Rolls Royce was in crisis needing to secure new financing from the markets and assurances from the government that the business would survive. In the middle of the crisis, a new CEO was appointed and in January 2023 Tufan Erginbilgiç took the helm. His opening remarks to the 42,000 employees was a message of both urgency and hope and in an interview¹ the new CEO discussed his approach and the steps he took to get Rolls Royce flying to new heights.

Erginbilgiç did his homework and determined that at its core Rolls Royce was still a good company with good people.  From his observations he felt this wasn’t a company that needed wholesale change but rather a reorientation and a new level of employee engagement.  In his initial address he spoke about a “transformation” of the company rather than a ‘restructuring’ as he felt there is a big difference between the two.  The former would communicate hope and a willingness to aggressively uncover new potential while the latter would signal an attempt to return to something Rolls Royce once was.

Erginbilgiç set a vision of creating a “high-performing, competitive, resilient, growing business.”   While the vision was aspirational those lofty goals needed to be backed up with action. To put meat on the bones of his vision he highlighted four distinct initiatives:

• Leadership Team Development: Rolls Royce would invest heavily into leadership development.  If Rolls Royce had future it would need to develop a leadership team that could clearly communicate the vision and define and develop a strategic path forward.
• Using Strategy Development as tool for competitive engagement and company alignment: Erginbilgiç chose not to develop a top-down strategy.  Instead, he engaged his 500 leaders in the strategy development process.  While having 500 people develop the corporate strategy may sound cumbersome, what might be lost in speed is gained in alignment and commitment.  Tapping into deep corporate knowledge results not only in a superior competitive strategy but also in superior execution of that strategy.
• Culture of Performance: Erginbilgiç knew a big part of Rolls Royce’s problems were cultural. The people were well intentioned, but he needed to get things moving.   To do this Rolls Royce developed a mantra. ‘Safety first. Do the right thing. Keep it simple. Make a difference’.   This mantra became a simple, yet effective tool for driving a renewed culture of performance.   Secondly, they put in place a clear performance management system ensuring that everyone knew what “good” looked like.  Finally, they wanted a culture of purpose that would bring more meaning to work.  This required a distinct shift; listening and empowering people at every level of the organization.
• Intensity, Pace, and Rigor: Rolls Royce didn’t have the luxury of time to get this right.  They needed to move fast to assure markets they were on the right path.  Transformation by its very nature requires entering new uncharted waters.  Here leaders needed show they had “skin in the game” and take on a measure of personal risk by actively developing their divisional strategies with their teams, while keeping a shared focus on continuous learning.

Today profits are back, the share price is soaring and, while Rolls Royce can’t yet unbuckle their seat belts, they have emerged from the turbulent market of 2020.

Rolls Royce shows us that words matter, contrasting business ‘transformation’ with ‘restructuring’.   They showed us that vision needs to be backed up with action and that engaging the broader team to develop strategy can deliver huge dividends as well as a deep commitment to that strategy’s execution.

Is your business strategy developed at the top and communicated down or have you taken the time to engage your team? It makes a big difference!

1.   Reinventing Rolls-Royce: McKinsey October 25, 2024 | Interview