The Dark Pattern: The Hidden Dynamics of Corporate Scandals with Guido Palazzo

In this episode of Leadership Bites, I interview Guido Palazzo, Professor of Business Ethics,  University of Lausanne, who explores the dark side of corporate behaviour and the systemic issues that lead to ethical failures. We discuss Guido's background, the concept of his brilliant book 'The Dark Pattern: The Hidden Dynamics of Corporate Scandals' in corporate scandals, and the importance of understanding the systems and cultures that allow unethical behaviour to thrive. 

The conversation delves into the psychological aspects of corporate culture, the slippery slope of ethical compromise, and the need for organisations to create environments that promote ethical decision-making. Ultimately, we highlight the importance of awareness and proactive measures to prevent ethical failures in business.

Takeaways

• Guido focuses on the absence of ethics in business.
• Corporate scandals often involve good people making bad decisions.
• Systems, not just individuals, drive unethical behaviour.
• Leadership plays a crucial role in shaping organisational culture.
• Group dynamics can lead to conformity and ethical blindness.
• The slippery slope of compromise can lead to significant ethical failures.
• Survival instincts can overshadow ethical considerations in the workplace.
• Creating a 'bright pattern' can help organisations avoid ethical pitfalls.
• Awareness and proactive measures are essential for ethical business practices.
• The importance of having a court jester to provide honest feedback in organisations.

Key Moments & Chapters

00:00 Introduction to Ethics and Corporate Responsibility
03:03 Guido's Background and Academic Journey
05:37 Understanding Ethics in Business
08:49 The Role of Systems in Ethical Failures
11:45 Exploring Corporate Scandals and Dark Patterns
14:35 The Impact of Leadership on Organizational Culture
17:41 Group Dynamics and Ethical Decision Making
20:30 The Combination of Dark Patterns in Corporations
23:28 Survival and Ethical Compromise in Business
26:12 Conclusion: The Human Element in Corporate Ethics
26:42 The Dark Patterns of Corporate Culture
29:39 The Slippery Slope of Compromise
33:16 The Illusion of the Messiah in Leadership
40:13 The Disconnect Between Leadership and Reality
44:11 Finding the Bright Pattern in Dark Times

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Transcript

Guy Bloom (00:19)
It is fabulous to have you on this episode of Leadership Bites Welcome.

Guido (00:27)
Thank you.

Guy Bloom (00:29)
So here I go. ⁓ If I met you at a social gathering and you looked like an interesting fella and somebody said, you and Guido should have a chat. And we start talking and I go, Guido, what do you do for a living? What do you do, Guido?

Guido (00:47)
Well, I'm paid for working on the dark side of business, so to speak. I'm a professor of Business Ethics. But instead of focusing on ethics, I focus in my research on the absence of ethics.

Guy Bloom (01:01)
in. That's hooked me already and that's why I wanted you on because I think this is a fascinating topic. Now before we jump into the conversation and the book The Dark Pattern, I think it helps just to get a little line of sight on the individual so it doesn't require a kind of

intervention from you but I think it just helps to get a sense of where you've come from, how you got to where you are, just so people can see the history behind you and in essence your frame of reference for the world. So just give us that if you would be so kind.

Guido (01:40)
Yes, I'm a half German, half Italian, growing up in Germany, studying business and philosophy. Actually, I wanted to study philosophy only, but I didn't want to become a taxi driver. That's why I also studied management. ⁓ business ethics, in a way, was the interface of the two. So I ended up working on that. I wrote my PhD in Germany, in Marburg.

University where Heidegger was having a chair in philosophy. I was working on that chair, but many years after Heidegger, and writing a PhD in the consequences of globalization for corporate responsibility. I moved from there to become a professor of business ethics in Lausanne in Switzerland, and that's where I'm now since then. So I have become Swiss in the meanwhile, so I'm...

I'm everything and nothing, so I belong nowhere because I'm always in between something.

Guy Bloom (02:41)
So basically you're an academic mystery man.

Guido (02:45)
in a way.

Guy Bloom (02:49)
So, ⁓ I kind of, have, well, we have the book, The Dark Pattern, The Hidden Dynamics of Corporate Scandals, so we're definitely gonna talk about that. And then there's just something I guess about the role that you play if I was to come into an institution and I was to meet you and I was to hear you talk and I was on a program or a course or whatever it is that you,

What would I get? Let's part the book for a moment. But if I was in your kind of sphere of influence in the sense of, Guido is going to be your tutor or your coach or your facilitator, whatever the term is, what would you be talking to people about? And I think there are people that will have a very high level of understanding of this. And then there might be people listening to this podcast that go...

even what is it, when you say ethics, what do you even mean? So I think for some people, you know, let's even start there.

