Corporate stupidity, business idiots and hallucinations.
Why directors need to wise up.

It’s been tough being The Corporate Philosopher over the last 20 years. Whilst some of my work has come from CEOs who think deeply, most of my work has come after stupid and bad decisions have been made by Board directors and c-suite executives. It’s hard to convince intelligent people, some of them narcissistic, a few of them sociopathic – that their decisions have been stupid, unethical, dangerous and sometimes lethal.

Business leaders often behave irrationally and carelessly despite being smart and educated people. This paradox reflects systemic issues like “corporate stupidity,” the rise of the “business idiot,” and hallucinations – deliberate miscommunication in reporting, unchecked externalities – and a troubling absence of moral reasoning.

Philosophy, long focused on wisdom and virtue, offers tools to address these failures.

Corporate stupidity

Corporate stupidity manifests primarily as functional stupidity—a condition where intelligent employees are actively discouraged from thinking critically about their work. This phenomenon occurs when organizations prioritize immediate compliance over reflective analysis, creating environments where employees learn to “just do it” rather than question underlying assumptions or processes.

André Spicer and Mats Alvesson’s research reveals that functional stupidity creates a paradox: while it can produce short-term harmony and efficiency, it ultimately leads to catastrophic organizational failures. Companies exhibiting functional stupidity demonstrate several key characteristics. They promote process over purpose with excessive reliance on company policies that stifle innovation and critical thinking. They employ managers more concerned with appearing impressive instead of managing effectively. They display mindless imitation, copying other organizations without considering contextual appropriateness. They promote cultural conformity, creating mental “straitjackets” that prevent employees from using their full intellectual capacity.

The consequences are far-reaching. Organizations suffering from functional stupidity often experience major failures—from Nokia’s inability to compete with Apple’s iPhone, to the 2008 financial crisis, and BP’s Gulf of Mexico disaster.

The rise of the business idiot

The “business idiot” represents a specific type of corporate leader who has ascended to positions of power not through competence or wisdom, but through mastery of organizational politics and superficial presentation. These individuals operate “above work and thinking and knowledge,” making decisions without understanding the actual products or services their companies provide. Their decisions rely on superficial impressions rather than deep understanding of business fundamentals. They have authoritarian tendencies and use their positions to shift blame and avoid accountability while systematically devaluing labour and customer experience.

The business idiot phenomenon emerges from several converging factors. Shareholder supremacy and the relentless pursuit of short-term stock gains over all other considerations has created a leadership class detached from actual value creation. This neoliberal ideology fosters executives who prioritize financial engineering over product quality or customer needs.

Modern corporate culture celebrates managers who appear to “take the big picture” view without understanding that effective big-picture thinking requires comprehension of constituent details. This creates incentives for leaders to remain deliberately ignorant of operational realities.

The business press perpetuates the business idiot phenomenon by providing uncritical coverage that defers to corporate power structures. This creates a feedback loop where incompetent leaders receive validation that further entrench their authority.

Business idiots create profound systemic problems. They build economies “run and built for other business idiots,” creating markets that serve corporate interests rather than genuine customer needs. This leads to the production of inferior products that manipulate and mislead by design. By chasing superficial trends rather than solving real problems, business idiots prevent genuine innovation. Technologies like generative AI become tools for maintaining the illusion of progress without actual contribution. Business idiot leadership thrives on alienation—distancing itself from customers, employees, products, and societal impact. This creates organizations that exist primarily to serve their own power structures rather than broader social purposes.

Hallucinations and selective truth in corporate reporting

Corporate reporting often conceals problems through framing and omission – presenting facts in ways that minimize concern; protecting reputations at the cost of integrity; and board complicity, where non-executive directors accept euphemistic narratives.

Such selective truth erodes trust, disables oversight, and fosters systemic risk. Organizations regularly offload harms—pollution, exploitation, financial instability—onto society without accountability. These externalities represent market blind spots, where real costs are invisible in company accounts. Structural incentives, where maximizing profit means minimizing responsibility, and regulatory gaps, which struggle to capture long-term, global impacts. Traditional fixes like even more regulation, and market pricing have proved inadequate.

Why philosophers are needed in boardrooms

Philosophers are trained in moral reasoning, critical thinking, and long-term vision—skills vital for overcoming corporate dysfunction. They bring moral clarity, challenging decisions that ignore societal impacts; systemic awareness, helping organizations escape short-term mindsets; stakeholder integration, seeing beyond shareholders to broader human concerns.

Boards also need structural change. Include at least one director with philosophical training to question assumptions. Adopt ethical and critical reasoning frameworks in key decisions. Align education and incentives with reflection, responsibility, and societal value.

Most important – appoint people with the courage to challenge corporate stupidity, business idiots and hallucinations.

Further reading

The Stupidity Paradox: The Power and Pitfalls of Functional Stupidity at Work, by André Spicer and Mats Alvesson (2016)

The Era of the Business Idiot, by Edward Zitron (2025)

The Threat of Externalities, by Pierre Lemieux (2021)

I work therefore I am: why businesses are hiring philosophers, by Louise Tickle and Claire Burke, The Guardian (2018)