(Out)breaking bad news
In the wake of the Coronavirus spread, it remains abundantly clear that the value of transparency is something that most governments and businesses – and yes, individuals – still haven’t figured out.
China kicked off the opacity parade by downplaying the risk and spread of infection both inside and beyond Wuhan, only to cave somewhat as its spread became too difficult to ignore. Iran was next, at first reporting only deaths that suggested an impossibly low infection rate. The US followed suit, albeit less overtly. Instead, our governments and many prominent individuals questioned the likelihood that infected individuals resided inside our borders, despite common sense telling us that was impossible given the ubiquity of worldwide travel to/from our cities.
One region that has been exceptionally transparent? Singapore, which not only provides regular tests to people and announcements about the latest cases, but also allows you to track the infection in an online portal that breaks down transmission by individual and primary source. It’s no coincidence that the most serious consequences of COVID have largely avoided the region..
All of this got me thinking: what is it about difficult news that drives people to obfuscate, hide, or lie to others, especially when the truth is likely to come out anyway? And what can we learn from those tendencies to improve the way we govern, run business, and lead our families?
Bad news bad
The first startup company I joined in 2012 found success early. Facilitated by legislation from the Bush and Obama administrations and spurred on by research from the Gates Foundation, teacher competency had become a focal point of US education. As a result, dozens of states enacted teacher evaluation requirements designed to identify top performers (ostensibly to identify who should get raises) and the worst offenders (to determine who should get fired).
Our first product was a software solution designed to support teacher evaluations. In an environment where archaic technology was the norm (which was cemented by both bad policy and human habit), there was an opportunity to create a platform that simplified the process for administrators and provided a fairer evaluation for the teachers. With great teachers underpaid and bad ones too difficult to fire, a platform to better assess talent was undeniably attractive. As a result, the company attracted a team of smart and passionate people.
The company was led by a CEO with experience in both educational policy-making and management consulting. He had great connections with governments, investors, and advisors, and could get access to nearly anyone within the education sphere. He was smart, ambitious, and exceptionally personable. There was just one problem – he hated delivering bad news.
Crime and avoiding punishment
The challenges surrounding (and desires to avoid) transparency are fundamentally a conflict between the needs and desires of an individual vs those of the group. How these conflicts manifests themselves can be better understood using game theory.
Game theory’s consequences were highlighted during an amazing scene in the movie “A Beautiful Mind”, and is a branch of mathematics that explains how people ought to behave in certain situations. In the past decade interest in game theory has exploded, and with the complement of artificial intelligence it transformed our understanding of the world, from the “game” of social engagement to literal games such as poker.
While the mathematics behind game theory can get exceedingly complex, it’s easy to explain in scenarios with few decision points. For the sake of (morbid) simplicity, let’s say that Bob kills his wife. Upon committing that crime, Bob realizes that he has two choices: 1) turn himself in, 2) attempt to cover up the crime. Let’s make the reasonable assumption that Bob wants to avoid getting caught, and for the sake of simplicity let’s ignore that Bob may get a reduced sentence for turning himself in.
In a mathematical sense, we have now described the characteristics of a “game” with constraints (i.e. rules), choices (i.e. moves), and objectives (i.e. goals). Bob now has a choice to make: which of his possible moves give him the best chance of winning” the game? Since there are only two possible moves, it’s easy to map out every possible iteration of the game:
Bob turns himself in -> Bob always gets caught
Bob attempts to cover up the crime -> Bob occasionally avoids capture
It should be obvious that given the structure of the game, it is always in Bob’s best interest to attempt to cover up his crime. It should also be obvious that it is always in society’s best interest for Bob to turn himself in. While this is a simplistic example, it illustrates how situations may arise in which competing desires lead individuals to decisions that are damaging to the group.
The game theory of life
Most real-life situations are significantly more complex than the example above. People typically have more than two choices. People have to act on imperfect or non-existent information. There is often more than one person playing the game. That said, it’s still a useful exercise to map out potential scenarios to understand the impact of poor transparency, and to illustrate why the cover-up is often worse than the (literal or figurative) crime.
