These companies failed because leaders did not want to hear bad news: The Ostrich Effect

Leaders who do not want to hear bad news can cause their companies to suffer from the Ostrich Effect, where problems are ignored instead of acknowledged. This can result in a culture of fear where employees do not feel comfortable reporting bad news at all, and so will actively try to hide it and lie about progress. Two examples where leadership failed to take on board bad news are Volkswagen and Nokia. These companies suffered from a culture of fear, and this led to them being out-innovated by other companies in their industries. To counteract the Ostrich Effect, leaders should build up psychological safety in their organizations.