After every institutional debacle, the arguments are the same: it was just a few bad apples. Nobody at the top is to blame. A few rogue, or over-zealous employees just went off piste. Then the full scale of the debacle emerges and another face-saving fiction emerges: no one could possibly have seen this coming. Both arguments were wrong in Abu Ghraib, at Enron, WorldCom, BP, Countrywide and Lehman Brothers and both are wrong today at News International.
The phone hacking scandal, and the enormous price paid for it by News Corporation, isn’t the unfortunate byproduct of a few naughty freelancers. Nor was it an unpredictable, unforeseeable event. Rather, it was the product of a series of systemic failures any one of which was visible, but each one of which Rupert Murdoch and his UK-based chose to ignore.
Willful blindness is a legal term, cited in the trial of Enron’s Skilling and Lay. It states that if there is knowledge that you could have had and should have had but chose not to have, you are still responsible. The causes of organizational willful blindness are many but News International demonstrated most of them:
Big ideas create tunnel vision which encourages the believer to ignore disconfirming data. Murdoch has always believed in the business value of political power and the importance of scale. Those beliefs appear to have blinded him to two fundamental mood changes in British political life. Ever since the MPs expenses scandal (and perhaps even earlier, since Tony Blair pushed through his Iraq war) British public opinion has demonstrated a distaste for politics and politicians. Concurrently, takeovers of national icons by foreign companies — such as Kraft’s takeover of Cadbury — inspired a revulsion against very big, very foreign corporate intervention in national life. But Murdoch’s belief in politics and big corporate takeovers — which had previously guided him to success — blinded him to a fundamental sea change in British life.
Ever since the Milgram experiments demonstrated that human beings are fundamentally obedient, serious leaders have understood that this represents a significant risk for those in power. What the experiments showed, he wrote, was “the capacity for man to abandon his humanity — indeed the inevitability that he does so — as he merges his unique personality into larger institutional structures.” In plain terms that means that if you ask someone to hack a phone or impersonate a politician, most people will comply. If you are a powerful charismatic autocrat, they are even more likely to comply. What may have begun as a minor infraction becomes bigger and bolder — and no one ever intervenes. This is a risk because compliance looks like harmony.
Milgram’s teacher, Solomon Asch, demonstrated that most of us so want to belong that we’d rather give a wrong answer (when we know the right one) than be left out of the group. Jaak Panksepp, the neuropharmacologist, has demonstrated the opioid reward for belonging — and the consequent pain of exclusion. Seeing what success requires in an organization is readily seen and imitated. In big, successful glamorous companies these motivations become even more extreme, even cult like. Deborah Layton, one of the few survivors of Jim Jones’s People’s Temple in Guyana has spoken to me about what she sees as the cult-like quality of many corporations, a description regularly (although unwittingly) echoed by many I know who work at News International’s headquarters in Wapping. If everyone is drinking the same Kool-Aid, you can be pretty sure no one will come and tell you when something is wrong. They’re too afraid of exclusion and too eager for inclusion.
Kathleen Vohs has conducted a battery of experiments into money all of which demonstrate the same finding: money undermines our sense of social connection. Extreme amounts of money do this extremely — and it’s easy to see how that works. The more money you have, with limos and helicopters and private jets, the less connected to the ‘real’ world you become. You’re blind to your customers, your market, to political mood swings. Reading your own newspapers is no compensation.
Power operates in much the same way. Frances Milliken did a marvelous study comparing how those in power think and communicate differently from the rest of us. They’re more optimistic, prepared to take bigger risks and think in more abstract terms. And the more cut off they become, the more certain they are that they are right.
We all are attracted to people like ourselves, people who confirm our sense that we are good and right. Murdoch was remarkably surrounded by just those people: his children. They blinded him to what was going on and to its full ramifications.
Of course Murdoch wasn’t the only one who was blind. But for someone who succeeded in the past by being uniquely in touch with popular sentiment, this latest debacle demonstrates yet another source of blindness: success.
A deep piece linking today news to psychology of human nature playing out in institutions. Several notes:  human beings are not fundamentally obedient but just adaptive;  looking at human beings from a dynamic perspective: what worked yesterday may not do so today;  human independence is conditional: they may deliberately and willingly imitate others to win out of a crowd;  money alone often is not sufficient to move people, especially when wealth level is sufficiently high, despite psychologists experiments show that money is everything.