How GE CEO Larry Culp pulled off the turnaround of the century

When Larry Culp first saw Plant One in Lynn, Mass., back in 2018, it was, in short, a mess. The burly, six-two Culp, now 63, proudly points to a hulking yellow machine about the size of a TSA baggage scanner that mills the teeth on turbine disks. “The machine was such a disaster when I first saw it,” says Culp. It continually turned out faulty parts that the turbine blades couldn’t fit into. “A lot of people said we should close it,” he recalls of the cavernous complex, nearly three football fields long, that makes engine parts for Black Hawk helicopters and F-16 fighter jets. “It was like something from another age. They said it was old, dirty, that the union was too tough. But it had great bones.”

At the time, the same could be said of GE. When Culp took the helm in 2018, the colossal conglomerate that Jack Welch built into the most valuable and admired enterprise in America teetered on the brink of collapse. The sprawling business model that competitors once envied had become a liability—unwieldy, capital-intensive, and increasingly unable to compete in focused, fast-moving markets. Culp first shrank a crushing debt load and radically retooled operations to remake GE as a durable profit-spinner, then orchestrated a split into three publicly traded players that started via the spinoff of GE HealthCare in early 2023, and culminated in the separation of power franchise GE Vernova and GE Aerospace in April 2024. Culp went from running the whole show to piloting GE’s longtime crown jewel, the jet-engine maker.

On Culp’s first day as CEO, GE’s market cap measured just $96 billion, down over 80% from its peak in September 2000. Today, the valuations of the three enterprises total $689 billion. Combined, they’d rank as one of the top industrial companies in the U.S. by market value, second only to Tesla ($1.5 trillion), and 16th overall, edging the likes of Visa, J&J, and ExxonMobil. Since Culp arrived, the trio has garnered annualized returns of roughly 30%, twice the record for the S&P 500. The performances of GE Vernova and GE Aerospace stocks are particularly notable in their just over two years as independents. The former has jumped over 600%, while the latter has risen more than 160%. (GE HealthCare, the smallest by far of the three, gained only 16% as a standalone, but is strongly profitable.)

According to a number of CEOs and investors Fortune interviewed, Culp’s achievement likely towers as the top comeback in modern business history. “I don’t know of any turnaround that matches it,” says Kevin Sharer, the former Amgen chief who taught at Harvard alongside Culp. Nelson Peltz, CEO of activist firm Trian, took a big position in GE, and Peltz’s then-partner Ed Garden served as an influential dissident director pushing for the regime change that helped put Culp in the CEO seat. Says Peltz: “I was sure GE was going to file for Chapter 11. Then Larry arrived and performed the most amazing rescue I’ve ever read about or borne witness to.”

How did Culp pull off this remarkable turnaround? By deploying a playbook he runs from the factory floor, not the boardroom—one he first learned decades ago, at the foot of an exacting team of sensei in Tokyo, screaming at him in Japanese.

As a kid, Culp witnessed firsthand what it took to run a business. His mom and dad employed about a dozen people at the welding and machine shop that his grandfather founded in 1938 in Silver Spring, Md. “I still have my grandfather’s payroll register to remind me of the importance those modest amounts meant to families,” he says. Upon graduating from Harvard Business School in 1990, the hottest destinations for newly minted MBAs were consulting and investment banking. But Culp saw a big future in the out-of-vogue field of manufacturing. He joined Danaher of Washington, D.C., a midsize maker of hand tools for mechanics.

In just three years, Culp secured his first P&L running Veeder-Root, a manufacturer of gauges for gas station tanks, and proved so successful heading a series of other bigger and bigger Danaher units that in 2001, he rose to CEO at age 38. Over the next 13 years, he constructed a conglomerate resembling a mini-GE, taking Danaher’s revenues from $3.9 billion to $20 billion; multiplying its market cap almost sevenfold to $54 billion; and delivering shareholders five times the returns of the S&P 500.

