The virtues of telling the truth are as American as the country’s first president, George Washington. The apocryphal story of the six-year-old Washington being given a hatchet, chopping down a young cherry tree, and when confronted by his father, bravely crying out, “I can’t tell a lie. I did cut it with my hatchet” is familiar in popular culture.
Few people know or remember that the story originated with Mason Locke Weems, sometimes called Parson Weems. His occupation was that of a book agent and author. Weems apparently developed the story in order to boost the sales of a book he wrote about Washington. The story’s theme of honesty and honor fit the needs of Americans in the early 1800s for heroic figures, a need that remains a cornerstone of the leadership industry today.1 Ironically, a tale about America’s first president not lying is itself apparently a lie.2
Telling the truth is a foundation of religion. To take one example, “Thou shalt not bear false witness against thy neighbor,” sometimes colloquially restated as “thou shalt not lie,” is one of the Ten Commandments. The Bible, both the New and Old Testament, has numerous passages decrying lying and forecasting ruin for those who do. The apocryphal story of the snake deceiving Eve in the Garden of Eden presents deception as the ultimate source of evil.3
Many of those ubiquitous sources of leadership advice also advocate candor, honesty, and transparency.4 The logic seems sensible, even unassailable. Leaders should be candid and open, because if leaders lie, then subordinates, the leaders’ own bosses, and the leaders’ peers presumably won’t trust what the leaders say, and trust is important to effective leadership (a theme we will explore further in the next chapter). Moreover, if leaders lie, others around them will do the same as they model the leader’s behavior. If few people in a workplace tell the truth, then almost no one will have accurate information about what is really going on. And valid information about what is happening and the results of decisions is essential to both learn from experience and to make more effective choices. And if leaders lie, they will have committed a sin, reflecting negatively on themselves and undermining their authority and credibility. Research shows that “people view duplicity as one of the gravest moral failings.”5
There’s only one problem with the admonitions in favor of truth-telling: lying is incredibly common in everyday life and rampant among leaders of all sorts of organizations, including some of the most venerated leaders and companies. It logically follows that if some specific behavior is pervasive, that behavior must confront few sanctions, or else it would be rarer. One of the reasons lying persists is that there are few adverse consequences for it; and as we will see, positive results very often come from not telling the truth.
My conclusion: if we actually want to build more truthful organizations, we need to understand some of the empirical realities about lying, including its startling pervasiveness and efficacy.
Of course, there are successful leaders who have sought to build cultures of truth-telling in order to enhance the effectiveness of their firms. Kent Thiry, the CEO of DaVita, a kidney dialysis provider and disease management company, helped create a culture that emphasizes “no brag, just facts.” In town hall–style meetings with employees around the United States, Thiry and other senior managers encourage employees to ask anything—even about salaries—and to raise concerns and issues. When Thiry or his colleagues do not know the answer, they say they do not know. When problems that surfaced previously have not been adequately addressed, they admit their mistakes. Even in DaVita’s formal measurement and reporting systems, whenever there is a crucial operational indicator that cannot be produced by the company’s current systems, they put the indicator on the reports anyway, with the notation “not available”—something that encourages people to figure out how to obtain data on crucial measures of performance.
But, in most situations and in most organizations, openness and candor are not default behaviors. Part of the problem comes from the fact that the higher one rises in an organization, the more likely it is that people will tell you you’re right. People will agree with powerful leaders as a strategy of ingratiation, as nothing is as flattering as others’ telling you how right and how smart you are. But even if individuals don’t intend to flatter the powerful, hierarchical position is often assumed to be associated with intelligence and skill. If people think an individual in a senior position is smart and successful, they will bias their evaluations of that person’s behavior and decisions and overestimate their wisdom. Why? Because they assume that a person in power in a senior position must have positive qualities, as they have been successful. In short, power comes to equal omniscience.
These tendencies make building a culture of truth-telling a difficult task requiring conscious effort. Creating a culture of candor requires work, constant diligence, and difficult decisions. In part because of the effort required, in part because hearing the truth can be unpleasant, and in part because people naturally think that those who agree with them are smarter and better, Kent Thiry’s leadership behavior is unusual.
Or take another case. When Gary Loveman left Harvard Business School to become the COO (and then CEO) of Harrah’s Entertainment, now called Caesars, he was determined to build a culture of truthfulness, one in which people actually admit their mistakes. Loveman defines lying as saying something that you know not to be true at the moment you say it—which is different from something that you believe to be true that subsequently turns out to be false.
