Not long ago, General Electric faced a pivotal point in the company’s long history. The stock price had dropped to below $7 in 2018, down from more than $30 in 2016. In October 2018, in an unprecedented move for a company founded in 1892, GE turned to an outsider to right the ship.

That outsider is Larry Culp, a former president and CEO of the global giant Danaher Corporation. He’s also devoted to Lean methodology and a believer in how it can change company culture.

Changing culture at GE is one of Culp’s primary missions. So far, it’s working, with the stock bouncing back to over $10 in 2019.

“We do Lean to drive safety, quality and productivity,” Culp told Barron’s. “That helps profits, but it’s about the cultural transformation of the place.”

“Stunned” By Lack of Lean Methodology

Culp officially started as the CEO of GE in October 2018. But in the summer of 2018, he was touring a GE manufacturing plant in South Carolina. The factory, in Greenville, makes gas-fired turbines that generate electricity in power plants.

The plant had just started to implement a Lean production project. Culp said he was both pleased and surprised, according to Reuters.

“It put me back a little bit to go to our Greenville, South Carolina, plant last summer and to have the team regale me with a really good Lean production (project) that had just been implemented,” Culp said when speaking at a New York investor conference.

“They did a very nice job. But just — it really stunned me (to) be there in the summer of 2018 and have such an important plant at GE beginning its Lean journey or re-beginning its Lean journey.”

According to Reuters, the plant has been losing money and is a top priority in Culp’s plan to turn around GE.

Eliminating Waste, Increasing Efficiency

Toyota pioneered many of the ideas, tools and techniques involved with Lean methodology, starting in the 1950s. The Japanese car company developed the Toyota Production System and has gone on to be a leader in the global automotive sales business. It’s little wonder that more and more companies are interested in how Lean works.

Lean calls for an organization to focus on end users when reviewing a process. Anything that doesn’t make a product better for customers is eliminated. There are eight areas of waste that Lean specifically focuses on. They are:

  • Defects
  • Overproduction
  • Waiting
  • Transport
  • Unused talent
  • Inventory
  • Motion
  • Over-processing

Lean includes many tools and techniques to identify and eliminate waste in these areas. It’s been used by a large variety of organizations, including small towns that want to improve services and companies that want to track and reduce food waste.

A Commitment to Lean

Barron’s reported that GE executives have been focused on paying down debt and cutting corporate costs. Part of this has involved slowly changing the company’s culture to a Lean-like approach.

GE has long been interested in a Lean approach, but Culp seems to be turning the idea into a reality. GE has created reports in the past that promoted the idea of using Lean at the global conglomerate.

A recent report highlighted the advantages of Lean in a connected era in which technology could unite systems and create even more chances to put Lean ideas to use.

“The benefits of Lean have yet to reach their full potential. Today’s technology, powered by the Industrial Internet, allows enterprises to drive even more value and reach new levels of performance to accelerate their competitiveness,” according to the GE report titled, “Lean Manufacturing in the Age of the Industrial Internet.”

Whether Culp succeeds in fully deploying Lean throughout GE remains to be seen, as does the future financial health of the corporation. But the company is providing one of the highest profile forays into Lean by any American business.