The Long View: Interview with H. Lawrence Culp, Jr., Chairman and CEO of General Electric Aerospace

Overview

In these special editions of “The Angle,” Eric Veiel, head of Global Investments and chief investment officer at T. Rowe Price Associates, welcomes CEOs and industry leaders to share their personal stories, leadership strategies, and lessons learnt from running successful companies. Listen as we pull back the curtain on what it truly takes to lead a company in today’s fast-paced and ever-changing business landscape.

In this first episode, Eric is joined by Larry Culp, chairman and chief executive officer of General Electric Aerospace.

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Eric L. Veiel, CFA® Head of Global Investments and CIO

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H. Lawrence Culp, Jr. Chairman and CEO of General Electric Aerospace
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      Disclaimer

      This podcast is for general information purposes only and is not advice. Outside of the United States, this episode is intended for investment professional use only. Please listen to the end for complete information.

      “If you don't build a great team, if you don't treat them with great care and respect, I'm not sure success is in your future.”

      Eric Veiel

      Welcome to “The Angle” from T. Rowe Price, a podcast for curious investors. Sharper insights on the forces shaping financial markets begin here. I'm Eric Veiel, head of global investments and chief investment officer at T. Rowe Price Associates. In these special episodes of “The Angle,” I'll be talking to CEOs and industry leaders to pull back the curtain on what it takes to lead a company in today's fast-paced and ever-changing business landscape.

      Today, I'm joined by Larry Culp. Larry was CEO of Danaher from 2001 to 2014. During a brief retirement, he taught at Harvard Business School and served on T. Rowe Price’s board. Larry was appointed CEO of General Electric in 2018, and today he's Chairman and CEO of GE Aerospace.

      Harvard Business Review named him one of the Top 50 CEOs in the world, and Barron’s has named him one of the Top 25 CEOs in the world five times since 2020.

      Larry, welcome back to Baltimore. Thank you for joining us on “The Angle.”

      Larry Culp

      My pleasure. Good to be back in my home state.

      Eric Veiel

      So I had some fun preparing for this episode of “The Angle.” I went back through our T. Rowe Price research archives, and I found some pretty interesting notes. Nearly 20 years ago, our analyst on GE wrote a note titled, “Breaking up GE Could Create Significant Value and May Not be as Far-Fetched as You Think.” Well, it only took 20 years—and you joining the company, Larry—but we've gotten there. Can you name that analyst? He still works here, and he's a portfolio manager of some note.

      Larry Culp

      Of some note?

      Eric Veiel

      Yes.

      Larry Culp

      That does not narrow it down, given the PMs I know at T. Rowe.

      Eric Veiel

      2006.

      Larry Culp

      Well, I was a CEO then, and I think that was David's…

      Eric Veiel

      That is correct.

      Larry Culp

      tenure.

      Eric Veiel

      David Giroux. Very good. Very good.

      Larry Culp

      Okay. Okay.

      Eric Veiel

      Okay, second question: Taking on a task of that Herculean effort—tell us how you went about it. What were the steps that you took to get to where we are today?

      Larry Culp

      Well, that's a long story. I think if you go back a little over six years now, I'd been on the board for just about six months. One thing during the course of that summer led to another, and the next thing you know, I'm not only lead director, but the first outsider to come in to be CEO and chairman.

      At that time, we didn't really have a lot of strategic optionality. You talk about what David saw back in, in 2006. We didn't really see that. But we saw two things that were critical. The first was the deleveraging that we went through and subsequently reduced over $100 billion of excess debt. The second was really beginning to transform the business operationally. These were outstanding businesses across the portfolio, but they certainly weren't performing optimally.

      Eric Veiel

      Right.

      Larry Culp

      Through ‘18, through ’19, we were gathering some momentum. And then, of course, we were hit with the pandemic.

      Eric Veiel

      Right.

      Larry Culp

      It hit our businesses differently across the portfolio—certainly hit probably our biggest and best business at the time, what is now GE Aerospace. It hit the industry. Coming out of the pandemic, we really were performing better on an absolute basis. It hadn't been proven out yet on a relative basis. The deleveraging was well on its way. We were focused on the P&Ls. We were focused on the customer. And as you would imagine, that does help drive better performance. So, when we got to 2021, it wasn't as if we had to weigh the benefits of one corporate form versus the other; I think we knew we were on a path. And that, coupled with a clear-eyed view as to who owned us and who didn't—and why those who didn't were not in the stock- led us to view a two-step breakup as the, the best path forward. And we've been, obviously, gratified with the results.