Loveman has often publicly bemoaned the widespread absence of truth-telling in the business world, whether it was the CEO of Bear Stearns telling the world the company’s balance sheet was in great shape just days before the company collapsed and then continuing to deny culpability,6 Lehman Brothers’ CEO doing the same thing, the traders in the London office of JPMorgan Chase grossly underestimating and misinforming others about the losses on a trade gone bad,7 or the numerous other instances of duplicity that accompanied the financial meltdown of 2007 and 2008 and what followed.
Loveman received a Ph.D. in economics from MIT and then taught at Harvard Business School before being appointed by then-CEO Phil Satre to the job of chief operating officer of Harrah’s in 1998. The academic culture from which Loveman came emphasizes tolerating and even encouraging substantive disagreements with colleagues in an effort to uncover the truth. And academic culture also has a norm of being true to the data in the quest for understanding—academic values emphasize not fabricating results and even being willing to share your data with others. Loveman, in part because of his background and in part because of his own persona, believed that there is never any excuse for lying. While he and the company did not necessarily need to tell everyone everything that those others might inquire about, what they did say had to be truthful.
One example dramatically illustrates Gary Loveman’s insistence on truth-telling. In one of the Harrah’s properties, a manager was terminated and the individual went home and killed himself. The company’s PR department wanted to put out a press release saying that the individual had died as a result of an accident, something that was untrue and known to be untrue at the time the release would be issued. Loveman refused to let the press release come out as written. He noted that the release could just say the individual died, and he also noted that the company did not have to even issue a statement, but he refused to let the company release a statement that was not truthful. He said that he received much pushback about this decision—after all, this is precisely the sort of instance in which euphemisms and small untruths occur all the time, and no one is really harmed. But Loveman believed that the road to a culture of untruthfulness began with small steps, and he was unwilling to countenance the first of such steps.8
Loveman also sanctioned employees who told him they knew how to fix problems when they really didn’t. To him, the point of having multiple units and a corporate headquarters and staff was to be able to share knowledge with poorly performing units so they could improve. But providing help and spreading best practices required units and their leaders to admit when they did not know something or had made a mistake. Loveman himself modeled this behavior of being willing to admit areas in which he was incompetent, such as building design, and he also admitted his mistakes. In management training and other meetings, Loveman would regale his managers about the mistakes he had made, such as passing on an opportunity to purchase Steve Wynn’s Macao gambling subconcession when it was offered to Harrah’s and also messing up the employee health plan. Loveman believed that you could run a company successfully only if people admit what they do not know and talk about their mistakes. In that way, he believed decisions would be made on the basis of facts rather than just hopes and dreams.
Loveman, Thiry, and other exemplars of transparency and candor are notable not just for their leadership skills but also for their rarity. One of the sometimes-unnoticed ironies about our search for heroic leader behavior, illustrated in oft-told tales and case studies, is that the very fact that such behavior is heroic—which implies it is exceptional and exemplary—speaks to how unusual such behavior, such as honesty, actually is.
Even in academia, where standards of integrity and the pursuit of truth are highly valued, problems proliferate. For instance, there is the case of Fred Walumbwa, a professor at Florida International University whose area of research includes, ironically, ethical leadership. Leadership Quarterly retracted five of his papers because of suspected scientific fraud, including two papers on authentic leadership and one paper concerning ethical leadership. Oh well.9
One of the reasons leaders lie is that they seldom face serious consequences for doing so. Yes, some CEOs and for that matter football coaches have lost their jobs for lying about their credentials on their résumés. But in many instances, particularly if an individual is successful or the untruth fits what people want to believe, leaders just sail along. Here are a few examples.
