In 1971, a team of researchers from Stanford University embarked on what was to become the infamous Stanford Prison Experiment. The premise was simple: split the participants into two roles, prisoners and guards. The participants were placed into a prison environment. None of these participants had backgrounds of violence. How would they react to their new roles? While you hoped it would be with civility, you would be wrong.

Guards fell into authoritarian roles and prisoners rebelled. The guards used psychological torture tactics, such as stripping away prisoners’ names and only referring to them by their numbers.
That’s the nice stuff though. A third of guards exhibited genuine sadistic tendencies.

The participants fully internalized their roles.

What Does This Have To Do With The Volkswagen scandal?

At first blush, it appears that only a few high-level execs decided they would cheat on emissions testing.

Their directive went down the management ladder, and everyone, including the engineers, agreed to cheat too, even if it approval for such was only tacit.

Though anyone from an outsider’s perspective could see this was wrong, enough people on the Volkswagen’s team did not. Or, they knew it was wrong outside of VW but, internally, it was the right thing to do. This was a part of the process. After all, their subordinates, peers, and managers were all doing the same thing.

Why Do Good People Do Bad Things

That’s a question many research experiments have sought to answer. Here are two of the best explanations we’ve found:

People Follow Their Peers

Duke’s Psychology and Behavioral Economics professor Dan Ariely found that, once people see others like them illegally downloading books, music, and movies, they begin to think it’s socially acceptable.

Research on related topics, like Triadic Closure, shows that people will follow the behavior of those they trust or relate to. Even if, at times, they do so while unconscious of the effect of their peers’ influence on such behavior.

Within organizations, this can create problems or benefits.

  • If just a few, highly-trusted people within an organization are seen to behave badly, it is highly likely that some number of their peers will follow their lead and behave badly as well.
  • By contrast, if a few highly-trusted people set a positive behavioral example, a measurable number of their coworkers are likely to mimic that desirable behavior.
  • If all of your friends jumped off a bridge, it turns out you probably would, too.

Behavior Is Contagious (Like A Cold)

Ideas and behaviors actually spread from person to person, not unlike the spread of disease. In fact, recent studies have found that even a mildly negative behavior, like rudeness, spreads like a contagion throughout an organization — oftentimes triggering even worse behavior.

So, clearly, we need to give thought to inoculation in order to preserve organizational health. And here’s what happens when you try to inoculate against a disease:

If you inoculate 96% of people against some disease, the effect is as good as inoculating all 100% — there are not enough people to carry the contagion to the 4% who remain vulnerable;
However, if we inoculate 30% of the population selected at random, it’s as though we didn’t inoculate anyone — the contagion will likely spread unchecked throughout the remaining 70%.
Good or bad behavior spreads much in the same way, and efforts at inoculation work in much the same way.

But there’s one other wrinkle: when inoculating a minority of the population — like 30% — it matters just how well-connected they are. A lot.
If there is a small set of people who are very influential over a larger group’s behavior, inoculating them yields effects much the same as if you had inoculated 100% of the population. A minority of highly-trusted peers has an outsized effect on the group as a whole.

Let me use another example to illustrate this phenomenon:

  • If 30% of US airports are shut down randomly, we could re-route planes such that travel continues with relatively minor delay
  • But if those 30 percent are main hubs in the system (LAX, JFK, DFW, O’Hare, Miami, etc.), all air traffic grinds to a halt


How Can We Apply These Lessons?

The key take-away here is in the importance of culture, and of the systems that work to support it, conscientiously.

Set a Positive Example

It’s clear that employees are likely to be influenced by, and follow the behavior of, those they trust or relate to most profoundly. Companies should know who those essential culture carriers are. Few actually do.

And once identified, these individuals (and the example they set) need to be celebrated meaningfully by senior management. Additional research from Stanford shows that trust-based efforts at promoting good governance through such a positive focus is far more effective — and cost efficient — than are efforts at “catching bad guys” through greater command and control based management activities.

Encourage Heros

Philip Zimbardo, the professor behind the Stanford Prison Experiment, found that, at times, a minority of people will resist conforming and won’t follow the herd.
Zimbardo calls these people heroes, and he calls on society to celebrate them. They can lead an organization or social group out of a negative rut, and put the group back on a successful track. Companies can act likewise, and should if they care to save themselves from unnecessary risk and attendant costs. Ask VW.

Bad Behavior Is Everywhere

It now appears that Volkswagen wasn’t the only company to cheat auto-emissions, they were just the first to be caught. The cheating issue appears more pervasive than we might have thought. The follow-the-leader mentality infected not just Volkswagen’s management structure, but may well extend throughout the industry overall.
For the Stanford Prison Experiment, there was a simple solution: end the experiment early. For corporate malfeasance, that’s not an option.
Instead, companies will have to work to consciously change their culture under intense regulatory and investor pressure and close scrutiny.

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