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Insanity in individuals is something rare, but in groups,
parties, nations, and epochs it is the rule
Insane people are always sure they are
It is only the sane people who are willing to admit they are crazy.
The Looniness of High Command
It is a well-documented feature of business (and other) leadership that, as you get higher in up the corporate ladder, you tend to get exposed to less and less "reality" and more and more carefully doctored and stage-managed data and scenarios. These are often carefully scripted by the leader's subordinates for several reasons: for personal advancement, to suck up to the boss, to avoid conflict, and many other mostly self-serving reasons.
The bosses are often consciously or unconsciously collusive in this. Few people attain positions of status and control in modern companies by being shy and retiring. Most executives are highly opinionated and very forceful in delivering and defending those opinions. When this combination of drive and will-power is coupled with skill and expertise and the person attains a position of significant power and control, what was an asset can prove to be a liability.
When executives are convicted that they are right, they may set up a system that can continually reinforce that sense of rightness even if it is clearly, well, wrong.
Crazy Is as Crazy Does it to You
When a boss, given the often skewed version of reality given to him or her, decides that white is black or black is white, the people nearby (usually subordinates) have two choices:
The problem with choice 2. is that, in order to maintain intellectual integrity, the person agreeing with the boss must often rearrange his or her own analysis, logic, and conclusions. Otherwise, the person is faced with holding two different opinions at the same time: the boss is right and the boss is wrong. The stress caused by these contradictory views is called cognitive dissonance and people are known to perform impressive mental gymnastics to get out of the situation.
Cognitive Dissonance and Viral Insanity
People have a great resistance to actively holding contradictory propositions in their minds at the same time. To alleviate the stress caused by cognitive dissonance, they have to build up a mental framework that supports the view they choose to (or have to) take. When your boss holds to some insane idea or approach the chain goes like this:
Weird behavior, it seems, is contagious.