truthiness: "truth that comes from thegut, not books" (Stephen Colbert, Comedy Central's 250px-Colbert-truthiness   "The Colbert Report," October 2005); “the quality of preferring concepts or facts one wishes to be true, rather than concepts or facts known to be true" (American Dialect Society, January 2006)

Some business leaders appear to prefer truthiness to truth. This is evident in two high profile examples: Toyota and BP, who have repeatedly made public statements later found to be false or misleading. It may be that their CEOs don’t know the truth. It may be that no one around them is willing to tell them the truth. This contributes to a culture that is bad for business, and, in the case of Toyota and BP, bad for consumer safety and protection of the environment. Jeffrey Pfeffer, professor of organizational behavior at Stanford’s Graduate School of Business, in his blog, writes:

…a culture of lying is contagious, and it’s very hard to run an organization if the leader doesn’t know the truth about what is actually going on…If you want to understand the one cause of the recent financial carnage, Toyota’s quality problems, and many other corporate misdeeds and mistakes, look to the organizational culture and whether telling the truth, even when unpopular or unpleasant, is rewarded or punished. There are, of course, lots of causes of company problems that depend on the specific circumstances, but one common thread in many of these incidents is a story of deception.

Speaking “truth to power” is risky. Many senior leaders intentionally or inadvertently create a work environment that discourages employees from reporting accurate information about what is happening in the company, especially if the facts are not consistent with the way that leader wants to view the company. When an employee does step forward with the truth, a CEO might “shoot the messenger” (discredit the person speaking the truth) as a defense against hearing something that he or she does not want to hear. The employee faces the real possibility of negative consequences for doing the right thing. It is up to senior leaders to develop an environment that makes it safe for employees to express well reasoned viewpoints. Ralph Jacobson, in his blog Leading for Change, puts it this way:

Many employees are hesitant to express their concerns because they feel that they will be viewed by their managers in a less than favorable light. In an economy with excess supply of labor, employees may feel vulnerable. So the role of the senior leader is to create a culture where speaking truth is understood as good for business. Those who appropriately raise concerns and create viable options are rewarded with higher-level work and opportunities for professional development. They need to find ways that mid-level managers understand that questioning the status quo is acceptable behavior.

Businesses are not sustainable when they are built on lies, half-truths, and truthiness. Even major juggernaut companies like BP and Toyota can be hurt severely for many years to come when they are not totally honest about problems that affect their customers and stakeholders.