When Paranoia Makes Sense

On September 11, 2001, in the space of a few horrific minutes, Americans realized the fragility of trust. The country’s evident vulnerability to deadly terrorism rocked our faith in the systems we rely on for security. Our trust was shaken again only a couple months later with the stunning collapse of Enron, forcing us to question many of the methods and assumptions underpinning the way we work. These two crises are obviously very different, yet both serve as a reminder of the perils of trusting too much. The abiding belief that trust is a strength now seems dangerously naive. This new doubtfulness runs contrary to most management literature, which traditionally touts trust as an organizational asset. Whether the subject is leadership, change, or strategy, nearly every business book blithely proclaims the benefits of trust. It’s an easy case to make. When there are high levels of trust, employees can fully commit themselves to the organization because they can be confident that their efforts will be recognized and rewarded. Trust also means that leaders don’t have to worry so much about putting the right spin on things. They can act and speak forthrightly and focus on essentials. In short, trust is an organizational superglue. Indeed, much of what makes life pleasant and efficient comes from the salutary effects of trust. When we feel we can’t trust the people around us, we’re forced to foreclose on many opportunities for mutually beneficial exchanges. As we fret over office politics, our decision making becomes distorted, and the whole organization suffers. When we start fearing and avoiding (rather than trusting and cooperating with) people we work and compete with, we enter a world of impoverished zero-sum games and escalating arms races. In extremes, paranoia poisons almost every aspect of the workplace. People spend enormous amounts of time trying to figure out how to decode what’s really being said (or left unsaid).Rumor and gossip become preferred routes of communication, resulting in arid meetings during which nothing gets resolved because nothing is ever openly analyzed or discussed. The result is an organization run by a series of covert operations. Nevertheless, two decades of research on trust and cooperation in organizations have convinced me that—despite its costs—distrust can be beneficial in the work-place. As September 11 and the collapse of Enron have reminded us, we have long operated under the illusion that we live and work over safety nets, not realizing—or even questioning—how flimsy those nets really are. Such high levels of trust have made us less vigilant and thus less able to protect ourselves. But there may be a way to reduce that vulnerability: I’ve observed that a moderate form of suspicion, a state I call prudent paranoia, can in many cases prove highly valuable—to the distrustful individual or organization. As former Intel CEO Andrew Grove famously liked to remind his employees: “Only the paranoid survive. In the following pages, I’ll not only describe situations in which that advice makes sense but also show how paranoia, when properly deployed, can serve as a powerful morale booster—even a competitive weapon—to organizations. Let’s begin, though, by defining more precisely what I mean by “prudent paranoia.” When Is Paranoia Prudent? Prudent paranoia is a form of constructive suspicion regarding the intentions and actions of people and organizations. Prudently paranoid people monitor their colleagues’ every move, scrutinizing and analyzing each action in minute detail. They are aware that those around them harbor powerful—and often conflicting—motives for the things they do. By awakening a sense of present or future danger, prudent paranoia serves as part of the mind’s early warning system, prompting people to search out and appraise more information about their situations. Employees in times of mergers and acquisitions, for instance, may become rightly distrustful of other groups or departments. Supervisors and managers also may use their paranoia to tell them when and where their power is being threatened. I’ve also observed a form of collective paranoia that can grip an entire organization. In many cases, the paranoia serves as a healthy defense against a genuine outside threat. Some people object to my use of the word “paranoia” as being too loaded to describe the kinds of individuals who work in organizations. Of course, it’s true that we normally think of paranoia as a pathological condition, whose sufferers are tormented by delusions of persecution, convinced that everybody is out to get them. Such people link seemingly disconnected events, which they then weave into elaborate, unrealistic conspiracy theories, much as mathematician John Nash, the paranoid schizophrenic who won the 1994 Nobel prize in economics, was shown doing in the film A Beautiful Mind. Or there is the famous clinical case of a woman who was convinced that everyone around her was always disparaging her appearance behind her back. Therapy revealed the true problem: Because she felt that