Guido (03:51)
Well, when I started here in Lausanne in 2003, what I was focusing on is global supply chains. It's this observation that we started to discuss at the end of the 1990s that business had gone global in the production, while the governance around companies had remained national. So you suddenly had global supply chains in which...

Companies were producing for Western countries, but under conditions that were more looking like the Middle Ages. Human rights violations, ⁓ slave labor, child labor. And I was investigating for many years what kind of obligations come with global production. I moved from there into working on organized crime.

and the interface to normal businesses, so for instance toxic waste management by the Italian mafia, protection money systems in South Italy. As I said at beginning, everything dark. And from there I jumped into analyzing corporate scandals, starting with the Enron story in 2003. And from there, always following all these crime stories and always asking myself, is there maybe something all these cases have in common?

And that is how my book emerged. So if you would come to Lausanne, one of my students, you would probably sit in a course on corporate responsibility. You would sit in a course on ethical and unethical behavior, the psychology linked to that. Or if you would be a PhD student, would sit in a course on philosophy of science, where we discuss questions like what is truth, ⁓ how do you understand the world when you do research.

Is there a world out there or is this all constructed? So all these things philosophers have discussed for centuries.

That's the beauty of being a professor, you are paid for talking about stuff you read.

Guy Bloom (05:54)
First

of all, I think you're far more fascinating than you might even think you are. That's the first thing. The second thing is this is a topic where I may be under- under-qualified, but I'm going to have a go. But I'm deeply interested in this because I think there is... I work with organisations and I work within and organisations are systems and you've got the individual and then you've got the system. And if I think about just a social... just to keep it...

at that level, people are sometimes different individually than they are when they're in a group. You can just very simply have a brother or whatever that behaves one way, but when he's with his other brother, he behaves another way. you know, and there lies the start, I guess, of the whole thing. And I think I'm also very interested in the normalization of things. And I think where...

Bad people doing bad things is one thing, but good people doing bad things, sometimes knowing that they are, but the system feels overwhelming, or not even recognizing it as a thing. So I don't think I've even got a question in there. I think really what I'm probably asking is, how do you approach those things that I've started to speak about and to bring them into people's consciousness?

Guido (07:19)
I always tell my students it's very boring to ask why bad people do bad things, Because they do it because they are bad. That's very quickly finished as a story. The big mistake that we make when we look at companies is that we attribute the behavior to people's character. As you said, there are people and there are systems.

And we tend to believe that if something bad happens, whatever that bad is for us in our perspective, in an organization, it must have happened because there are bad people. What we do in our book is we say, it's normally not bad people doing the bad things, it's good people. So it's the system that explains the behavior rather than the character of individuals. Of course, there might be bad people, ⁓ bad leaders, toxic leaders at the top of an organization.

But how do you want to explain a story like Wells Fargo by looking at the character? Wells Fargo is this American bank in which more than 100,000 salespeople committed fraud. 100,000. So they were just taking the electronic signature of their customers and opening bank accounts for them without the customers knowing about it. And then charging a fee on their regular account, 100,000. Doing this a few million times. What kind of...

HR department would that be that only hires criminal salespeople, right? They have a kind of blueprint for what they're looking for us. Or criminal salespeople would say, I have to work for Wells Fargo because that's where I can unleash my criminal energy. No, the people explanation in systematic actions of wrongdoing doesn't carry us far. We have to look into the systems. And that's what we do in the book.

Guy Bloom (09:06)
Just in the book, I'm not going to be able to say his surname, but you have a co-author Ulrich, which I think I can do correctly, but I'm going to get you to say his surname for me.

Guido (09:16)
My co-author's name is Ulrich Hoffrage and he's my colleague here in Lausanne. He's a psychologist. I'm a philosopher, so we put forces to analyze scandals.

Guy Bloom (09:25)
So, ⁓ great answer. ⁓ first question, know, why do bad people do bad things because they're bad people? Right, so the system really is in irrelevance in some respects to whether or not their prokivities may take them down that path. But the system, if the system was healthy, might prevent it. Or at least highlight it. So is the question...

what drives epic ethical failure in organizations.

Guido (09:59)
That is what we try to answer in the book by looking at a series of scandals that happened since the Enron story in the early 2000s up to the most recent cases like Boeing, Theranos, WeWork, Wells Fargo. So we look in these cases and we dive into court documents, into whistleblower reports, into investigative journalists' accounts of it.

And we try to ask ourselves, is there something that happens repeatedly across all these scanners? Is there a pattern? Because on the surface, these scanners are all different, right? have at Wells Fargo, have fraud on your customers. At Volkswagen, you have the manipulation of a software. there's always something more technical happening, a compliance problem.