In his first year at Danaher, Culp had a revelatory experience that would forever forge his approach to leadership: He spent a week learning the Toyota Production System from the original TPS masters at an air-conditioning plant in Tokyo. “If you’ve never been yelled at in Japanese while building air conditioners, you haven’t lived,” he quips. Under Culp, Danaher became a watchword in top-tier production as the first U.S. company to deploy TPS or “lean” production. At the heart of this method are “kaizen” sessions, where trained practitioners lead a structured gathering with employees across departments to identify a bottleneck and rapidly prototype solutions together.

Vicente Reynal, now CEO of industrial equipment maker Ingersoll Rand (market cap: $31 billion), got to watch Culp up close as a young plant manager at Danaher, and marveled at how the boss blended extreme toughness with a caring touch.

In 2012 Reynal had a weak quarter while managing a dental equipment facility in California, and in a meeting, Culp sharply criticized the results. “I was feeling really bad about it,” recounts Reynal. “Then Larry says he’s coming to California and wants to have dinner and says he’ll pick me up at my house. I arrive, and there’s this big guy playing with my 4-year-old. It showed he believed in my potential and wanted to build a strong relationship, despite the bad results that one quarter.” Reynal notes that Culp was particularly attentive after a kaizen session. Culp would show up unannounced at the plant, and head straight for the shop floor to ensure the progress got sustained. “It was his way of finding out if [we were] talking BS about all these improvements, or if they really had legs,” says Reynal.

Culp showed great respect for frontline workers but wouldn’t take guff, even from powerful customers. “We were at a meeting in New York with a health care company that was our biggest client,” Reynal recalls. “The CEO was considered the godfather of the industry, and he was also known for being late. The meeting is supposed to start at nine, and we’re on time and waiting, and the CEO’s late again. At 9:20, Larry gets up and says, ‘We’re leaving,’ and walks right past the ‘godfather’ who’s walking in. Larry showed that he wasn’t going to ‘kiss the ring,’ and that the relationship goes both ways.”

In April 2018, following four years of travel and teaching at HBS after retiring from Danaher at age 51, Culp joined the board of GE, then based near his new home in Boston. In the months that followed, the descent of the fabled, Thomas Edison–founded institution that produced the first long-lasting light bulbs, home TVs, and American jet engines was rapidly accelerating. By that fall, the directors had determined that John Flannery, a GE vet they’d named just over a year earlier, had to go. The board offered Culp the top job three times before he finally agreed to, as he puts it, “suit up again, something I never thought would happen.”

The Global Financial Crisis had saddled GE Capital, long its biggest profitmaker, with mountainous debt. Previous leadership had bet on returning GE to its industrial roots via equipment for gas, steam, and other forms of power generation, but the pivot backfired as energy demand fell short and wind and solar grabbed share. GE couldn’t generate enough cash to pay down debt that totaled a ruinous $150 billion when Culp took charge.

The chance of rescuing the legend whose equipment provides around a quarter of the world’s electricity and whose engines power about three-quarters of commercial flights worldwide clearly stirred the ultra-competitive Culp to action. But also Culp knew from what he saw as a director that he could do the job.

The awakening struck during a meeting of the GE power brass in Atlanta that Culp attended as a board member in the summer of 2018. “It was a windowless room like this one,” Culp told me as we spoke in a nondescript conference area at Lynn. “It was a war room situation. The finance team was putting up charts that looked sharp, crisp clean, on metrics such as trends in inventory levels. But it wasn’t clear that any of it was tied to the underlying operations of the businesses. Plus, the numbers weren’t business by business, but different areas lumped together. And I’m thinking, if we could just get to discrete P&Ls, as in my Danaher experience, we could really see the problems, and grasp the opportunities.”

As CEO, Culp broke the power complex into around eight units led by executives granted broad freedom to manage their own financials, and spread that super-decentralized model across GE. He also unleashed the “lean” credo everywhere. His assorted “sensei” from Japan, including his favorite wingman from his Danaher days, Yukio Katahira, led kaizen sessions at GE plants around the globe. But just as the power numbers started improving, the COVID outbreak struck—and hammered profits at what Culp calls “the engine carrying the corporation,” the aerospace franchise.

Courtesy of GE Aerospace

GE harbored huge central staffs then estimated at 26,000. Culp says he doesn’t remember the exact number but that he eliminated about three-quarters of excess positions, including many in the business segments that each had their own headquarters and big bureaucracies. Many of the people in those jobs left the company. He also shuttered the 60-acre executive training campus in Crotonville, N.Y., that once symbolized GE’s power as a single entity.

