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GE News Release Demonstrates ...

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There aren’t many companies that crank out over $100B in revenue each year.

GE is one of them.

GE’s succession planning and consistency in leadership has been a Harvard Business Review case study. So when the company punts its CEO to the curb after a year and change on the job, it becomes big news is more ways than one. For context, consider that the two previous CEOs, Jack Welch and Jeff Immelt, were both on the job for 15+ years.

The news release offers lessons in how to handle communicating this type of news.

First, it’s worth noting that GE pulled the yellow tape around the new CEO Larry Culp and his predecessor John Flannery, shutting down all access to journalists. The news release served as the company’s only communications to the outside world. When you have the size and cachet of a GE, it’s a little like being a poker player with all of the chips. You can foist your will on the media knowing they have to write about the announcement.

This approach ensures that everyone stays on message. No need to worry about the new CEO fielding a question and reciting the wrong narrative. Instead, the Board has parsed every sentence — no, make that every word — in the news release to guarantee the pristine messaging comes through.

Turning to the actual news release —

Consider what the news release does NOT include. It does not attempt to “pretty up” GE’s leadership debacle and the associated financial debris on the side of the road. We don’t read that Mr. Flannery has decided to spend more time with family, attend a Zen camp and explore a new career path that makes the world a better place.

 

We also do not see braggadocious adjectives and adverbs in the core of the news: the headline, subhead, graph #1 and graph #2. I’ve included the full news release at the end of this post, highlighting the adjectives and adverbs.

But if you’re thinking this news release aims for the bird cage, you would be sorely mistaken. Let’s zero in on the one-two punch delivered by the headline and subhead.

Headline: H. Lawrence Culp, Jr. Named Chairman and CEO of GE

Subhead: GE Power business outlook declines, leading to shortfall relative to 2018 guidance; Company to take non-cash impairment charge related to GE Power

I love the classic storytelling, show, don’t tell. The news release does not tell us that Mr. Flannery had to go. Instead, it mentions that the GE Power business is sucking wind — used up my pun quota for the month — and, oh, by the way, the numbers fall short of our 2018 forecasts. Of course, this happened under Mr. Flannery’s watch, hence, we can connect the dots to understand the why behind the change. I suppose if you’re Mr. Flannery, being thrown under the bus this way doesn’t feel like such a gentle landing.

Back to the messaging, the news release communicates in black-and-white language that after losing $115B in market value in 14 months under Mr. Flannery, enough is enough. And the release explains why Mr. Culp is the right person to sprinkle his pixie dust across the company and restore GE to rightful place in the pantheon of corporate giants.

We’ll see.

Just don’t blame the PR department.

They did their job.

 

.
LAWRENCE CULP, JR. NAMED CHAIRMAN
AND CEO OF GE

October 1, 2018

GE Power business outlook declines, leading to shortfall relative to 2018 guidance; Company to take non-cash impairment charge related to GE Power

Thomas W. Horton appointed as Lead Director

BOSTON – October 1, 2018 – GE (NYSE: GE) announced today that H. Lawrence Culp, Jr. has been named Chairman and Chief Executive Officer of the Company by a unanimous vote of the GE Board of Directors, effective immediately. Additionally, the GE Board has appointed Thomas W. Horton as Lead Director. Mr. Culp and Mr. Horton have been members of the Board since April 2018. Mr. Culp will succeed John Flannery as Chairman and CEO.

While GE’s businesses other than Power are generally performing consistently with previous guidance, due to weaker performance in the GE Power business, the Company will fall short of previously indicated guidance for free cash flow and EPS for 2018. In addition, GE expects to take a non-cash goodwill impairment charge related to the GE Power business. GE Power’s current goodwill balance is approximately $23 billion and the goodwill impairment charge is likely to constitute substantially all of this balance. The impairment charge is not yet finalized and remains subject to review. The Company will provide additional commentary when it reports third quarter results.

Mr. Culp said, “GE remains a fundamentally strong company with great businesses and tremendous talent. It is a privilege to be asked to lead this iconic company. We will be working very hard in the coming weeks to drive superior execution, and we will move with urgency. We remain committed to strengthening the balance sheet including deleveraging. Tom and I will work with our board colleagues on opportunities for continued board renewal. We have a lot of work ahead of us to unlock the value of GE. I am excited to get to work.”

Mr. Horton said, “Larry Culp has a proven track record in company transformation and delivering shareholder value. He is a strong leader with deep knowledge of industrials and technology, and an intense focus on execution, organization, and talent development. The board looks forward to working with Larry and his team to return GE to growth and long-term success. On behalf of the board, I thank John for his significant contributions and long service to GE.”

Mr. Culp, 55, served as Chief Executive Officer and President of Danaher Corporation from 2000 to 2014. During his tenure he led the highly successful transformation of the company from an industrial manufacturer into a leading science and technology company. Under Mr. Culp’s leadership, Danaher executed a disciplined capital allocation approach, including a series of strategic acquisitions and dispositions, a focus on investing for high-impact organic growth and margin expansion, and delivering strong free cash flow to drive long-term shareholder value. During his 14 years at the head of Danaher, the company’s market capitalization and revenues grew five-fold.

Thomas W. Horton, 57, served as Chairman and Chief Executive Officer of American Airlines from 2011 to 2013, and Chairman of American Airlines Group from 2013 to 2014. During his tenure he led the successful restructuring of the airline and its eventual merger with US Airways, creating the world’s largest airline. In addition to a deep knowledge of the aviation industry, Mr. Horton brings strong financial skills and corporate governance experience to the board, having served earlier in his career as the Chief Financial Officer of American Airlines and AT&T Corporation.

 

 


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