      Eric Veiel

      Very good. You referenced several times the operational improvements. Back to your time at Danaher, and then certainly your time here at GE, lean manufacturing and the Kaizen approach has been something that you've been wonderful at executing. Take us behind the scenes, Larry. Give us an example of how that actually manifests itself in improved operations, or improved P&L outcomes, or improved customer service.

      Larry Culp

      Sure. Well, 25 years at Danaher, I am who I am, right? And a lot of what we did over the years was really rooted in the Toyota production system—what we came to know as the Danaher Business System. When you break down all of those lean operating models, the, the DNA, I think, is common, and it's really all about respect for people, continuous improvement (or to use the Japanese, Kaizen), relentless focus on the customer. And that really is, again, the genetic code for Flight Deck, our proprietary lean operating model at GE Aerospace. And really all we try to do is make sure we are listening to the people who are closest to the work, often people who are closest to the customer. We are helping them drive improvement every hour, every day, every week, every month. And we do that with the customer in mind—not ourselves, not headquarters, not the CEO.

      I was in Madisonville, Kentucky, just last week visiting one of our mid-sized facilities, a plant I hadn't been to yet, primarily supports our military business. The team there, including our organized workforce on the floor, have really embraced Flight Deck in a, if I can, a beautiful way. 

      Eric Veiel

      Yeah.

      Larry Culp

      Right, they're making it their own. They are so proud of what they do. Not only for our warfighters that they serve down the road there at Fort Campbell, but the way they are using the tools and principles of flight deck to improve the safety, the quality, the delivery, and the productivity—or the cost of that operation. And we've seen a nearly 30% increase in a number of their outputs, based on their deployment of these tools. And what's really great about it is, they know they're just getting started.

      Eric Veiel

      That's great.

      Larry Culp

      We've got green shoots like that all across GE Aerospace—a lot to be proud of, but still a lot more to do.

      Eric Veiel

      When you're getting ready to implement one of these programs, is there initially some hesitation by the workforce to take it on? How do you approach that?

      Larry Culp

      Well, I think everybody, once you get to a certain age, right, is not necessarily waking up in the morning looking to change or transform the way they go about work. So, our approach has been very simple: We want to expose people to these tools and principles, not to jam it down their throats. All we ask is to keep an open mind, and let's jump in and experiment, right? Let's try. Let's maybe even fail but learn and get better through that process. And that's why respect for people is so important.

      Eric Veiel

      Right.

      Larry Culp

      Again, if this was a CEO-led initiative that gets jammed at everybody's throats, you might get compliance. You won't get belief. You might have people doing what you've asked, but they won't make it their own.

      Eric Veiel

      Yeah.

      Larry Culp

      But by going through the approach that we've used, which is often really rooted in a five-day-long Kaizen event, people who are reluctant on Monday and still skeptical on Tuesday, begin to have a slightly different mindset on Wednesday. And by Thursday night, Friday morning, they are just on fire in all good ways. And that's what's so fun about what I've seen in Madisonville, what I've seen it in Avondale, Ohio, Lynn, Massachusetts—a number of our facilities that I've visited just in the last month or so.

      There's a lot still in front of us, so I don't want to paint a picture that suggests that GE Aerospace is an exemplar with respect to lean. But I really like the work we've done this year, and I think we're on the right trajectory.

      Eric Veiel

      Well, it's continuous improvement, right? If it wasn't continuous, you'd be done. 

      Larry Culp

      Exactly.

      Eric Veiel

      The aerospace industry, obviously, went through a dramatic event in 2020, as we all did, but maybe no industry, was as impacted as yours was. Then here we are today. Volumes are back above pandemic levels globally. The engines that you all make power three out of four flights that are taking place commercially every day. Tell us about your view on the industry right now.

      Larry Culp

      There is a lot to be excited about. I think in the short to medium term, we know we have a demand profile that's probably the envy of many corporate leaders across the economy. We have air framers, the likes of Boeing and Airbus, for example, that have backlogs that take them into the 2030s. At the same time, we have our airline customers that we serve directly over the course of a 20- or 30-year lifecycle for an engine who are flying those planes and thus those engines with great frequency today. So, we have these twin demand profiles that are really putting a lot of pressure on us because we're still, as an industry, recovering from the pandemic. But I wouldn't wish it any, any other way.

