AMERICA'S CEO

In October 2018, H. Lawrence Culp Jr. ’85 was named the CEO of General Electric. His appointment was headline-grabbing because Culp was the first outsider to lead GE in its history.

Since its founding in 1892, GE had taken great pride in training, developing, and promoting its own management talent and appointing CEOs and upper management from within its ranks. This formula had worked so well that by 2000, GE was the most valuable company in the world, worth an estimated $600 billion.

By the time John L. Flannery was appointed CEO in 2017, however, the industrial giant was in trouble, even though it was still a world leader in several key industries. Its stock had lost 80% of its peak 2000 value, and it was struggling to service its $135 billion debt. It was also struggling to manage an enormous portfolio of diverse businesses that ranged from medical imaging machines to powerplants to jet engines. Furthermore, it had a cashflow problem thanks to the burden of failed investments and higher interest on its debt.

Flannery, cognizant of the dire state of the company, decided the board that had just appointed him needed to be reset. He approached Culp, among others, in late 2017 about joining GE’s board because, according to Culp, Flannery wanted to “bring some real operators onto the board.”

“I thought I could help him,” Culp said. “The fact that [GE] had relocated its headquarters to Boston, and I was teaching in Boston [at the Harvard Business School] and doing some private equity work up there, I thought it’d be very easy to be on a Boston-based board. And I had always admired GE.” He agreed to join the board.

In the fall of 2018, GE’s new board, including Culp, recognized the severity of GE’s situation.

GE needed a leader who could right the ship immediately. That person, the board reasoned, would have to have experience running a large corporation, preferably one with a portfolio of very different companies; the personality to bring the employees, management, and investors on board; and the vision and determination to reimagine the business—not an easy ask.

His fellow board members offered him the position. They argued that he fit the bill because, as the former CEO of a large manufacturing conglomerate, the Danaher Corporation, he had overseen a diverse portfolio of companies and had increased its annual revenues and market capitalization fivefold. Culp rejected the offer out of hand. The board persisted and again offered him the position. He rejected it once more but agreed to think about it.

The more Culp thought about GE, the more interested he became. He had been an admirer of GE since childhood, believed fundamentally in the power of American manufacturing, and thought he did have something to offer. Nonetheless, he was hesitant. He had a pretty good life since retiring from Danaher—he was teaching at the Harvard Business School, had more time to spend with family and friends and on the ski slopes, and had enough consultancy and equity interests to keep him busy and stimulated. Why take on a company at a low point in its history?

“When I was considering the GE role, I couldn’t consult with too many people,” Culp said. He turned to retired businessman and long-time supporter of Washington College Truman Semans, who he jokingly referred to as his “Baltimore sensei,” for advice. “Truman turns 98 this month, so he’s seen it all,” Culp said of Semans. “Former [Washington College] president and board chair Jay Griswold [P’94 H’07] introduced us more than a decade ago. We quickly bonded on all manner of things, including the Bay, the Shore, and Washington College.” (The Semans Griswold Environmental Hall is named in honor of the two Washington benefactors.)

“Truman put the [GE] opportunity in the context of national importance,” Culp said. That GE was more than just another large company that may have overreached and gotten itself into trouble had been one of the reasons Culp had joined the board and been willing to help. But to have its symbolic importance to the country and as an international flag bearer for U.S. manufacturing articulated in such an unambiguous way by Semans, confirmed for Culp that this was an obligation as much as an opportunity for him. “Only later did I come to appreciate how right he was,” Culp acknowledged.

When the board offered Culp the position a third time, he accepted.

Six years later, his appointment appears to have been inspired. When Culp took the reins, GE’s market capitalization was down half a trillion dollars from its high in 2000. Since his appointment, the company has reduced its debt by almost $100 billion; its market value has increased from about $100 billion to $270 billion, with the stock price increasing 95% in 2023 alone; and shares in the three companies Culp split GE into—GE Vernova, GE Aerospace, and GE Healthcare—are performing very well.

So, given all these accomplishments, who is this Washington College alum who has reached the pinnacle of global business? His resumé has only two employers, Danaher and GE, on it, which sounds like a throwback to the early 20th century when jobs were often for life. (He did work for Arthur Anderson for three years straight out of college.) Yet he has also navigated the choppy waters of recessions, the outsourcing of whole industries to other countries, housing bubbles bursting, Covid shutdowns, and break-neck technological advances. What did Culp bring first to Danaher and recently to GE that made him the leader he is?

Culp was born in Washington, D.C., and grew up primarily in the nearby Maryland suburb of Rockville. His family ran a small welding business, which his grandfather founded, and his father took over. Culp Welding ticked by steadily for decades, rarely employing more than a dozen workers at one time and making enough for the families to lead comfortable middle-class lives. Culp sometimes helped on the shop floor, where he observed his grandfather and father run the business. Not that he intended to take over from his father—his mother was adamant he wouldn’t follow his father into the business.

