It wasn't soon after Tufan Erginbilgiç became chief executive of Rolls-Royce (RR.) that he made his infamous "destroying value" speech. The message, where he described Rolls as a "burning platform" and said "every investment we make, we destroy value… it cannot continue", hardly inspired confidence.
His intention was to impress on investors that he understood the business, had identified the problems and knew what had to be done. It was also for internal consumption: to tell employees to brace themselves. The turnaround was going to be supercharged. With the speed and intensity of change that he had in mind, there’d be no room for complacency.
Some assumed that Erginbilgiç would focus too much on short-term profits, but that rather missed the point. He knew from his experience with other complex multinational organisations where the inefficiencies were likely to be, and his approach makes a distinction between wealth creators and wealth absorbers. Rolls-Royce depends on developing cutting-edge technology and bringing it to market; he’s well aware of the importance of engineering expertise. It was the management and administration who were in his sights. One of his former colleagues commented that his "sharp focus on costs, margins, revenues and returns, together with his clear thinking, will see through any corporate bull”. He’s a hard taskmaster. He overhauled management and set clear targets, with the aim of instilling a greater sense of commercial-mindedness into every level of the organisation. The heads of the main two divisions – civil aerospace and defence – were replaced.