The Leadership Lessons Hidden Inside Corporate Scandals

Chatham, MA

The thing nobody wants to admit about the great corporate scandals is that they were almost never committed by villains. We would all feel better if they were though. It would be tremendously reassuring to believe that the disasters at Wells Fargo and Boeing and Volkswagen were the work of cartoonish bad men twirling mustaches in the executive suite, because then the lesson would be simple and the rest of us would be safe, since we are not cartoonish bad men and we do not twirl anything. The truth is far more uncomfortable and far more useful, which is that these catastrophes were built almost entirely by normal people responding rationally to the incentives their leaders handed them, and that is precisely why they are worth studying instead of merely condemning.

I have spent enough years inside organizations to know that the distance between a healthy company and a scandalous one is not a moral chasm. It is a series of small structural choices, each of which seemed defensible in the conference room where it was made, that quietly arranged for ordinary employees to find that the easiest path through their workday ran directly through a fraud. Leadership is the act of arranging those incentives, which means leadership is also, whether the leader intended it or not, the author of whatever its people end up doing to survive. Every scandal is a leadership artifact. Read it correctly and it will teach you more than any framework ever printed on a laminated card.

Start with Wells Fargo, because it is the cleanest demonstration of the principle. The bank decided that cross-selling was the future, that every customer should hold more products, and it translated that strategy into aggressive daily sales quotas pushed down onto branch employees who had no power to change the math they were handed. The relentless pursuit of unrealistic sales targets compromised the ethical foundation of the bank. Faced with goals that could not be met honestly, employees did the only thing the system left available to them, which was to open accounts and issue cards in customers' names without their knowledge, and they did this not by the dozen but by the million.

The eventual numbers are the kind that should be tattooed on the inside of every executive's eyelids. Wells Fargo eventually said that 3.5 million accounts were potentially opened without customers' permission between 2009 and 2016. The bank fired thousands of low-level employees for doing the thing the incentive structure all but demanded, which is the corporate equivalent of building a slide and then punishing the children for sliding. The lesson here is not that the employees were weak. The lesson is that a sufficiently aggressive target, set by leadership and divorced from what is actually achievable by honest means, is not a goal at all. It is an instruction to cheat, delivered with deniability, and the people who set it own the result no matter how many subordinates they later sacrifice to the press release.

Boeing offers a darker and more tragic version of the same disease, because here the price was not money but human lives. The story is well documented at this point, and what emerges from every serious account is a culture that had gradually inverted its own priorities. Boeing senior leadership contributed to the 737 MAX failure by instituting cultural change that emphasized financial performance at the expense of engineering quality. The company that had once been run by engineers who would obsess over every failure mode became a company where the schedule and the stock price increasingly set the terms, and the people who actually understood the airplane found their warnings outranked.

The mechanism of the disaster was a flight control system that could trigger off a single sensor and push the nose of the aircraft down, and the deeper failure was a culture that had stopped wanting to hear about exactly that kind of risk. Investigators uncovered internal emails showing some employees had raised concerns about the 737 MAX while it was still in development and had questioned the safety culture of the company. The warnings existed. The people who could see the wall coming were inside the building, doing their jobs, saying the uncomfortable thing. What they lacked was a leadership that had built a structure willing to absorb bad news and act on it, and two airplanes full of people paid for that absence with everything they had. The lesson is brutal and it does not soften with retelling. When you build a culture that rewards confidence over candor and schedule over safety, you are not removing the risk. You are simply guaranteeing that you will discover it in the worst possible way, on the worst possible day, when it is far too late to do anything but grieve and litigate.

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Then there is Volkswagen, which is the most instructive of the three for anyone who runs a company, because its scandal was not an accident or a breakdown but a deliberate piece of engineering. Faced with American emissions standards its diesel engines could not meet without sacrificing the performance the company had promised the market, Volkswagen did not abandon the promise and it did not solve the problem honestly. It built software, the now-infamous defeat device, designed to recognize when a car was being tested and to switch on the emissions controls only for the duration of the exam, then switch them off the moment the car returned to the open road where the regulators could not see.

This was not one rogue actor in a basement. Investigations into Volkswagen revealed a culture of secrecy and cover-up that contributed to the severity of the scandal. The deception ran across roughly eleven million vehicles and the better part of a decade, and when it finally surfaced the market erased an enormous portion of the company's value almost overnight. What makes it the sharpest lesson of the three is the leadership response when the truth came out, because the instinct at the top was to reach for the oldest excuse in the catalog and blame a handful of individuals. Volkswagen's U.S. chief told lawmakers the cheating was not a corporate decision but something that individuals did, describing it as a couple of software engineers who put this in for whatever reason. Lawmakers did not buy it, and neither should you, because a deception operating at that scale for that long is never the work of a couple of people acting alone. It is the predictable output of a culture that set an impossible target and made it clear, in the unwritten way these things are always made clear, that excuses were unwelcome and results were mandatory and nobody up the chain wished to be told how the sausage got made.

Look across all three and the same skeleton shows through the skin every time. In each case leadership set a goal that could not be reached by honest means within the constraints provided. In each case the culture made it dangerous to say so out loud. And in each case, when the inevitable arrived, the first instinct at the top was to locate the smallest possible number of junior people to hang it on. The hell of it is that none of this required malice. It only required leaders who declined to do the genuinely hard work of asking whether the thing they were demanding could actually be delivered without someone, somewhere down the chain, being forced to lie to make the numbers true.

Corporate scandals are not morality plays starring villains. They are leadership artifacts, the predictable output of incentives that ordinary people responded to rationally. That is what makes them worth studying instead of merely condemning, because you are far more likely to repeat them than to recognize yourself in them.

The pattern repeats with almost boring reliability. Wells Fargo set targets that could only be met by fraud, then fired the people who committed it. Boeing let finance outrank the engineers and silenced the warnings until two airplanes fell out of the sky. Volkswagen engineered a lie to scale, then tried to pin a decade-long deception on a couple of programmers. Impossible goal, dangerous to dissent, scapegoat the juniors when it breaks.

So here is the test for anyone who leads. The next time you set a target, ask honestly whether it can be hit without someone down the chain being forced to lie to hit it. If you do not know the answer, you have not finished the job of leading. And if the answer is no but you set it anyway, then whatever your people do next is not their scandal. It is yours, and the press release blaming them will fool exactly no one who has read this far.

Views expressed are the author's own and do not represent any employer or organization. All examples are drawn from public record. Brace 4 Impact is independent commentary and satire.

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Skip Maloney writes for people who understand that the world doesn’t reward hesitation. He proudly serves as Executive Vice President, Chief People Officer at InterDigital (NASDAQ: IDCC).

With over 30 years inside executive leadership, Skip has had a front-row seat to how power actually works inside companies, boardrooms, and careers. He has hired executives, fired executives, advised CEOs, and watched firsthand who rises, who stalls, and who disappears quietly.

He created Brace 4 Impact to tell the truth most professionals only learn after it’s too late.

This isn’t theory. It’s pattern recognition earned through decades of decision-making, risk-taking, and being around those who either adapted or became irrelevant.

Skip writes about career leverage, money, travel, health, leadership, risk, and the uncomfortable realities of modern ambition. His work sits at the intersection of business, psychology, and survival in an economy that no longer offers guarantees.

His philosophy is simple: nobody is coming to rescue you, and that’s the best possible news.

Because once you accept that, you become dangerous in the right ways.

Brace 4 Impact exists for builders, operators, and individuals who refuse to drift.

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