Is it OK to lie in business for the right reason?

Can lying in business be OK?

A long time ago I was in a very difficult ethical position. The best thing to do for the business was to lie and mislead technical executive management, but it didn't sit right with me. My boss was more flexible, he did the misleading for me, and the result was the executives made the right decision. Listen to my story and tell me what you think was the right thing to do.

(Eric Kilby from Somerville, MA, USA, CC BY-SA 2.0, via Wikimedia Commons)

The situation

My company has previously bought exclusively from supplier X, but supplier X was having financial difficulties and had stopped innovating; their products were extremely expensive relative to the market. My company had just spent a large amount of money with X and our technical executive management was very committed to them, it was very apparent we were an "X shop". At the same time, the technology had changed and new entrants had come to the market offering faster and cheaper products. 

My team needed new hardware to generate network traffic. We tried the solution from X, but it just didn't give us anything like the performance we needed and was extremely expensive. We then tried a product from one of the new entrants which gave us the performance we needed (and more) and was much cheaper. In fact, performance was 10x faster and we had the test results to prove it. So my team wanted to buy from the new entrant.

The dilemma

My manager told me that if we told the truth that the new entrant was 10x faster than X and much cheaper, technical executive management wouldn't believe us and we would lose credibility, in fact, it's likely we would be told to go with technology from X even though it wasn't good enough. 

I wanted to educate technical executive management and show them what we'd found. My boss said that was a bad idea and we should spin a story technical executive management could accept.

What should we do?

What happened

My boss took the results and did some massaging. He told the technical executive team that while the new entrant wasn't as fast as company X, it was a lot cheaper and was a better fit for this particular project - he implied it would be a sacrifice for the team to go with the new entrant, but we would do it to save money. He reassured executive management that their prior decision to go with X was sound because the other projects were different. He presented a version of the results that hinted we needed more equipment from the new entrant than we would need from X, but it would still be cheaper overall.

We got permission to go with the new entrant. My boss told me that technical executive management had commented that the new entrant had really come a long way and that maybe in five years they would be as good as X.

Subsequent events

Within a year, supplier X hit bigger financial problems and was taken over. It stopped producing networking equipment completely. My employer moved off their hardware within two years and exclusively bought equipment from new market entrants. 

The story in the specialized press was that X had offered inferior and over-priced products for some time. When new entrants came into the market with faster and cheaper technology, X couldn't compete. X had been reliant on inertia and existing business relationships for sales, but of course, that came to an end eventually.

Technical executive management talked about how their decision to go with the new entrant for my project showed they were on top of things. However, company C-level leadership had changed and they wanted better technical decision-making, so the entirety of the technical executive management team changed. However, I was long gone by this point.

Sunk cost fallacy

This is an example of the sunk cost fallacy where people remain committed to something because of the amount of effort they've previously put into it, even though going with something new would be better. There are numerous examples in business and politics. 

In this case, technical executive management had invested a lot in supplier X, including their own credibility. Because of that investment, they weren't going to change suppliers easily, even though they "should".

Unfortunately, I've seen other examples of the sunk cost fallacy over the years, but never anything as bad as this. Organizational inertia is a real thing and it can be gut-wrenching to make changes. Sadly, the heralds of change are often punished and end up leaving because their message is uncomfortable; the nail that sticks up is the one that's hammered down.

What's the right thing to do?

Over the years, I've come to the conclusion that my boss made the right call in the circumstances. Yes, technical executive management was wrong, but they were deep into the sunk cost fallacy and weren't thinking rationally. There was no way they would have accepted our results, even though they were true. They needed a rationale that would enable them to cling to X while giving us permission to do something new, and my boss gave it to them. The best possible solution for the company was for technical executive management to realize how the market had shifted and change their buying behavior, but they just weren't ready to do so and it would have been career suicide for us to try.

Ultimately, it's not about doing what's right, it's about making the change you can.

What do you think?