people weren’t paying enough attention to her, she went to great lengths to put the spotlight on herself. In fact, she was the only person obsessed with her appearance. Clinical cases aside, we can observe paranoia in every-day people in their everyday lives. To a greater or lesser extent, we all experience paranoid feelings on occasion, for the simple reason that paranoid fears and suspicions often serve some highly useful functions. Typically, paranoia starts when something disturbing or unexpected happens—the firing of a boss, the loss of a close colleague, the rumor of layoffs. Such events create uncertainty, and we deal with the unknown by trying to give the events meaning. That mental processing sets in motion a common psychological reaction known as “hypervigilance.” Suddenly, to make sense of things, we start paying close attention to everything going on around us. Maybe our boss didn’t echo our remarks at the last meeting, or maybe we were left off an important committee. Whatever the situation, every little word and action seems to be endowed with personal significance. The more we worry, the more we notice. And the more we notice, the more we worry. It’s easy to dismiss these concerns as little more than the ill-conceived and misplaced apprehensions of over-sensitive folk. But Sigmund Freud disagreed. As he put it, “The paranoid person does not project onto the sky, so to speak, but onto something that is already there.” In other words, rather than being crazy, the paranoid individual—particularly someone who is prudently paranoid—is actually an extremely keen and often penetrating observer. Indeed, prudent paranoia can be a sign of high emotional intelligence. Emotional intelligence, after all, consists in large part of paying attention to what’s happening in the environment and responding to it. As Sigmund Freud put it, “The paranoid person does not project onto the sky, so to speak, but onto something that is already there.” Consider a man I’ll call Charles Zebrowski, a middle manager from a large Chicago clothing retailer. Zebrowski was competing for a promotion, and his boss was deliberately playing the internal candidates off one another. Without even noticing it, Zebrowski began to monitor the patterns emerging around him. First, he started noticing who was working late at night when the boss was around. Then he realized that one of the female contenders had suddenly started wearing power suits. Soon he was paying close attention to seating in meetings—who was sitting next to the boss? He had never paid much attention to this kind of nonverbal signaling before. In one sense, Zebrowski was perhaps attributing too much significance to these events, believing that each one affected his chances for promotion. Yet the uncanny thing is, many of his perceptions turned out to be accurate and useful, giving him invaluable information about the inner machinations of the office. For example, he observed that his boss was a real night owl and suspected that he might be inviting a select few out for drinks after work. Zebrowski deliberately maneuvered to identify that insider group and then promptly insinuated himself into it. In this way, he learned a great deal about his boss and managed to forge a relationship with him. Ultimately, Zebrowski was able to use that information and relationship with his boss to win the coveted promotion. Keeping Paranoia Prudent How can you use paranoia constructively and not let it rule your life? Although there is no foolproof system for deciding just how much paranoia is enough, my research and conversations with hundreds of executives suggest that we can take several steps to make paranoia more prudent. Gather data relentlessly. Make sure you have all the facts—and not just the facts you want to hear or those that are handed to you. Paranoid people suffer from what psychologists call a “confirmation bias”—they look for evidence to confirm their most sinister hypotheses or feared expectations. Prudently paranoid people counter this tendency by trying to learn everything they can about what is going on around them. They keep their radar on at all times and always do a full sweep. Question your interpretations. Collecting data is important, but the way you interpret that information will determine how prudent you are. The most effective people leave a margin for error in their interpretations—often by consulting trusted advisers. In addition, they are particularly suspicious of brilliant theories that explain every possible fact. They avoid jumping to conclusions, even when it appears that they have all the information. Embrace your enemies. One of the best ways to avoid being blindsided is to have trustworthy advisers and supporters who look out for your interests. But that isn’t enough. Prudently paranoid people keep their friends close, but, as the saying goes, they keep their enemies even closer. Indeed, when asked why he didn’t fire FBI director J.Edgar Hoover, President Lyndon Johnson said, “If there is an elephant loose in the jungle, it’s better to have him inside the tent pissing out than outside the tent pissing in.” Trust the shuffler, but cut the deck anyway. President Ronald Reagan often invoked this rule, especially when he was dealing with the Soviets on arms-control issues. Reagan was easygoing and trusting. He liked people immensely and wanted people to like him. But he was also an experienced politician who had his share of prudent paranoia. So while it seemed as though he trusted his Soviet counterparts, Reagan always acted to protect himself against any trickery in U.S.