Tufan Erginbilgiç, the CEO of Rolls-Royce, shares insights on his transformative vision for the iconic brand. He highlights the difference between real transformation and mere restructuring and discusses how he boosted profits and share prices. The conversation covers key strategies for engaging employees, fostering a performance-oriented culture, and adapting to modern challenges. Erginbilgiç emphasizes the importance of cash generation and competitiveness as vital components of resilience, ultimately shaping a strong future for Rolls-Royce.
Tufan Erginbilgiç's transformation strategy for Rolls-Royce focuses on clear communication and a shared purpose to mobilize 42,000 employees effectively.
The emphasis on leadership culture fosters open debate and alignment in strategic priorities, which is crucial for navigating transformation challenges.
Deep dives
The Vision for Transformation
The vision for Rolls-Royce focuses on achieving a high-performing, competitive, and resilient business through transformation rather than mere restructuring. Transformation is framed as an ambitious journey, moving the company from its current state to an elevated future state that opens up new opportunities. Tufan Ergenbilgic emphasizes the importance of mobilizing 42,000 employees toward this vision, which requires clear communication about the company’s trajectory and a shared purpose. He differentiates between successful and unsuccessful transformations by highlighting the need for a detailed strategy that incorporates performance management and implementation plans.
Building a Strong Leadership Team
A top-notch leadership team is pivotal for the transformation at Rolls-Royce, according to Ergenbilgic, who prioritizes selecting individuals who are not only effective business leaders but also passionate about the company's success. He believes in fostering a culture of trust, openness, and transparency within the leadership team to navigate difficult discussions and align priorities dynamically. By engaging in debate and acknowledging differing opinions, he aims to create a strong alignment among leaders that encourages best outcomes. This approach not only strengthens team dynamics but also clarifies strategic expectations and priorities, which need to be adapted as circumstances evolve.
Resilience and Purpose in Strategy
Ergenbilgic distinguishes two types of resilience: cash generation resilience and P&L resilience, underscoring their importance in maintaining stakeholder trust during volatility. He introduced a new key performance indicator, total cash cost gross margin, to evaluate the operational resilience of Rolls-Royce, aiming to enhance competitive advantage. Furthermore, he emphasizes that a clear purpose contributes to employee motivation by connecting their work to a larger positive impact on the world. This sense of purpose, aligned with clear strategic initiatives, helps to mobilize the workforce and fosters a culture where everyone feels empowered to contribute meaningfully to the transformation.
Since Tufan Erginbilgiç took the helm of the iconic brand, its share price has surged. Profits have more than doubled. How he did it is a case study in the art of corporate transformation. In conversation with McKinsey senior partner Michael Birshan.