Ethical Leaders Do Not Say “I Know Nothing”

Okay, I’ll admit it. I do still enjoy watching Hogan’s Heroes sometimes. In that 1960s comedy about Americans in a German POW camp, one of the most endearing characters is Sergeant Schultz. Schultz, who is happy to have this non-combat job in the German army, avoids getting in trouble so he won’t get transferred to the Russian front. So, whenever he sees or hears the American POWs are up to something he says, “I know nothing” and quickly exits stage right.

Too often today we see leaders who behave like Schultz; they “know nothing.” And with some leaders, it isn’t just avoiding decisions involving ethical dilemmas, it is failing to recognize future dilemmas the organization’s strategies may create for their teams.

Power of Noticing

I recently discovered an interesting book The Power of Noticing: What the Best Leaders See by Max Bazerman. Bazerman, who is a Harvard Business School professor, writes about the impact of what happens when leaders fail to notice or recognize future side effects of business decisions. If you have time, I recommend this Harvard Business School webinar on the book and topic.

One of the examples used by Bazerman is what happened when Walmart buyers executed their buying strategies in pursuit of Walmart’s well-publicized mission – “Everyday low prices.” The case surrounded the Blitz gas can, which once held 80 percent of that market segment and Walmart was the primary customer. In short the gas can sold in Walmart failed to block gasoline vapors effectively and several cases of explosions and deaths resulted. Because Walmart effectively shifts all product liability to its suppliers, the Blitz company had to bear all the financial liability for these incidents.

Blitz later redesigned the can to add a vapor block. They approached Walmart and asked to pass along the extra cost of 80 cents per can to Walmart and the consumer. Walmart buyers, following procedures that supported “Everyday low prices” basically told Blitz to absorb the cost. Blitz couldn’t absorb the cost, so they kept making and selling the same can to Walmart. The Blitz CEO later reached out to the Walmart CEO asking Walmart to participate in a gas can safety campaign and Walmart refused.

Blitz eventually went out of business likely because of the product liability claims and the fact they were controlled by one customer, Walmart.

Bazerman uses this case and others to point out how leaders regularly don’t notice or think about possible negative or damaging side effects of strategies deployed in the spirit of achieving their mission.

My Four Lessons or Takeaways

As I thought about this, here are four of my takeaways.

1. When your team develops a strategy ask questions about the action plan; probe into possible “harmful” side effects. Recognize that your teammates might tell you all the positive things and hide, downplay, or simply miss the negative things. Recognize the difference between just competitive issues and issues that could do harm.
2. If you are an optimist by nature and a strategy has any harmful possibilities, assign a “watch dog” role to someone on your team to ask more probing and uncomfortable questions while you are in the room, listening.
3. Make sure the organization understands your ethical principles and that these principles guide decision-making, strategy formation, and bonus formation.
4. Remember this – your organization’s compensation system, if designed correctly, will drive behavior. Does your system have the potential to incent people to ignore harmful side effects or to at least think, “I know nothing.”

Bazerman reminds us how easy it is for us to simply fail to notice things and that is one thing we can improve. It is worse, though, to see something and turn away thinking, “I know nothing.” That is either an ethical or a courage issue. I’ll just leave that up to you to think about on your own.