“My mother was very keen to make sure that I did not learn to weld lest I go and fall into the family business,” Culp laughed.

Luckily, what he observed and learned from Culp Welding was not lost. One of his prized possessions to this day is his grandfather’s payroll register from the 1940s.

“When you think about it, this register is business at its core,” he said.

In his opinion, making products that satisfy customers and make enough profit to pay your people is at the heart of any manufacturing business, and these simple fundamentals are as applicable to Danaher and GE as they were to Culp Welding. When talking about his career, Culp keeps returning to the concept that business is simple, whether you are running a small welding business or making jet engines for a huge multinational corporation, it’s about customers, products, and people.

“I’m a simple guy,” he said. “I have no other way to approach getting my arms around things than getting out there, talking to people, and listening and observing. Be it with a customer, be it in a factory, what have you.”

When it came time to go to college, Washington College fit several criteria. First, he wanted to be far enough away from home to feel independent yet close enough to visit his family regularly. Second, he loved the Chesapeake Bay and the Eastern Shore of Maryland from spending time with his father and grandfather hunting and fishing throughout his youth, and he wanted a college where he could continue to pursue these hobbies. Third, he was interested in history and political science, and the College had strong programs in both. Fourth, he wanted a small college where students had direct access to their professors.

“Going to a small school where you have a chance to actually interact with your professors, not sit in the back of an auditorium and listen to TAs, you have an opportunity both in small formal settings and a host of informal settings to get to know people, to lead people, to figure out what works and what doesn’t,” Culp said of his time at Washington. “It wasn’t like I came [to Washington] to be the CEO of GE. Right? But I do think that a lot of those skills, at least the seeds of those skills, were planted here because of that experience.”

Team sports, basketball in particular, also played an important role in his development as a person and leader. He grew up a fan of the University of North Carolina’s Tar Heels, and he credits their coach, Dean Smith, with modeling how a good leader brings his team with him.

“One of the most important things, I’m convinced, 61 years on, was observing Dean Smith, one of the greatest college basketball coaches of all time,” Culp said. “He instilled in his players year in, year out, a real team-oriented ethos that I just love, and it’s part of my business philosophy to this day.”

Launching GE Aerospace with the leadership team at New York Stock Exchange

He added, “I really, truly, deeply believe I cannot be successful if my team’s not successful.”

His nascent belief in the importance of teams would be reinforced and multiplied later at Danaher when he was introduced to kaizen—a production and quality control system adapted for the Toyota production lines that emphasized continuous improvement where everyone from the CEO down to the janitor collaborates on improving the production processes.

At Washington, the young Culp shifted his focus from political science and history to business and economics and began toying with the idea of going into business rather than his original aspiration to go into law. Upon graduating, however, he did neither. Instead, he landed a job as a “management information consultant” with Arthur Anderson. Despite the ambiguous title, the job was actually an IT position where he helped design and install large mainframe-based IT systems for the federal government.

“I loved Arthur Andersen. I loved the firm, the values, and the culture. And even in 1985, ’86, and ’87, the technology work was really interesting,” he said. “But the itch I couldn’t scratch was it wasn’t competitive enough.”

He explained, “[Basketball is] competition and teamwork together. To gather with a number of people and compete, which is what I did growing up, that’s great fun. It’s great fun in business, too.” He paused. “I much prefer winning to losing. But I also prefer winning the right way, and particularly in a business context, you do that with and through other people.”

After three years at Arthur Andersen, the itch to experience competition daily was too strong, and he left for Harvard Business School, thinking “that might be a good way to transition into a more traditional business where you do feel the breadth of the competitor every day.”

He completed his MBA, which he credits with giving him insights and management tools that have proven invaluable. However, he reentered the workforce as the economy was going into recession. “In the spring of 1990, the U.S. economy was on its back,” he recalled. “I had just been fed two years of institutional propaganda about how U.S. manufacturing was dead, and either the Japanese or the German model was going to carry the day. But I was enough of a contrarian to say, ‘Okay, let’s see about that.’”

Good as his word, he took a bold step that would lead him from Harvard straight onto the frontlines of industrial manufacturing. He “cold-called” the newly appointed CEO of the Danaher Corporation, George Sherman.

“I knew a little bit about the company, but not much,” he said. Danaher, as he describes it, was a grab-bag of unrelated manufacturing companies purchased through leveraged buyouts. Because everyone believed that U.S. manufacturing was dead, many of these still successful American manufacturers were underpriced and ripe for the picking by Danaher. Sherman had come from Black and Decker and was tasked with strategically connecting Danaher’s disparate acquisitions. “When I heard George talk about what he was going to do, I said to myself, ‘Gosh, that sounds like an opportunity.’ I typed out a letter to George and put it in the mail. He called me a few days later and said, ‘Come on down.’”

