his cautious approach to investment and innovation ultimately drew criticism regarding the company's long-term growth and adaptation to new technologies.

GEC's failures can be attributed to a number of factors, many of which contrast with the steps to rejuvenate a mature business. Here are some key reasons why GEC faltered:

• Short-term focus and lack of long-term vision: Arnold Weinstock, the head of GEC, famously told the incoming CEO to "just concentrate on making money". While this focus on profitability led to impressive short-term financial results, it appears to have come at the expense of long-term strategic development and investment in future growth areas. The book suggests that GEC under Weinstock lacked a "grand strategy for the group as a whole". This contrasts with the need for ambitious goals and a clear direction during the "Galvanize" stage of rejuvenation.

• Failure to nurture new growth and invest strategically: Despite amassing a significant "cash mountain", GEC was criticised for not investing it in ways that would secure Britain's future in emerging industries. Weinstock was "notoriously 'tough' to deal with and plays the part of a skeptic to all requests for investment funds". This reluctance to invest in new ventures and technologies hindered GEC's ability to capitalise on opportunities, a crucial aspect of both the "Build" and "Leverage" stages of rejuvenation.

• Missed opportunities in emerging technologies: GEC failed to become a major player in the computer and semiconductor industries. The company's decision to put most of its semiconductor efforts into the ASM venture proved problematic. Furthermore, GEC was slow to recognise and respond to the "semi-conductor revolution". This failure to embrace innovation in strategy, a key element for mature business rejuvenation, left GEC behind its international competitors.

• Problems with collaborative ventures and technology transfer: GEC's joint venture with Hitachi in the television market ultimately failed, with GEC's brand being significantly less desirable. The ambitious plan to build a business based on electronic measuring technology (involving Avery, Gilbarco, Fisher Controls, and GEC's meters) also did not succeed due to a lack of someone capable of making the idea work. These failures suggest a difficulty in effectively leveraging external partnerships and internal technological capabilities.

• Over-reliance on defence and telecoms sectors: GEC became heavily dependent on defence contracts and the nationalised telecoms market (Post Office/British Telecom). The skills required for success in these areas were "very different from those required for success in globally competitive markets". This special relationship with government, while a strength in some ways, also became a weakness by limiting GEC's exposure to and development of skills for broader international competition.

• Management style and internal collaboration: Weinstock's management style, while focused on financial control, may have hindered collaboration and the pooling of knowledge across GEC's various companies. The structure of self-contained divisions made it difficult for overlapping initiatives like information systems to thrive. Furthermore, while Weinstock gave managers a degree of autonomy, his tight financial controls and apparent lack of deep understanding in certain technological areas may have stifled innovation and risk-taking. This could be seen as a failure to foster an entrepreneurial organisation, a key to rejuvenation.

• Failure to adapt to changing market dynamics: In the consumer electronics market, GEC struggled to compete with Japanese and Italian manufacturers. The company was slow to react to the rapid changes in the television market and ultimately "more or less opted out" of being a dominant force in the domestic marketplace. This lack of agility and failure to "alter the culture for faster adaptation" contributed to its decline in these sectors.

• Problematic defence contracts and project management: The Nimrod project serves as a significant example of a major failure, plagued by issues with project management and a lack of understanding of the technical requirements. The cost-plus nature of many defence contracts may have reduced the incentive for efficiency and effective management.

These points highlight several areas where GEC's approach deviated from the principles of rejuvenating a mature business, ultimately contributing to its struggles in the later decades. The emphasis on short-term financial control and a cautious approach to investment and innovation appear to be significant factors in GEC's failure to maintain its position as a leading industrial force.