On business: Disguises and denial

A healthy corporate psyche is essential for commercial success, but most management vision is blinkered to the truth.

by James Bellini, World Business

The recent billion-dollar bankruptcies of Enron, WorldCom, Global Crossing, Parmalat and a host of other corporate giants, not to mention the dishonesty epidemic that destroyed once-mighty names such as Arthur Andersen, have led many to believe that this new millennium must have a poisoned soul.

Yet business crime is nothing new. In the decade before Enron and the rest, US courts registered scores of criminal convictions - and massive fines - against big multinationals for breaches of antitrust, financial, environmental or other laws. The top 10 cases totalled nearly $2 billion in court-imposed sanctions.

Dishonesty and bad conduct have been the staple diet of money-making since the birth of the business age. Indeed, corporate deception was once given a ringing endorsement by the Harvard Business Review. In his 1968 article 'Is Business Bluffing Ethical?', author Albert Z Carr was blunt: "The pressure to deceive is felt everywhere in business and deceptions are ethically justifiable. Departing from the strict truth and the golden rule is part of the strategy of business."

Mainstream management thinking has rarely addressed this issue, preferring to focus on strategies and processes as the foundations of competitiveness. But we need to move on from this narrow view, principally because it looks no further than the balance sheet assets and superficial activities of an enterprise.

It is time to change the way we analyse companies; we must delve beneath the corporate surface into the workings of their underlying psyche if we are to develop a meaningful way of assessing their fitness for survival. Management thinking that dwells solely on the physical assets and processes of an enterprise cannot assess the ability of an organisation to survive in the long term.

Businesses behave like people; they have personalities and psyches. Over time, organisations, as entities, take on personality traits of their own. The nature of this behaviour gives us vital clues as to the condition of a company's underlying psychological state and in so doing helps identify those that will succeed and those doomed to fail. It also offers the means by which those confronting failure because of an ailing, dysfunctional psyche can be given a new direction, towards revival and profitability.

As with people, we can gain important insights into the psyche of corporations by the signals they give out - through what they say and do, their logos and livery, their advertising slogans and marketing promises, even their corporate HQ. Very few pass the test: most organisations present a personality to the world that is misleading because it springs from a form of corporate self-delusion.

The result is a corporate voice that sends out signals that do not match the underlying psychological realities. And this mismatch indicates a corporate personality flaw that can lead to skewed strategies, ambitions and beliefs, and ultimately to business difficulties and failure.

Many senior managers have an irrational belief in the guaranteed survival of their company; corporate history - littered with failures - proves them wrong. The original Fortune 500 list, published in 1955, was headed by names such as Esmark, Wilson, Armco and Borden Chemical. Who? Pan-Am went south; Kodak is a shadow of its old self. Ditto Levi-Strauss. Ford and GM are walking wounded. Sony may not be far behind. Management gurus explain their plight by pointing to, say, radical innovations by rivals, changes in fashion, a crisis badly managed.

But these are not the cause of corporate problems, merely the external symptoms of a deep-rooted emotional condition that blocks corporate vision. Kodak, for instance, invented popular photography and developed a corporate persona shaped by the age of box cameras and optical film.

The company fumbled the transition to digital technology. Levi-Strauss - a family-run enterprise until it hit trouble - was psychologically rooted in the baby-boomer generation. It failed to spot the immense competitive challenge of younger, more creative designer jean labels on the horizon.

But corporate history also has its winners - companies that have a bullshit-free psyche, uncluttered by false perceptions - for example, easyJet. Older brands, such as GE, have been around for a century or more and have probably had their moments of dysfunction.

But GE under Jack Welch was a paragon of clear, unsentimental management drive. During his 20-year reign, GE revenues leapt from $26.8 billion to $130 billion, and shares went up 4000%. In retirement, Welch told a UK newspaper his formula for success: "I want bosses to have more candour, less bullshit."

- James Bellini's new book The Bullshit Factor: the truth about corporate disguises, lies and denial, co-authored with Kati St Clair, is published by Artesian Publishing, £12.99, ISBN: 0-95511-640-6.

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