"It wasn’t like I came [to Washington] to be the CEO of GE. Right? But I do think that a lot of those skills, at least the seeds of those skills, were planted here"

It was a leap of faith for a newly minted Harvard MBA to buck the national trend and the advice of his professors and hitch his future to the very uncertain future of American manufacturing. But with Danaher, Culp emerged as the sort of visionary leader that earned him the position at GE, and it was under Culp that Danaher emerged as a model for strategically savvy manufacturing conglomerates.

Culp was the first person Sherman hired, and Culp accepted the position without any job description. He did think that, at the very least, whether taking the job was a mistake or not, he would get to live close to his family because Danaher was headquartered in Washington, D.C. Sherman had other ideas for his young protégé. He decided that Vedder-Root in Hartford, Connecticut, a manufacturer of environmental and measuring systems for retail gas stations, was the best opportunity for organic growth. He sent Culp there with the simple and vague instructions to make it work.

The 27-year-old Culp packed his bags and moved north with the ambiguous title of marketing projects coordinator and was left to his own devices. Culp, recognizing that a fresh-faced kid with a shiny new MBA might not cut it in this very technical industry, joked that the first thing he did was hide his Harvard MBA in a drawer and didn’t take it out for years. What he actually did for the first year was listen and learn.

He also had the great good fortune to work for the first company in the U.S. to bring over Toyota production system masters to teach kaizen, also known as continuous improvement or lean production. This was a production method invented in Japan by an American statistician, Edwards Deming, to improve manufacturing by ensuring quality at every step in the process. It was most famously honed and developed at Toyota and evolved into a system that expected everyone in a company, from top to bottom, to take responsibility for the manufacturing process, collaborate on eliminating mistakes and waste, and continuously improve the process and the product.

“Working with these people from Toyota changed my worldview as to how to run a manufacturing company,” Culp recalled. “[Kaizen] is how we ran Danaher and how we’re trying to run GE.”

Its adoption and development at Danaher would eventually become known as the Danaher Business System. Since then, it has been widely embraced in the U.S. and around the world.

One of the kaizen masters, Katahira-san (Yukio Katahira), whom Culp refers to as his sensei, has been a friend and mentor to him ever since they met at Danaher and epitomizes the lean production values Culp espouses.

“When you sit with my 79-year-old sensei, you really understand his passion for what the customer wants and eliminating all of the waste that prevents a company from delivering for that customer,” Culp said. “You see in his total commitment to the people working the second shift, where the customer, the elimination of waste, and respect for people all come together.”

This philosophy of focusing on the customer through continuously improving the production process and having everyone in an organization collaborate on these goals really spoke to Culp. It also aligned seamlessly with his belief in teamwork and leadership as he understood it in basketball and with the simple fundamentals of business he had elicited from observing his father and grandfather at Culp Welding.

By ’91, Culp had been promoted to sales and marketing vice president at Veeder-Root. But he didn’t run a sales force, and Veeder-Root did little marketing. The title allowed him to, in his words, “freelance.” Shortly after this promotion, he attended a big trade show where the company was hosting a congratulatory lunch for their top 20 distributors.

“I got up, introduced myself, probably scared to death, and said, ‘I’m going to come to see every one of you in the next hundred days to understand how we can be better partners,’” Culp said.

Culp hit the road, visited each distributor, listened to what they had to say, and asked broad, open-ended questions. “It’s not that hard to synthesize what those 20 guys said and end up with four or five things that if you go do, then good things follow.”

And good things did follow his initiatives and improvements. Within three years, he was president of Veeder-Root. When he started there straight out of Harvard, it had over 40 major competitors; by the time he left, it was the industry leader.

In typical Culp style, he did not want to take credit for this turnaround and characterized it this way: “We had a lot of success, and I probably got my unfair share of the credit.”

Within 11 years, he was appointed the CEO of Danaher, and his expansion of revenues and assets and success there led to his appointment to GE.

If there is a secret to his success, it revolves around this approach of listening, asking, distilling what he learns, gathering a team of collaborative individuals, and empowering that team to make changes. The team is already invested in implementation and improvement because they have been consulted and given input at every step. The product is better because the process reduces errors. And the customer is happy because the product is better—simple, as Culp would say.

Culp with the Rev. Martin Luther King Jr. family members Arndrea Waters King and Martin Luther King III accepting the “Dreamer Award.”

Recently, Culp was at a GE Aerospace plant that builds engines for Apache and Blackhawk helicopters for the military. On the shop floor, he asked, “’How are we doing? What’s working? What’s not working? What would you do if you were me? What can I do for you?’ Just very simple things. If you’re really listening, not only to what people say but maybe to the body language as well, it’s gold.”

