Posted by ExperiencePoint on Oct 13, 2006 11:58:00 AM

Following the Leaders

People’s inclination to follow their superiors – betraying their own morals – is a critical factor in scandals like Enron’s. (Appeared originally in the Ottawa Citizen, May 29th, 2006.)

Raw emotion on film reached its apotheosis in “Obedience”, a documentary featuring grainy footage from Professor Stanley Milgram’s experiments in the 1960’s.

Test subjects believed they were participating in ‘learning experiments’ where pain – in the form of electric shocks – was used to discourage forgetfulness. Two subjects were required – one was the shockee (i.e. the “student”) and the other the shocker (i.e. the “teacher”). Under the guidance of an authoritative scientist, the teacher read aloud a series of words or numbers and the student endeavoured to repeat in order. With each mistake, the teacher was to administer progressively severe electric shocks.

But there was a twist to this seemingly twisted study.

The student was an actor – a shill that purposefully answered incorrectly thus necessitating electric shocks (which were, mercifully, also fake).

It was the teacher’s behaviour that interested Dr. Milgram. With the scientist ever present, would the teachers continue after their counterpart protested, demanded cessation, and ultimately faked death? If the teacher expressed concern or a desire to stop, the scientist simply stated, “For the sake of the experiment, please continue.”

The results were staggering. Sixty-five percent of the teacher test subjects delivered the maximum – and ostensibly fatal – shock. In the words of Dr. Milgram: “Stark authority was pitted against the subjects’ strongest moral imperatives against hurting others, and, with the subjects’ ears ringing with the screams of the victims, authority won more often than not.”

I saw Obedience many years ago in a first year psychology class at Queen’s University. Normally boisterous freshmen were suddenly silenced by the images of test subjects – sometimes laughing nervously, pausing gravely, or even crying uncontrollably – as they persisted to the tragic end.

Hope for humanity existed however in the form of several test subjects who adamantly refused to comply. One bespectacled man leaned back in his chair with arms folded as he defiantly informed the scientist that he would not continue.

As we solemnly filed out of class that day, I imagine each of my peers was turning the same question over in his or her mind – would I have stopped?

An online experiment – the OMEGA Simulation

Unquestionably disturbing, the extent to which the Milgram footage is truly edifying for viewers faces two significant challenges. The first, as per the question contemplated above, is its inability to predict individual behaviour. Until we experience the pull of authority’s will in a morally complex decision, we won’t know if we’re susceptible to the phenomenon.

The second is its proximity to reality. When facing a real decision involving an authority figure, will we instantly see the parallels to Milgram’s subjects’ extreme situation and act appropriately?

ExperiencePoint? created the OMEGA Simulation to overcome both challenges. In this online game, the participant allocates a marketing budget across four product lines based on both hard data and qualitative advice. Unbeknownst to participants, 50% will receive advice from a superior; the other 50% from a subordinate. And despite the fact the advice is the same, verbatim, our results to date show that those advised by a superior will, on average, invest 30% more in an ethically questionable product line than those advised by a subordinate.

The experience is both deeply personal and, because it relates to the business chain-of-command, relevant to most participants’ lives. OMEGA users leave the exercise recognizing – at a visceral level – that they must be mindful of blindly abdicating responsibility to authority.

How important is this lesson? No doubt former Enron employees and shareholders will have an opinion.

The right verdict

It is now a matter of record that the inflated giant of Enron was exploded with pinpricks of ethically repugnant behaviour.

Nonetheless the Prosecutors in Houston still had a tough assignment in proving Kenntety Lay and Jeffrey Skilling were directly involved in Enron’s malfeasance, so today’s verdict was preceded with a small victory when last week’s jury instructions included a line on “knowledge and deliberate indifference”.

Jury members were told to find Mr. Lay and Mr. Skilling guilty if the two leaders reasonably should have known about the egregious behaviour in the executive suite by Andrew Fastow and others. It is a lesser degree of culpability and one that has perversely created opportunities for a defense appeal.

However, on the spectrum of responsibility between “direct involvement” and “turning-a-blind-eye” is indirect influence. As authority figures, Lay and Skilling were the magnetic north of the organization’s moral compass. The OMEGA simulation illustrates that the average person is greatly influenced in complex business situations by a superior’s suggestions.

And although other factors undoubtedly contributed to the unethical acts perpetrated, it is difficult to square the breadth and depth of transgressions at Enron with anything other than the leadership’s influence. Let’s remember Enron’s acts went beyond Andy Fastow – this was not a case of a single Nick Leeson falling a Barings Bank.

Recent Posts