He is the most important executive at GE’s most important business. Could he run the whole company someday?
I’m on a reporting trip in Angola, a place where the State Department advises travelers to “never touch anything that resembles a mine or unexploded ordnance.” I have brought a guidebook. It says Angola is “not a holiday destination for beginners.”
I am traveling with a team of GE executives led by John Krenicki, CEO of the company’s energy unit. We’ve sat through a lecture on an especially virulent strain of malaria in the region. We’ve had two days of back-to-back meetings, visited a power station floating on a barge, and toured a liquefied natural gas plant on the banks of a tributary of the Congo River, downstream from Livingstone Falls, named for the explorer who died of dysentery. We’d had to leave behind two members of the team whose visas to Angola hadn’t come through. And now we’re in a chartered jet, homeward bound, getting ready for takeoff.
A crew member comes into the cabin with an announcement. The flight will be delayed. There are wild dogs on the runway.
I’m ready to jump into the Congo, but Krenicki (pronounced KRIN-icky) just pokes away at his BlackBerry. It’s a long way from Crotonville, but he’s used to doing business this way. In fact, Krenicki’s energy division and its far-flung operations are becoming the main engine that drives GE (GE).
For most of the past decade it was GE’s finance division, GE Capital, that famously held that distinction, at times providing more than half of the company’s earnings. But during the financial crisis GE Capital floundered. Jeffrey Immelt, GE’s CEO, vowed to shrink it and refocus on industrial businesses. Since the start of the recession, GE has shed its security operations, along with some assets in the finance division. GE spent $11 billion on acquisitions in Krenicki’s business last year, including all of the $8 billion it gained selling part of its stake in NBCUniversal to Comcast.
Now, Krenicki says, “If I don’t like where the GE share price is, I look in the mirror.”
This year Krenicki’s division, which manufactures things like gas turbines and solar panels, is expected to bring in about $45 billion in revenue, making it the biggest industrial unit in the company. Profits haven’t grown year over year since the third quarter of 2010, hurt by the popping of a bubble in the wind turbine market. GE says the energy division’s profits should start to rise again in the final period of 2011. Of the third quarter, when profits were down 9% year over year, Krenicki says, “We feel crappy, but we made $1.5 billion.”
Krenicki, who is 49, has nearly doubled the unit’s size since taking it over in 2005. Last year it had revenue of $37.5 billion, which would have made it No. 67 on the Fortune 500 list if it were a standalone company. He expects revenue to hit $60 billion by 2014 and $100 billion in a decade. Compare that with GE’s total revenue of $152 billion in 2010, and you see the size of the bet. “This is a business that can absolutely move the needle in a major way,” says J.P. Morgan analyst Stephen Tusa.
Betting big on Africa
Although GE isn’t in the business of producing energy, it makes equipment for those who do. A decade or so ago that was relatively simple. In the late 1990s the energy division, called Power Systems and run by Bob Nardelli (yes, that Bob Nardelli), mostly sold one product in one country: gas turbines for electric utilities in the U.S.
Today GE Energy operates three divisions — GE Power & Water, GE Energy Management, and GE Oil & Gas — and a total of 15 business lines, 13 of which generate more than $1 billion in annual revenue. With the scramble for energy resources intensifying all over the globe, GE Energy is almost an emerging-markets business. In China, Anheuser-Busch InBev has agreed to work with the company on reducing water use and increasing energy efficiency. In Russia, GE has a joint venture to build a gas turbine factory. Krenicki’s biggest deal to date was a $3 billion contract for gas turbines in Iraq in 2008, a contract he signed in the same room where President George Bush had had a pair of shoes thrown at him two days earlier.
And now Krenicki is making a big push into sub-Saharan Africa.
GE has been in the continent for about 100 years but exited South Africa, along with other big businesses, in response to apartheid. Many Africans know the company only for its appliances. Right now the continent generates about $2 billion in revenue annually for GE’s energy business, but Krenicki says it could easily be $5 billion with very little investment.
We touch down in Cape Town after 20 hours of travel and proceed immediately to a meeting with executives of a local oil and gas company (one of whom says to Krenicki, “You don’t look tired. Americans, they make differently”). Then it’s out to the street for a ride past Table Mountain in an electric car. “We’re going from oil and gas to electric cars in 30 minutes,” Krenicki says.
He’s got an incentive to be speedy, because competitors are flying in from all over. Commercial flights from Johannesburg to Luanda, the capital of Angola, are carrying a lot of Chinese laborers.
Regional employees view the enterprise as a startup. During a meeting of the GE Women’s Network in the company’s office just outside Johannesburg, the crowd oohs and aahs over a woman who has been with the company for 10 whole years. Krenicki’s HR staff is focused on hiring Africans in senior management and on pushing decision-making to the region and away from headquarters. It’s an initiative Krenicki is trying to implement globally, but it’s still a work in progress. After the trip I talked to Renova Energia CFO Pedro Pileggi, a GE wind turbine customer in Brazil. He likes the quality and reliability he gets from working with Krenicki’s energy team, but he says that partnering with big companies like GE can mean occasionally having the “call center” issue: “We want to talk to the guy who decides,” he says, “and you can never find the guy.”
“One of the company’s best young leaders”
Just who is the guy who decides? John Krenicki Jr. grew up in Clifton, N.J., a blue-collar town where his father worked as a toolmaker for a plastics company. A high school athlete, he played football, hockey, and lacrosse (he still hits the gym most mornings and sprinkles his speech with sports metaphors). After spending a semester at the University of Alabama, he transferred to the University of Connecticut, where he met his wife, Donna.
Krenicki was recruited right out of UConn’s engineering school into GE’s marketing program in the energy business. But he found his first rotation boring and left to take a full-time job in GE’s plastics business, which had a reputation for fostering innovation after being led by the legendary Jack Welch.