Most of all, Culp engineered a cultural reboot that’s enriching all three freestanding players to this day. “The businesses would come to reviews and only talk about things that were going well. Larry called it ‘success theater,’” says Cathie Lesjak, former CFO of HP, who joined the board in the dark days of 2019. Culp reversed that dynamic by encouraging managers to above all spotlight what was failing. “In the old GE, messengers got shot. I wanted to create a market for problems,” says Culp.

Culp has a nonthreatening style that’s highly Socratic. He uses “questions and not directives,” says Scott Strazik, CEO of GE Vernova, whom Culp identified as a young star in the power unit and anointed to head the spinoff. “He didn’t say, ‘Do a, b, or c.’ He coached us to determine our own KPIs.” Adds Peter Arduini, president and CEO of GE HealthCare, “Larry made airing problems not something to be feared, but a goal. He called it ‘Embracing red.’”

The economic winds also turned in GE’s favor as air travel rebounded fast post-COVID, and starting around 2023, the boom in AI data centers ignited a liftoff in sales of power-generation gear that continues to make GE Vernova such an extraordinary success story.

With all three franchises on a strong footing, setting them free was a natural extension of Culp’s drive to unbundle GE. “GE was pursuing the benefits of synergies, of using the full weight of GE, and it was expensive and not working,” he says. “The best route was the opposite, allowing each business to operate on its own so it can best serve different sets of customers. Focus beats synergies every time.”

On the factory floor of the Lynn plant, Culp is showing off what the concepts of kaizen and “lean” look like in practice. The CEO pauses at the dojo (Japanese for martial arts training hall) post, where employees study the sequential steps in kaizen problem-solving; then we walk over to the obeya (workspace for collaboration) room, which displays pie charts for every workstation, each divided into five color-coded slices tracking KPIs. “Green” for delivery means the cell is right on time; “red” for inventory means stocks are too high and need a fix. Every morning at 8:30, Culp explains, two dozen managers huddle at the obeya, striving to turn red to green—for example, getting a station the extra parts it needs that very day to raise its output of spare tail rotors to what the customer needs.

Culp’s shop is immensely profitable and growing fast—it already stands among the leading beneficiaries of one of this century’s greatest industries, global air travel. It’s not a matter of whether GE will continue to be successful, but how big a success it will be. Business is so strong that the faster Culp can raise production, the bigger his profits.

His biggest logjam? GE’s sprawling base of over 500 direct suppliers is straining to ship the volumes of parts, at the right times, that the engine maker needs to satisfy the giant backlogs and new orders. Now, as Culp is making GE Aerospace more efficient (from here on referred to as GE), he’s also coaching a galaxy of contractors to raise their lagging output.

The business operates on a “razor and blade” model: The razors are the new engines. GE commands a 55% share of all those freshly installed under-wing, with its LEAP—a 50-year-old joint venture with Safran of France—the sole engine on the Boeing 737 Max and sharing the A320neo family with Airbus, garnering 61% of those orders. GE is also the largest manufacturer of wide-body engines; the GEnx has a 70% win rate on the Boeing 787 Dreamliner, and the GE90 is the sole source in powering the Boeing 777.

The “blades” part makes up the aftermarket side and divides into two parts: overhauls or servicing of fleets in use, and sales of spare parts. Think of taking your car for a checkup every 10,000 miles. Regulations require that the airlines get their engines overhauled after a set number of hours in the air. That translates into maintenance sessions at five- to eight-year intervals. In most cases, the engines travel to GE’s giant maintenance centers for servicing—two of the largest are in Brazil and Wales—while some airlines do the work in-house but buy custom parts from GE.

GE is now sitting on an immense $211 billion backlog, equivalent to around four years of sales. The $10.6 billion defense side is prospering as well via such big programs as the CH-53K Lockheed Martin helicopter, and lots of service work on the equipment deployed in the Gulf war.