—Soviet negotiations. Be unpredictable. So much of today’s leadership literature focuses on the importance of being earnest. Indeed, sincerity, clarity, and consistency are undoubtedly effective leadership qualities, but unpredictability can also be useful, especially when dealing with potential enemies. Unexpected behavior can push the other guy toward toxic paranoia, undermining his strategy and sense of security. Disregard all the rules. Even the best-trained observer of human nature can make mistakes. That’s because people can be different from what they seem—sociopaths, for example, are masters at inculcating trust and a feeling of security. Following all the rules can also lead to a false sense of security. Real leaders know when to forget the rules and go with their instincts. Zebrowski’s story shows that prudent paranoia arises not because individuals are troubled but rather because they find themselves in situations that are themselves disturbing.That recognition is the basis for my work on prudent paranoia and differentiates it from most clinical research on paranoia generally. Let’s turn now to some of those situations in which the lack or suppression of paranoia has held back an individual or an organization. Believing That Power Is Benevolent Most people are too trusting of their colleagues. In my 20 years of research, which has involved talking to hundreds of managers, eight out of ten executives reported having made a major mistake with respect to trusting the wrong person at least once in their careers. Think about that for a moment: Eight out of ten executives felt they had trusted too much. Eight out of ten executives reported having made a major mistake with respect to trusting the wrong person at least once in their careers. People place confidence in the wrong people for many reasons. One explanation is that powerful authority figures in a person’s childhood—parents, grandparents, teachers, and so on—provide fairly positive experiences with trust. Thus, many people step into adulthood assuming that powerful people are trustworthy. I call this the “Pollyanna effect” because it causes individuals to inappropriately trust others too much—including the people they work with. Contrary to expectations, colleagues and bosses may not have our well-being at heart. Indeed, many are often indifferent to us or see us as competitors. Consider Jeff Lieberman (another pseudonym). After getting an MBA from Harvard, he joined a large pulp and paper company in the Northwest. Shortly after Lieberman arrived, his boss asked him to write a very detailed report on how the division should be structured. Lieberman saw this as a great opportunity to demonstrate his abilities and get a leg up on his colleagues. For months, he labored over the report—interviewing people, collecting data, even comparing innovative arrangements at similar organizations. Tremendously proud of the depth and creativity of the report, he submitted it to his boss, confidently expecting praise and recognition. To his dismay, Lieberman didn’t receive any feedback from his boss. In fact, soon afterward, the boss was promoted, and Lieberman later learned that his supervisor had taken credit for the report, acknowledging Lieberman in a single footnote at the end of the document. Too trusting, Lieberman had failed to understand the situation and protect his own interests. Unfortunately, novices like Jeff Lieberman aren’t the only ones who make the mistake of trusting a boss or colleague too much. Even veterans sometimes misread the overt friendliness of others. Consider the case of a seasoned executive I’ll call John McCarthy, a senior partner at a large West Coast advertising firm. McCarthy got an MBA by working full-time and going to school at night. As he climbed the ranks, he decided to help himself by helping others. He made it a point to mentor many of the MBAs coming into the firm. McCarthy invested in helping one young man in particular, an individual I’ll call Robert Huston. McCarthy did everything he could to help Huston meet the right people and learn the trade. Huston was a quick study and rose rapidly through the ranks. At one point, McCarthy was instrumental in helping Huston pitch ideas for drawing in a major new client. The young man took it all in—and ended up signing on the client himself. Deciding not to make a scene, McCarthy chose to write off the betrayal as one of life’s lessons. But the truth is, the experience gnawed at him for years, and he was never able to really mentor again with the same relish or innocence. How Paranoia