After spending almost a decade in plastics, Krenicki hopped around the company, as is typical of GE lifers. He ran lighting and transportation before being tapped in 2003 by Immelt, in his biggest management shuffle since becoming CEO, to return to the troubled plastics business as its new chief. Krenicki relocated his family for the 11th time — they’d already been to Europe twice — to move near the division’s headquarters in Pittsfield, Mass. In his annual report that year, Immelt said plastics was the company’s biggest earnings issue — it had been hit by the skyrocketing price of raw materials — but singled out Krenicki, “one of the company’s best young leaders,” as the person who was going to improve it. Two and a half years later, Reuters reported Krenicki had turned it into “one of the fastest-growing arms of GE.”
As head of plastics, Krenicki became known for his decisive style. Once, on a trip back from Asia, his CFO, Brian Gladden (now CFO of Dell (DELL)), called during a layover in Chicago to tell him that a competitor’s move had created a crisis for their business. On the last leg of the trip home, Krenicki decided to shift the whole direction of the business, putting most of its resources into premium products. “That’s a big part of his strength — simplifying complex issues very quickly,” Gladden says.
Krenicki also developed a reputation as a straight shooter with a knack for gathering intelligence by asking simple questions, then corroborating the answers. “He has this sort of noncommittal way of finding out what’s going on, whether it’s about customers or people,” says Bill Banholzer, chief technology officer at Dow Chemical (DOW) and former head of research for GE’s plastics business.
In 2005, Immelt promoted Krenicki to run the energy division, which was three times the size of plastics. Rather than relocate his family to the division’s headquarters in Atlanta — he has two sons in college and a daughter in high school — Krenicki kept his house in Massachusetts’ Berkshires near the plastics division’s headquarters. He’s on the road 70% of the time anyway. His wife and secretary talk every week, and he books his schedule a year in advance.
For vacations, the family usually opts for their house on Cape Cod. Krenicki likes to fish, although he admits to not being very good at it, and he professes an affinity for Belgian beers.
Real power doesn’t have to prove it
Even as he shoots toward $100 billion in annual revenue, Krenicki wants his enterprise to act like a small company that’s fast and flexible. He worries he’ll forget what it’s like to run a $100 million business, and that complacency and arrogance will follow. “My job is to weed that out of the system,” he says. He makes sure he remains accessible to customers. At Davos last year he met with 24 of them in two days. In Africa he tells his employees to get educated about the expanding portfolio so they can offer more to their business partners. When he toured that floating power plant using a GE turbine in Luanda, Krenicki noticed that a GE cleaning solution was being used on a compressor. He wants to see more of that. “I’m constantly trying to connect the dots and look for disconnects,” he explains. In Johannesburg, after meeting with a company that mined titanium, Krenicki sent an e-mail to his head of sourcing. He asked that someone from GE’s aircraft business, which uses titanium in its manufacturing, figure out how to work collaboratively with the company. It’s a way to get his foot in the door.
Krenicki relies heavily on his team for these kinds of insights: “It’s too big, and it’s too technically complicated. I’ve got to hire really smart people.” As a young manager, he feels he made the mistake of bringing on people who were too much like him. Now he looks for hires who can compensate in areas where he lacks experience. “I want people to tell me things I don’t know,” he says. “A lot of times people will line up and say, ‘You know, John, China’s big. We’re going to put a lot of resources there.’ Yeah, thanks a lot.”
With his team, Krenicki is approachable and laid back. He arrived at the airport for the flight to Africa from New York wearing jeans and a black T-shirt, looking more like a guy ready to watch his kid’s soccer game than one of the most senior executives at GE. “He’s not imperious,” says Krenicki’s head of M&A, Ronnie Hawkins. “He’s one of the top five people in GE worldwide, but he doesn’t wear that on his sleeve.” And yet when the group convened every morning during the trip, no one dared arrive after the boss.
Krenicki is cerebral and values intellectual curiosity. (One of his standard questions: “What are you reading?”) Sharon Daley, his HR chief, says she’ll sometimes go a weekend without hearing from Krenicki — rare at his level — because he’s been spending the past few days just thinking.
While there’s very little that gets to him, Krenicki describes himself as paranoid. His biggest fear is missing out on the next big thing. “One of my competitors runs a play where they create a $10 billion business, and I slept through it — I’d say that’s a disaster,” he says. “I worry about that a lot.” Every morning he reads news clippings on anything related to his business, key competitors, customers, and suppliers. He has all financial reports sent to him automatically. “I want to know what could go wrong,” he says.
Krenicki might not be a household name, but headhunters say he is one of the most highly sought-after executives in the industry. “John can run any business,” says a former GE manager who now works for a competitor. “He’s smarter than a bunch of other people who get a lot of play at GE.”
When I asked Krenicki if he wanted to be CEO of GE, he told me flat out that it isn’t his ambition. This, coming from someone who has thrived in a cutthroat company and readily admits to a competitive side, may be taken with a grain of salt. But after 27 years, he says he’s extremely loyal to GE and his people. He’s already in Immelt’s inner circle after being named a vice chairman in 2008. He views his main role as a coach for the next generation of leaders. Krenicki tells me he’s got plenty to do to get to $100 billion, and that in and of itself is a great legacy for him.
The job promises another kind of legacy as well. Angola, for instance, endured a nearly 30-year civil war until 2002 that wrecked its infrastructure. The country is a member of OPEC, and about 72% of its revenue comes from oil production, yet only 26% of the population has electricity. Helping change that state of affairs offers a different kind of reward from, say, shuffling derivatives contracts.
“It’s a complicated job,” Krenicki says. “It’s a great portfolio, so I don’t look past that.”
This article is from the December 26, 2011 issue of Fortune.