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WARNING: LONG POST
The Book of the Week is “The Dark Pattern, The Hidden Dynamics of Corporate Scandals” by Guido Palazzo and Ulrich Hoffrage, published in 2025. In this hodgepodge of a volume, the authors listed the various goings-on that inevitably lead to a scandal at a big-name corporation. They cite several real-life examples such as Theranos, Boeing and Uber.
Although the authors have European names and do college-level teaching in Switzerland, this book covered American companies and reflected the American mentality. It is difficult, if not impossible to fact-check propaganda spouted by American companies because they manipulate the media.
Prior to the scandal, the media crow about how the CEO is doing a great job in enriching the company’s shareholders. Leadership (that is toxic and heading for trouble but the public doesn’t know it) is enhancing shareholder value (yay!). Until it isn’t. After breaking news of the scandal, the media pile on about the company’s seamy underbelly that led to the failure.
Scandals erupt again and again due to human nature– fear and greed are the two major motivators that cause most of the trouble in the world. Moral failure gradually occurs on a colossal scale throughout the organization, because if it really were only a “few bad apples” there wouldn’t be a scandal. Here’s how it happens.
A large number of employees are eventually brainwashed into rationalizing away their bad behavior, through:
- ethical shift (baby steps which gradually take one down an unethical path, until matters come to a head; breaking one taboo makes it easier to break more of them);
- pluralistic ignorance (getting influenced by how others react in an unclear situation);
- evaluation apprehension (fear of getting publicly judged for speaking up);
- bystander effect (not reporting bad behavior because one thinks others will do it);
- euphemistic labeling;
- what-about-ism;
- minimizing, ignoring or misconstruing the consequences;
- dehumanizing the victims to make it easier to harm them.
The human resources department covers the employer’s legal ass by establishing an “ethics hotline” for employees. It is a joke because employees are reporting the bad behavior of their bosses to the very perpetrators of that bad behavior! The bosses will be vengeful– harassing those employees, shutting them up, or firing them.
When interdepartmental rivalry within the company is taken to the extreme, one of two things happen: the company has a scandal, or a group of workers will leave to form a company that competes against their former employer.
The usual cliches apply: The fish rots from the head down; if the truth makes you angry, you’re living a lie; and just another case of the fox guarding the henhouse.
Anger from perceived unfairness will lead to additional vicious office-gossip, and an even more hostile work environment.
Excessive greed led to: 346 deaths in two plane crashes in 2018 and 2019; attendant trauma, lawsuits, hearings; a few heads’ rolling; an attempt to move on, so as to forget all that unpleasantness. Never mind learning from it.
Such was the case with Boeing, whose CEO James McNerney, made approximately $290 million between 2001 and 2016.
Boeing was aware of its software bugs in its plane mechanics. It was cutting costs to the bone in the name of profit. It deemed training pilots in a simulator or in the actual upgraded plane, too expensive.
Boeing also forgot to tell the FAA about that issue. The understaffed, underfunded FAA (a federal agency which is supposed to regulate airline safety) changed its language and became besties with Boeing. “By 2018, Boeing already certified a stunning 96% of their own work [doing the FAA’s job.]”
Elizabeth Holmes of Theranos was a spellbinder, and became a cult leader. She was able to fund her pipe dream because her family and friends were wealthy. The social networks of the wealthy, trust one another even when they lack direct knowledge of a technical subject, such as medicine or investing (like with Bernie Madoff), so they throw their money at the opportunity, blinded by greed.
Uber slapped the new name “gig economy” on an old idea, but became successful because the concept was ready for the technology of the times. The problem was, Uber’s purely libertarian culture got it into legal trouble. A corporate culture of pure libertarianism means zero-sum, cut-throat competition. One independent-contractor’s gain means another’s loss.
After the fact, there is: displacement of responsibility and blaming the victim.
Read the book to learn additional lingo of psychology describing more details of the above, and about other corporate scandals.