Rolls-Royce CEO fired managers and held staff brainstorms as part of a ‘4 pillar' turnaround plan that led to 600% share price jump
Just two years ago, Tufan Erginbilgiç, then newly installed as CEO of Rolls-Royce, gave a grim warning to the engine maker's employees, describing the company as a 'burning platform' facing its 'last chance' at survival, as he lamented its track record of destroying value with each of its investments.
With that considered, Rolls-Royce's turnaround since—including a 600% share price jump and hitting profit targets two years ahead of schedule—is nothing short of astounding.
But Erginbilgiç, a former BP executive who doesn't regard himself as ruthless, took a fairly rudimentary approach to instill a successful turnaround at a group that has added more than $70 billion to its market value in the last two years.
Rolls-Royce manufactures engines for major plane manufacturers, Airbus and Boeing, on large, dual-aisle aircraft. The group is also a supplier of engines and propulsion systems for combat aircraft and submarines to government defense departments including the Ministry of Defense in the U.K.
Despite that, when Erginbilgiç joined Rolls-Royce, the company was near its floor for market valuation, bogged down by falling air travel during the COVID-19 pandemic and costly contracts with loss-making clients. An industry-wide rebound in travel demand and some astute contract negotiations are among the headline points that explain Rolls-Royce's turnaround.
In the background, though, are the fruits of an ambitious plan involving each of Rolls-Royce's 42,000 employees.
In an interview with the Financial Times, a victorious Erginbilgiç described how he leaned on 'four pillars' to encourage wholesale change throughout his organization.
The first pillar involved showing staff the extent of the difficulties faced by the company, exemplified by Erginbilgiç's 'burning platform' comments, which both shocked and focused his employees.
Tougher stances were to follow. Under Erginbilgiç's guidance, the company laid off 2,500 employees in 2023, mostly in middle manager positions, the FT reports. At the same time, Erginbilgiç held workshops for 500 employees to allow brainstorming and the implementation of the best ideas.
Erginbilgiç's third pillar required the company to set clear performance targets. The company now has 17 targets, including improving the amount of time its engines were on the wing of a plane, rather than losing money in the repair shop. The fourth pillar of the turnaround aimed to ensure Rolls-Royce's targets were attacked with 'pace and intensity.'
'If you don't have a strategy that can cascade down to 42,000 people it won't get delivered,' Erginbilgiç summarized to the FT.
Bosses are increasingly turning to management practices that can help them get their message across directly to as many staffers as possible. In some cases, this is driven by urgency and, in other cases, by technological advancement.
Speaking to Fortune last year, Sanofi CEO Paul Hudson described how he used the 'Fight Club' approach to encourage employees to begin using its AI agent. Hudson initially got a small group of people in a room using the tool, before allowing word of mouth to help uptake of the technology spread.
Meanwhile, Bayer, a similarly struggling European giant, also turned to a personnel shakeup to combat investor pessimism.
Bayer's CEO, Bill Anderson, got rid of more than 5,000 employees, mostly in managerial positions, and asked employees to self-organize and work in 90-day 'sprints' in self-directed teams.A year after Bayer's attack on bureaucracy began, Anderson said attrition at the company had fallen.
Editor's note: A version of this article first appeared on Fortune.com on March 25, 2025.
