View profile

Bursts of Color - Lying and Cheating and Stealing, Oh My!

Bursts of Color - Lying and Cheating and Stealing, Oh My!
By Geoff Donaker • Issue #60 • View online
Last week, HeadSpin’s CEO was charged with fraud for providing “investors false information that overstated HeadSpin’s annual recurring revenue … by approximately $51 million to $55 million.” This week, Elizabeth Holmes goes to trial, three years after she was indicted and her company’s value dropped from $9 billion to $0.
Every few years we see one of these implosions based on a house of lies: Enron, WorldComm, Bernie Madoff, Jho Low, Michael Milken, etc. Yes, a few of the guilty execs eventually get pilloried, as they should. But these aren’t frauds committed by one person on one day: they are systemic and built over years. So I always wonder: how did this start? And how can we stay far clear of the conditions that allow lying and cheating to take root in a group?

For a two-hour cringe...
For a two-hour cringe...
Honesty in Behavioral Science
Behavioral Science can teach us a lot about truth-telling, and my favorite book on the topic is The Honest Truth About Dishonesty. Here are a few of my take-aways, first posted in October 2020:
Most People Fudge, But Don’t Realize They Do
Given the opportunity to grade our own tests, peek at an answer key, calculate our own bonus or score our own golf game, most people “fudge” their answers a bit. More interestingly, we tend to be convinced that we scored ourselves correctly, and have little or no recollection that we exaggerated. These results were repeated consistently across age, country and other demographics.
Some Factors Increase Exaggeration
While most people fudge a bit, some conditions can cause group dishonesty to get out of control. For instance:
  • Irritation: fudging rates double when we’re annoyed.
  • Fatigue: tired people exaggerate more.
  • Disconnection from Money: we’re more likely to steal a pen than a dollar.
  • “In Group” Behavior: when we see friends take mulligans, we tend to do the same.
How We Can Increase Honesty
Leaders can increase team integrity by trying to avoid the negative conditions above. A few other things that help:
  • Monitoring: we don’t exaggerate when we’re being watched.
  • Moral Reminders: we’re more honest right after reviewing a school honor code or our company values.
  • No Temptation: When we don’t grade our own work, we don’t tweak the score. This is the most self-evident one… and also the most relevant for system design!
Did you enjoy this issue?
Geoff Donaker

Bursts of Color is a newsletter for start-up leaders who work with Burst Capital. It's meant to include products, people and ideas that I think are interesting and maybe relevant for you.

In order to unsubscribe, click here.
If you were forwarded this newsletter and you like it, you can subscribe here.
Powered by Revue