Sometimes the stock market isn’t all about Wall Street upgrades and downgrades, or company earnings reports. Investors can focus on other things that help them generate returns.
Wednesday, General Electric (ticker:
GE
) hosted a “Lean Mindset” event in New York City in a converted warehouse space adjacent to the High Line walking park on Manhattan’s west side. It was a gathering of GE employees, customers, investors, and others. The list of speakers was something else.
Hall of Fame quarterback Peyton Manning showed up, talking about leadership lessons learned playing football. NBA Champion Giannis Antetokounmpo was there, too, talking about learning from failure. There were many more speakers.
Ford Motor
(F) CEO Jim Farley,
Uber Technologies
(UBER) CEO Dara Khosrowshahi,
PG&E
(PCG) CEO Patti Poppe, and
Ingersoll Rand
(IR) CEO Vincente Reynal spoke as well.
GE HealthCare Technologies
(GEHC) CEO Peter Arduini interviewed Cleveland Clinic officials. Chef Wolfgang Puck was interviewed by filmmaker David Gelb. Psychologist Carol Dweck talked about growth mind-sets. Retired Navy Admiral Bill Lescher also showed up to chat about improving the management of F-18 jet fighters.
The themes of all the talks and interviews were leadership and lean manufacturing principles. Lean, very simply, is a set of management principles that find their roots at
Toyota Motor
(TM), emphasizing problem-solving, employee involvement, waste elimination, and continuous improvement.
For investors, the whole event was a chance to gather management tidbits, things that reflect best practices that they can listen for when any management team is speaking at an investor conference or on an earnings conference call.
Ingersoll Rand, for instance, sells pumps and compressors. Those aren’t the most interesting products in the world, but necessary for countless processes and every manufacturing facility on the planet. Sales have grown about 11% annually on average for the past three years. That’s fast for an industrial company. Acquisitions help, but organic growth has exceeded the growth of global industrial production.
One way the company has managed that performance is by focusing on demand generation. “We have about 100 people dedicated to demand generation,” Reynal tells Barron’s. “Every day these people are on Google [trying] to generate a marketing qualified lead.” That’s a potential customer with interest. Ingersoll now generates thousands of new leads each week.
That activity isn’t typical for an industrial company and arose out of the problem of how to sell more compressors and pumps. Selling products to a fragmented customer base isn’t easy. Ingersoll is large in its markets, generating some $7 billion in sales annually, but it plays in markets that total roughly $60 billion in sales. Market share is relatively low for an industry leader.
Lean benefits can feel unquantifiable, but lean management is practiced at
Danaher
(DHR), the place Larry Culp ran before GE. Danaher stock is up more than 17-fold over the past 20 years, before dividends. The
S&P 500
is up about 4.5 times over the same span. That’s quantifiable.
Culp is a lean-management disciple, and has been implementing such techniques since he took over GE in 2018. They have started to yield results. GE stock is up roughly 60% since he took over, including in the latest 12 months a 101% surge.
Improvement hasn’t been a straight line. There was the pandemic to contend with over that span, and the current commercial-aerospace recovery has helped the stock. Still, internal improvements are showing up. Quarterly results have become more consistent and less feared by investors.
Write to Al Root at [email protected]
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