In 2011 as the U.S. government moved toward a shutdown because there was no ability to reach agreement between the Democrats and Republicans on spending priorities, Jon Kyl, a Republican senator from Arizona, took to the floor of the Senate to berate the fact that the Obama budget included funding for Planned Parenthood, an organization that is the bête noire of the Republican right. During his speech, Kyl noted that “well over 90 percent” of the organization’s activities are related to abortion. When numerous sources pointed out that the actual proportion of Planned Parenthood’s budget devoted to providing abortion as contrasted with other women’s health services was only about 3 percent, Kyl’s office, facing a media firestorm including satiric segments on the television shows The Colbert Report and The Daily Show with Jon Stewart, issued a statement saying that the senator’s remarks were not intended to be a factual statement.10
Of course, you may think that elected politicians regularly lie and apparently face few consequences for doing so. That is sort of what we expect, not only from the campaign promises soon forgotten but also as politicians distort opponents’ records and even disagree with proven science. Then how about government civil servants, people who do not face the task of running for election? When the U.S. director of national intelligence, James Clapper, was asked during a Senate hearing if the government collected data on millions or hundreds of millions of Americans, he said no. But of course this was not a truthful response, as people learned when Edward Snowden released classified information about the widespread surveillance of the telephone and Internet activities of U.S. foreign citizens and even leaders of foreign governments. Once the facts became known, Clapper later apologized before Congress for giving a “clearly erroneous” answer that he intended, at the time he gave it, to be as close to the truth as possible, given his other objectives. Clapper kept his job, of course.11
Some of my colleagues maintain that business leaders are certainly better than politicians or government officials. Maybe not. It’s hard to overlook, for example, those tobacco industry CEOs, all testifying in front of Congress that they had no knowledge of the health effects of smoking. Subsequently, we learned that their companies had conducted lots of research showing the adverse health effects of smoking, and these CEOs knew about the studies. Or what about the various financial industry executives claiming their balance sheets were in fine shape just days before filing for bankruptcy? Or the bank executives in the United States and the United Kingdom who had to raise equity capital even when they had just said they would not have to, because they had plenty of equity compared with the level of their nonperforming loans? Or the automobile industry executives, who when confronted with data showing large differences in fatalities related to the design of cars,12 insisted that the cars were safe even when they weren’t, and harassed their critics, even when the executives knew about internal documents substantiating the problems? The list is lengthy. Just pick up a newspaper or consult your favorite news source online; some reasonable fraction of news stories every day are about senior people in all sorts of organizations—our so-called leaders—not telling the truth.
It doesn’t matter what industry we examine either—whether it’s the financial industry, big tobacco, automobiles, or even that much-vaunted center of innovation and youthful vigor, Silicon Valley. Look no further than Lawrence J. Ellison, the cofounder and CEO of the Oracle Corporation. Ellison is one of the richest men in the world. Oracle operates in an industry, software, in which not telling the truth about product features and particularly if and when a product will be ready is so common that there is even a term for this ubiquitous prevarication: “vaporware.” Ellison, particularly in the early days of the company, understood that to get and keep customers in a competitive business, one sometimes needed to misrepresent product availability. In David Kaplan’s book The Silicon Boys, a history of the Silicon Valley, Kaplan asked a colleague of Ellison’s about Larry’s propensity to exaggerate product features and particularly product availability. This is what Kaplan wrote:
More than a few authors, employees, customers, and stockholders have marveled at Ellison’s ability to fudge the facts. . . . “Does Larry lie,” asks Ed Oates, an Oracle cofounder who’s known him for twenty-five years. “We prefer to say that Larry has a problem with tenses. For example, ‘our product is available now’ might mean it’ll be available in a few months or that Larry was thinking about one day developing the product.” . . . “Temporally challenged,” another colleague calls it. “Not a lie, just a different version of the truth.” . . . One man’s prevaricator is another man’s visionary.13
The software industry illustrates another principle that can help explain why lying is so common: the idea that in competitions, you must meet what your competitors are doing. In this instance, if your competitors distort the truth about product features and availability, do you really have any choice but to do the same? William F. Miller, a former president of SRI International, a former provost of Stanford University, a member of the National Academy of Engineering, and a colleague of mine, has a distinguished and exemplary biography.14 One of his positions during his long, illustrious career was as nonexecutive chairman of Borland Software. I recall running into Bill one evening as we were both headed to our cars in the parking lot. He bemoaned the fact that Borland had competitors who were misrepresenting product features and when a product would be released—the famous vaporware problem. Miller told me that he did not want Borland to do the same, but since customers were buying the promises of others, economic survival practically dictated that Borland had to use the same tactics as its competitors. My reply was along the lines of, “Get over the ambivalence if you are going to do this, because you and your colleagues will need to be as convincing as the competition.” The lesson: sometimes survival demands that you do what prevails in the ecosystem in which you are competing.
And then there’s Steve Jobs, the visionary leader of Apple who transformed the company upon his return as CEO into one of the most successful and highly valued firms on the planet. People sometimes forget the phrase “reality distortion field,” and how it originated. It came from a member of the Macintosh team in the 1980s, and it was used to describe Jobs’s behavior, and particularly his predilection to create his own version of reality about Apple, its products, and its success. After Jobs died, an old FBI file on him became public. According to materials released by the FBI, “several individuals questioned Mr. Jobs’s honesty stating that Mr. Jobs will twist the truth and distort reality in order to achieve his goals.”15
As the foregoing suggests, leaders often lie. And no wonder. In the first place, studies of both children and college undergraduates show that the ability to create “credible, deceptive messages predicted dominance in preschool children and men but not women.”16 So lying helps people attain powerful positions. Moreover, leaders are, by definition, people in positions of great power. And research consistently demonstrates that “powerful people lie more often and with more ease.” Leaders prevaricate with greater aplomb because “power, even when minimally endowed in the laboratory, mitigates the impact of stress associated with dishonesty. . . . The experience of power also brings illusory control, and their perceived control may aid the liar in the production of a convincing narrative. . . . Finally, high-power individuals are less sensitive to societal norms; e.g., norms that condemn the use of deception.”17 Thus, powerful people—leaders—are able to lie more successfully, and they do so.
