I read an excellent article in the Wall Street Journal this week entitled “How Jeffrey Immelt’s ‘Success Theater’ Masked the Rot at GE.” In it, authors Thomas Gryta, Joann Lublin, and David Benoit describe how the Immelt and his top leaders, “projected an optimism about GE’s business and its future that didn’t always match the reality of its operations or its markets.” I was fascinated by the article because it described the kind of pervasive good news culture that I have seen in some of my client organizations.
To be fair, when Jeff Immelt took over as CEO from Jack Welch in 2000, General Electric had a lot to be bullish about. GE was a $130B company with $13B in annual profit. Their market capitalization had grown 4000% since 1981 at sat at $600B. Things at least appeared to be in great shape. (If you’re interested, this article by Barry Ritholtz provides a counter-narrative about the health of the company in 2000 and the so-called ‘genius’ Jack Welch.) The point is, it was easy to paint a rosy picture. But 18 years later, the revenue is down to $122B and market capitalization has plummeted to $126B.
While I have never consulted to GE and have no knowledge of what actually transpired there, I have seen similar behavior elsewhere. This is how I see organizations create ‘success theater.’ Are habits like these putting your organization at risk?
- Everything is discussed as an opportunity. The language of success theater is lopsided. There are no weaknesses or threats. Anything that isn’t great today is just an “opportunity to be better tomorrow.” I saw this in action when leaders in a large bank color coded an issue on their project update light green. I asked what ‘light green’ signified and they told me that the item was behind schedule, but they didn’t want to raise alarms by coding it yellow. I tried to argue that was the very purpose of yellow, to raise a flag but not the alarm bells that coding it red would set off. I failed to convince them. They had spent a career as actors in the success theatre. If your organization has introduced new shades of green rather than talking openly about a yellow, worry.
- Every plan looks like a hockey stick. I don’t have to share client examples for this one. I worked in a consulting firm that made hockey stick plans, with modest growth in the current year and astronomical growth in next, a standard operating procedure. Without projecting significant return on investment, we would never be able to justify the hiring and spending we wanted. So, our leaders kept pretending that investing today would create double-digit returns in 6 months. We in middle management just kept pretending it was true.
- Hit the number at all costs. When the going gets tough, you pull out all the stops to hit the target. All the stops can include profitability, customer satisfaction, or employee engagement. Essentially, you sell your soul to live another day. The WSJ article outlines how GE’s Power Division did exactly that. They got into trouble with significant inventory and to hit the growth goals, they had to slash prices. They reached the revenue targets but took the hit on margins as they hollowed out pricing. Similarly, they used upgrades to customers’ power plants to get a nice one-time revenue bump but dug themselves a hole with lower service fees ever after. You know you’ve got a problem when you start taking short-term gains that create long-term pain.
- Keep Proving You’re Worthy. I get suspicious when I interact with leaders who always seem to be interviewing for the job they already have. If the conversations between subordinates and superiors are full of all the reasons why they deserve the job, you know there is a lack of trust and an environment where flaws and risks will be hidden. If people aren’t using their conversations with their managers to problem solve on the most challenging issues they’re facing, you’ve got trouble.
- Shoot the Messenger. If you start to notice that the people who raise concerns are disappearing, then you have ironclad evidence that only good news is permitted. To be fair, getting shot is unlikely, but getting passed over for promotion or slowly relegated to a quiet spot in the Boise office might not be. If the harbingers of trouble can no longer be heard, you have a problem.
There are many things you can do to add some range to your company’s success theater. Try one or more of the following:
Ask for issues
At least in the areas where you have control, ask people to highlight issues or concerns. If the culture is completely averse to admitting weakness, you can soft pedal your language, “If a risk were to develop, where would it be?” Frame any discussions about potential weakness as a favor to you, “I need your help, I’m trying to identify the three things that I need to pay more attention to.” You might not be able to pass these messages on up the chain, but at least you can foster a more balanced culture on your own team.
Celebrate those who share problems
When someone does share an issue or concern, make sure you reinforce their courage and willingness to be vulnerable. If the issues aren’t too personal, share them in a team meeting and recognize the value of the person who brought the issue forward.
Promote people who have bounced back
Another way to change the plot line is to promote people who have demonstrated resilience, rather than those who have never tasted failure. In my experience, leaders who have never presided over problems just don’t know how to handle it when things get rocky. The longer they have success, the more anxious and protective they become of their perfect track record. If you promote someone for how well they handled adversity, you demonstrate that setbacks are normal and it’s what you do to rebound that matters.
Scenarios and contingencies—plan for the dark days
You need to spend way more time thinking about what might NOT go your way and what you’re going to do about it. If your only plan is the plan for how you’re going to bask in the sunshine of endless opportunity, you need another plan. What are some of the likely and less-likely scenarios that might play out that could take you off track? What will you do if those situations happen and when and how will you make the call to go to plan B? There’s no room to be superstitious about talking about problems; just talking about scary things will not make them happen. It will, however, prepare you a little better if they do.
I understand how choosing one goal and becoming maniacally focused on it can help you be successful. Unfortunately, focusing on only one measure is what leaves room for people to game the system. If it’s only about top-line, it’s easy to drive volume by slashing prices and compromising on margin. If no one is watching the customer retention or satisfaction scores, you can boost revenue by hiking prices. These strategies work in the short term; just long enough to hit the quarterly number or land a juicy bonus. If you don’t want the wool pulled over your eyes, you need to be watching and rewarding the leading indicators too.
Success feels good. It might even be addictive. Jonesing for continual growth, bigger profits, higher share price can lead you to some risky behavior that could put all your success in jeopardy. Be on guard for signs that your company is becoming a ‘success theater.” Do what you can to shed light on the drama as well as the triumphs. Otherwise, it will soon be obvious that it was all just a show.