Surely, if it was so simple to distill this information, anyone could have been appointed CEO of GE and fixed its problems. Culp didn’t disagree. Rather, he added, “I have a lot of [repetitions] and there’s a little bit of pattern recognition in my favor.”

At GE, the scale of the enterprise was the biggest difference from Danaher. And it was scale, in his opinion, that sometimes got in the way of focusing on the product, process, and customer. He recognized that GE had an enormous pool of talented people already in place to make the adjustments needed to turn the company around. What he did was focus everyone at GE on small and often simple improvements they could make in their daily jobs, whether they worked on a production line or in HR.

He said it can be easy for people who work in administration or areas not directly connected to products to lose sight of the customer. So, he went to great lengths to reinforce and explain that every member of the GE team contributes to the outcome, and every improvement, no matter how small or tangential to the physical product, improves the outcome.

“Focus and humility and transparency lay the foundation for lean manufacturing,” he said. He described himself as a leader who walks the walk as well as talks the talk. In his business philosophy, mistakes are golden because they point to solutions, and taking responsibility for mistakes is not shameful but a necessary step in process of continuous improvement.

The implementation of any philosophy of continuous improvement requires a team. Culp could not emphasize enough the importance of gathering the right people onto a team and giving them the freedom to act.

Of course, turning GE around took more than introducing and adopting Culp’s version of kaizen—important though that was. When he took the reins, he had to make tough decisions to stop the hemorrhaging and find the cash to reduce the debt burden.

He spent the first year trying to wrap his arms around the issues and one important conclusion was that size did matter. Whereas at Danaher he had spent his time expanding the company through strategic acquisitions, at GE he would have to do the opposite and sell businesses first. Instead of being a company that could do everything, he wanted it to become a more strategic and focused company that did less but did less better.

Change required cash, and the company had a critical cash flow problem. He decided to sell the very successful GE Biopharma that was not central to GE’s healthcare portfolio. He knew it would provide an excellent return on GE’s investment and an important cash boost.

"Focus and humility and transparency lay the foundation for lean manufacturing"

“This was the sort of thing that the company had really struggled with, ‘How can we give up something that’s that good?’” he said. “But at some point, we have to make some tough decisions.”

Little did he know how much of a get-out-of-jail card this sale would prove. Culp negotiated the sale for just over $20 billion to Danaher. The sale cleared the regulatory hurdles and went through in March 2020. Within a few days, the country and world shut down due to the Covid pandemic.

“Remember,” Culp said, “our major cash-generating business was our aerospace business (maintaining jet engines) powered by the hour. And by the end of March the hours were near zero. You could hear the air go out of the balloon.” He added, “If that check hadn’t cleared, I don’t know what would have happened.”

The cash from the sale bought GE the time to reset and remerge more focused and determined. Culp continued to sell off peripheral businesses and consolidate core businesses into leaner, more strategic entities. His vision was to focus on three main areas where GE could be a world leader—healthcare products and services, powerplant and energy production, and jet engine manufacture and maintenance.

“When the pandemic cleared, we could begin to think strategically about the future,” he said. “We were already running the business with a smaller corporate headquarters and more of a focus on each of the three businesses. It didn’t take much to look at where we were and say we’re going to operate better as three businesses.”

He described it as a “massive undertaking” but would eventually spin off these core businesses into three standalone and publicly traded companies—GE Healthcare, GE Vernova, and GE Aerospace. It’s early days, but each company is doing well in revenue generated and stock value, and, as Culp intended, each is a global leader in its field. Culp remains the Chairman and CEO of GE Aerospace, and his contract has been extended through the end of 2027.

According to Culp, there is no secret to his success. It is a combination of listening to the customers and workers on the shop floor, learning from mistakes, focusing each business or company on what it does well, and continuously improving the processes and products.

He credits Washington College for sowing the seeds of communication and teaching him how to think rather than what to think. He credits his kaizen sensei, Kathahira-san, for not only opening his eyes to the benefits of continuous improvement in manufacturing but also for his passion for pursuing the goals. He credits his Baltimore sensei, Truman Semans, for good advice in general and specifically for making him see how the survival of GE was of national importance. He credits Dean Smith for showing him how to be a leader that brings a team with him. He credits his father and grandfather for teaching him the purpose of a manufacturing business. Above all, he credits the men and women on his teams with the success of Danaher and GE.

At no point does Culp credit himself for any successes or allude to having superior insight or intelligence. Through these very omissions, there emerges the portrait of a leader profoundly dedicated to the people around him, convinced of the power and value of manufacturing quality products, devoted to the process of continuous improvement, and having the steel to make difficult decisions when needed.