2. Strengthen our businesses

As we solidify our financial position, it is our next priority—strengthen our businesses—that will drive our long-term transformation. We began with the premise that the people closest to the customer know best how to serve them, so we shifted resources and accountability from Corporate to empower our business units and removed overhead layers in Power and Renewable Energy. These efforts will continue into 2020 and beyond.



We got back to basics in how we work, standardizing common operating metrics with safety always at the core and focusing our attention on customers, operations, and priority-setting. I’m also encouraged by how our team is embracing candor, transparency, and humility with each other. We can solve just about any challenge we encounter, but to do so, we need to put the good and the bad on the table in equal measure. While it takes discipline, we’re fostering this at all levels of the company.



The best tool I know to drive this type of positive change at a fundamental level is lean management, in which a relentless focus on customer value helps leaders get to the root cause of problems, continuously eliminate waste, and ruthlessly prioritize their work. Over the course of 2019, we laid the foundation to apply lean more systematically across GE, driving better results and, in turn, a better culture.



In my experience, lean transformations succeed when the senior team leads by example. So, in June, more than 100 of our leaders and I spent five days at Power in Greenville, South Carolina, for a Lean Action Workout. We divided into 10 teams focused on improving our gas turbine manufacturing, repair, and services.



We failed a lot that week. We tried things that didn’t work and went back to the drawing board to attack the problem differently. Doing this day after day, a remarkable thing happened. Rather than growing tired with each turn, the teams became more energized. Vidya Ravishankar from the materials planning team in Greenville summed up the week perfectly when she said: “The energy levels just kept skyrocketing. The senior leadership at GE cleared their calendars and focused—with such respect—on the problem.” It was an important moment. And a really fun week.



After Greenville, we held lean events almost every week across the company. One of the most pleasant surprises for me as the year went on was the flood of people who began reaching out, raising their hands, and looking to help. Phil Lawrence, a welder at our Aviation Component Service Center in Springdale, Ohio, shared with me how he was hopeful the changes they were making at his site would stick. His site leaders were unequivocal; if anything started to slide back to the way it was, they told him, he should call them immediately. Phil shared that he had never experienced that attitude before at GE—and that improvements at the site were only accelerating.



Across our businesses and around the world, we’re using lean to make real improvements in safety, quality, delivery, and cost. For example, in 2018, a different Aviation plant in Batesville, Mississippi, was losing up to 15 percent of its output due to production defects. Using lean tools, the plant has been able to reduce losses by more than 60 percent so far, saving millions of dollars’ worth of waste. And it applies well beyond manufacturing; our Digital team uses lean to shorten the time it takes for our customers to install or update our software while also creating software for customers to map and eliminate waste in their own processes. This is resulting in significantly quicker turns; for example, we reduced planned downtime on a software upgrade for one major manufacturer by 50 percent.



There are thousands of opportunities like this within GE, each representing untapped potential for customers and investors. This is why prioritizing the goals toward which we channel these improvements is so important. Our new series of operational, talent, strategic, and budget reviews is helping our leaders define what “game” we are playing in each business and how we “win.” At the same time, we’re consciously aligning our incentives with yours, tying our business teams’ compensation more closely to their repective business’ results as well as executive compensation more closely to GE’s stock performance.



Additionally, I spent significant time making sure we have the right leadership in place. More than two-thirds of my direct reports are new to GE or their role since I began as CEO, and I’m looking forward to welcoming our new CFO, Carolina Dybeck Happe, to the team in March. Our new, smaller Board is also now in place, which today includes 10 directors, seven of whom are new to the Board since 2017 and four of whom are women—bringing fresh perspective, diversity of thought, and the right experience for GE. This is a board that is dedicated to doing what is right for the company and has tough, direct, and substantive discussions. GE is becoming a better company as a result.



Overall, as I think about the thousands of employees and customers I met with this year, each interaction has only deepened my excitement about our work. Our people are committed, capable, and enthusiastically driving these changes, and our customers are rooting for us. As we move forward with our lean transformation, we are not looking to simply “check the box.” We are changing the way we run GE, business by business, every day, from the bottom up.



Let me now take you through what our progress looks like by business.