Paralyzes Paradoxically, the prudently paranoid are often the most reluctant to act on and share their knowledge. That’s because paranoia unearths mainly unpleasant information about people and, as such, invites others’suspicions. So many prudently paranoid individuals know that it’s sensible to lay low, be discreet, and double-check the facts before taking action. It is generally an admirable rule to proceed prudently, but it can also lead to what I call “paranoia paralysis.” Full of suspicion—and yet unwilling to really believe what they fear to be true—paralyzed paranoics become unable to act in order to protect themselves. As a result, they remain trapped in vicious cycles of self-questioning and self-doubt. Consider the Hollywood film industry, which is famous for political intrigue, back stabbing, and betrayal. As Woody Allen once quipped, “It’s worse than dog-eat-dog. It’s dog doesn’t return other dog’s phone calls.” Into that dicey world stepped the young and ambitious Dawn Steel, who would go on to become the first woman to rise to the top of a major motion-picture studio. Paranoia@Work E-mail, cell phones, fax machines, the Internet—they’ve all made doing business more efficient, but they’ve also increased our levels of paranoia. In many ways, it has never been easier to stay in touch and, it would seem, to avoid misinterpretation and confusion. Yet ironically, I’ve found that these more convenient modes of communication have only exacerbated the potential for paranoia—and not all of it prudent. Because such communication tools allow people to be reached virtually anywhere and at any time, people have come to expect instantaneous responsiveness. When those expectations are not fulfilled, the seeds of paranoia are often sown. In my interviews with managers and executives, for example, I’ve often found that slow responses to e-mails or faxes can trigger uncomfortable bouts of suspicion and distrust: “I sent out that e-mail to my boss this morning and still haven’t heard back. Is there something wrong?” On the other hand, a response that comes back too quickly may not necessarily assuage our concerns either. If we send a very long and detailed message, for example, and the reply is a terse acknowledgment, we may start to fill in the blanks. Worse still is no response at all. Indeed, when it comes to breeding paranoia, there is nothing so powerful as total silence. When someone fails to communicate with us, even the most balanced person begins to project his fears and anxieties onto others. Is the recipient upset with me? Did I say something that offended him? Did I make a mistake trusting him? What’s worse, once the message has been sent,it’s “out there” and irretrievable. Using e-mail can engender a sort of sender’s remorse that’s not necessarily irrational, but nonetheless powerful. Finally, people feel paranoid about how their e-mails are used. E-mails can be forwarded, copied, and printed, making them fodder for more worry. A few years ago, a young woman sent a romantic e-mail to a suitor from work. To her horror, he forwarded the e-mail to friends, and it quickly made its way around the world. But the fears don’t end there. E-mails can also be retrieved. Even after we’ve deleted them, they may still exist on backup tapes in the vaults of the organization—as Oliver North learned to his consternation. In the early 1980s, Steel broke into the upper echelons at Paramount Pictures by learning to talk the talk and walk the walk—by becoming, as she says,“one of the boys.” In her aptly titled memoir They Can Kill You, but They Can’t Eat You, she wrote humorously of the constant paranoia needed to keep even a savvy and seasoned power broker like herself on top. That paranoia rose to new levels, though, when her membership in the boys’ club unexpectedly changed. In 1985, Steel’s mentors at Paramount were suddenly replaced by Ned Tanen, who had come in as the new president of Paramount’s Motion Picture Division. When all her attempts to establish a cozy rapport with Tanen were rebuffed, Steel thought she saw the writing on the wall. As she tells it, “I was beginning to have a vague sense of isolation. Things were happening without my knowledge. I was beginning to be excluded from meetings… I started to hear about deals being made that I knew nothing about, projects put into development that had never been discussed with me.” The lowest point came when she overheard two secretaries in the women’s room talking about how she was already dead and buried. “I felt I was surrounded by people plotting against me,” Steel lamented. She was paranoid—and for good reason. Unfortunately, Steel was unable to take action. She kept on telling herself that her fears were irrational. She was good at her job, and she made the company plenty of money. “I did some of the best work of my career during this time,” she said. But, she added, “in my hormonal state [Steel was pregnant with her first child], it was really tough to separate paranoia from progesterone.” Accustomed to projecting a positive image and being a member of the club, she could