It’s not just bosses who don’t tell the truth. A survey conducted by Sales and Marketing Management magazine of 316 sales and marketing executives reported that “45 percent of managers have heard their reps lying about promised delivery times, 20 percent have overheard their members give false information about the company’s service, and nearly 78 percent of managers have caught a competitor lying about their company’s products or services.” The article detailed numerous instances of salespeople deceiving customers, with many of the cases coming from selling Internet advertising.18
And it’s not just about “putting a shine” on something that may or may not be quite accurate. In fact, not only executives but many people at all levels lie on their résumés. For instance, people lie by listing educational credentials they don’t really have or by exaggerating their job responsibilities and accomplishments. David Edmondson, at one time the CEO of the electronics retailer RadioShack, was forced to resign from the company when it was discovered that he had told the company he had two college degrees when in fact he had none.19 As reported by ADP Screening and Selection Services, a subsidiary of the payroll company ADP, out of about 2.6 million screening background checks, “44 percent of applicants lied about their work histories, 41 percent lied about their education, and 23 percent falsified credentials or licenses.”20
A senior executive at the search firm Heidrick & Struggles told me that lying on résumés has become so common that executive search firms now make it a routine part of background checking to confirm everything listed by a candidate that can be confirmed, such as degrees and job histories. Perhaps more surprising, the senior executive said this in a tone that conveyed that résumé distortion was well known and sort of expected in the executive search business. If any inaccuracies are discovered, a résumé will be corrected, but the fact of lying in itself does not disqualify the candidate from further consideration. As he noted, if such behavior eliminated people from being considered for jobs, the applicant pools would be too small.
There is also lying in negotiations. Many people do not honestly reveal what is the lowest offer they are willing to accept or, for that matter, the highest amount they would be willing to pay, or other information about their resources and preferences. One experimental economics study found that when people could obtain at least a moderate advantage from lying about their resource endowments, many did so.21 Many individuals also misrepresent their emotional state in negotiations, feigning anger, disappointment, and surprise, for example, to achieve strategic advantage. There is a substantial literature, primarily in various law reviews but also elsewhere in the social sciences, that discusses the ethics of using deception as part of the negotiating process, as well as some limited research assessing the effectiveness and consequences of lying.22
The very existence of such an extensive discussion of these ethical issues suggests that misrepresentation is frequently part of the negotiating process. So apparently Mark Twain was correct when he wrote, “Truth is such a precious commodity, it should be used sparingly.” And Niccolò Machiavelli demonstrated great insight when he endorsed the art of deception: “You must be a great liar . . . a deceitful man will always find plenty who are ready to be deceived.”23
Research on lying shows that it is commonplace in everyday life. A random sample of one thousand people in the United States found that 40.1 percent of respondents admitted to telling a lie in the previous twenty-four hours.24 One overview of the relevant social science literature noted:
Most of us lie . . . with astounding regularity. According to a 2011 survey, people in the United States do so, on average, 1.65 times a day. And it’s not just Americans—or, for that matter, humans—who deceive: recent studies of 24 other primate species found that they regularly lie to one another . . . one in 10 text messages involves a lie of some kind. . . . According to a study of online daters, a full 81 percent exaggerated their attributes on their dating profiles.25
Five social psychologists empirically investigated how common lying was and whether or not people who told lies were bothered by doing so. Their reasoning was that if lying was somehow counternormative and was considered deviant behavior, people would be bothered by their lying even if they were willing to admit that they lied. The study found that college students reported telling two lies a day, on average, while community members told one. The authors noted that “many of the lies of everyday life are told to avoid tension and conflict and to minimize hurt feelings and ill-will,” a finding consistent with other studies.26 Sometimes lies seem to function to smooth over difficult situations and to lubricate relationships—for instance, complimenting people on their appearance (even if it is insincere) or saying things that downplay disagreements. Because lies are so much a part of how people present themselves to appear more favorably during social interactions, and are also used to smooth over relationships, lies ought to be “of only minor cognitive or emotional significance to the people who tell them.” And that is precisely what the research showed.27
One reason why lying is common is that the ability to lie or deceive others offers evolutionary benefits and, as a consequence, has increased over time. A second reason is that “manipulative ability is a foundation of social power and the ability to lie successfully is an important skill linked to personal and professional success.”28 Simply put, lying is useful for getting ahead. There is a reciprocal relationship between power and lying: the powerful deceive more often, and the ability to deceive effectively creates social power.