But behind that, maybe there is something that happens again and again. And that is what we find and what we call the dark pattern. It's a repeating pattern of nine building blocks that you find in all corporate scandals with very few exceptions.

Guy Bloom (11:10)
Before we get into that, I know certain, I don't know all these, case studies. There are notes I'd know to a point. and if I just talk that, there is a figurehead who has a certain sense of, well, certain level of connections. They have a certain personality that...

is maybe, if you said charismatic, whatever that might mean to a point. And ⁓ they offer an answer that is financial. It seems to fulfill a need. It seems to be genuine. But actually the people often making the decisions around it don't know enough to know. Somebody becomes suspicious. They raise a flag, et cetera.

So at one end, I have this kind of ⁓ ideal in my brain about the person at one end that their character and their sheer force of will and the sheer momentum of the enterprise takes them forward. And then maybe the Volkswagen emissions or the Boeing, it's a much more established entity.

And they may not per se be charismatic individuals that are just carrying everybody along on a whirlwind of look at the money you could make. It's a more secure, it's almost like, you know, you could lose your job. It's a, maybe it's a different motivation, but I'm just, I'm just kind of intrigued by ⁓ the nine building blocks. Do they kind of cover that spectrum of personality versus concepts? I'd maybe bring those like, cause I'm thinking about this

relatively broad spectrum of which probably everything sits. But I'd love to kind of hear you kind of look at those blocks and maybe start to touch on some of those points.

Guido (13:10)
Well, These CEOs of these big companies and these startups, might look different because some of them are charismatic and others are not. But what they all share is they are toxic. They are psychopaths, right? So maybe not clinical psychopaths. We don't know that because we didn't do tests with them. But at least they are behavioral psychopaths. And for victims, that's the same. Elizabeth Holmes at Theranos was creating a similar terror regime.

as Martin Winterkorn was doing at Volkswagen. So it's people at the top who yell, who humiliate, who randomly fire, who do not allow people to pronounce problems.

who threaten them. So who create something that ⁓ for Volkswagen, by a news magazine, has been called a kind of North Korea minus concentration camps. It's an organization which everyone has fear. There are these quotes from people working in these organizations, like in Wells Fargo, salespeople who after this scandal broke out said, well, when I was thinking about work on Sunday evening, I had stomach pain. Or...

Another one said, I was fighting in the Iraq war and Wells Fargo is worse. So it's cultures that are so toxic ⁓ that people do not dare to speak up. And if they speak up, they get punished. So whether you are charismatic or not, doesn't matter in this context. mean, the charisma might make it worse because it helps people to somehow rationalize the way all their cognitive dissonance as they feel. There's this famous story of...

Tyler Schultz, the whistleblower in the Theranos story, who said, I was working in the lab. I was trying to build this blood testing machine that Elizabeth Holmes had promised to the world. It didn't work. I went to her and after this meeting, because she was so charismatic, I went back to the lab and said, I will make it happen. So this distortion of reality, you have this in all scandals. That's why we start the book by telling the fairy tale of the emperor's new clothes.

People together in organizations can develop a totally distorted world perception in which what they do makes total sense to them. And they do not listen to warning signals to people from outside. They will say, well, you don't understand my industry. ⁓ The storytelling inside can be so strong and so sealed from reality that they do not even see it coming. And then they are shocked when they get arrested.

Guy Bloom (15:47)
So is this a... ⁓

I read a book called Group Think and is it a group think that has been created by the will of the individual because they have such a dominion over the individuals that maybe report into them that when they go out and create the rest of the organization they don't have to be present but they've now created an ecosystem that is representative of

their gaslighting I guess. So I can imagine that with the sheer force of will of an individual and then interested also in the other side of that which is no it's not the force of will of the individual but somehow we got here and and that seems to be at one end sheer weight of character versus incremental steps that

Guido (16:19)
better.

Guy Bloom (16:46)
ended up where almost, how we get here? Because it never used to be like this. I'm just kind of interested in that kind of ending up in the same place but through different routes. Just love to hear you talk about that.

