Thursday, February 22, 2018

Success Theater at GE: Ambitious Targets and Hiding Bad News

Thomas Gryta, Joann Lublin, and David Benoit have written a lengthy feature article in the Wall Street Journal today about GE's struggles. The authors describe a "confidence culture" where senior executives set very ambitious targets and exuded relentless optimism about achieving those goals. Moreover, people found it difficult to push back and suggest that these objectives might not be achievable. Jeffrey Immelt seemed to downplay clear signals that the goals could not be achieved, perhaps selectively looking for information that would confirm his preexisting beliefs about what they could achieve as an organization. Gryta, Lublin, and Benoit write:

GE’s precipitous fall, following years of treading water while the overall economy grew, was exacerbated, some insiders say, by what they call “success theater.” Mr. Immelt and his top deputies projected an optimism about GE’s business and its future that didn’t always match the reality of its operations or its markets, according to more than a dozen current and former executives, investors and people close to the company.... Mr. Immelt didn’t like hearing bad news, said several executives who worked with him, and didn’t like delivering bad news, either. He wanted people to make their sales and financial targets and thought he could make the numbers, too, they said.

The article raises an important question for all leaders: How do you know if you have set overly ambitious goals for the organization and put harmful pressure on your people? How might we rethink what it means to stretch the organization? Here are my thoughts. It can be very productive to set a long term goal (3 years or more) of creating a breakthrough new product or entering a whole new market. Framing that goal in a way that provides meaning to people's work is important when setting that long term goal. Ask yourself: What is our purpose here? How are we trying to make our customers' lives better? Stretching your people in this way can be very inspiring. Setting over-the-top ambitious short term financial targets, on the other hand, can be dangerous. It can even lead to unethical or illegal behavior, as people feel pressured to deliver and to hide bad news. It also doesn't inspire people if you simply aim to achieve higher ROI or market share. Think about goals about which your people will feel passionate and inspired. 

Moreover, co-creating highly ambitious goals can be much more productive than establishing them in a top-down manner. What do your people want to achieve? What bold moves would they like to pursue? What do they care passionately about, and what do customers care deeply about as well? Finally, You have to create a healthy feedback loop. How are things really going? Where are we finding it difficult to meet our objectives? Being honest doesn't mean walking away from stretch goals. It does mean understanding how things are transpiring differently than you had hoped, and adjusting your plans accordingly. Work together with your people to figure out how to surmount obstacles, rather than simply telling them to charge up that hill again. 


Budd said...

This article reminded me of your exploration of the Challenger O-ring disaster, where the woman in charge did not like to hear bad news, and she had intimidated much of the organization, so the opinions of the engineers, that low temps could be a problem, never percolated up. One of those engineers drove home to watch the blastoff and told his intimates that he expected a disaster and has felt guilty ever since that he was not more assertive. Lonely-at-the-top can be self-imposed and destructive. For a more positive way to get information, knowing that you are lonely at the top, see Daniel Ellsberg's recent book and the actions of Admiral Hicks at CENTCOM. My review points this out:

Michael Roberto said...

Thanks so much for the recommendation!