Open up your mind and say, ahh...

“Cause right now you’re just a liar
a straight mentirosa
today u tell me something
y manana es otra cosa”
–Mellow Man Ace

When a company starts to lose its major battles, the truth often becomes the first casualty. CEOs and employees work tirelessly to develop creative narratives that help them avoid dealing with the obvious facts. Despite their intense creativity, many companies often end up with the exact same false explanations.

Some familiar lies

“She left, but we were going to fire her, or give her a bad performance review.”
High-tech companies tend to track employee attrition in three categories:

• People who quit
• People who got fired
• People who quit, but it’s okay because the company didn’t want them anyway

Fascinatingly, as companies begin to struggle, the third category always seems to grow much faster than the first. In addition, the sudden wave of “semi-performance-related attrition” usually happens in companies that claim to have a “super high talent bar.” How do all these superstar employees suddenly go from great to crap? How is it possible that when you lose a top-rated employee before you can say “unwanted attrition,” the manager carefully explains how her performance fell off?

“We would have won, but the other guys gave the deal away.”
“The customer selected us technically and thinks we are the better company, but our competitor just gave the product away. We would never sell so cheaply as it would hurt our reputation.” Anybody who has ever run an enterprise sales force has heard this lie before. You go into an account, you fight hard, and you lose. The sales rep, not wanting to shine the light on himself, blames the “used car dealer” rep from the other company. The CEO, not wanting to believe that she’s losing product competitiveness, believes the rep. If you hear this lie, try to validate this claim with the actual customer. I’ll bet you can’t.

“Just because we missed the intermediate milestones doesn’t mean we won’t hit our product schedule.” 
In engineering meetings where there is great pressure to ship on time–a customer commitment, a quarter that depends on it, or a competitive imperative–everybody hopes for good news. When the facts don’t align with the good news, a clever manager will find the narrative to make everybody feel better–until the next meeting.

“We have a very high churn rate, but as soon as we turn on email marketing to our user base, people will come back.”
Yes, of course. The reason that people leave our service and don’t come back is that we have not been sending them enough spam. That makes total sense to me, too.

Where do lies come from?

To answer that question, I thought back to a conversation that I had years ago with the incomparable Andy Grove.

Back at the tail end of the Great Internet Bubble in 2001, as all the big technology companies began missing their quarters by giant amounts, I found myself wondering how none of them saw it coming. One would think after the great dot-com crash of April 2000, companies like Cisco, Siebel, and HP would realize that they would soon face a slowdown as many of their customers hit the wall, but despite perhaps the most massive and public early warning system of all time, each CEO reiterated strong guidance right up until the point where they dramatically whiffed their quarters.

I asked Grove why these great CEOs would lie about their impending fate.

He said they were not lying to investors, but rather, they were lying to themselves.

Andy explained that humans, particularly those who build things, only listen to leading indicators of good news. For example, if a CEO hears that engagement for her application increased an incremental 25% beyond the normal growth rate one month, she will be off to the races hiring more engineers to keep up with the impending tidal wave of demand. On the other hand, if engagement decreases 25%, she will be equally intense and urgent in explaining it away: “The site was slow that month, there were four holidays, we made a UI change that caused all the problems. For gosh sakes, let’s not panic!”

Both leading indicators may have been wrong, or both may have been right, but our hypothetical CEO–like almost every other CEO–only took action on the positive indicator and only looked for alternative explanations on the negative leading indicator.

So if you read this and it all sounds too familiar and you find yourself wondering why your honest employees are lying to you, the answer is they are not. They are lying to themselves.

And if you believe them, you are lying to yourself.

Author Ben Horowitz is a cofounder and General Partner of Andreessen Horowitz. Ben blogs at bhorowitz.com.  

Image: Flickr user Disney Passholder

The other day, as I took a taxi ride across Manhattan, the driver was pondering the state of the world. “I can’t believe all these disasters happening everywhere,” he said. “If it’s not a flood, it’s a tsunami. There are fires and hurricanes and earthquakes… then there are riots and bombs and wars and shootings.” He kept shaking his head as he muttered, “What is this world coming to?”

On the one hand, it’s difficult not to agree with him. We need look no further, after all, than the latest headlines to see the world has turned into a pretty horrifying place. But then again: Is this really the case?

Let me explain. My job as a brand guy has a few advantages. One of them is that I get to see a lot of different places–I spent 300 days away from home last year–and my research takes me into a lot of private homes. And the upshot? I’ve begun seeing people in a new light. I’ve begun to question why some people find happiness wherever they may be, and others don’t. Last week I visited one of the poorest districts in Medellin, Colombia. The town’s very first escalator had recently been installed. The technology was so unfamiliar, it required strategically located spotters with the sole purpose of instructing people how to ride it. I was thoroughly absorbed watching the looks on the faces of the kids who were transfixed by the site of moving stairs. When I asked them about happiness, they waved their hands in the air and laughed. They dismissed happiness as a Western thing, and suggested we stop talking about it and just get on with the business of living.