Guido (17:01)
You mentioned just two other elements of the nine dark patterns. One is group conformity and one is the slippery slope. So if you are in an organization in which you have this feeling everyone is against us. Uber, right? You come with your wonderful innovation and everyone is against you. The taxi drivers, the regulator, even your own drivers cheat on you. So you feel that you are

like in medieval castle surrounded by the enemy and you have to fight back. Uber managers told me in interviews, well, we had bodyguards. They were beating us up. And we've thought we bring such a beautiful thing to the world and the world hates us for it. So we have to fight back. The more you are under pressure from outside, the more you feel as a group that you have to fight back. You have the right to do things to balance.

all this pressure that comes from outside. That's one type of group effect. It makes the group less and less reflecting upon other types of perspectives. Because whoever is critically thinking about what you do is an enemy. It's a troublemaker from inside or from outside. So that's one group thinking. The other type of group thinking is you feel you are above the rules. Enron...

used to say we are new economy, the others are old economy. Rules apply to the old economy, not to us. Or Elon Musk, his lawyer recently said, well, Elon sends rockets into space, he's not afraid of the regulator. Because he sends rockets into space. The transhumanism crap of ⁓ Open AI and the other AI companies, we will transform humanity, we will...

fuse the brain with a machine and live forever. So that kind of ideological ⁓ storytelling leads people inside the organization to believe we are special. Rules don't apply to us. We can break those rules and we have the right to break those rules because these rules are only for the mortals, not for us. So group conformity increases ⁓ the effect that we describe. And the third group conformity is when you...

when you see left and right people speaking up being punished. You don't want to be the next one, so you blend in. There's this famous quote from one of the managers, engineers at Boeing. ⁓ Boeing was involved in these crashes of the 737 MAX, who said to his superior that what they were producing is dangerous, and the superior answered, at Boeing people have to die before we change. They have to die before we change. And that's what happened.

Guy Bloom (19:49)
Yeah, there's even conversations about whistleblowers being bumped off after the fact as well. So that got very dark and very real for people. these ⁓ nine ⁓ building blocks, can they all exist? I mean, sorry, do they have to all exist at the same time? is it, no, any one would be enough? Or how does that play out?

Guido (19:54)
Yes.

It's the

combination. ⁓ They need to exist for the company to morally collapse. It's the combination. Just give you two, let's say three elements, three decisive elements, and you understand the combination. You have this culture of fear that I mentioned already. You have bosses who yell, who humiliate, who kick out. And now imagine these people give you goals you cannot achieve. That's another element of the building blocks. Unrealistic.

It's totally unrealistic, but you cannot say that. Even the word problem is forbidden sometimes, like at Volkswagen. You cannot have a problem. You must achieve those goals. Combine these two already. You have total fear and you are given goals you cannot achieve, but you must achieve them. And then you see people around you breaking the rules. Your colleagues cheating on their customers, like at Volkswagen. And it's not only tolerated, it's...

It's desired by your superiors. They promote these people. They get the bonus. They a promotion to a higher position, the hierarchy. So you see that rules are at your disposition as long as you are successful. So you build up this gray zone between what is right and wrong, where it's not so clear what right and wrong is, because it depends on how successful you are. Then you can break more rules.

These three things alone, already together, create a very powerful context. You have fear. Your goals cannot be achieved, but you know you can do things that are borderline illegal, and it's okay. And it helps you to achieve your goals, to sell more products at Wells Fargo, for instance, or to build this blood testing machine at Theranos, or to build this...

filter for your diesel emissions at Volkswagen.

Guy Bloom (22:05)
So I'm just looking up something actually, because I just wanted to say to you, there's a comedian, George Carlin, who said you don't need a formal conspiracy when interests converge, which I find quite fascinating because it sounds, when you talk about a system, it's this idea that everybody's in a room.

going, right, so what we'll do is... And there might be an element to that. I can imagine a kind of star chamber kind of, you know, there's certain people at the top going, well, do know what, if we don't get caught, who cares? I can kind of imagine that at one end at some point. But also, I think sometimes presume that actually people are having these conspiratorial conversations. But actually...

if, and I love that, you don't need a formal conspiracy when interests converge, actually, what's the convergence? I get that earn out, I get that bonus, I keep my job, I get... So it may not even be the same thing, but we move towards things we want and we move away from things we don't want. So, again, I don't know that... how that resonates with you.

Guido (23:15)
The word interest for me is a bit dangerous because it signals rational decision making. It signals someone is weighing pros and cons when doing the wrong thing, which might exist. But as we argue in the book, it fades away over time. One of the Enron traders who was cheating on his customers when he was arrested, said, you do this once, cheating, it smells. You do it again, smells less.

And I would add, you keep doing it, stop smelling it, it becomes a routine, a habit. You don't think about it. It's not constant inner reflections about what's in for me. One of the main things people said after the scandal, when they get caught and they have to justify why they participated, one of the main things they say is, I thought I had no choice. I had no choice. So they just try to survive in the system.

As I said, this trader, this salesperson at Wells Fargo, this is worse than the war. In a war, you don't make calculations, you just try to survive. And these salespeople were not getting rich, these are not traders, these are people who live on food stamps very often because their salaries are not sufficient to make both ends meet. So it's not so much interest, it's survival.