This story was originally featured on Fortune.com
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
21 minutes ago
- Yahoo
Trump Wants the Fed to Cut Interest Rates by a Full Point. That Normally Takes a Recession
President Donald Trump demanded the Federal Reserve lower its benchmark interest rate by an entire percentage point. The Fed, which operates independently of White House control, has resisted Trump's call to lower interest rates. Lower rates could boost the economy but risk igniting inflation. The Fed typically adjusts its interest rate a quarter point at a time: the last time it cut a full point was in March 2020 when the pandemic Donald Trump renewed his calls on the Federal Reserve to lower its benchmark interest rate Friday, and this time, he had a specific (and huge) ask in mind. In a series of social media posts Friday morning, Trump pointed to the economy's recent track record of solid job growth and cooling inflation, and taunted Federal Reserve Chair Jerome Powell for not having lowered interest rates sooner. Trump said the central bank should lower its influential fed funds rate by "a full point," saying it would be economic "Rocket Fuel!"The Fed adjusts its fed funds rate, which influences borrowing costs on all kinds of loans, to keep inflation down and employment high. Fed officials have kept their rate higher than usual so far this year in an effort to push inflation down to its goal of a 2% annual rate. Officials said they are waiting to see what happens in the economy because they are concerned Trump's tariffs could push up prices and set off a fresh round of Fed's cautious approach has angered Trump, who wants rate cuts and the economic growth they could promote. A full percentage point cut would be a major move by the Fed and would bring the fed funds rate to a range of 3.25% to 3.5%, its lowest since September 2022. The Fed typically moves rates a quarter-point at a time. The last time the Fed cut rates an entire percentage point was March 2020, when it was evident that the onset of the COVID-19 pandemic would thrash the economy. Before that, the Fed cut an entire point in December 2008, during the Great Recession. The posts were the latest moves in Trump's pressure campaign to influence the Fed's decision-making about monetary policy. The central bank is designed to be insulated from politics, and Powell has said the Fed's decisions will be based only on economic considerations. Trump has repeatedly criticized Powell for not lowering interest rates, in contrast to the Fed's European counterpart. The European Central Bank has cut rates eight times since last June. The Fed cut rates three times over that time period, including a jumbo half-point cut in September, but has kept rates flat. Read the original article on Investopedia Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
San Francisco Chronicle
33 minutes ago
- San Francisco Chronicle
Bay Area library visits have sharply declined. But not in this tranquil suburb
Across the Bay Area, libraries saw just about two-thirds as many visits per capita last year as they did seven years ago, a Chronicle analysis of state library data found. Most libraries in the nine Bay Area counties have yet to see visits climb back to pre-pandemic levels. Large public library systems like San Francisco, San Jose and Oakland are all still seeing about 30% fewer visits per capita than they used to. A handful of systems, though, have not only recovered — they've grown. The data comes from the California State Library, which surveys each public library system each year. To calculate visits per capita, the number of visits at a library in a given fiscal year is divided by the population of that system's service area. Declining visitation is virtually a universal problem. Almost no local public library system saw growth between the 2018-2019 and 2023-2024 fiscal years, the Chronicle found. The numbers are in keeping with national trends, according to a report by the Urban Libraries Council, an advocacy group. But those numbers aren't so bad when viewed in the context of other amenities post-pandemic. 'When you compare what's happening with libraries to what's going on in commercial (office) space, libraries are doing pretty well,' said Brooks Rainwater, the president of the Urban Libraries Council. And though they're still not at pre-pandemic levels, visits per capita in the Bay Area and nationally have been slowly ticking up since their shutdown-induced low points, said Rainwater. He compared the slow but steady recovery of libraries to shifts in all parts of city life, like transit ridership, office visits, tourism and retail shopping, all of which still have yet to reach what they were before COVID. And he expects the recovery will continue. Early data being collected for the council's 2025 report indicates that in-person library visits are up to about 75% of pre-pandemic levels. Part of the picture — and a reason for hope — is the shifting role of what a library is within a community, a change that was happening even before the pandemic, Rainwater said. While an increasing number of people are borrowing ebooks instead of physically checking out books, libraries are also increasingly used as a 'third space' for people to gather, to work or to just hang out, he said. 'Literacy and books are always going to be our stock and trade,' he said, 'but libraries are reflective of community needs.' That's a philosophy Anji Brenner, the city librarian at the Mill Valley Public Library, believes in wholeheartedly. The library, nestled among redwood trees and boasting floor-to-ceiling windows with views of the forest, a deck overlooking the nearby creek and even a wood-burning fireplace, is one of the few in the Bay Area to have fully recovered its visit numbers — an especially impressive feat given that its per capita visit rate was already one of the highest in the Bay Area. 'What's not to love about this place?' Brenner said. Brenner said the recovery didn't happen automatically: Staff worked hard to adapt programming during and after the pandemic. That has meant, for example, everything from author talks to nature walks, and experimenting with the times those programs are offered: Weekends have proven very popular. The library also hired a more diverse staff, which Brenner said helped it to engage with more members of the community. Likewise, Brenner also said that the demographics of visitors have shifted. Twenty- and thirty-somethings come to the library regularly now, a relatively new phenomenon, and teens, who were always reliable patrons, spend even more time there. It also helps that Mill Valley is rich. Brenner noted that both the Mill Valley Library Foundation and Friends of the Mill Valley Library fundraise for the public library. In general, library visits were higher in wealthier places like Marin County. Still, none of that matters if a library system isn't attuned to the community. 'You have to be grounded in who you're serving and why you're here,' she said. 'We want to bring joy to people's lives.'
