Insights from GE CEO Larry Culp’s Annual Report

Larry Culp, CEO of GE, their first outside CEO in 125 years has been leading their transformation using a Lean mindset. Many Lean practitioners and business leaders have been following GE’s performance. Recently Larry released the annual report and I really appreciate the lessons I found within. You can read the full report here.

1.     Grounded in purpose, values, and responsibilities.

GE’s purpose of building a better world beholden to shareholders, customers, and society.

This document always has been about more than our financial performance, though. It’s told the continuous story of GE’s culture and how our values are embedded in the purpose of building a better world. We remain acutely aware of and humbled by our responsibility to shareholders, customers, and society. And we recognize that our team still, and always, strives for results.

2.     Tackle challenges head on with clear goals.

Companies are in business to make a profit, so this is not a surprise but goal two is really about how they expect to accomplish goal one. Lean will ensure their efforts are both sustainable and culture changing.

We embraced reality head on, taking disciplined and deliberate steps to tackle our challenges while investing to protect what made GE special. We set two clear goals: One, improve our financial position to deal with our debt load. Two, improve our operations to strengthen our businesses. Lean, with its relentless focus on the customer and pursuit of continuous improvement, makes our efforts sustainable and is leading to lasting culture change.

3.     Embracing a Lean philosophy rooted in kaizen.

We’ve been taught there is always an opportunity for improvement and embracing the spirit kaizen will propel your business forward.

Belief in a better way has propelled this company forward since our earliest days. Today, in an ever-challenging environment, GE employees are embracing a lean philosophy rooted in kaizen, “change to make it better.” They are delivering for our customers by listening, learning, and executing. Step-by-step, one process at a time, they are advancing safety, quality, delivery, and cost, in that order, serving our customers and each other with deep respect.

4.     Empowering people leads to results.

When you combine compelling purpose with problem solving people within lean systems in my experience you’ll find increasingly better performance.

The merging of great people with great purpose. The connecting of plans and performance.

5.     Kaizen is the magic that frankly becomes addicting as the improvements build on themselves and grow.

Like the example below my experience is the same. Improvement begets improvement. It is infectious.

Enter lean… through a kaizen event at our Lynn, Massachusetts, plant… Our goal: Take that 75 hours down to under 32, with one mechanic working at a time.

By the end of the week, engineers and operators working together on the floor identified opportunities both big and small; saving hours of prep time by using a heat gun instead of an oven to treat a compressor rotor, for example. The result was reducing build time to just 11 hours with one operator, all the while enhancing safety and quality.

75 to 11 is the kind of change that takes your breath away. But to me, the best part was the fact that on Thursday of that week, the team was already talking about how they were going to do better than 11; what they could do next.

That is the spirit of lean and kaizen. Always getting better. Your mindset shifts to look for opportunities at the most granular levels, day in and day out, to enhance performance and eliminate waste.

These steps, scaled and compounded across our teams, help customers and support our own businesses. This “power of the ‘and’”, as Jim Collins would say, is the magic that frankly becomes addicting as the improvements build on themselves and grow.

6.     People are our passion.

Respect for people is a key pillar of the Toyota Production System intentionally as they solve problems. They are the solutions. They create opportunities. They are the lifeblood of the company.

With unmatched passion and talent, the people of GE remain at the heart of our efforts, including reinventing ourselves. Challenges can become opportunities when humility joins with optimism, leading us to believe that a better way is possible.

7.     Challenge just good enough culture.

Status quo must be challenged. The just good enough culture must be challenged.

Our goal has never been good enough, or a company that’s just better off. It is to build a world that works better. Period.

8.     Leadership, humility and gratitude.

Embrace every opportunity. As a leader your making a mark on the lives of others and the community you serve.

I’m grateful for the opportunity of a lifetime to work each day alongside this team.

9.     Larry Culp’s Photo (see above)

Many CEO’s would have a professional board room headshot but Larry has a photo from the Gemba. He’s on the shop floor perhaps in a kaizen but at least seeing where the value is created. More CEOs need to do this and set the example for their leadership teams.

It’s great to see both examples of Lean and leadership in the workplace and no less together. What do you think? Are there companies that can learn from Larry Culp and GE’s new approach with Lean? I can think of few in the news recently.