Why They Do It

Synopsis

From the financial fraudsters of Enron, to the embezzlers at Tyco, to the insider traders at McKinsey, to the Ponzi schemer Bernie Madoff, the failings of corporate titans are regular fixtures in the news. In Why They Do It, Harvard Business School professor Eugene Soltes draws from extensive personal interaction and correspondence with nearly fifty former executives as well as the latest research in psychology, criminology, and economics to investigate how once-celebrated executives become white-collar criminals.

White-collar criminals are not merely driven by excessive greed or hubris, nor do they usually carefully calculate costs and benefits before breaking the law. Instead, Soltes shows that most of the executives who committed crimes made decisions the way we all do-on the basis of their intuitions and gut feelings. The trouble is that these gut feelings are often poorly suited for the modern business world where leaders are increasingly distanced from the consequences of their decisions and the individuals they impact.

The extraordinary costs of corporate misconduct are clear to its victims. Yet, never before have we been able to peer so deeply into the minds of the many prominent perpetrators of white-collar crime. With the increasing globalization of business threatening us with even more devastating corporate misconduct, the lessons Soltes draws in Why They Do It are needed more urgently than ever.

Summary

Chapter 1: The Power of Influence

* Summary: The chapter introduces the concept of influence and its pervasive nature in human interactions. It highlights the importance of understanding influence in order to effectively navigate social dynamics.
* Example: The author cites the example of a study in which participants were asked to donate money to a charity. When the request was made by a person in a wheelchair, the donation rate increased significantly compared to when the request was made by a person without a disability. This demonstrates the power of physical appearance and perceived helplessness in influencing behavior.

Chapter 2: The Six Weapons of Influence

* Summary: This chapter presents Robert Cialdini's six principles of influence: reciprocation, scarcity, authority, liking, social proof, and commitment and consistency.
* Example: Reciprocation: A restaurant owner might offer a free appetizer or dessert to diners, which creates a feeling of obligation to return the favor and patronize the establishment again.

Chapter 3: Reciprocation: The Gift That Keeps on Giving

* Summary: This chapter explores the principle of reciprocation and its applications in various settings. It emphasizes the psychological discomfort that people experience when they feel indebted to others.
* Example: A salesperson might send a thank-you note or small gift to potential customers after a meeting, creating a sense of obligation that could lead to increased sales.

Chapter 4: Scarcity: The Power of the Rare

* Summary: This chapter focuses on the scarcity principle and how people tend to value things that are limited or in short supply. It discusses the psychological factors that drive this phenomenon.
* Example: A clothing store might advertise that a particular item is available in limited quantities, creating a sense of urgency and motivating customers to purchase it before it runs out.

Chapter 5: Authority: The Halo Effect in Action

* Summary: This chapter explores the authority principle and how people are more likely to comply with requests from those they perceive as experts or figures of authority.
* Example: A medical professional's advice is often more likely to be followed than advice from a layperson, simply because of their perceived authority in the field of medicine.

Chapter 6: Liking: The Key to Persuasion

* Summary: This chapter discusses the liking principle and how people are more inclined to say yes to requests from those they like or find attractive.
* Example: A salesperson might build rapport with a customer by engaging in small talk or sharing personal anecdotes, creating a sense of familiarity and likeability that increases the likelihood of a sale.

Chapter 7: Social Proof: The Wisdom of the Crowd

* Summary: This chapter explores the social proof principle and how people tend to conform to the behavior of others, especially in situations of uncertainty.
* Example: A restaurant with a long line of customers waiting to be seated is likely to attract more customers based on the assumption that it must be popular and therefore worth patronizing.