An experimental study of deception found that engaging in deception helped the individuals who deceived to present their communications in a more dominant fashion.29 Being forceful and dominant—a form of exhibiting confidence—helps individuals to be seen as more powerful. The study found that the dominant communication styles that came from those engaging in deception enhanced the credibility of those individuals, and thus helped them in achieving their objectives. As the authors noted, “Persuasive deceivers became more dominant” . . . and “Participants felt empowered by the act of deception itself.” This study shows that deceiving others not only creates career success but also causes the person engaging in the deception to feel more powerful, which would be a desirable psychological outcome. No wonder lying is so common.
Yet another reason that lying is common is that although most people believe they can reliably discern when they are being lied to, the evidence suggests that they can’t. Some analyses of people’s judgments of the truthfulness of others show that, on average, people are no more accurate than the flip of a coin.30 Even a review of multiple studies, which showed that people are better able than chance to discern lying, reported an accuracy rate of only 54 percent.31
If lying is common and imperfectly detected in everyday life, it should be even more common and less often detected when done by leaders. That is because power of the sort that leaders possess leads to even fewer behavioral inhibitions. And because observers, believing that the world is a just and fair place and that leaders are to be venerated rather than scrutinized, are even less likely to check on the truthfulness of what leaders say. Thus, everyone lies—the typical leader just does so more frequently and with fewer risks of detection.
Leaders lie in part, as we will soon see, because there are benefits to doing so—and because the downside of being caught is so small. There are few sanctions for lying, and, by contrast, there are often punishments for those who have the temerity to call out others who engage in deception.
One study demonstrated both the importance of peers—insiders—for discovering and reporting fraud,32 but also concluded “that the career prospects of employees who report corporate malfeasance are so dismal that it is surprising that people whistleblow at all.”33 Whistle-blowers in settings ranging from the government to private industry are shunned and often have trouble finding subsequent employment. In an experimental study, researchers found that even though some individuals are willing to report lying, when “groups can select their members, individuals who report lies are generally shunned, even by groups where lying is absent.”34 The title of the study, “Nobody Likes a Rat,” says it all, and reflects that even in childhood, tattletales are more likely to confront social ostracism than to receive praise for revealing problems or bad behavior.
Numerous examples demonstrate that lying, even on financial statements or in statements made to investors, seldom brings permanent harm to its perpetrator. As the New York Times columnist Floyd Norris has documented, a court in Germany ruled that sometimes lies are necessary, and in the United States, the Supreme Court is “considering whether to reverse a decision . . . and make it impossible for most investors to ever recover if they fall victim to corporate lies.”35
Oracle is scarcely the only company to ever misrepresent its financial statements by overstating revenues. On August 27, 1990, the company admitted it had seriously misrepresented its revenue for five consecutive quarters, and less than a year later it admitted to making even more mistakes. All of this resulted in an investigation and a fine by the Securities and Exchange Commission in the early 1990s. No serious consequences ensued either for Oracle or for its CEO, Larry Ellison. As reported by the New York Times, “Now, with its stock again soaring, Oracle’s faithful fans on the Street tend to dismiss the past as a mere case of ‘overaggressive’ accounting.”36
In fact, misstating revenue and engaging in other financial statement inaccuracy was reasonably common prior to the Sarbanes-Oxley reform, with one study finding almost two thousand restatements during 2006 alone.37 That is one reason that one of the financial and corporate governance reforms that emerged from the financial crisis is to require CEOs to personally attest to the accuracy of the financial information their firms release. However, it is far from clear that this policy has significantly diminished financial statement misrepresentations or the need to subsequently restate financial results.
I recall a dinner I attended in Palo Alto with a number of executives in the semiconductor industry. One way that revenue is distorted is by keeping the books open after the end of a quarter, so that sales booked, for instance, on July 1 are credited to the quarter that supposedly ended on June 30. These individuals, who came from some of the leading semiconductor companies, not only told me that such a practice was quite common (and not just in that specific industry), but they joked that someday a company would have to cancel a quarter because it had extended the previous quarter so long to make its revenue targets. When I expressed some degree of disapproval and surprise at their openness about this practice, the people at the table looked at me as though I were crazy, naive, or maybe both.
