Who tells you the truth?
Stanczyk by Jan Matejko. Source: Warsaw National Art Museum
There’s a tragic cycle in human affairs. A leader solves a problem and is celebrated for their wisdom or decisiveness or practical understanding. They’re given more and more authority. Eventually, all the adulation goes to their head. They don’t want to hear bad news—who does?—and acquire toadies and sycophants who only tell them what they want to hear.
Eventually, the leader overreaches—they try to accomplish things beyond their abilities and resources. They don’t get the bad news until it’s too late—no one wants to deliver it. The ancient Greeks called this “hubris.” The cycle of success-overreach-downfall repeats itself in individuals, companies, and nations. When people have to deliver bad news, they implore their boss not to “shoot the messenger.”
It’s important for companies to have systems in place where bad news can be safely communicated to those in charge before simple mistakes become costly and potentially tragic design flaws. Recently, Proctor and Gamble had to get rid of half its brands in order to streamline its business. Seemingly no one was willing to tell the previous CEO that the agglomeration of products as diverse as pregnancy tests and pet foods were acting like barnacles on the bottom of a ship, slowing growth and making it hard to steer. It took new leadership to see the problem and propose a radical solution.
In movies and drama—and especially Shakespeare—many leaders threaten anyone who brings them bad news. This usually happens just before they fall. Cleopatra, Macbeth, King Henry IV—they all follow this pattern. By contrast, those who keep a “fool” close to them often fare much better. Only a fool—someone with nothing to lose—is willing to tell the truth. If companies want to avoid overreach, they need to have a culture that encourages people to speak truth to power.
Because—ironically—it’s the fool who is honest and frank who is often the most astute.
Douglas R. Tengdin, CFA
Chief Investment Officer