Transforming a British icon

“If you believe you are going to transform a company without taking any personal risks you are dreaming,” Tufan Erginbilgiç says. “I said to my team: ‘Guys, you may feel nervous, because every day we make progress we are in uncharted territory. That’s how you transform. How do you go to a place that a company has never been in your comfort zone?’”

Erginbilgiç is explaining the transformation of Rolls-Royce in his tenure as chief executive. Since Erginbilgiç took over in January 2023, the stock market value of the aerospace and defence company has increased tenfold, including by nearly £50bn in 2025 alone. Rolls is now the fifth most valuable company in the UK, behind only AstraZeneca, HSBC, Shell and Unilever. This illustrious company, which was founded in 1906 by Charles Rolls and Henry Royce, has entered a new era.

For this achievement we have named Erginbilgiç our Business Leader CEO of the Year for 2025. In an exclusive interview, he explains how he has approached the job.

First, don’t describe his work at Rolls as a turnaround. “I don’t actually use the word ‘turnaround’ because ‘turnaround’ feels to me like I’m coming back to the same point I started,” Erginbilgiç says. “From day one this was about a transformation: taking RollsRoyce from point A to point B. Rolls-Royce has never been at point B. At point B, RollsRoyce can do things that it was never able to do at point A. That is a transformation. At point B you are such a different company in terms of capability, mindset and financial strength that it opens up opportunities.”

Rolls-Royce staff got their first sense of what Erginbilgiç was like when he gathered them for an address at its factory in Derby in early 2023. Erginbilgiç had been chief executive for a few weeks and was ready to set out his stall.

For many of the 40,000-plus employees, it was the first time they had heard from their new boss. They knew it had been a challenging time for the engine-maker, but what came next was a big shock.

Erginbilgiç warned that Rolls was a “burning platform”. For a company with the history of Rolls, it was a shocking intervention. It created headlines around the world.

“Every investment we make, we destroy value. We underperform every key competitor out there,” he said at the time. “It is at a level [at which] it cannot continue. Rolls-Royce has not been performing for a long, long time.”

Staff were left in little doubt that further job cuts were on the way. Erginbilgiç spoke of a “transformation programme” that would bring “efficiency and optimisation”, according to the Financial Times, which first reported his speech.

Some people were not happy. A few weeks later at Rolls-Royce’s annual shareholder meeting, one private investor told the room they were “astounded” at the comments and that they risked being “extremely destabilising”.

But many others welcomed Erginbilgiç’s honest assessment. The day after the speech he was walking through King’s Cross station in London when a woman approached him. “Are you Tufan?” she asked. “I work in turbines in Derby. That presentation was so energising.”

Erginbilgiç had spent weeks assessing Rolls before the presentation. After being appointed in September 2022, he set out to gather information and benchmark Rolls against its competitors before he started in January. Erginbilgiç shared that data with staff in his presentation. He wanted to make it clear that Rolls needed to change, but also offer a vision for how it could be done.

“How do you transform a company? In my opinion, it is about mobilising the workforce with purpose, focus and alignment,” he says. “So everything I do is about purpose, focus and alignment.

“Put the mirror up so people know where they are. Then tell them the vision. The vision will probably be very exciting but overwhelming, because they didn’t even imagine that you could actually talk about that. Therefore you need to talk about how you are going to get there, so even if they don’t believe you immediately, at least they start thinking about it.

“And you need to do it with data and specificity. You cannot just go and say: ‘I think this company is a burning platform.’ I did extensive external benchmarking.”

According to Erginbilgiç, in any transformation, 15 per cent of staff will be with you from the start, but 85 per cent won’t be. “This data is obviously not scientific, but in my experience, 15 per cent will say: ‘Wow, hallelujah, I was hoping for this moment because we are not going anywhere.’ The other 85 per cent are either scared or uninterested, frankly. Scared because it is overwhelming.”