A cycle of behavior is created. Because lying produces few to no severe sanctions, lying increases in frequency. Because lying is then common, it becomes normative, in the sense that norms describe common behavioral patterns. Because lying becomes normative, it isn’t sanctioned, because it makes no sense to try to punish widespread, almost taken-for-granted behavior.
I’m certainly not saying that lying is virtuous or to be encouraged, or that a world in which not telling the truth is both reasonably common and tolerated is in any way a perfect world. I’m just saying that the evidence is quite clear that leaders (and, for that matter, other people) frequently don’t tell the truth and face few to no consequences for doing so. And this fact is something worth understanding, rather than continuing to pretend that leaders are the paragons of truthfulness that they are so often portrayed to be.
If lying is common, and if sanctions for lying are either mild or nonexistent, it makes sense to ask how and why lying might actually be useful and helpful, and therefore why it is more accepted and acceptable than commonly recognized. One reason people lie is to smooth over otherwise difficult situations—to make relationships and interactions proceed more smoothly. And lying often accomplishes this goal of making important social relations work better. Because people lie often for good reason, one interesting research finding is that people judge others’ deceptions much more harshly than their own. As one review of part of the literature on lying noted:
As deceivers, people are practical. They accommodate perceived needs by lying. . . . People may lie in the interest of impression management. . . . They exaggerate, minimize, and omit. . . . Regarding half-truths and self-editing as necessities of social life, deceivers see deception as similar to these sanctioned practices. . . . lies occasion little anxiety, guilt, or shame. . . . They are easy to rationalize.38
To take just one business-relevant example that illustrates how common prevarication is and to what ends, Marc Effron, the president of the human resources consulting firm the Talent Strategy Group, surveyed more than two hundred companies in early 2014 about their talent management practices. He reported that “73% of companies have decided that lying to their employees about their potential to advance is the right choice.”39 In hierarchical organizations, where there are many fewer promotion opportunities than contenders, companies have apparently decided that telling people the truth about their actual promotion prospects will demotivate them. Companies also think that when people know their actual (small) likelihood of being promoted, turnover will increase and companies will lose those solid performers who make things run but who do not see much potential for further career growth. In these cases, companies that lead people to believe they have better promotion prospects than they actually do maintain more positive relationships with their employees, at least for a while. In fact, this positive relationship may last even longer because people frequently do see themselves as above average and are prone in many instances to engage in wishful thinking.
A second answer to the question of the benefits of lying comes from a series of experiments that show that individuals actually have higher levels of positive affect when they cheat, a phenomenon researchers call the “cheater’s high.” The studies in question eliminated some alternative explanations for why cheaters feel happier, such as the fact that they earned financial rewards or believed that their good performance made a statement about their abilities. The authors noted, “Even when prospects for self-deception about unethical behavior have been reduced, the high cheaters experience from ‘getting away with it’ overwhelms the negative affective consequences that people mistakenly predict they will experience after engaging in unethical behavior.”40
Not only do lies often smooth over difficult situations, not only are people readily able to rationalize their own prevarications, and not only do people apparently feel good about engaging in deception and getting away with it, there’s a fourth explanation as to why lying may be helpful and often unpunished: Lies, told often enough and convincingly enough, can become the truth—sometimes with positive effects. That is because what people say, whether truthful or not, helps construct a social reality that then becomes real.
One of the most important ideas in social and organizational psychology is that of the self-fulfilling prophecy.41 The fundamental idea is that if people believe that some situation is real, it becomes real. Relevant to this chapter’s focus on lying, the sociologist Robert Merton noted that “the self-fulfilling prophecy is, in the beginning a false definition of the situation evoking a new behavior which makes the originally false conception come true” (emphasis in original).42
There are numerous examples of the self-fulfilling prophecy. For instance, bank runs: if all the customers of a bank believe the bank is in danger of failing, they will withdraw their deposits and the bank will fail. Another example is analysts’ expectations for stock prices: if everyone believes a stock price will go up, everyone will encourage clients to buy, and the stock price will rise.
One pertinent example of the self-fulfilling prophecy is the effect of leaders’ expectations on the behavior and performance of others. Research shows that people who are expected to do well often perform at a high level because of those expectations, while those, including students in school, for whom others hold low expectations, often underperform.43 Leaders’ expectations are particularly potent in their effects, because leaders are in positions of power, which gives their beliefs greater weight.
