Rupert Murdoch: Guilty of willful blindness

News Corp. CEO Rupert Murdoch delivers a keynote address at the National Summit on Education Reform Oct. 14, 2011, in San Francisco.
AP Photo

(MoneyWatch) COMMENTARY In a damning report, the U.K. parliament's Culture Committee says that Rupert Murdoch is not a fit person to exercise the stewardship of a major international company. Why? Because the chairman of News Corp. exhibited "willful blindness" to what was going on in his empire. Last July, I argued that Murdoch was guilty of willful blindness in his failure to see how pervasive phone hacking had become in his organization, in his refusal to investigate it, and his refusal to acknowledge what other people found. Now, it appears, the legislators agree with me.

This is a saga from which every leader could, and should learn. Because willful blindness isn't just a character flaw; it is a structural trap that lies in wait for anyone in power.

UK lawmakers: Rupert Murdoch unfit to lead News Corp.

My book, "Willful Blindness: Why We Ignore the Obvious at our Peril" shows that willful blindness has been with us for a long time. It emerged in Victorian time as a legal concept that argues that when there is information we could have, and should have, but somehow manage not to have, we are nonetheless responsible. While most often used to prosecute cases of money laundering and drug trafficking, it was used most sensationally in the government's case against Enron CEO Jeff Skilling and Chairman Ken Lay. The phone hacking scandal is the media's Enron moment.

The key driver of Murdoch's blindness has been power. Power encases its recipients in a bubble. Some of that bubble has a physical reality: encased in limousines, private jets, and hotel suites, very powerful individuals rarely inhabit the same world as the rest of us. Moreover, academic studies have shown that those with power are more optimistic, more abstract in their thinking, and more confident that they're right. So mentally they're in a bubble too.

But perhaps most potently in Murdoch's case, powerful people can't escape a structural trap: those who hold power are surrounded by people who tell them what they want to hear and hide from them what they imagine they don't want to hear. On one level, this is not personal; it afflicts everyone. Ambitious executives want to please their bosses -- so they deliver the good news and bury the bad. It's assumed that conflict is undesirable so anything that might provoke it mysteriously disappears. Leaders themselves need do nothing to encourage this: the ambition of those around them is enough to ensure that they are surrounded by smiling bearers of success stories.

Murdoch isn't the first and he won't be the last to be caught in this power trap. John Browne, when he led BP, was famously ensnared in it, blind to the dangerous operations which led to accidents and fatalities. His later, rather bromidic memoir, acknowledged as much: "I wish someone had challenged me and been brave enough to say: 'We need to ask more disagreeable questions.'"

The truth is that it takes individuals of terrific integrity and fortitude to resist the willful blindness that comes with power. Tony Blair didn't. Richard Fuld didn't. James Cayne didn't. John Browne didn't. And now the Culture Committee concurs: Rupert Murdoch didn't either.

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    Margaret Heffernan has been CEO of five businesses in the United States and United Kingdom. A speaker and writer, her most recent book Willful Blindness was shortlisted for the Financial Times Best Business Book 2011. Visit her on