This raises the question of how to bring the workforce with you. Rolls employs more than 40,000 staff, so 85 per cent of that is a considerable number. Furthermore, Rolls staff had heard pledges about restructuring before.

Rolls is one of the most famous names in British business but its history is blotted with extreme highs and lows. During the Second World War it made the engines that powered the Hurricane and Spitfire aircraft. It also began to develop the aero gas turbine, which had been designed by Sir Frank Whittle, the British engineer. This would form the basis of the technology that would revolutionise commercial air travel after the war and make it accessible for everyone.

But developing jet engines is expensive and takes years. It is also competitive, with Rolls battling against General Electric and Pratt & Whitney for key contracts.

In 1971, Rolls was nationalised after racking up huge costs developing the ground-breaking RB211 engine for wide-bodied planes, such as the Boeing 747. Under state ownership, Rolls sold off its car business, which is now owned by BMW. It was not until 1987 that Rolls was privatised and floated on the stock market.

The RB211 engine went on to be a great success, but it left a scar on the business. Speaking in 2005, Sir Ralph Robins, who was credited with reviving Rolls in the 1980s and 1990s as chief executive, said: “The RB211 demanded a huge step in technology within a very short timescale – a double challenge for which Rolls-Royce was ill-prepared. One very important lesson emerged from the early problems with this engine – the fact that major, new, advanced engine programmes can only be successful if they are well-founded on previously demonstrated technologies. That, sadly, was far from the case at the start of the RB211 programme.”

During the 1990s and 2000s under the leadership of Sir Ralph and then Sir John Rose, Rolls became a UK business success story. Sir Ralph and Sir John pushed back against the City’s demands for short-term results to insist that Rolls must invest in technology to deliver long-term results. Sir John boasted of being “boringly consistent”. They were proved right, because while developing an airline engine is expensive, it delivers revenues for decades once it is ready. Rolls thrived after developing the Trent 900 engine for the Airbus A380 superjumbo and the Trent 1000 for the Boeing 787 Dreamliner.

But there was more trouble ahead. While Rolls enjoyed success with its engines for bigger aircraft such as the A380 and the 787, it missed out on a boom in orders for narrow-bodied short-haul planes. Indeed, while orders for the Airbus A320 and Boeing 737 Max surged, Airbus stopped production of its A380 super jumbo. Rolls’ reputation also took a serious hit after it paid £671m to authorities in the UK and US to settle bribery allegations related to engine contracts. Rolls was accused of bribing middlemen to win contracts to supply airlines with engines.

After Sir John left in 2011, his successors John Rishton and Warren East struggled to address the problems facing the business and Rolls found itself in a vicious downward spiral. When things are going right for Rolls it becomes a cash-generating machine – collecting revenue from engines it developed years ago and using that cash to invest in new, better technology that wins more market share.

But when things are going badly, cash disappears quickly. For example, Rolls reported it had net debt of £5.2bn in 2021, which was unsustainable. In the most recent financial results under Erginbilgiç, Rolls revealed that it now had a net cash position of more than £2bn. Operating profits have gone from £513m in 2021 to £2.1bn in the first half of 2025 alone.

Erginbilgiç’s approach to the transformation has been built around four pillars. The first is people – having the right team and being clear to them about the challenges the business faces. This has involved change: 2,500 jobs have gone and half of the top 100 managers have been replaced, including the bosses of Rolls’ commercial aerospace, defence and power systems business. “I don’t need to tell you that some of the buy-in is new leadership,” Erginbilgiç says. “You need to change people in some cases.”

The second is having a detailed strategy that cascades through the workforce so staff can get behind it and understand their role. The third pillar is tracking performance, the fourth is moving with pace and intensity. “I needed to put scores on the scoreboard very quickly,” Erginbilgiç says. “Pace and intensity are important because more and more people will start to believe what you said can happen. That will make your job a lot easier.”

The pillars are designed to get all the workforce to buy into the strategy and plan. “I don’t do strategy in a dark room with consultants and go out there and say: ‘I’ve got news for you. This is the strategy,’” Erginbilgiç says.

