Last Updated Jul 6, 2011 8:38 AM EDT
News International's admission of phone hacking has, in the past, inspired cynicism but not public outrage - for the simple reason that, as Hugh Grant so succinctly put it, the victims were rich. But these cases have generated profound public outrage. A deeply competitive publicly traded company has misled the police and grieving parents for no better reason than to generate some sleazy stories to generate profits.
Inside this disgusting story are many important issues that any leader has to confront.
Pressure to Deliver
Mulcaire complains that he was under such pressure to deliver that he had to have recourse to immoral and illegal tactics. This is the excuse all fraudsters use. Walt Pavlo, in his book Stolen Without a Gun, describes the immense pressure at WorldCom to deliver impossible results - and when he did, no one asked him how he'd managed it.
"Of course there was never a direct order to cook the books," Pavlo explained to me. "Instead it was just a kind of willful neglect. Since nobody told you to stop, you kept going. Why did I think this was right? I was doing my job."
Pavlo worked in conditions of high pressure that many will recognize:. 'Don't bring me problems, bring me solutions' was his boss's mantra. So he obeyed. And he was surrounded by people of dubious morality - to which he conformed. If you create a culture in which intense pressure to deliver is coupled with some dubious ethics, you can entirely predict that criminality will spread through an organization.
Many in the newspaper world today are discussing the intense pressure that print publications suffer, as they attempt to maintain readership and profit. Make no mistake: that pressure cascades right through organizations. And unless it's very clear how business is upheld, frightened or ambitious individuals will always break the rules.
Don't Ask Don't Tell
At News International, no one apparently asked where their juicy copy was coming from. As long as Mulcaire did his job, the paper got their story and their sales and everyone looked like a winner. UK CEO Rebekah Brooks insists she had no idea what was going on. And that is supposed to exonerate her. She could, of course, just be lying - or it could be that this is one of the most spectacular cases of willful blindness I have yet encountered. After all, if you are able to deliver outstanding business performance that outstrips your rivals, it is a CEO's job to know how. At the very least, it might be applicable elsewhere. At the worst, it could suggest a serious problem. But under the legal concept of willful blindness, executives are responsible for information they should have known and could have known - even if they somehow failed to know. That's what condemned Enron's Skilling and Lay and sent Skilling to jail and it's an application of the law that any leader (especially Mrs. Brooks) would do well to remember. Murdoch and Brooks both could have known and should have known what was going on in their newspapers - and even if they didn't, they are still responsible.
Today, News International is probably among the most despised corporation in the U.K. - second only to some of the bigger banks. Their strategic goals are severely threatened by this public contempt and advertisers are abandoning their newspapers. That's the cost of turning a blind eye to spectacular results you can't quite explain.
Photo courtesy of World Economic Forum