not accept the truth behind the deeply negative evidence that kept presenting itself. Caught between reason and paranoia, she felt unable to intervene on her own behalf. Inevitably, therefore, she fell victim to the palace coup. She learned about her dismissal from a newspaper headline, read to her by her husband while she was recovering in the maternity ward, holding her newborn in her arms. Even when people act on their prudent paranoia, they may still have to contend with others’ unwillingness to accept their message. Because paranoia is so bleak, even the most prudently paranoid person tends to be cast as a Cassandra, the famous Trojan princess who could foresee the future but who was cursed to have people disbelieve her. In 1979, Adele Goldberg, a project manager working at Xerox PARC, found herself in precisely that role. At the time, Xerox was developing the prototype for an innovative personal workstation called the Alto, which had a number of revolutionary features, including a graphical user interface and a new device called a mouse. One day, Goldberg was instructed by her bosses to let a young visitor preview the new machine. Although other visitors had seen the Alto, something in Goldberg’s gut told her that this particular interloper was bad news, so she objected vociferously to the visit. Despite her persistence, her concerns were ignored, and she was ordered to show the young man around. Even Goldberg’s insistence on a written order did not deter her bosses. The visitor was, of course, Steve Jobs, who would later recall that within ten minutes of seeing the Alto, he knew exactly how to design a better Macintosh. The problem is, most of us don’t like paranoid people. They aren’t a lot of fun to be around, and they tell us things we don’t want to know. As a result, we tend to blame and avoid them. Prudent paranoics have only two ways around this. One is to dress up the bad news in such a way that it becomes more palatable to the people around them. Perhaps more effective, though, is to follow Andy Grove’s example and condition the whole organization to be sufficiently paranoid that it will react quickly to warning signs. As he describes it: “I believe the prime responsibility of a manager is to guard constantly against other people’s attacks and to inculcate this guardian attitude in the people under his or her management.” Interestingly,Grove grew up in Nazi-occupied Budapest, where paranoia was necessary for survival. Ever watchful of the enemy, Grove teaches his people to think the same way. That may sound obsessive, but as Henry Kissinger liked to remind us, even paranoid people have real enemies. The Overwhelming Facts The prudently paranoid are most vulnerable when all the hard evidence seems to contradict their nagging suspicions. Clever enemies are often very careful to appear to be the opposite of what they really are; they do this by creating what looks like hard data to counter others’ intuitive fears and reservations. Because the evidence seems more credible than the paranoia, the unwary are lulled into a false sense of security. Indeed, the harder the data look and the more compelling the conclusions seem, the more distrustful we should be. Think back to December 6, 1941, the day before the Japanese attack on Pearl Harbor. An American naval attaché in Tokyo telegraphed Washington to say that he did not believe the Japanese military was preparing an attack; for proof, he cited the compelling evidence that large crowds of Japanese sailors could be seen casually strolling the streets of Tokyo. Without sailors, the aircraft carriers obviously could not have left port. Unfortunately in this case, believing really was seeing. What the attaché did not consider—indeed, could not even imagine—was the possibility that these “sailors” were not sailors at all. In fact, they were soldiers who had been ordered to pose as sailors in order to conceal the fact that the Japanese fleet had already taken off for Pearl Harbor. As history has duly recorded, the deception worked brilliantly. But from the perspective of U.S. intelligence, the incident provides a powerful cautionary tale regarding the perils of insufficient paranoia. It is often when we are most trusting of our senses that we become most susceptible to deceit. Such deceptions obviously apply to the business world. Just think of Enron and the story reported in the Wall Street Journal under the title “En-Ruse?” The article recounts how Enron had in 1998 asked more than 70 low-level employees to go to an empty trading floor and pose as busy sales representatives to impress a group of Wall Street analysts who were visiting the company’s headquarters. According to one employee who had participated in the lie, “We actually brought in computers and phones, and they told us to act like we were typing or talking on the phone when the analysts were walking through. They told us it was very important for us to make a good impression, and if the analysts saw that the operation was disorganized, they wouldn’t give the company a good rating.” To enhance this illusion, the