“My strategy needs to hit multiple dimensions. First of all, like any strategy, it needs to make choices, otherwise you don’t have a strategy. Second, while you are developing this strategy, you need to run the process in a way that aligns the organisation and captures everybody’s opinion. Last but not least, the strategy needs to be so granular that you can cascade it down to 40,000 people.

“When we were developing the strategy it took nine months. There were lots of workshops. Even I personally attended 25 to 30 workshops in 2023. More than 500 people were involved in strategy development. It is very data-driven, but when I go into the workshop I say two things: one, there is no hierarchy in this room, so everybody’s opinion is equally valid, and secondly, the conversation will be chaotic by design. There is a big distinction between a plan and strategy. A strategy conversation is about all the possibilities. A plan conversation is about numbers, and it closes the conversation, because nobody wants to commit big numbers.

“When we were done more than 500 people knew the strategy and bought into that. We made the choices together and we already knew the strategy and implementation plan.”

Erginbilgiç says that Rolls decided to shut down a business after multiple meetings where its future was debated. “Later on, the person who was actually running that business said to me: ‘Tufan, this was a great process.’ That’s buy-in for you,” Erginbilgiç says.

Rolls has ended up with 17 strategic priorities across the business’s three divisions: civil aerospace, which makes engines for planes; defence, which powers fighter jets and submarines; and power systems, which makes propulsion for boats and power generation systems, such as small modular reactors (SMRs).

Civil aerospace is still the biggest of these. Under Erginbilgiç, Roll has sought to renegotiate contracts with airlines, some of which were loss-making, and invest in improving its engines. Erginbilgiç was concerned that Rolls was seeking market share over margins, leaving itself with burdensome contracts and unable to deliver a high-quality maintenance service to airlines after the engine was delivered.

“I have given you a gift as a team leader,” Erginbilgiç says of the strategic priorities. “You don’t only have a strategy, you have clear targets that you agreed with. You know where you are going and you know your role in the group. Actually in big organisations, mostly nobody knows.”

In terms of tracking performance, Erginbilgiç prefers to look at year-on-year improvements rather than how someone is doing compared to their budget. “We changed the incentives so that we rewarded and recognised strategic progress. Are you making Rolls-Royce better every year? The proxy I use, therefore, is year-on-year improvements. Rather than a budget that you may have negotiated with your boss. If you are a good negotiator, you get a good budget that you can easily hit. I don't want that. That doesn’t create any mindset change. All you learn is that you need to negotiate really well.”

Before joining Rolls, Erginbilgiç spent more than 20 years at BP, where he led a revival of its downstream business, which included refining, petrochemicals, service stations, lubricants, midstream operations and the Air BP jet-fuel operation. “These pillars are not textbook stuff. I actually learnt by doing,” he says.

Rolls is now looking to the opportunities ahead. This includes the roll-out of small modular reactors. Rolls has long argued that the nuclear reactors it builds for submarines could be adapted into small power stations. But now it is making progress. The government approved the first SMR plant on Anglesey in Wales in November 2025, and Rolls is also rolling them out in the Czech Republic. “Frankly, when I first came here, one of my worries was that I would have to shut down SMR because I had zero projects and 600 people looking at me saying: ‘What are we going to do?’ Now it is 1,000, by the way,” he says.

Then there is the future of the airline industry. Rolls does not want to miss out on the next generation of single-aisle, short-haul jets, which are likely to arrive in the 2030s. “That is a $1.6tn market and only a couple of players can play in it,” Erginbilgiç said. “We didn’t have the capability or credibility or money, frankly. Now it is not a possibility, it is a probability – a high probability, I would argue.”

Rolls is developing its UltraFan engine technology for these planes but there is much work to do. It needs to make a demonstrator, do testing and then is likely to seek a partner to build the engine with. That will be a big challenge for Erginbilgiç and Rolls-Royce, but it is also a big opportunity. The work done so far is just the beginning.