CEO Larry Culp has been head of General Electric for a year. He’s the first outsider hired at the firm and is known for running his former corporate operation as a collection of independent businesses orbiting a small, central staff.
The WSJ published an article recently describing Culp’s first meeting with his lieutenants, where he laid out his plans for the company. During his first year, he has stuck to the plans of former CEO Flannery who had gained board approval for selling off the locomotive division, exiting the oil and gas business and spinning off the health care unit. (Culp revised the health care plan by keeping the unit that makes hospital equipment and selling the biotech). Culp has made additional moves to reduce debt, recently saying that the company would freeze its U.S. pension plan for about 20,000 salaried employees and make other moves that would reduce its debt by up to $6 billion. When describing the future architecture of General Electric, Culp told his executive team that he would be streamlining the operations and shrinking its bureaucracy, which ballooned to 26,000 by 2018. To date, he has moved about half of the bureaucracy into individual GE businesses. And, although headquarters will be smaller, it will continue to oversee capital allocation, talent and technology. In other words, Culp’s plan is to fix GE rather than to break it apart, as has been forecast by Wall Street. Here’s wishing Culp well in his continuing efforts to get General Electric sparking again and back to its former successes.