General Electric‘s new CEO, Lawrence Culp, will have to move quickly to turn things around amid “unsettling” change at the company, said Bob Nardelli, GE’s former transportation CEO and power systems CEO.
“Any organization needs stability, continuity of direction. So this change in 14 months doesn’t help steady the ship,” Nardelli said Wednesday on CNBC’s “Fast Money.” “Hopefully Larry will get in there, he’ll be very direct, he’ll be very candid, very deliberate in his decisions, consistent in decisions … and that will help.”
GE’s board of directors removed former CEO John Flannery after he was on the job for just over a year, due to reported frustration with the pace of his turnaround plan for the embattled industrial conglomerate.
Culp, 55, was named to GE’s board in April. He was president and CEO of Danaher from 2000 to 2014, during which time he quintupled the size of the science and technology company.
Flannery was appointed CEO in August 2017, taking the helm from Jeff Immelt as the conglomerate’s stock fell steadily. But GE’s value had continued to erode, setting new lows as investors remained unconvinced about Flannery’s turnaround plan. Despite Flannery’s efforts, GE’s stagnant power business has hit new roadblocks, such as a failure of a turbine blade at the Colorado Bend power plant in Wharton County, Texas.
Yale management guru Jeffrey Sonnenfeld admitted Flannery’s turnaround was a “huge disappointment,” but he told CNBC on Monday he thinks the company should have given him “a year and a half at least,” because “it’s a shame to have this kind of disruption” at the company.
“What difference would six more months have made? I actually think it might have made some difference, especially if he had divested” GE’s health-care business, Sonnenfeld said Monday on CNBC’s “Squawk on the Street.”
Nardelli said Flannery, who “had been there 30 years,” just moved too slowly for the board’s liking, although he said the constant change in leadership has been rough on the company.
“In 125 years, we had five CEOs. We’ve had two in 14 months. So it is very unsettling, and to that point, we’ve seen about 16 officers, vice chairmen, leave the company in the last 14 months … so you’re having a pretty significant brain drain, while you’re facing all these issues,” said Nardelli, who has also served in executive roles at Chrysler and Home Depot.
Coming from outside of the company, Culp will be “a breath of fresh air” and will “move at blink speed,” Nardelli said, which is going to be very important.
“He’s going to have to move expeditiously, quickly and try to right the ship, when you have that much change,” Nardelli said.