employees even brought in personal pictures to adorn the tops of their desks. The ruse worked. Although the whole charade lasted only ten minutes, it was enough time to create the impression of a dynamic, flourishing trading floor. “Reality” is not a fixed entity but rather a tissue of facts, impressions, and interpretations that can be manipulated and perverted by clever and devious businesses and governments. These stories are dramatic proof of what can happen when we remain overly confident in the hard evidence we hold in our hand. They remind us that “reality” is not a fixed entity but rather a tissue of facts, impressions, and interpretations that can be manipulated and perverted by clever and devious businesses and governments. James March, the organizational theorist, often talks about the wisdom of “treating reality as a hypothesis;” this is especially true in cases where you can’t be sure of the facts. When it comes to securing a solid and enduring sense of trust in today’s world, there well may be, as Gertrude Stein wrote, “no there there.” Creating Paranoia on Purpose Up to this point, I’ve highlighted some of the ways paranoia serves as a defense mechanism, and how, properly listened to and acted upon, it helps people and organizations keep out of harm’s way. Yet prudent paranoia also has its offensive manifestations. In particular, I’ve found many cases where deliberately increasing paranoia in an organization can help leaders rally the troops. Steve Jobs is a master at using paranoia in this way, as he deftly demonstrated in his famous 1984 speech to Apple shareholders and employees. In that speech, Jobs introduced the Macintosh computer to the world. At one level, Jobs’s presentation was simply the usual new-product introduction; he obviously wanted Apple people to get excited about selling this new product. But he accomplished far more than that. In his speech, Jobs depicted IBM as a colorless, impersonal, totalitarian corporate behemoth determined to “dominate and control” the future of personal computers. The fledgling Apple, he proclaimed, was the only “force” that could ensure buyers’ “future freedom.” Jobs deliberately invoked language and imagery from the movie Star Wars, suggesting that Apple employees were akin to the rebel alliance taking on the evil Darth Vader. Apple was not just making and selling computers; it was out there protecting the liberty of the galaxy! By invoking such grand themes as life and death, Jobs knew he could conjure up a real sense of danger that would spur his people to passionate action. As former president Franklin D. Roosevelt once said, “If a leader doesn’t have enemies, he had better create them… If a loyal supporter will fight hard for you, he will fight twice as hard against your enemies.” Paranoia in its destructive form can also be used as a weapon to demotivate and deflate your competitor’s troops. As the military is well aware, stoking paranoia in the minds of enemies can unsettle and even derail them. A young engineer at an up-and-coming design firm in Silicon Valley described to me how his organization had once been on the receiving end of just that kind of black propaganda. “We kept hearing rumors about a product that our competition was working on. It was apparently similar to something we had been working on and was aimed at the same market—only supposedly much better. But we couldn’t get any details—we would hear just the vaguest sort of stuff. But the ‘buzz’ was this thing was hot. It drove us crazy.” Later, the engineer found out that the other company knew they were in trouble with their product but were hoping they could buy some time distracting and maybe even psyching out the other side. “It turned out that their idea was completely wrong-headed. They crashed and burned on this thing. But we sure didn’t know that at the time.” The goal of leaders, then, should be to sow constructive paranoia in their own organizations while seeding destructive paranoia in the competition. • • • It’s easy to make the case that pathological paranoia is extremely toxic. But it’s far less simple to judge when paranoia is prudent and helpful. The problem is that even the most pathological-seeming paranoia has its prudent side. Ernest Hemingway’s psychiatrists and friends, for example, all pooh-poohed his claims that J.Edgar Hoover was out to get him, suggesting that his fears were signs of a mental illness. But thanks to the Freedom of Information Act, we now know that Hemingway was right. His FBI file dates back to October 8,1942,long before he suspected he was under surveillance, and contains 125 pages (the last entry was dated January 25,1974—13 years after his death). Hemingway, of course, tragically committed suicide, but there’s no doubt that his paranoia brought him closer to the truth about Hoover and the FBI. Even in our most irrational fears, we may find important and useful information. While we may be a little sadder for our paranoia, we will be a little wiser for it, too.

When Paranoia Makes Sense

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