Self-fulfilling prophecies exist in the domain of consumer purchasing behavior as well. People buy products when and to the extent they think they are cool—witness the long lines outside Apple stores when the company introduces a new phone or tablet computer. Product desirability often depends on the ancillary features and services developed by others—software in the case of computers, applications in the case of smart phones—as well as people’s beliefs that the product will be around for a while, as no one wants to purchase something that then disappears, which affects a product’s resale value and even its usability. Consequently, the ability to convince others of a company’s future success is one of the key tasks of a CEO, and, if successful, it helps ensure a firm’s future success—because others will develop ancillary products and services that create more value and because customers have more confidence in the company and its products, which will increase their likelihood of actually purchasing the good or service.
No one was better at the task of creating the perception of success and coolness than Steve Jobs. In the early 1980s, Apple Computer (as it was known then) faced an existential threat. After the Apple II’s introduction, IBM had launched its own personal computer, and many people felt that IBM would crush Apple. Then came the Lisa, Apple’s next product, which was not a very good—or successful—product. So when Apple was to introduce the Macintosh in 1984, people would need to be convinced that the product would be successful, so they would buy it, and developers of software needed to be convinced that Apple would sell enough computers and survive long enough to make it sensible for them to develop the software that would make the computer useful—and thereby help ensure its sales. The Macintosh was introduced to a packed auditorium with much fanfare and the famous “1984” advertisement, which ran only once on television, during the Super Bowl. Almost all industry observers and analysts were captivated, and the Macintosh was a success. Jobs’s ability, honed and implemented over decades, to continually and convincingly make the case that Apple was the coolest company with the neatest products to all of the various company constituents ensured Apple’s success.
Leaders also affect companies’ ability to survive difficult economic circumstances. If employees believe that a company is going to fail, they will leave—and the best ones, who have the greatest chance of finding other good jobs, will leave first. As talent drains out, the odds of turning the company around are reduced. Thus, one important task of leaders is to convince their employees that success is possible. Believing in success, people will expend more effort and exhibit more confidence, and by so doing, thereby create success.
One of the most impressive accomplishments of Steve Jobs was to convince talented people that their working at Apple was the most productive use of their working time, because the company would be successful and they would have a hand in changing the world. His recruitment of John Sculley from Pepsi-Cola with the line “Would you rather sell colored water or change the world?” is only one instance of Jobs’s ability to attract talent. He recruited Joel Podolny from his job as dean of the Yale School of Management by presenting the opportunities at Apple as being much more interesting than even running a university. In fact Podolny’s first job at Apple—he now runs all of human resources—was to lead Apple University.
In many instances, leaders convince customers to buy their products, investors to part with their money—a particularly important task for start-ups—talented employees to join, and stay, and suppliers to work with their company by presenting the organization as more successful than it really is. By so doing, leaders enlist the resources and support that will ultimately make the organization successful. This is why I often say that the ability to misrepresent reality is a crucial—maybe the most crucial—leadership skill.
And leaders convince others to hire them and to keep them in their leadership positions, sometimes in spite of poor performance or a not-so-great track record, by their ability to articulate a compelling case for why they should hold the job. That is why, as we saw in chapter 2, exhibiting confidence is so important for career advancement. If you don’t feel confident, or competent, then getting and keeping a good job entails misrepresenting your true feelings—being able to lie convincingly about your ability to do the job. But often, if people believe you can do the job, you can, because they will give you the advice and support to make you successful.
An example of this phenomenon is illustrated by the life of Frank Abagnale, which was the subject of the movie Catch Me If You Can. Before he was nineteen, Abagnale had convinced others that he was a Pan Am pilot, a Georgia doctor, and a Louisiana parish prosecutor. “His primary crime was check fraud,” and he became so skilled “that the FBI eventually turned to him for help in catching other check forgers.”44
This is all to say that sometimes, maybe even often, saying what is not true at the moment helps make the statement true down the road. This is because of various forces that the untruthful statement brings into play, thus making the statement become true. Whether or not this self-fulfilling process provides a sufficient justification for not telling the truth depends on one’s view of the ethics and rationale for lying. But there is no question that sometimes lies become the truth for the very fact of their being told and believed—with, on occasion, positive consequences for companies and leaders.
