Larry Culp on Success Theater, Embracing Red, and the GE Turnaround
GE was in bad enough shape in 2018 that investor Nelson Peltz says he was sure the company would end up in Chapter 11.
Inside GE, meanwhile, business reviews were full of good news.
Both things were true at the same time.
Larry Culp eventually had a name for that: “success theater.”
He'd gotten an early look at how it worked that summer, before he was CEO. Culp was still a board member when he sat in on a meeting of GE's power leadership in Atlanta (this business is now part of the spun-out GE Vernova). The finance team put up charts that looked sharp and clean, tracking things like inventory trends. But Culp couldn't see how the numbers connected to how the individual businesses actually operated.
The charts looked fine. The company wasn't.
And the meeting wasn't helping anyone see why.
The Name for It
Cathie Lesjak, the former HP CFO who joined GE's board in 2019, described the pattern in this recent Fortune article: businesses would come to reviews and talk only about what was going well. Culp had a name for it. He called it “success theater.”
You can also read the article for free through Yahoo.
I like that phrase because it's specific. It doesn't accuse anyone of dishonesty, and it doesn't reach for a vague complaint about culture. It describes a behavior with a venue, a script, and an audience. People prepared for those reviews. They prepared well. They just prepared the wrong thing, because they had learned what the room rewarded.
That's the part leaders tend to skip past. Success theater is a performance, and leaders had taught people what the audience wanted to see. That's a phrase that I first heard from Eric Ries, of The Lean Startup fame. Read more: Don't Turn Your Performance Metrics into Success Theater
Creating Demand, Not Just Permission
Most of what gets written about psychological safety, including a fair amount of what I've written, focuses on the supply side, if you will. Make it feel safe to speak up. Don't punish the messenger. Respond with curiosity instead of blame. Read more: Why Bad News Must Travel Fast: GE CEO Larry Culp on Psychological Safety and Leadership
Culp's framing in the Fortune article runs the other way. He says that in the old GE, messengers got shot, and that
what he wanted was “to create a market for problems.”
A market has buyers. That's a different standard than permission. Permission means you won't be penalized for raising something. Demand means someone upstairs actually wants it, will act on it, and will notice if it stops arriving.
The distinction matters because permission alone tends to run out. Ethan Burris has written about the second problem that follows fear, which is futility. People can feel perfectly safe raising an issue and still stop bothering, because nothing ever happened the last four times. Safety can get you the first report. What happens next helps determine whether you get the fortieth.
Peter Arduini, now CEO of GE HealthCare, described the shift in the article as making the airing of problems a goal rather than something to be feared.
He called it “embracing red.”
That phrase has particular resonance in an organization where a red metric can quickly become something to explain, defend, or get back to green (“hit the goal no matter what!”). Embracing red means treating it instead as useful information: something that tells you where to look, learn, and improve. It's a gap that needs to be closed. That fact, like any problem in Toyota thinking, is something to work on rather than get upset about.
Questions, and What Happens After
Scott Strazik, now CEO of GE Vernova, says Culp led with questions rather than directives, and coached his team to work out their own KPIs rather than handing them a list. Vicente Reynal of Ingersoll Rand, who ran a Danaher plant under Culp, tells a story about a weak quarter that Culp criticized sharply in a meeting, followed by Culp flying to California, showing up at Reynal's house for dinner, and playing with his four-year-old on the floor.
High standards and genuine regard, in the same week. That combination is harder than either one alone.
Reynal also mentions that Culp would turn up unannounced at plants after kaizen events to see whether the improvements had held. You can read that two ways. It's gemba discipline, which is real and necessary, because improvements that aren't sustained aren't improvements. Or it's verification driven by distrust. The behavior can look identical from a distance.
The article doesn't settle which it was, and I don't think a magazine profile could. I think it's Culp loving the gemba. But the practical test isn't whether a leader shows up unannounced. It's what happens when they find red. Follow-up is coaching if the answer is help. It's evaluation if the answer is consequence. People figure out which one they're dealing with quickly, and they adjust what they put on the board accordingly.
What Embracing Red Actually Bought
Here's the part that connects the culture story to the operations story.
At the Lynn, Massachusetts plant, site leader John McCarron says production has increased sharply in recent years without adding buildings and with only a modest increase in headcount, to around 1,700 people. Culp describes the method as rearranging machines, redrawing workflows, and adding automation. The article states plainly that this did not involve pushing workers to move faster.
You can only fix flow problems you can see. A plant where every station reports green is a plant where nobody knows where the parts are piling up. The “obeya boards” at Lynn are covered in color-coded slices precisely so that red shows up, every morning, in front of two dozen managers at 8:30. The daily meeting creates the demand. Red is supposed to show up there, in front of people expected to respond to it.
An Honest Note About the Scoreboard
Fortune calls this the top comeback in modern business history. GE's market cap was $96 billion when Culp started. The three successor companies are now worth roughly $689 billion combined, with returns around 30 percent annualized.
I'd be careful about how much of that we hang on Lean, as much as I'm a fan of Lean as a management methodology.
The same article mentions that air travel rebounded fast after COVID and that the AI data center boom drove an extraordinary run at GE Vernova, which is up more than 600 percent since the spinoff. GE HealthCare, spun out by the same CEO in the same period, gained 16 percent. Same operating philosophy, wildly different stock outcomes. Some of that is Lean and some of that is which industry you happened to be standing in.
This is the outcome bias trap, and it's the same one that made the Seahawks' goal-line pass call look obviously idiotic after the interception. Same decision, different result, different story.
So I'd rather grade the operating system on the operating evidence, which is specific and checkable. Production up at Lynn without new buildings. Reviews where people bring red. Kaizen events running most weeks somewhere in the company. Those things would be worth studying even if the stock had gone sideways.
Back to the Review Meeting
So if the last review you sat through was mostly green, that tells you something. I'm just not sure it tells you anything about the work.
Who in your organization is currently buying problems, and how would anyone know?
