61BloombergBusinessweek June 17, 2019
alsononfinancialmetricssuchason-timedelivery.Theseare
measuredonmonthly,weekly,daily,andevenhourlybases,
dependingona project’surgency.FromthemomentCulp
joinedDanaherin1990,heembracedit likea religion.
DanaherwasCulp’sfirstjoboutofHBS.Classmatessought
outbig-namecompanies,butCulpthoughtDanaher’srelative
obscuritywouldgivehimthechancetohavea biggerimpact
quickly,hetoldstudentsina talklastyearatMontgomery
CollegeinMaryland.Oneofhisfirstassignmentswashelp-
ingassembleairconditionersata plantinJapan—hisintro-
ductiontoleanthinking.In2001,atage38,hebecameCEO.
ImmeltsucceededWelchatGEthesameyear.
Overthenext 14 years,Culpoversaw$25billioninacqui-
sitions.Theyincludedmakersofdigitalmicroscopes,dental
implants,waterpurifiers,andadvancedpackagingtools.Each
year,Danaherperformedduediligenceon 150 companiesor
morewhilecultivatingothertargetsthatweren’tforsale,at
leastnotyet.It deliberatelyavoidedcyclicalbusinessesand
thoseinthefinancialsector,CulpsaidinanHBSstudy.
Soonaftera purchase,theacquiredcompanywouldoften
beplungedintoa DBSkaizen“event”thatcouldlasta few
days.“Eventhesmallestoperationwasscrutinized,beit the
actofpickingupa tool,theorganizationofparts,orthedis-
tancea workermovedtogettheproducttothenextstage
ofproduction,”accordingtoa studybytheUniversityof
Virginia’sDardenbusinessschool.
A monthafterDanaherboughtRadiometer,a makerof
bloodanalysistechnology,in2004,thetop 40 managersof
theacquiredcompanysplitintosixstudygroupstoseekeffi-
ciencies.Radiometer’sCEOtoldHarvardthatheandhisteam
were“skepticalthatanybody... couldmakeusanybetter.”
OneRadiometerstudygroupquicklylearnedthata partthat
tooklessthana half-hourtoproducetookaslongas 18 days
toship.Thegroupslashedthattolessthantwodaysbycut-
tingtwodepartmentsoutoftheproductionflow.
Radiometerexecutivesthenpresentedthenewownerswith
theirupdatedstrategy,boastingoftheir40%marketsharein
keyproductsegments.Danaheraskedwhy60%ofthemarket
preferredrivalofferings.Radiometer’sCEOtoldtheHarvard
researchers,“Weprobablyknewourownexistingcustomers
verywell,butwedidnotknowourcompetitors’customers.”
Whatothercompaniesmightseeassuccesscouldbeviewed
withsuspicionatDanaher.In2007,Culp,a rabidBostonRed
Soxfan,toldthismagazine,“Therearea lotofcompanies
whereif youwin10-9,nobodywantstotalkaboutthenineruns
[they]justgaveup.”AtDanaher,hesaid,“We’lltalkabout‘How
didwegiveupnineruns?Whydidn’twescore12?’”
CulpretiredfromDanaherinMarch2015.“Iwasveryhappy
withmypost-CEOlife,”herecentlytoldtheHarbus, anHBS
publication.InadditiontoteachingandadvisingBain& Co.,
hedida lotoffishingandskiing.Moneywasn’ta problem;he’d
madeabout$300million at Danaher, according to a Bloomberg
News analysis. “Some friends said, ‘Why put your legacy at
risk?’ And I thought that is exactly why I should do it,” Culp
said. “I strongly believe GE as a company matters to the world.”
I
n Culp’s first day on the job, GE’s stock shot up 7%. It soon
reversed direction as the extent of the company’s problems
became clearer. By yearend, GE had cut its quarterly dividend
to a penny—30¢ lower than its all-time high in early 2009—and
the stock had fallen by almost 40%. In February, Culp’s first
letter to shareholders was a crisp five pages (vs. the 26 pages
of Immelt’s last such missive) that committed GE to a simple
two-stepstrategy:reducedebtandfixthepowerbusiness.
CulpmovedashemighthaveatDanaher.Hefinalizedan
agreementtopay$1.5billion to settle a Department of Justice
investigation into GE’s defunct subprime mortgage business.
He scaled back Immelt’s grandiose plan for the new head-
quarters in Boston. The smaller board now meets in a smaller
roomarounda smallertable.Heditcheda plantospinoffthe
thrivinghealth-careunitinfavorofsellingitsbiopharmaceu-
ticalbusinessfor$21.4billiontoDanaher.Herestructureda
FlannerydealtosellGE’slocomotivebusinessina waythat
willraiseadditionalcashofasmuchas$3.4billion.
GE also is getting a taste of Culp’s zeal for that Danaher
regimen. Inside the company, he has preached the impor-
tance of hewing to measurable results. On a conference
call with analysts in January, he said, “When we talk about
execution, we talk about daily management.” He used the
phrase “daily management” six times and the word “lean”
11 times in a recent presentation at an industry conference.
David Joyce, who heads GE’s healthy aviation division,
says this way of running things requires understanding not
only what a business has accomplished but how. “I can sit
down with Larry and show him 30 metrics and tell him rel-
ative to plan, the variance was positive in every one.” But
that’s not enough. “Did you do it because there was a one-
time event that allowed you to get across the finish line? Did
you have a lot of variation and just happened to be on an
upswing at the end of the quarter? How do you control it to
make sure this performance repeats itself ?”
A mountain of work remains. GE Power, in particular,
shows how hard it will be for Culp to untangle the knots
his predecessors tied. Angry shareholders have dragged it
into court. Unfavorable contracts that past managers nego-
tiated have helped Power become GE’s biggest cash drain.
The unit’s marquee gas turbine suffered an embarrassing
malfunctionlastyearthatnecessitatedwidespreadrepairs.
Thesewouldallbeproblemsevenif thegas-powermarket
wasn’tsufferingasit is.GEPowerlostmorethan$800mil-
lionlastyear.At$27billion in revenue, it’s one of GE’s big-
gest businesses, yet investors value it at zero—or worse. Culp
has acknowledged that a turnaround will take years.
If he can restore GE to its old self, he could go down as
oneofthegreatestCEOsever,surpassingevenWelchathis
cult-statuspeak.Culpalsocouldcollecta windfallofmore
than$200million if GE’s stock goes way up and stays there.
He says he’s eager to get back to what he did so well at his
old job: buying good companies and making them great.
For now, though, he’s stuck trying to make GE merely good
again. <BW> �With Anders Melin