      Medium to long term, we often talk about our purpose, which includes inventing the future of flight. We really believe that we do that. And when we look into the 2030s, be it in terms of the next commercial aircraft that will come to market, let alone sixth-generation combat fighters, we want our engines to be underwing on all the winning platforms, and we're hard at work in our laboratories today on that activity.

      Eric Veiel

      So there's a lot to be excited about in the advances happening in technology across the whole world. It would be remiss of me not to ask you about how you think artificial intelligence might play into that next generation, either on the defense side or on the commercial side, or both. How are you all thinking about it, and what does that look like for your company?

      Larry Culp

      Well, we spent a good bit of time on this conversation just yesterday, in fact, with our leadership team. I think, like many companies, we're still exploring where the use models are that are going to have the greatest impact. If you think about what we do day in, day out, with the airlines, we support the performance of the engine, their use of the engine, the maintenance and service lifecycles around those fleets. We have a lot of data. We do what we think is a good job at putting that data to use as we support the airlines. But what we're finding with AI, we're able to be quicker, we're able to be smarter with the use of that data in support of the airlines. And we believe we're just scratching the surface in that regard.

      By the same token, there isn't a scientific or technical discipline that doesn't end up utilized in some fashion in a jet engine. So a lot of the computational modeling that we do, a good bit of the design work that we do, we think will be enabled, will be accelerated, through the use of AI. Again, even there, I think we're, we're scratching the surface. But given this is as high-tech an industrial business as any I've ever seen, it's a quite natural fit that we'd be pushing the edge of computational capabilities, of digital capabilities, like AI, in pretty much all that we do, be it in servicing today's fleets or designing tomorrow's.

      Eric Veiel

      For sure. That's really interesting. And my sense is the way you've described that, Larry, is that you think there's obviously room for it to make real improvements in how you design engines. But the world of still having engineers, you know, working with customers and with pilots, is that something that you, as far as you can see, you think we still have or is there something more you know exotic or dystopian in the future here?

      Larry Culp

      Well I don’t know if I would go to dystopian but clearly there's a lot of capital, plenty of smart people looking at innovation both around crewed and uncrewed platforms. I suspect we'll see more uncrewed applications on the military side of the industry at large. I'm not sure how many people are ready to step into a, an aircraft that does not have somebody up in the cockpit—but, never say never, right?

      Eric Veiel

      Well, we're getting into cars doing it, so it's probably not as far away as we think, but I doubt it's right around the corner. Let's pivot a little bit. You've obviously spent a lot of time as a leader. You've taught courses on leadership. You were kind enough to write the foreword for my colleague Sébastien Page's book, The Psychology of Leadership. What are the one or two bedrock principles that you try to live by as a leader and instill in that next generation of your team?

      Larry Culp

      Well, it may go back to that lean DNA I was talking about earlier, right? Respect for people. Ultimately, business, in my experience, is a team sport. It’s a team game. You win or lose as a function of who is around you, right? Who you work for, who you work with, who works for you. And if you don't build a great team, if you don't treat them with great care and respect, I'm not sure success is in your future.

      Business, like basketball. I grew up playing basketball. Never was particularly good but loved it. I remember early on a coach telling me, you've got to practice because you either get better or you get worse. And I thought about that the first time I walked the floor in Japan at an air conditioner factory and learned about Kaizen. It's the same idea, just operationalized in a business setting. And every business talks about being focused on the customer—again, easier said than done. So what I like to do is find leaders, large and small, who know it's all about the team, who may be successful but want to be better and to find success ultimately in the eye of the customer. When we put those people together, good things usually follow.

      Eric Veiel

      So, Larry, in the investing business, you know, we obviously try to get every single decision right. Um, I'm sure as a leader, you try to do the same thing, but we both know that that's impossible. What's a mistake that you've made along the way that allowed you to really learn and grow from that resonates with you?

      Larry Culp

      When I think about the mistakes I have made—and I'm sure there are many—the ones that come immediately to mind as you ask the question, looking me square in the eyes, are the people decisions I didn't get right. Somebody I might have hired, who wasn't a great fit. Somebody that I promoted that maybe wasn't necessarily ready for that. Those are the mistakes I wish I had back. Right? Again, it's all about the team. And I had the good fortune of getting my first P&L when I was 30. I became CEO at Danaher in my late 30s, so I've had lots of reps—still don't get ‘em all right.

      Eric Veiel

      Right.

