As I prepare for teaching some new material during the fall semester, I came across this terrific article by Jena McGregor last year in the Washington Post. It's titled, "A lesson from GE: The power of telling hard truths - and the peril of avoiding them." She described the cultural deficiencies that conributed to the downfall of GE. She explains that these cultural flaws did not just manifest themselves in the past few years; they stretch back two decades. McGregor describes a "history of selectively positive projections, a culture of overconfidence, and a disinterest in hearing or delivering bad news." She argues that the company had a strong "can-do" attitude; unfortunately, that created certain problems. McGregor writes,
"In professional workplaces where a can-do attitude is valued above all else, and fears about job security remain common, getting unvarnished feedback and speaking candidly can be especially hard... Add to that its history as a business icon - GE was known as much for its vaunted management practices as it was for its actual products - and leadership experts say it's easy for a sense of overconfidence to creep in."
She goes on to quote Peter Crist, Chairman of Crist Kolder Associates (an executive search firm) and Chairman of the Board of Wintrust Financial Corporation. Crist explained, "It's the mindset of invulnerability that iconic companies create - that we are a special entity. There was a time when GE players had a certain arrogance to them."
McGregor closes the article with some good recommendations from Ethan Burris, professor of management at the University of Texas - Austin. She writes,
"Burris suggests they (leaders) have to model the behavior, being realistic about goals and forecasts and candid when things go wrong. They should host town halls where employees can speak up without criticism, structuring them so bad news can flow to the top. For instance, he recommends getting mid-level managers to first interview lower level employees about what's not working to make sure tough subjects are aired."
This week, as I taught a case study about the Columbia space shuttle accident to a group of Japanese executives here in Tokyo, several of them told me that they have begun to start meetings in a different manner than usual. They ask first for bad news before people can begin to share success stories from the past week or month. It reminded me of a startup back in Boston where the leaders used to tell managers that they had to share two problems or pieces of bad news for every celebratory brag that they shared in a meeting.