In a competitive environment, there is a lot of pressure to cheat. Athletes do drugs, countries tweak their accounting (just like large companies), and now, the largest car manufacturer in the world recognizes a massive scam about its diesel engines. This post is not about judging these cases morally, but about understanding what such tricks do to corporate culture and innovation. With one clear conclusion: real innovators don’t lie.
A lie makes you dumb
In the corporate world, a lie may be a quick way to seemingly boost results or 
reach a milestone. But truth be told, it has no such effect: it just creates the illusion of it. The problem with a lie is that it forces you to keep the truth secret. Because of this, in large organizations, you quickly have to treat your employees at the same playing field as the general public, i.e. you have to lie to your employees. When you lie as a manager, you are hiding potentially key info to your employees, making it impossible for them to be smartly processing this info.
I witnessed such behavior right before the launch of the 4th mobile operator in France. One consultant was advising an incumbent telco about their strategy to resist the launch of this new competitor, which turned out to be brutal. The momentum (hope?) in that company, at the time, was that customers would pay them more because they enjoyed quality customer service. The new entrant was supposedly appealing only to geeks, and this incumbent was obviously better. Or not. Thing is, the employees had ended up believing their own marketing lies. Any customer of this incumbent could see that customer service was on par with others’, sometimes even worse. Nevertheless, the corporate momentum was that they had some quality customer service. As a result, they expected to charge a premium for a non-existent quality customer service. Obviously, customers could see what employees had been taught not to question, and this incumbent suffered massively from the launch of the new entrant. Indeed, it was left with no strategy to counter the new entrant, because employees were living with a false perception of reality — one that the marketing department had been proud to build with expensive ads !
Similarly, imagine the investment committee at Volkswagen evaluating the investment of a few million euros in a more efficient diesel engine: why bother, since they are already so good at making diesel engines ? Clearly, this kind of lies tricks the company into not working on real issues.
A lie promotes the wrong people
In your company, which one is more likely to get promoted: the one that plays 
with cookie jars to consistently match result expectations, or the one that accepts the volatility of her results with a clear understanding of the weaknesses ? If it’s the former, I would suggest to look for a better place. For two reasons:
- the promoted liar may have tricked the management based on fake data, but operational teams cannot be fooled so easily. As a result, this puts a non-leader in a management position. Good people will leave (bad ones always stay) and results will fall down one way or the other.
- the promoted liar knows how she got promoted, and will apply her broken ethics in other situations. After all, it is easier to lie than to get the job done. Fail to spot these toxic managers, and soon your organization will be full of them.
Innovation needs honesty
One key part of the innovation process is that ability to detect and priorize the right issues. Broken ethics and corporate lies distort this process. That is why innovators don’t lie. They humbly recognize weaknesses and work on them. An innovative organization knows how to reward such behavior, while being merciless with bad ethics.