General Electric’s ongoing turnaround is one of the clearest modern case studies in crisis communications and reputation management. A company that defined American industry for a century is now rebuilding its narrative in public — quarter by quarter, message by message.
A Legacy Brand Under Pressure
The past few years have been very difficult for one of the most revered and successful companies in the history of the United States. General Electric (GE), founded in 1892, has been a stalwart of American commerce and ingenuity for more than a century. Recently, though, the news has not been good for the company — and it’s not getting better any time soon.
CEO Larry Culp recently confessed to investors that 2019 is going to be another rough road for GE, but he has promised to take on the issues facing his company “head on” and said that the future is bright.
Confronting the Business Reality Head-On
The simple, hard, economic truth is that many of the key products that helped GE remain strong in the second half of the 20th century just aren’t working for the company like they once did. Faced with this reality, Culp was blunt in his comments, calling the challenges facing the company “complex but clear.”
“We are facing them head on as we execute our strategic priorities to improve our financial position and strengthen our businesses,” Culp added.
That’s not to say there’s universal support for or agreement with the accuracy of this messaging. GE has continued with moves that shrink the company, both through eliminating certain products and a steady stream of layoffs that are expected to continue, based on several media reports.
Messaging Optimism Without Losing Credibility
Still, Culp strived to keep his overall message one of hope and optimism, saying GE is refocusing on business that will create new cash flow and free up other cash flow as soon as 2020 — and that this new trend will only accelerate into 2021. This is textbook corporate communications: acknowledge the pain, then anchor the audience to a credible forward story.
Optimism for the future is a strong and necessary message for a company that has faced a series of disastrous years, as well as the embarrassment of being removed from the Dow. However, there are many who seem to believe this venerable American brand is headed for a rebound. Wall Street appears to be betting big on Culp’s leadership, as the CEO frees up cash by selling off under-performing businesses.
Rebuilding Investor Confidence
Clearing up debt and jettisoning poorly performing businesses have been the twin mantras coming out of GE in recent years, and that appears to be the message investors want to hear. This has led to a spike in GE stock during the first quarter of 2019, and many are saying this will continue as confidence in the direction the company is taking continues to climb. Effective investor relations depends on exactly this kind of repeated, consistent signal.
What Other Brands Can Learn from GE’s Turnaround
That confidence will be contingent both on the decisions the company makes and the messaging delivered about those decisions, as well as others to come. This is a time for optimism, but it’s also a time to communicate and demonstrate progress at every opportunity — the core lesson from most crisis communications case studies.
Ronn Torossian is the CEO and Founder of 5W Public Relations.