[MUSIC] Welcome to this second video of the second week of our course on unethical decision making. In our last video, you listened to the fairy tale of The Emperor's New Clothes by Hans Christian Andersen. In this video I would like to share with you some thoughts on what this fairy tale teaches us about organizations. The main goal in this session. You will get familiarized with the main idea of this course, the power of strong contexts over reason. And you will meet some of the main psychological forces that create such strong contexts. Many of us have read Anderson's fairy tale of The Emperor's New Clothes to our own children already or we know it because our parents read it to us when we were children. Most children find the story very funny, and they are surprised by the strange behavior of the actors, and they easily identify with the only seemingly rational actor in the story, the little boy. Reading this story to our children we normally emphasize that this is just one of those fairy tales like the Sleeping Beauty or The Brave Tin Soldier and we assume that in real world such a dynamic would never evolve. We explain to our children. And that moment, when we try to debrief them on this fairy tale that there are various moment in this story when normally reason would interfere. The two tailors for instance, would have been chasen away by the guards of the castle. The Prime Minister would have revealed the lie because he was an old wise man. The Emperor would never have walked the street nakedly. The crowd would have started laughing about him. If he had decided to walk the streets with these imagined clothes. Only in fairy tales we explain to our children such absurdities can be found. Well, the power of reason should not be overestimated. If I used this fairy tale in courses with managers would I receive as a reaction, reaction very often is. This story reminds me of my own organization. So it's useful to have a closer look at the dynamic of this story. Let us start by asking ourselves what is the overall atmosphere that we can observe in this kingdom? You look at the cold sweat, at the forehead of the old man. You get a hint already, so this strange kingdom is governed by fear. The Guide, the Chief of the Guides, the Court Chamberlain they know about the love of the emperor for clothes, so they don't dare to stop the crooks at the, at the gate of the castle. Their fear is to be punished. The Prime Minister, he turns pale, He's uncertain about what he has really seen or not. He decides to lie because he doesn't want to risk his job. People in the crowd, they fear the punishment of the emperor, but they also fear to be ridiculized by the other people in the crowd, if they reveal that they can't see it. So all of them are terribly afraid of something and what they show is a reaction is, is a very common reaction to fear. In organizations, outside fairy tales as well. Fear dominates many organizations. The fear not to live up to expectations to, of superiors. The fear of being marginalized by one's peers. The fear of time pressure. The fear of complexity, the fear of decisions. The fear of being aggressed, harassed, and expelled from one's social context. And the two crooks, they play with that fear. And it's a common strategy to switch off reason in people using fear. Who creates that fear? Well, the emperor because he's an autocratic king of his, of his kingdom, but interestingly fear is contagious. So it tracks back on him as well, he has fear. To look stupid as well. So he becomes a victim of his own creation. Fear is not the only driving force of the story. The two crooks play with another very important element. We have seen at the very beginning of the story that this emperor is driven by his vanity. To be more accurate it's not just vanity in general. It's, it's vanity that drives him to love clothes and nothing else. Today we might describe him as a passion victim. So, he perceives the world only through clothes. The only thing that interests him is clothes. And the two crooks, they describe their product, they write their story exactly in this frame of world perception of the emperor. That's why they are so powerful. It's the combination of fear and the frame of the emperor. We all make use of frames when we act in the world. We don't act in an objectively given world. We interpret the world. Based on our routines or experiences, and we frame different things based on interests based on values, based on what we have perceived before. So we have a frame of looking at the world and left and right of that frame there's darkness, we don't see things. We reduce complexity by using frames. We prestrutcture a highly complex world and we make it easier for us both to make decisions as individuals but also to collaborate with others. But frames can be too narrow, and that's the light motive of our course. Frames can be too narrow, they can give us a too narrow perception of what we should see when we make decisions. So we run into risks if the frames are not appropriate. The Prime Minister, what does he actually see? If we look at him as a key person in the story. Well, he says nothing, because there is nothing. But what does he believe? There's cold sweat on his forehead. He get uncertain. So he believes that there is something, but he cannot see it. He believes in the story, he doesn't question and challenge the story of the two crooks. He panics, because he believes he is stupid and incompetent, and he tries to hide that. He actually feels incompetent in that very moment. What about the boy? Some people argue that the boy has nothing to lose that's why he tells the truth. Well I think this is not the right way of interpreting his behavior because having nothing to lose means he makes a calculation of what's in for him and what's the risk but he doesn't make that kind of calculation, he's just shouting out what he sees. Not being framed like the others, by the fear that dominates the kingdom. He has nothing to lose, in the sense of the frame, but he has something to lose, with regards to his father. Think of what he does. He grabs him. He shouts at him. He probably beats him up afterwards. So the boy is acting irrational in his own context because he risks indeed something. What is rationality? What is irrationality? If we assume a very simple model of rationality, it would mean that we know which means we should use to achieve particular objectives. And all actors in that story, know exactly what they have to do to achieve their objectives. The Prime Minister wants to stay Prime Minister, so he does what he does. The guards and the Chief of the guards, they want to keep their jobs as well, so they do what they do. From inside the story what they're doing makes sense, it's rational, is rewarded. Only for us outside that story it's seems to be irrational, but they cannot see what we can see. That's an important lesson that I would like to share with you at this point of our course. Maybe actors cannot see what everyone else can see while they make their decisions. What seems to be highly unethical, irrational, stupid from outside a context might seem rational, ethical and normal thing to do, common sense from inside the context. The context can be stronger than reason. Look at the end of the fairytale. For me this is one of the most amazing elements of this story. Look what the emperor does. He realizes that he is naked but he continues the procession. Reason does kick in but the routine is even stronger in that very moment. You have this very same situation in corporation that are caught by, by a scandal. Very often this can, people realize internally that something is wrong, but the routine is stronger. Another interesting element is the dynamic that develops in this story. If you look at the Prime Minister and the, the Emperor. We would assume they are both exposed to the same kind of situation. They both on the surface, have no big difference. They meet the crooks, they see nothing, they try to hide it but there's a difference between the Emperor and the Prime Minister because the Prime Minister goes first and he goes back to the Emperor and confirms the story of the crooks. In this very moment, the confirmation and the decision of the Prime Minister becomes the context for the King. The more people confirm, the more difficult it becomes for following people to not see the clauses or not believe the story. So commitment can escalate throughout such a dynamic. It becomes stronger and stronger. So gradually, the reality is shifted towards the narration of the two crooks. And the stronger the context, the more difficult it becomes for the individuals inside the context, to escape from the logic of the narration. They get trapped. Andersen's fairy tale is not a story about some stupid people caught by some stupid forms of behavior. It is a story about pathological context. It tells us something about how psychological forces can make context so strong that they become stronger than reason, that they even switch off reason. If you put people into a strong context they might do what these people in this fairy tale do as well. The fairy tale gives us some first ingredients into the dynamics of strong situations that we will analyze in more detail further on in our course. Fear. Authoritarian leadership. Group pressure, uncertainty about one's own evaluations. The use of too narrow frames, the escalation of commitment over time. And if you look at your own organization, you might find at least some of these elements also in your own context. Actors might behave irrational not because of who they are but because of the context in which they are embedded. So let me conclude this, analysis by giving you five learnings. Learning number one, context can be stronger than reason. Learning number two. Actors might get trapped in a very narrow perception of reality. Learning number three, what looks irrational from outside a context might look completely rational from inside the context. Learning number four, fear is a key driving force of such irrational behavior. And finally, learning number five, modern organizations sometimes look very similar to this kingdom in the fairy tale. [MUSIC]