And there is at least one additional positive consequence from not telling the truth—the ability to get things done by forestalling the opposition that might occur if people knew precisely what was going on and what an individual’s intentions really were. For example, John F. Kennedy assured the American people that there were no plans to invade Cuba even as his administration was plotting the Bay of Pigs invasion, and Franklin Roosevelt assured the United States in 1940 that he had no plans to send American troops to fight in the war then breaking out in Europe. But perhaps the classic case of lying and its positive consequences in helping presidents get things done was Abraham Lincoln. Meg Mott, a professor of political theory at Marlboro College, refers to Lincoln as a skillful liar, for good effect. According to the journalist John Blake,
Lincoln lied about whether he was negotiating with the South to end the war. . . . He also lied about where he stood on slavery. He told the American public and political allies that he didn’t believe in political equality for slaves because he didn’t want to get too far ahead of public opinion, Mott says.45
When Sherron Watkins, the vice president for corporate development at the Enron Corporation, went to Kenneth Lay, the CEO, to voice her concerns about the proliferation of and the accounting for all of the special-purpose entities being set up to mislead investors and artificially boost perceived profits and Enron’s stock price, her reward was that Andy Fastow, the company’s chief financial officer, sought to have her fired. That’s not unusual. In the conflict between money and truth, bet on the money—in Enron’s case, the fortunes that senior corporate executives made from running, for decades, what was essentially a massive accounting fraud.46 No one wants to hear that the golden eggs being laid by the goose aren’t actually golden, so people close their eyes, either actively or passively, to lies and distortions all the time.
A lie typically involves two parties who are in interaction with each other—the person who tells the lie and the person who signals that he or she wants to hear it. In the massive Ponzi scheme and financial fraud committed by Bernard Madoff, some people who knew that the returns and their lack of variability were too good to be true nonetheless decided not to look too closely, hoping that they were real. CEOs who receive overly optimistic sales forecasts often hope that they will come true and therefore don’t ask too many probing questions. In many ways, people are complicit in their own deception. That is certainly true in the case of the leadership industry as well. People, wanting to believe the best about others and the world, not only fail to do due diligence but signal that they want to hear the myths and tales that have become so much a part and parcel of leadership lore. So that’s what they get.
People are complicit in one other way as well: People have a choice once they uncover that others have told them lies—to continue associating with, doing business with, and in other ways failing to sanction the individual doing the lying, or to do the opposite. Of course, if people were doing something like associating with one another in the first place, they must have perceived some benefit, so expecting them to stop is naive. This is one reason that the lying continues; in the end, it does not matter, at least in terms of affecting people’s subsequent actions.
The dynamic just described concerning individuals’ reactions to leaders who lie has been extensively explored in the domain of consumer choice, in particular in an innovative study that sought to understand the “reasoning processes consumers use to generate support for public figures who have acted immorally.”47 The study identified and demonstrated empirical support for two distinct processes. One process is moral rationalization, “the process of reconstruing immoral actions as less immoral in order to maintain support for an immoral actor.”48 Fudging a little on financial statements—well, lots of people and companies do it, and it’s not that bad. Promising software that doesn’t exist—sort of what customers expect and no one is really harmed. You get the picture.
The second process the authors call “moral decoupling,” which is “a psychological separation process by which people selectively dissociate judgments of performance from judgments of morality.”49 So the marital infidelities of golfer Tiger Woods could be argued to be irrelevant to his skills as a golfer, and Bill Clinton’s dalliance with Monica Lewinsky believed to not detract from his performance in foreign affairs and stewarding the economy.
This research confirms my argument about observers’ complicity in creating and perpetuating a culture of immorality or, more specifically to the subject of this chapter, lying. Our motivation to rationalize and decouple so we can continue doing what we want to do helps ensure the absence of sanctions for lying. And with positive reasons to deceive—creating a reality in which what was originally untrue becomes true—and with few to no sanctions for doing so, why would we expect most leaders or anyone else to do anything different?
Now that I’m at about the halfway point of this book, I think it will be helpful to review what I’m trying to accomplish, a task particularly important given the subject matter of this chapter. Many people instinctively recoil from the idea of deception, strategic misrepresentation, lying—call it what you will—and don’t see their own misstatements in the harsh way they view those that come from others. Taught to be truthful, wanting to think of themselves as honest and upstanding, many individuals gloss over their own behavior and embrace the “shoulds,” the normative aspects of what people and leaders are supposed to be and do.
But by ignoring the evidence, the social science facts about deception, or, for that matter, any other topic pertaining to leadership, by pretending that common behaviors aren’t really that common, we miss the important opportunity to understand the social world as it is—the first step on the road to changing it. Admonitions to behave in ways that run counter to what many people regularly do will have no effect without understanding the psychology of why people’s behavior is the way it is. Only by using that understanding to design social systems and interventions will things conceivably be made different.
Ignoring the frequency of lying, the fact that it is positively associated with both having and acquiring power, and the possibility that lying is a behavior that is often quite effective won’t change any of these oft-documented facts. All that ignoring reality will accomplish—and that includes the form of “ignoring” that comes from finding some rare and possibly untrue exception to everyday life—is what the talks and books about leadership so often do: present a world that is notable in its discrepancy from what people see and how they often behave themselves.