Guy Bloom (24:37)
So is that linking us back to Maslow's pyramid where we actually go, in truth you see...

the veneer disappears or maybe people apply the, you know, they become performative when actually they fear. And maybe fearing not making the two million pound bonus when you already earn a million, well, that might just be greed because actually you can, you know, probably deal with that too depending on your circumstances. But actually it becomes much more about almost submission.

because actually I fear that actually I may lose my house, I may not be able to feed my children, may, et cetera. So greed is a different thing. That's your conscious choice too. I'm gonna do that because I want more than I need. But actually, what would my behavior be if I was...

earning the money that allowed me to survive, I look around the market and I don't know where I could go and get another job. And then I fear being less than I should be for my family. I fear letting my children down. I fear not be, you know, fulfilling my requirements as a provider, male or female. So is that fear level, that Maslow pyramid, does it equate to that? Does it align to that?

Guido (26:04)
It's very often a much more fundamental fear. It's not fear connected to finance, to this job that I need to pay my house or the school of my children. It's already this fear of not being recognized as your own being, of being humiliated by your co-workers.

of not being someone. that's why probably most of these people at France Telecom, the case we discuss in the book, killed themselves. They had a wave of suicide in a change management process. A hundred people killing themselves within three and a half years. This is not about bonus. This is not about money. This is about being constantly signaled, you are not belonging here. You are an obstacle. You should feel ashamed. We don't need you.

Guy Bloom (26:49)
Thank you.

Guido (26:58)
you react to this yelling, to this abuse. You are, and that's another element of the dark pattern, this hunger game structure. the company fires 20 % of the people every year. One of these wonderful innovations of Jack Welch. And you know that in your team, 20 % have to leave at the end of the year. You don't want to be one of them. Not because of the man. You might find another job. It's just so humiliating.

It's so threatening to your identity. There's this famous episode from Philip Zimbardo's prison experiment. So, much remember 1970s, he puts young boys, 18, 19 years old, in a prison environment, a mock-up prison, puts them into two roads, prison guards and prisoners, and the situation escalates within days. And there's one of the prisoners who collapses, and who says to Zimbardo he wants to get out.

And while he's talking with Zimbardo in another room, the prison guards had instigated the other prisoners to shout that prisoner 106, that was his number, is a bad prisoner. And as soon as he hears that, he wants to go back. He said, I don't want them to believe I'm a bad prisoner. See, he takes over this crazy situation as reality, and he said, I don't want to be a bad prisoner. So...

We think always when people do the wrong thing, it's a calculation, it's money, it's career. Most of the time it's basic survival. And that is what we don't normally read about in these scandals. These scandals have this front stage where we see some illegal stuff happening and they have the backstage of tremendous human suffering.

Guy Bloom (28:43)
When we say survival, social survival, identity survival, ego survival, am I saying the right words when I say that?

Guido (28:56)
I would say these are exactly the words. Yeah, you are nobody. If you're told that all the time, you're a bad salesperson, ⁓ you're superfluous, we don't need you here, you're a bad engineer. ⁓ If you're told these things all the time, you start believing them. add to this the so-called bystander effect. So the fact that even your peers don't react to your abuse. We know this from bullying in schools. Everyone, every child,

has the tendency to rather side with the bully than with the victim because if you side with the victim you might be the next victim. So you want to be with the strong. There's silence around you when you are the victim. They might even start to blame you. You might start to blame yourself. How did I provoke these things that happen to me right now? So I am guilty. That's also kind of group conformity effect. So if everyone sees me like a loser, well there must be something about this that is true.

self-doubt.

Guy Bloom (29:57)
So a couple of things here for me, because this is first of all everybody going by the book. Well the link will be in the description. If you haven't, if he hasn't hooked you in now then you're not listening to the right podcast. So I often write on a flip chart, tolerable, tolerate, tolerance.

which is something might be tolerable, it's just the way it is, I've only just landed, I'm new here, I've maybe got the line of sight on it yet, he's a bit shouty, it's tolerable. And over time, you become familiar to it, and it starts to slightly become easier to put up with because of that familiar, there you're tolerating it. But at somewhere, different timelines for different people, you develop a tolerance for it.

Guido (30:46)
Mm-hmm.

Guy Bloom (30:47)
And you see it just in personal relationships all the way through to whatever. But if I mapped that to this, that be fair?

