Rolls-Royce CEO leads bold corporate turnaround
Tufan Erginbilgiç didn’t wait for a crisis to call Rolls-Royce underperforming. Within weeks of taking over as CEO in January 2023, the 66-year-old Turkish engineer told 42,000 employees the company was destroying value and lagging behind every key competitor. He described the situation as a last-chance moment.
His direct approach was intentional. One employee later called his address inspiring. Unlike typical CEO warnings, Erginbilgiç followed through by involving 500 staff in developing a new strategy. He then launched 17 initiatives to reshape the business. “Transformation is more ambitious than restructuring,” he said.
The four pillars of a turnaround
Rolls-Royce was already improving when Erginbilgiç took charge, but he structured his plan around four key principles. First, leadership needed to communicate a clear vision. Second, a detailed strategy would ensure alignment. Third, a culture of continuous improvement would be essential. Finally, a commitment to rapid change would drive progress.
Most corporate transformations fail, and Erginbilgiç understands why. Many leaders focus too much on budgets and AI targets instead of defining what success looks like. His solution was to tell employees they were the best in the world at their work. “That’s when real change happens,” he said. The method reflects his belief that mindset matters as much as strategy. “If you’re not nervous, you’re not pushing boundaries,” he tells his team.
To measure progress, Erginbilgiç introduced a unique metric: the ratio of total cost to gross margin. In 2019, that ratio stood at 0.9, meaning the company spent 90% of its gross margin just to operate.
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A bet on nuclear and next-gen engines
Erginbilgiç has made bold claims about Rolls-Royce’s future. The nuclear effort remains in development, as no small modular reactor is yet operational.
The other major move is re-entering the narrow-bodied aircraft engine market, which the company left in 2011. Erginbilgiç believes the new UltraFan engine, developed at a cost of £3 billion, offers a technological edge. Tests show it’s quieter and more fuel-efficient than previous models, positioning it to power next-generation Airbus and Boeing planes expected around 2035.
At the Paris Air Show in June, he suggested forming a joint venture with UK government backing. He called the project the biggest economic opportunity for the country in the next 50 years. The remark echoed 1970, when Rolls-Royce’s collapse symbolized Britain’s industrial decline. Now, its revival could rewrite that story.
Erginbilgiç often quotes Confucius: “Wherever you go, go with your heart.” For the company, that heart now drives a push into uncharted territory. For leaders looking to focus distracted teams, his approach offers a clear example of how bold communication can spark change.