I had a similar encounter in a remote region of Thailand, where even though electricity was scarce, there was a general sense of well-being in the village. Kids happily played in the streets, a sight one rarely encounters these days in Western suburbs. A kindly older woman told me that happiness is when the family is together. Given the fairly intact nature of the rural village, people looked pretty content with their lot.

Another journey took me way into the Australian bush to a place where a toilet capable of flushing would be a novelty. Kids were busy kicking around a football on the street, but almost all took time out to speak to me, curious about who I was and what I was doing there. A young man told me that he felt happy when he helped others. He tried to perform one act of kindness a day. This young man had only seen television twice in his life.

But it was when I got the chance to visit some of the 60 million newly built homes in China that all this really hit, well, home. Each new home was wired for the 21st century. Every room had television screens hooked up to high-speed Internet and each home came equipped with the latest in electronic gadgetry. In fact, the entire block was connected to a community intranet designed to help the neighbors stay in touch. I couldn’t help noticing that there was an important element missing: smiles. I didn’t see one of them.

I pursued my questions of happiness with a young Chinese family who had only been living in the city for two years.  There responses were measured. They said, “We’re doing fine, but there is still so much to achieve before we will become truly happy.”  It seems the family aspired to all the things they were seeing being won on the daily online video shows. “I’ve seen what you can get, and we still don’t have many of the things. So, we need to work harder. Then, I’m sure, one day we will get there.”

The city was orderly. There were no children playing outside. I’d been instructed to wear a mask, wrap my shoes in plastic, and sit on a cover on the chair.  Everything was to stay clean and uncontaminated. Almost all the homes I visited around Beijing and Shanghai shared the same idea that sanitary living meant living a longer life.

An old boss of mine once instructed me never to reveal my salary to anyone. He maintained that it was a necessary secret because, if people knew what others earned, it would only lead to unhappiness. He was right. I came to realize that the more informed we are, the less happy we become because of our tendency to get caught up in constant comparisons. Working on this principle, it seems that the more limited the access to electronic media, the more time people spend together as friends and family and the higher the happiness quotient seemed to be. (Of course, this is just one man’s observation: There is no shortage of studies and best-selling books on the subject.) Meanwhile, my Chinese family, who had the chance to compare their life with others, seemed unhappier than ever. Using a bar set by the mass media, they felt they’d failed to achieve their full potential.

Now I know what I should have told my despairing taxi driver. The reality is that there have never been as few wars as there are today. Humankind has never been as healthy or as wealthy. Our contemporary techno-media wonderland means that whenever a disaster occurs, almost anywhere in the world, we know about it within hours. Only recently, we heard about a cruise ship sinking off the coast of Italy, a shooting incident in Belgium, and a bushfire in Western Australia. Our brains are not really wired to accommodate such a proliferation of bad news, regardless of it happening thousands of miles away. One disaster after another compounds, and increases feelings of helplessness.

Does that mean that on some level we’ve lost our way? Absolutely not. But what it does mean is that we need to realize that with the ever-increasing media outlets, we must be vigilant in maintaining our own personal view of happiness. No matter how high you set your goals, you may never actually get there. So, what is my definition of happiness? A good friend once said to me, “Happiness is not measured by the number of days you live but, rather, by the number of days you remember.”

I’ll buy that. One thing is for sure, I won’t be forgetting my time with all those happy people.

Image: Flickr user Rachel Hendrick

Read more by Lindstrom: Thou Shalt Covet What Thy Neighbor Covets

Martin Lindstrom is a 2009 recipient of TIME Magazine’s “World’s 100 Most Influential People” and author of Buyology: Truth and Lies About Why We Buy (Doubleday, New York), a New York Times and Wall Street Journal best–seller. His latest book, Brandwashed: Tricks Companies Use to Manipulate Our Minds and Persuade Us to Buy,
was published in September. A frequent advisor to heads of numerous
Fortune 100 companies, Lindstrom has also authored 5 best-sellers
translated into 30 languages. More at martinlindstrom.com.

Foursquare tells people where you are. A new mobile app called Forecast, which is opening to Facebook users on Tuesday, instead tells them where you will be.

Here’s how the free app for iPhone and Android works: Users make “Forecasts” that include what they plan to do and what time. Those Forecasts are broadcast to their friends, and can serve as informal invitations to join.

Friends can accept them by clicking a “me too” button, and when they arrive, they can check in the same way that they do on Foursquare. Pinnell says more than 80% of forecasts are followed through to the check-in.

“The special thing about the future is that it hasn’t happened yet,” explains CEO René J. Pinnell, “which means you can change it.”

This thing is especially special to advertisers.

It’s the reason that Google makes so much money off of search ads. When advertisers can reach people at a time they are making a decision, like searching for a dentist or declaring their desire to go out for pizza, they can influence that decision. Targeted deals and suggestions for complementary activities are both business models that work nicely with the future checkin.

For this reason, Forecast isn’t alone in its pursuit of what I call the “preemptive checkin”. Ditto, Hotlist and Crowdbeacon are just a few others.

None of these, however, dominates the concept in the same way Foursquare dominates the real-time checkin.