Guido (30:57)
Yes, that's what we call the slippery slope. And that is the case in all these scandals. The criminal behavior never occurs from one day to the other. It develops slowly over time in small compromises, one step after another. And because these compromises are so small, we can always...

go the next step because it's not much that we deviate from the rule. Take one of the cases we discuss in the book, is Lenz Armstrong's doping scandal. So Lenz Armstrong, the professional cyclist who won the Tour de France seven times in a row, and as we know, with the help of EPO. And people in his team, like Tyler Hamilton, one of his helpers, described this process of how they were... ⁓

introduced to doping and said well we had a thousand days without doping in the team but we were getting all these injections that were legal iron vitamins you get all these injections but but you know there is this day coming when they will ask you for the next step and you have to make a decision and you know that ⁓

Armstrong has an A team and a B team. The A team are the cyclists who will go to the Tour de France. The B team will not go to the Tour de France and probably not even get a new contract. But if you want to even survive the Tour de France, because it's a brutal race, you need the drug. It gives you 10 % more performance. You have to make a decision. And all these cyclists like Hamilton, they say, well, I was against doping ⁓ early on, but over time, this resistance to it...

became weaker. And in the end I was almost relieved when I got the first injection. I was almost relieved. So I went from being totally against it to being relieved that I'm now part of the A-Team. It's the slippery slope. Salespeople at Wells Fargo would not cheat on their customers at the beginning. They would maybe start by opening a bank account on their own name. Or they would sell a bank account or insurance to their own family members just to be able to go home in the evening.

It's the slippery slope that makes it so easy to continue. And that's why many people are shocked when they get arrested. They ask themselves, how could I ever end up in this? Yeah, you ended up because you made one compromise after another. Clayton Christens and the Harvard professor, the late Harvard professor once said it's easier to be 100 % aligned with your values than 98%. Because 98 means you make this small compromise that then opens the door to the next one, which is easier.

Guy Bloom (33:33)
watching a social media clip of Mike Tyson, I've become a bit of a fan on. He's become a very well-read, highly articulate person, regardless of anything else. And he was talking to a gentleman called Francis Ngana, who's a UFC mixed martial artist, who's an absolute beast. And he came from ⁓ some space in Africa.

you know, was working in the sort of the salt mines kind of thing. And he gets over to the UFC and he becomes heavyweight champion. So he's gone from literally abject poverty, not first world poverty, but third world poverty. And he now becomes a millionaire. And Tyson's talking to him and Tyson's obviously got a narrative that most of us know to a point of it all going wrong for him at various points, even though he was worth millions. And he said, ⁓

So you're favored by God as a metaphor, as a metaphor. goes, yeah, yeah, you know. He says, and the thing about being favored by God is that you're also favored by the devil.

And that really hit me. I'll be honest with you. There's a couple of things that have happened like that recently, but it really hit me because, you know, it's one, the temptation and the temptation might be money, but the temptation might be to give in, to submit, to, it doesn't always have to be the obvious, you know, if you do this, we'll give you that. And I think you're right. There is something about, you know,

once you let 1 % go, you're 1 % less. So this slippery slope is a very interesting topic. So I just hear that and I'm just reflecting as you talk because I'm aligning your thoughts to the sum of mine. But does that Mike Tyson thing, does that resonate with you when I say that to you or does that feel off-piste?

Guido (35:40)
You might remember when Enron was considered the next big thing, the future of capitalism, the economist called its CEO the Messiah. The CEO of WeWork was called the Messiah by his wife in front of managers. Elizabeth Holm was the next Steve Jobs. They're all waiting for the next Steve Jobs. Messiah, Steve Jobs. So you see this language of

someone walks over water. And if I tell you often enough that you are the Messiah, you start to believe that you are the Messiah and that rules don't apply to you and that you are special, God's special creature.

I sometimes discuss with my own students the movie The Devil's Advocate. I know whether you know this one. It's a tremendous movie with so many layers of meaning. But that's the story of the person who almost becomes God and then falls very deep. ⁓ Hubris. But I have to add that you find these people at the top of these scandals. That's the CEO who thinks he or she is almighty.

Guy Bloom (36:28)
Yeah. Yeah. Keanu Reeves and Al Pacino. Yeah.

Yeah.

Guido (36:52)
and at the same time psychopath. But we are not analyzing those people. We're analyzing the people in the middle. The sales person at Volkswagen, the engineer at Volkswagen or Theranos, ⁓ the software expert at Uber. So the people in the middle, because they will be punished in the end, they break the law. The CEOs rarely break the law. The only person, all these candidates who went to prison was Elizabeth Holmes. Interestingly, also the only woman in all these stories.

no one else was punished from the top because they normally are not the ones who break the law. They only create the context in which their own people think they have no other choice but breaking the law.

