The Emporor's Clothes intermedio

What we can learn from a fairy tail about the culture of fear in organizations

by Prof. Guido Palazzo

What do we do if the contexts in which we make our decision are so strong that we can not leave them? What happens when this little segment of the reality we see becomes the sole and overwhelming reality of our only universe? What is obvious to others, we are not able to see. How do we make our decisions under these conditions? How do we deal with the fact that a philosophical ideal is very often not applicable to the situations in which we make our decisions, because the environment in which we find ourselves is stronger than reason?
In decision making, we are increasingly confronted with ethical dilemmas. And dilemmas are in the gray area between the clearly right and the equally clearly wrong. In our toolbox we have different tools. But meaningful decisions are not always possible because we could be embedded in a culture of fear within which reason is eliminated.

The Emperor’s New Clothes (von Hans Christian Andersen)

Once upon a time there lived an Emperor whose only interest was to dress elegantly. He changed clothes all the time and he lived showing them to the citizens of the kingdom. The vanity of the Emperor was well known in the kingdom and beyond. Two criminals had heard about the Emperor’s passion for clothes and they decided to take advantage of it. They traveled to the castle of the Emperor and introduced themselves at the gate. We are two excellent tailors and we have invented an extraordinary method to weave a cloth so light and so fine that it looks invisible. It is, however, only invisible to those who are too stupid and incompetent to appreciate the quality of our wonderful work.

Die Weber

The crooks are on the door step

The guard led the two presumed tailors to the chief of the guards. The chief of the guards sent for the chamberlain of the court, and the chamberlain finally notified the prime minister. The prime minister ran to the Emperor to tell him about these amazing tailors. The Emperor got curious and he decided to see the two tailors. This cloth, your highness, will be woven in colors and patterns created especially for you, the two tailors told him. The Emperor gave them a bag of gold coins and ordered them to immediately start working on the fabric. The two criminals asked for a loom and for silk, gold thread, and silver. The Emperor was excited.
Besides getting a new wonderful suit, he would be able to find out who, among his citizens, was stupid and incompetent. After a few days, getting impatient, he sent his old and wise prime minister to the tailor’s in order to get a report on the progress of the work.

The minister's Self-deception

Soll ich dumm sein, das darf kein Mensch wissen!

prime minister was known throughout the kingdom to be a man of common sense. Go and see how the work is progressing, the Emperor told him and come back to me. The two traders welcomed the prime minister. They did as if they were working on the fabric, cutting the air with scissors and sewing the invisible cloth with their needles.
„We have almost finished our work but we need some more silk and some more gold thread.
Here, excellency, look at the colors, feel the softness of the cloth“, they said. The old man bent over the loom and tried to see the fabric, but there was not hing. He felt cold sweat on his forehead. I can’t see anything he thought. If I see nothing, that means I am incompetent. Nobody should know this. Otherwise, I will lose my office. What a wonderful work, he said, after a short hesitation. I will tell the Emperor about the great work that you are doing and the two tailors were very happy. They had almost made it. The Emperor decided to send another important councillor to evaluate the quality of the two tailors‘ work. Upon his arrival in the workshop this poor councillor had the same problem as the old prime minister. He couldn’t see anything. Isn’t this a wonderful fabric? The two crooks asked him pointing at their imaginary work. I am stupid, the councillor thought.
This is very strange but nobody should know this. So, he praised the work of the two crooks, went back to the Emperor and reported on the fine progress of the work. Finally, the Emperor received the announcement that the two tailors had finished their work and that his new suit was ready. The two tailors went to the Emperor moving forward slowly and bowed, pretending to hold the fabric. Here it is your highness, the tailor said.
„We have worked day and night to produce this beautiful fabric for you. Look at the colors, feel the softness“. Of course, the Emperor could not see or feel anything, and he panicked. I can’t see it, he thought. This means I’m stupid, or worse incompetent as an Emperor. But he soon realized that nobody could see that he could not see the fabric, and he calmed down. The two tailors invited the Emperor to take off his clothes, and to try the new ones, and they held up a mirror. The emperor felt very embarrassed, but since none of the bystanders seem to be equally uncomfortable, he felt relieved. This is marvelous. This is beautiful. How good it looks on me. The Emperor said, trying to look comfortable, „You’ve done a wonderful job“. „Your majesty“, the prime minister said, „the people have heard about this wonderful fabric and they want to see you in your new suit“. The Emperor was not sure whether this would be a good idea, to show himself to the people like this. But he could not say no. After all, only the stupid and incompetent would see him naked. „All right“, he said, „I will grant the people this privilege“. He gathered the dignitaries of the court around him and they formed a ceremonial parade. Then, the Emperor walked in a procession through the main streets. Many people yet gathered along the street, pushing and shoving to get a better look. A big applause welcomed the procession. All the citizens were curious to find out how stupid and competent the neighbors were. But, when the Emperor passed, a strange murmur rose from the crowd.
First whispering from one citizen to the next. Then in a loud choir, look at the Emperors new clothes. They are so beautiful. What a marvelous procession. And the colors. These wonderful colors. We have never seen such elegant clothes in our life. Of course, they were all disappointed of seeing nothing, but they did not dare to admit their stupidity and incompetence. They all behaved as the two scoundrels had predicted.
A little boy, however, who was standing in the crowd with his father, suddenly said, „but he’s wearing no clothes, the Emperor is naked!“. His father grabbed the boy.

Der Bub sieht es richtig

Only the kid sees the truth and is punished for that

, he angrily shouted at him, shut up and don’t speak nonsense. But some people in the crowd had heard the boy’s remark and they realized that he was right. The boy is right. The emperor is naked, it’s true! They repeat it over and over again, first whispering then louder and louder.
The Emperor realized that the people were right but could not really admit it. He though, thought that the best he could do was to keep up the illusion and to continue the procession. He walked on while a page kept holding the imaginary mantle behind him.

„This story remembers me on my organization“, said managers 

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.

What we teach our children

What we teach our children

Telling 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. 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 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.

A culture of fear with many drivers

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 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 very common reaction to fear. In organizations, outside fairy tales as well. Fear dominates many organizations. The fear not to live up to expectations 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 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 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.

Fraudsters have an easy job within a culture of fear

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.

The crooks take advantage of the context

The crooks take advantage of the context

We all make use of frames when we act. 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 prestructure 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. 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.

Incompetence is contagious

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 gets 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.

Different perspectives inside and outside of the context

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.

The boy is outside of the context

The boy does not live within the context and is deemed to be irrational

He is 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 what 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.
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 rationality.

The routine proves to 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 a scandal. Very often, 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 Emperor.

Routine proves to be stronger that reason

Routine proves to be stronger than reason

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.

The ingredients of strong contexts

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.

Let me close this analysis by the following five conclusions:

  1. The context can be stronger than reason.
  2. The actors can be locked in a too narrow perception of the reality.
  3. What looks senseless outside of the context can be perceived as making sense inside the context.
  4. Fear is a significant driver of such irrational behaviors. And finally…
  5. Modern organizations often resemble Andersen’s fairy tail

By Guido Palazzo, Prof. of Businesss Ethics and Ulrich Hoffrage, Prof. of Decision Theory at the faculty of business & Economics at the University of Lausanne.

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