Let’s return to the startup example. As I mentioned, our CEO hated to deliver bad news: company meetings were chock-full of progress updates, exec conversations rarely centered around company shortcoming or failures, and 1:1 discussions rarely contained any serious critical feedback. It thus came as a shock when roughly three years into my tenure, we found out that the company was in dire financial straits.
From our CEO’s perspective, his communication tactics made sense: he thought he could pull the company out of the situation we were in, and he didn’t want to unnecessarily alarm anyone with a pessimistic outlook. After all, what would happen if people got worried and jumped ship or became demotivated? What if he continued with a veneer of positivity until the problems were fixed?
Unfortunately reality is not subject to our narratives, and the impact was swift and brutal. Layoffs were made, execs were fired, and key strategies changed almost overnight. The remaining team was left in a state of shock, and many of the remaining team members transformed from passionate and optimistic to angry and bitter.
In order to stem the tide, our CEO hosted an immediate all-hands to address everyone’s questions. “What happened?” everyone asked after he took the floor. Given what happened, it was an understandable question. From a game theoretical perspective, however, it was not the most important one at that time – “Why didn’t we know about it?” was.
Why we catastrophize
As humans, we have an innate tendency to assume the worst, especially in times of crisis. From an evolutionary perspective it makes sense: if your ancestors assumed rustling grass meant that a lion was approaching, being wrong meant just being wrong; if they assumed rustling grass just meant rustling grass, being wrong meant being dead. For most of human history, our survival has necessitated an abundance of caution.
Modern society bears little resemblance to life on the savannah. Situations are rarely life or death, and we have more tools – and more people – available to us than ever. As a result, we have fewer catastrophic outcomes, better outcomes overall, and more control over the choices that lead to them. That we are no longer fighting for the resources to survive also makes cooperation and mutual support more likely today than at any point in history.
Even when the shit does hit the fan, most of us are surprisingly adaptable. “I don’t know what I’d do if I lost my job” or “I’ll never find someone like her again” are refrains we hear time and time again. Yet the vast majority of us not only survive these situations with our faculties intact, we become better and more resilient people as result.
Bad news good
Let’s re-examine the reaction of the CEO. It’s easy to assume that communicating “we’re not bringing in enough revenue and are struggling to find new investors” would incite panic and lead to a loss of morale. For some individuals that may have been true, though I would question those individuals’ fit for a startup in general. For others, the opposite was likely to be the case. Regardless, the possible outcomes of the CEO’s statement looks like this:
CEO shares bad news, person panics
CEO shares bad news, person is ambivalent
CEO shares bad news, person gets motivated
In this scenario, ⅔ of all possible paths are either neutral or positive, assuming each is equally likely. Peeling back the onion further shows that the positive outcomes are even more likely:
#2 was less likely because people who join early stage startups tend to be more passionate about their work
#1 was less likely because people who join early stage startups tend to be more risk-tolerant
#1 was less likely because the company was mission-driven and team-oriented
Given the above, and given that the CEO was charismatic and a good motivator, his fears were almost certainly overblow. The most probable outcome was that the team would’ve rallied behind him and the company to solve the problem. Yet despite those advantages, fear won the day. I quit the company months later, and the CEO was ousted a year after that.
What we can learn
My mom once told me that “weddings and funerals either bring families together or tear them apart”. In business and in life, emotional events tend to create divergent outcomes. What distinguishes the good from the bad, however, is the leader’s ability to communicate challenges effectively, empathize with all parties, and bring the team together to solve the problem.
Whether you’re a business leader that’s concerned about the impact of bad news on your employees, a parent fretting about telling something difficult to a child, or a spouse concerned with sharing tough feedback with their partner, I’d encourage you to err on the side of delivering honest and transparent communication whenever possible.
If you’ve put work and care into developing your personal and professional relationships, and make the effort to communicate effectively, you might be surprised by well challenging news will be received by others and how effectively it can bring people together. In this day and age, it might be the only thing that reliably can.
Hope you enjoyed this week’s newsletter.