Guy Bloom (37:29)
I and I'm gonna get the Henry wrong, but there is a English story of Henry and somebody's gonna go, you don't even know your history guy in a minute when they listen to this, I'm gonna say the fifth, it's probably somebody else, but I think, I probably even said the wrong one, but he said, will somebody rid me, not rid me of this damneded priest, and he was talking about Thomas Becket.

the story goes, I just can't imagine how many people are going to send me a message now, whatever, but the point was, and the story goes that a couple of nights then ride off and kill him. Because they took what could have been, was it a command or was it just a statement into the ether? Was it somebody just rolling his epic? somebody just get rid of this flipping person for me. But if it's come from you, it's a command.

So I do also, I'm very interested in the CEO that drives a narrative with knowing exactly what they're doing. Or that middle territory which you're hitting on here, which is actually they're making statements, but actually because of a disconnection or a lack of a finger on the pulse or whatever it might be.

there's a set of behaviors below that actually doesn't actually match their own internal ethic. And they are disconnected. I used to work for, I first started out for an organization in the UK called Habitat, and it was a retailer. And I'll never forget there being a visit and this truck turned up and all the things that didn't look very good were put in the truck and it was driven around the corner. Then the big visit came and then went.

Guido (38:55)
Mm-hmm.

Guy Bloom (39:18)
person went, it all came back. And we say in the UK, we used to be the Queen, now we say the King, the King thinks the world smells of paint, because there's somebody three metres in front of them painting everything. I'm sure that analogy translates. So there is those that know, and you could call it ⁓ a conscious blindness. I don't wish to discuss it, because actually, by driving these behaviours, it suits me.

But I wonder, and it doesn't let them off the hook, but I wonder if there's a set, there's a disconnection. But actually, the behavior actually starts in the middle because of the desire to present upwards, to manage upwards, to get the promotion, to be seen. And actually that senior person, wrongly, is devoid of any knowledge, is ignorant.

could say willfully ignorant, could say ethically blind, but they're not looking. And I just wonder, just again, just to hear you kind of just talk about that, I guess.

Guido (40:29)
All these people who are CEOs in the scandalized companies, are not born as CEOs. They have made a career. So they have learned certain behaviors as they move up inside the company. Winter Korn was the assistant of ⁓ Piek. And Piek was a psychopath too. A very different type of psychopath, but he created the terror regime at Volkswagen. And probably Winter Korn learned, this is how you have to lead. You have to be rough, otherwise people don't work.

and they will tell you we cannot make it, so you yell at them and then they will make it. And it always worked for him. Or take the guy at Boeing, StoneCypher, coming from Czech Welch. He learned, well, you have to fire 25 % of your people and then your performance goes up. And then you pressure your teams to build more airplanes with smaller teams and then even more airplanes and more airplanes. And it works for a while, right? And no one can tell you it doesn't work now anymore.

So this point you miss that point where the next pressure leads not to more performance but it's like turning this... it's one turn too much. The screw that you turn, it's not getting more firm into it, it's breaking. But you don't see that coming because it has always worked so far. The yelling has always worked. That's one point. And the other point, if you take people like Elizabeth Holmes, I'm convinced...

that she did until the end believe she would make it. It's this fake it till you make it culture in Silicon Valley where everyone who wants money from investors has to over promise. Otherwise you don't get money. Investors want big stories, not small stories. So she over promised, then she starts working on it. It doesn't work. She makes more pressure on her engineers. Still doesn't work. But where's this point where we could say until here it's the good motivation to make it

to fake it till you make it, but from here on it's fraud. I think this point doesn't exist. ⁓

Guy Bloom (42:30)
Isn't that fascinating?

I'm not lying, but I'm lying. I'm not being unreasonable. I have this phrase which is, sometimes it's not unreasonable to be unreasonable about reasonable things, like turning up on time. That's not unreasonable to be unreasonable about that. But actually, if it's reasonable to be unreasonable,

Guido (42:35)
Yes.

Guy Bloom (42:57)
about unreasonable things because actually it makes it happen. And I built a bit of a career by doing that because of my unreasonableness to you, but it's reasonable to me because I've got the big picture. I can force certain things to happen by sheer blinking bloody mindedness or willpower, but you're right. And it's sequentially, it's worked, it's worked. I've got this, I've got the house in here, I've got my mortgage, I get promoted, but...

I suppose in theory you could go an entire career and it did work for you but in truth when it goes wrong they actually then maybe can't rationalize well how did it go wrong because I wasn't lying I wasn't... ⁓ yes

Guido (43:35)
And there's no one telling you, right? No one is

there to tell you that something went wrong. Because you're alone.

Guy Bloom (43:40)
Yes, it's a fascinating

thing isn't it? So listen, again, I'm moving, I'm telling the family, then again I'm gonna have to come and sit next to you for the next three weeks and you go, I've got a full-time job and I don't know you that well, go away. So there is that. So the book talks about the nine...