Last year, the “blades” accounted for 70% of GE’s total revenues—and expanded by 21% in 2025. Measured in units, commercial engine sales leaped 25%. For the year, GE grew revenue 19% to $45.9 billion and profits 33% to $8.7 billion, and booked rich operating margins of 21.4%.

Says Scott Mikus, analyst at Melius Research: “The business is all up and to the right, but it all comes down to how much the supply chain can meet demand. That capacity doesn’t come online fast. Factories need to be built, tooling needs to be put in place.”

The steps to maximizing that potential mirror the template Culp learned at the AC plant in Tokyo: identifying the most efficient series of steps in making or inspecting each part, and turning that sequence into an unvarying chain. The guiding concept is the heart of the kaizen gospel, the constant quest for new heights. “The idea is that today is the best we’ve ever done, and the worst we’ll ever do,” says Mohamed Ali, chief of commercial engines and services at GE Aerospace.

Ali says kaizen sessions, many lasting a full week, are happening virtually every week at a GE plant. “It’s not McKinsey or BCG laying out 100 pages of PowerPoint or other superficial forms of management,” Culp avows. “It’s all about getting to the plant floor and finding the screw that needs a quarter turn.” He says that AI is aiding all parts of GE’s operations. But Culp also cautions, “Will the next generation of AI algorithms obsolete the respect for people who do the work? I don’t think so.”

In practice, that means finding improvements by rearranging machines, charting new workflows, and adding automation—not pushing workers to rush. Site leader John McCarron says Lynn has sharply increased production in recent years without adding buildings, raising its workforce only modestly, to around 1,700.

Perhaps Culp’s biggest bet is RISE, a program that encompasses a revolutionary “open fan” engine architecture that eliminates the nacelle or cone surrounding the blades. That enables far larger fans that reduce drag and provide a major advance in fuel efficiency. The airlines, says Culp, are disappointed that some of the newer engines aren’t any more durable, and in some cases have shorter lives on-wing, than the older models. But the RISE open design of the future will use less fuel and will outlast current engines, Culp says. Uncorking one of his favorite expressions, he adds, “It’s ‘the genius of the and.’”

According to Jason Adams of T. Rowe Price, the test for Culp will be convincing the airlines that RISE represents a historic advance, thereby putting pressure on the airframers to adopt it faster. Of course, at 63 Culp will no longer be CEO when and if RISE takes flight a decade or so hence. But its success would be a notable addition to his résumé.

For now he is relishing every chance to make the supply chain a little tighter, the production a little leaner, the process a little more efficient. A few weeks before I met Culp at the Lynn factory, he hosted a kaizen session featuring Yukio Katahira, the celebrated 80-year-old whom he met on his maiden trip to Tokyo all those years ago and shadowed through countless lean workouts. He took his mentor to a Boston Red Sox game at Fenway Park, where they were especially excited to watch Masataka Yoshida, the DH from Japan: “I got Katahira-san, that joyous soul, and his interpreter ‘Yoshida’ jerseys. The faithful at Fenway are taking pictures of Katahira-san—they think I’m escorting Yoshida’s father!” In the seventh, Yoshida got a single, and the crowd went wild, cheering toward the trio. Says Culp: “It was so beautiful.”

It was the best day Culp had had in quite some time. But taking a cue from his factory floor mantra, one suspects he has a plan to do even better tomorrow, and even better the day after that.

GE gets split into three

GE Aerospace: The aviation-focused company spinoff was completed in 2024.

Makes commercial and military jet engines; an installed base of 50,000 commercial and 30,000 military engines drives aftermarket services, which account for 70% of revenue. It powers 75% of global commercial flights and two-thirds of U.S. military combat and helicopter fleets.

GE HealthCare: Spun off in early 2023.

A provider of advanced medical technology, pharmaceutical diagnostics, and AI, cloud, and software products, with an installed base of approximately 5 million devices serving more than 1 billion patients annually. Its customers include health systems, hospitals, and health care providers.

GE Vernova: Spun off in April 2024.

Makes power-generation equipment, including gas, nuclear, hydro, and steam equipment; wind turbines; and grid infrastructure such as transformers, switchgear, and HVDC systems. About 25% of the world’s electricity is generated using its installed base of technologies.

This story was originally featured on Fortune.com