Larry Culp Redefines Success at GE When Larry Culp became the 12th chief executive officer of General Electric, he was the first CEO to be brought in from outside the company, and GE desperately needed a fresh perspective. The company, formed in the 1890s to deliver electricity to cities, later grew by adding a variety of businesses until it became a giant conglomerate. By 2000, GE seemed unstoppable: its total stock value exceeded that of any other corporation, and observers concluded that great management was enabling GE to thrive in businesses as diverse as jet engines, entertainment, power generation, and consumer finance. Then a financial crisis hit in 2008, and excessive risk in the financial-services division nearly caused the company to collapse under the weight of its debt. Ten years and two CEOs later, when Culp joined GE, the company was still struggling to remain relevant. The supposed advantage of being a conglomerate--that thriving business lines could keep the company going when other businesses hit headwinds-had become a ability, because this approach meant executives weren't consistently allocating funds where they could generate the most value. Culp arrived with a track record of wins over 14 years at Danaher Corporation, a manufacturing company that, like GE, had grown through a series of acquisitions but, unlike GE, had maintained a focus on pursuing efficiency in a couple of industries it could manage effectively. Within weeks, Culp was leading an extensive investigation into each division's performance. Mis experience, coupled with an education in business administration, enabled him to assess which companies consistently generated cash and where expenses were out of control. One of Culp's passions, going back to his years at Danaher, is to make processes lean by cutting unnecessary expenses and activities. At GE, he visited facilities to inspect operations and ask workers about their processes. A factory making turbines, for example, was moving the giant parts three miles around the facility over an 85-day production process. Upgrading machinery and rearranging the layout shortened the process to 165 feet and about 50 days. At an aviation facility, he observed a team studying ways to improve on-time deliveries of a military engine. During the week he was there, teams cut costs by $2 million and timelines by 62 days. In his first few years on the job, Culp's focus remained on improving operations so divisions could generate profits to help pay down the corporate debt burden. To generate more cash for debt reduction, he also cut dividends paid to shareholders andsold divisions including aircraft leasing and biopharmaceuticals. His predecessors had also sold off businesses but far less aggressively; Culp's moves pulled GE completely out of consumer-facing businesses such as appliances and home mortgages and left the company with four main businesses--aviation, health care (hospital equipment), renewable energy (wind turbines), and power (equipment for, fossil-fuel power generation). GE's aviation business is an industry leader, and health care has been reliably profitable. Orders and revenues for renewable-power equipment have exceeded those on the fossil-fuel side, and GE found it had overestimated the extent to which its customers would continue to pursue natural-gas solutions. In addition to these changes, Culp moved many corporate functions (for example, IT and human resources) to the business divisions and made each business responsible for its own performance, rather than expecting some businesses to prop up others. By late 2021, Culp determined that the divisions were profitable enough for him to announce his big move: GE would split into three parts: health care, power (fossil fuel and renewables), and aviation. The intent was that the divisions on their own would be more flexible at responding to market changes and more attractive to investors knowledgeable about each industry. At the time of the announcement, the plan was to spin off GE'S strongest division, health care, in early 2023. In the meantime, it would combine its fossil-fuel power unit with its renewable-energy unit to create one power unit, with the aim to sell it in 2024. With those deals complete, GE would retain the aviation unit and try to maintain its leadership position.

Questions for Discussion 1. List three examples of Larry Culp using organizational resources to achieve organizational goals.

2. What is something Culp planned? What is an organizational change he made? When was he engaged in controlling? How would effective leadership help him carry out these tasks?

3. At GE, Larry Culp is a top manager. How would the work of a middle manager at GE differ from Culp's work?