      Larry Culp

      But having had the opportunity to make important people decisions early on, and getting a number of them wrong, I think is something that was a gift I didn't appreciate at the time but certainly do now.

      Eric Veiel

      Are there one or two traits that you've identified, you know, when you're in that interview process, you're observing somebody move up through their career, where you say, you know, that's, that's the kind of person that I know is going to do well in this framework that we've built here?

      Larry Culp

      Sure. Well, we talk about our leadership behaviors at GE Aerospace today, and three ideals are probably a reflection of what I look for when I interview someone or meet someone who may already be on the team. The first is humility. Right, again, I have the good fortune to deal with very capable and successful people. But can they field the question you just asked me about mistakes and failures? With an eye toward both being honest about it and being smarter for it? We talk a lot about transparency. Can you deal with your successes and your failures comfortably, confidently, and in a highly transparent way? And we also talk about focus a lot. At GE, given our history, there's a lot that we've done. There's a lot that we can still do, but we can't do everything. 

      Eric Veiel

      Right.

      Larry Culp

      And I think leaders often need to be quite clear about what we're going to do and what we're not going to do to give the organization, to give the team, the highest probability of success.

      Eric Veiel

      Communicating to the team what we're not going to do is sometimes really difficult because, invariably, you're leaving somebody out, right? Somebody who thinks that their project is so important, but it's just not going to make you know that final set of priorities. How do you deliver that message? How do you communicate that in a way that doesn't completely demotivate that group or that person?

      Larry Culp

      Well, I think that you need to find a way to articulate why certain initiatives or projects are the priority for the organization at that time and why others aren't and take care to explain to those that might be dedicated to the areas that are no longer a priority, or at least not today, how they fit into the organization.

      You may be going slow in a certain area because it's not a priority this year. It may be an area in two years where you're going to be in a position where you'll want to accelerate that activity. Giving people the clarity of why you’ve made that decision and what it means for them—not in the moment, but over time—I have found to be perhaps the, uh, the best way to communicate. Most people can handle the truth, right? But when they feel like they're not getting it, that's when you end up sowing the seeds of doubt and the like. None of which is constructive.

      Eric Veiel

      Right. Before we end, I'd love to just ask you one or two questions about, about you. These are incredibly stressful jobs that you've had over your career. What do you do to, to unwind, to relax, to try to be able to sustain the drive that you need to?

      Larry Culp

      Well, I love to fish. And we're, we're sitting just, a couple hundred yards away from a part of the Chesapeake Bay. I grew up in the area, fishing on the bay, the shore, over in the Atlantic. And I find more than anything, even today, I can go get on a boat, have my fishing rod in hand, and that's when I can park my brain somewhere else. But I love what I do, at the, at the same time. And to be on this team at, at this point in my career, to be fully focused on the, on the business. I get up in the morning with a spring in my step. It's, uh, it's not stressful. It's just a privilege.

      Eric Veiel

      That's fantastic. Thanks so much for being with us, Larry. It's been a real pleasure. We've learned a lot, and I’ve really enjoyed it. And thanks for coming back to Baltimore and for all that you did when you were on the board at T. Rowe and, and all the great work you're doing now at GE Aerospace.

      Larry Culp

      Well, my, My pleasure. I've enjoyed it.

      Eric Veiel

      Thank you.

      Eric Veiel

      Again, I’m Eric Veiel. Thank you for listening to “The Angle.” We look forward to your company on future episodes. You can find more information about this and other topics on our website. Please rate and subscribe wherever you get your podcasts. 

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      This podcast episode was recorded in December of 2024. This podcast is for general information and educational purposes only, and outside of the United States, is intended for investment professional use only. It does not constitute a distribution, offer, invitation, recommendation, or solicitation to buy or sell any securities in any jurisdiction or to conduct any particular investment activity. This podcast does not provide investment advice or recommendations, nor is it intended to serve as the primary basis for an investment decision.

      Prospective investors are recommended to seek independent legal, financial, and tax advice before making any investment decision. The views contained herein are those of the speakers as of the date of the recording and are subject to change without notice. These views may differ from those of other T. Rowe Price companies and/or associates. Information is based upon sources we consider to be reliable. We do not, however, guarantee accuracy. There is no guarantee that any forecasts made will come to pass. For more information please visit: https://www.troweprice.com/en/us/insights/the-long-view-ge-aerospace. This podcast is copyright 2025 by T. Rowe Price. 

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