Politico
34 minutes ago
- Politico
AI, the disruptor-in-chief
FORWARD THINKING Artificial intelligence is upending how industries function and it's coming for scientific research next. Rene Caissie, an adjunct professor at Stanford University, wants AI to conduct research. In 2021, he started a company, that lets public health departments, researchers and life sciences companies pose research questions and receive answers immediately. And, unlike many AI systems, Caissie told Ruth, the AI explains those answers by showing the data its results are based on. 'It used to be hard to do research,' he said, explaining that it takes a lot of time for researchers to get access to and organize data in order to answer basic scientific questions. Manual data analysis can also take months. The company is now partnering with HealthVerity, a provider of real-world health data, to build up its data sources. In turn, HealthVerity will offer Medeloop's research platform to its clients. The company has worked with the Food and Drug Administration, the National Institutes of Health, and the Centers for Disease Control and Prevention in the past. Caissie says the New York City Department of Health and Mental Hygiene is already using Medeloop's AI to run public health analyses. Why it matters: Public health departments receive huge amounts of data on human health from a variety of sources. But prepping that information and analyzing it can be onerous. Having access to a research platform like Medeloop could give public health departments and academic medical centers much faster insight into trends and in turn enable them to respond more quickly. How it works: Medeloop's AI is designed to think like a researcher. In a demo, Medeloop strategist John Ayers asked the bot how many people received a first-time autism diagnosis, broken down by age, race and sex, and what trends were visible with that data. He wanted the AI to only include people who had had interactions with a doctor for at least two years prior to diagnosis. The platform returned a refined query to improve results and a suggestion for what medical codes to use to identify the right patients for inclusion in the study. It delivered a trial design that looked at a cohort of 799,560 patients with new autism diagnoses between January 2015 and December 2024. Medeloop's AI showed that 70 percent of new autism diagnoses were for males. A monthly trends report found that, outside of a dip during the Covid-19 pandemic, new autism diagnoses have been on the rise, particularly among 5-11 year olds since 2019. Though Medeloop doesn't determine the cause of autism, the ease with which users can obtain answers could help speed up the pace of research. One of the platform's key innovations is its use of a federated network of data. Medeloop's new deal with HealthVerity will raise the platform's de-identified and secure patient records to 200 million. Notably, the data never leaves the health system, which increases security. Instead, Medeloop sends its AI to wherever the data is stored, analyzes it there and then returns the results to the platform. WELCOME TO FUTURE PULSE This is where we explore the ideas and innovators shaping health care. Scientists are making cover art and figures for research papers using artificial intelligence. Now illustrators are calling them out, Nature's Kamal Nahas reports. Share any thoughts, news, tips and feedback with Danny Nguyen at dnguyen@ Carmen Paun at cpaun@ Ruth Reader at rreader@ or Erin Schumaker at eschumaker@ Want to share a tip securely? Message us on Signal: Dannyn516.70, CarmenP.82, RuthReader.02 or ErinSchumaker.01. TECH MAZE Large language models like ChatGPT and Claude generate inferior mental health care treatment when presented with data about a patient's race, according to a study published this week in npj Digital Medicine. The findings: Researchers from Cedars-Sinai, Stanford University and the Jonathan Jaques Children's Cancer Institute tested how artificial intelligence would produce diagnoses for psychiatric patient cases under three conditions: race neutral, race implied and race explicitly stated using four models. They included the commercially available large language models ChatGPT, Claude and Gemini, as well as NewMes-15, a local model that can run on personal devices without cloud services. The researchers then asked clinical and social psychologists to evaluate the findings for bias. Most LLMs recommended dramatically different treatments for African American patients compared with others, even when they had the same psychiatric disorder and patient profile outside of race. The LLMs also proposed inferior treatments when they were made aware of a patient's race, either explicitly or implicitly. The biases likely come from the way LLMs are trained, the researchers wrote, and it's unclear how developers can mitigate those biases because 'traditional bias mitigation strategies that are standard practice, such as adversarial training, explainable AI methods, data augmentation and resampling may not be enough,' the researchers wrote. Why it matters: The study is one of the first evaluations of racial bias on psychiatric diagnoses across multiple LLMs. It comes as people increasingly turn to chatbots like ChatGPT for mental health advice and medical diagnoses. The results underscore the nascent technology's flaws. What's next: The study was small — only 10 cases were examined — which might not fully capture the consistency or extent of bias. The authors suggest that future studies could focus on a single condition with more cases for deeper analysis.