Guido (44:02)
you

Guy Bloom (44:09)
⁓ building blocks. Does it get to a point where... Is it a narrative of just... beware? Or does it have a guidance principle to it? Or is the guidance principle in, well if you're aware of that, that is your guidance? Just give me a sense of that.

Guido (44:27)
Well, the book has a chapter called The Bright Pattern, because our publisher rightly argued you cannot leave your readers alone in the darkness. Even if you take Dante's original story, which we somehow model with the book, he is led out of hell by Virgil and led into paradise. No, not into paradise, to the door of paradise. So at least we have to lead our readers out of it. Exactly.

Guy Bloom (44:37)
in the darkness.

you

Give good people a doorway.

Guido (44:57)
And that's what we do. So we have a bright pattern that reflects the nine building blocks and says these are the nine things you could do to avoid becoming the next Theranos or the next Dieselgate. To not destroy your culture. And that includes things you can do as a person to protect yourself against falling for the wrong behavior. As a leader, creating the wrong culture for your team.

but also as an organization not to create a system that pushes people into the dark pattern.

Guy Bloom (45:32)
There is something about how, I think for an individual and for a team and then for an environment, it's not so much how do you see the back of your own head, which could be an element to it, but actually do you care enough to put a system in place that will send up an alarm bell that you would pay attention to, which takes a very interesting...

And I think this idea of ethics in business is under considered actually, because if I look at just private equity buying a business, there's going to be a turnaround in a certain amount of time. There's a three, five year funnel, whatever it is. At the start, everybody's in a good spot, great culture, commercial parities. Are we all on the bus? Bingo. And then every year it gets worse.

because until the last year where everybody loses their goddamn collective minds, not always the case but usually the case, because wealth is on the horizon, certain behaviors... so actually that ability to have a counterweight and a counterbalance as a conscious decision...

because actually you'll unconsciously probably get there, so you need something conscious to counterweight it, I think is quite fascinating.

Guido (47:02)
And there was a reason why in the Middle Ages kings had court justice, right? People could speak the truth without any risk. And the higher you climb in an organization, the less you want that. You don't want people telling you what you do is problematic because you have been right so often. Otherwise you wouldn't be the CEO or the CFO. And everyone who tells you what you do is problematic could also be someone who wants your job.

is a threat. So you surround yourself by cyclopons, people who always tell you what you do is great and amazing. So you lose contact with reality over time. Having a court jester would help organizations, I think.

Guy Bloom (47:36)
Yes.

You know, that's The Godfather films where Marlon Brando's got Robert Duval as the consigliere, you know, the person that can say something out without waking up with a horse's head in the bed next to him. You know, that's an important role, yeah, that court jester that. They're not in the fool's conversation is the truth. Yeah, I think that's really interesting. So listen, I'm at...

I'm going to bring us to a kind of a natural closure just because I want to go on. I'm really alert to this turning into a 20 hour podcast. So I'm going to put... Have you ever come across by the way the post office scandal in the UK?

Guido (48:20)
you

I'm reading this one or I'm analyzing this one right now with my own students. Yes, I have it. Yes, I read this book. It's a cool scandal. I love this. I love this scandal. It would have been in the book, but it came too late.

Guy Bloom (48:30)
Nick Wallace's book, yeah, Nick Wallace's book, the great post office scandal ⁓ is a great, he came on the podcast about, sorry.

No, no, I mean, you know, it's just when I when I had him on the podcast about a year before it broke probably in the UK and I'd never I kind of knew about it if it didn't I just spent an entire hour going really No, what well is there's anybody gone to jail yet? I just Yeah, so it's for those of you again if your US base maybe or whatever you may not have come across I mean

Guido (48:50)
Thank

Yeah.

Guy Bloom (49:07)
Guido's done some brilliant points of reference, but that's also another one that will blow your mind if you get into it. So listen, I will put links to you, Guido, in the description. I will put a link to the book. I'm just going to say it again, The Dark Pattern, The Hidden Dynamics of Corporate Scandals. I think if you've listened to this and you don't go out and buy it, I think there's something.

wrong with you because I've got so excited by this and sometimes I go, be a great boy, Debra Muthereen, but come on who doesn't want to know the nine building blocks of the dark pattern and then where the doorway is to get out of it. do. So boom. So listen you've been an absolute rock star this has been a ⁓ fantastic episode for me you can tell I'm genuinely excited about it so I'm going to bring us to a close

And ⁓ just for everybody listening, just thank you for your time. Thank you for your elegance of conversation. The succinctness and the depth of your clarity on this, I think, shines through. So very, very much appreciated.

Guido (50:14)
Thanks for having me.