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Larry Culp: We’re in the second or third inning of GE’s turnaround

October 26, 2020, 10:00 PM UTC

Few challenges in the business world are of the magnitude that Larry Culp faced when he took over as chairman and CEO of GE in 2018. The ailing multinational was a shadow of its former self, in the process of shrinking in market cap from $600 billion in its heyday to around $60 billion today, and shedding dozens of business units along the way. 

Then, in his second year on the job, Culp got thrown a monkey wrench in the form of the coronavirus

“We came into this year knowing that our two biggest and best businesses—aviation and health care businesses—were really going to carry us through 2020,” Culp told Fortune CEO Alan Murray on Monday at the Fortune Global Forum. “Aviation was then clearly the hardest hit of our business [by COVID-19], and health care was right behind that.” 

But Culp doesn’t see woes in the aviation industry lasting permanently.

“Aviation will come back now, and people will fly again,” Culp said. I think you saw over the course of the summer, really both here and in Europe, the public getting back in the air. We’ve seen China reach near pre-COVID levels of activity. So all in all, I think we’re gonna see the industry come back. Our view is, it’s just going to take a little while.”

Culp got the gig at GE on the strength of his performance as CEO of Danaher, a position he held from 2001 until 2014. There he embraced the principles of lean manufacturing, a philosophy he brought with him to GE. 

But is there a risk to a lean operating philosophy during a catastrophe like the pandemic? Does it come at the expense of being resilient? 

“I don’t see that tradeoff. I think you can be efficient, and you can be resilient,” said Culp. “Lean is very much a problem-solving philosophy, to solve problems well at root cause and to solve them sustainably.”

So how is that working out for GE? Murray asked Culp to put it in baseball terms: How many innings into the GE turnaround are we? 

“Alan, as a Red Sox fan, I’m trying to not think about baseball this season. But if we were playing a little bit of baseball, I think we’re probably in the second or third inning,” Culp replied. “I think it’s very early in the transformation of GE. Certainly COVID-19 has pushed us back a bit, but the way that we are going to play to this company’s historical strengths, and add new capabilities and assets, I think, is a long-term play.”