The Story We Tell Ourselves
Major organisational failures often look obvious after the event. The warning signs appear to have been everywhere: the questionable transaction, the unexplained number, the uncomfortable engineering report or the person who had been saying that something was not quite right.
Yet organisations rarely fail because nobody had information. More often, they fail because information is interpreted, filtered or rationalised until it fits a story that people become comfortable believing.
That is what makes the stories of Enron, the NASA Challenger disaster and the current Manchester City Football Club controversy interesting. They are entirely different cases, but each raises a fundamental question about leadership and governance: what happens when the story an organisation tells itself becomes more powerful than the reality underneath it?
These cases are clearly not equivalent. Enron was a corporate collapse; Challenger was a catastrophic engineering and management failure that resulted in the deaths of seven astronauts; and the Manchester City case concerns regulatory findings that are currently being challenged through an appeal.
The common thread is the danger of becoming disconnected from reality.
Enron: When Financial Reality Becomes Obscured
During the 1990s, Enron transformed itself from an energy business into a sophisticated trading and financial services organisation. It was innovative, ambitious and apparently highly successful.
Behind that success, however, was an increasingly complicated collection of transactions and financial structures that made it difficult to understand the company’s true financial position. Special-purpose entities and other arrangements helped move liabilities and losses away from the main business, while accounting practices contributed to reported results that did not necessarily reflect the underlying economics.
The deeper problem was the growing gap between the representation of the business and the reality of the business.
Enron eventually collapsed into bankruptcy in December 2001. Investors and employees suffered enormous losses, senior executives were prosecuted, and Arthur Andersen was effectively destroyed as a major audit organisation.
The lesson was not simply that accounting rules can be abused. It was that sophisticated organisations can fail when their incentives and culture cause uncomfortable information to be ignored or subordinated to a preferred narrative.
Challenger: When Warning Signs Become Normal
The NASA Challenger disaster provides a very different example of the same organisational problem.
On 28 January 1986, Challenger broke apart shortly after launch, killing all seven astronauts aboard. The immediate technical cause involved the failure of seals in a solid rocket booster joint. But the Rogers Commission found serious problems with decision-making, communication and the management of safety information.
Engineers had raised concerns about the O-rings, particularly in low temperatures. On the evening before launch, Morton Thiokol engineers initially recommended against proceeding because of the cold conditions. That recommendation was subsequently reversed.
The uncomfortable lesson is that NASA did not have any information. It had information. The problem was how that information was interpreted.
This became associated with the concept of the normalisation of deviance: a problem occurs, nothing disastrous happens, and the organisation gradually becomes comfortable with it. Eventually, abnormal behaviour begins to look normal.
The organisation starts confusing the absence of disaster with the absence of risk.
Manchester City: The Question of Economic Reality
The Manchester City case is obviously different, and it is important not to suggest otherwise.
In September 2026, an independent Premier League commission found Manchester City guilty of a number of breaches relating to financial reporting and other matters. Manchester City denies wrongdoing and appealed on 1 October 2026. The appeal remains unresolved, so the commission’s findings should not be treated as an uncontested final outcome.
It would therefore be inaccurate to describe Manchester City as “the Enron of football”. Enron collapsed; Manchester City has not. The legal and factual circumstances are fundamentally different.
Nevertheless, the case raises an important governance question: how closely does the financial story presented to regulators correspond with the underlying economic reality?
That question extends far beyond football. Financial services firms, pension schemes, charities and technology businesses all produce information intended to describe what is really happening. Good governance requires that the description remains connected to the underlying reality.
Governance Is About Asking Difficult Questions
Good governance is often associated with structures: boards, audit committees, risk committees, compliance functions and policies. All are important, but structures alone do not guarantee good decisions.
Ultimately, governance depends upon the quality of the questions being asked and the willingness to listen to uncomfortable answers.
A good board should not simply ask whether something is technically permissible. It should ask why the organisation wants to do it, whether it makes commercial sense, whether the assumptions are reasonable and whether the organisation would be comfortable explaining the decision publicly.
Perhaps the most valuable question is: “What are we not being told?”
This matters because information rarely reaches senior management in its raw form. As it travels upwards, it is simplified and interpreted. A serious problem can become a “manageable issue”; a project running late can become “broadly on track”. None of this necessarily represents deliberate deception. But collectively it can create a dangerous gap between management information and reality.
Success Should Never Stop Challenge
Enron, Challenger and Manchester City should not simply be viewed as stories about wrongdoing or incompetence. They demonstrate how organisations can gradually develop cultures in which success is expected, bad news is unwelcome and challenging information is discounted.
Success itself can create risk. Challenger had flown successfully before. Enron had reported spectacular growth before it collapsed. Manchester City has enjoyed extraordinary sporting success while its regulatory dispute has developed.
The lesson is not that success is suspicious. It is that success should never make an organisation less willing to challenge itself.
Leaders need intellectual humility. They need people who are prepared to say, “I don’t think this is right”, and they need to respond not with defensiveness but with curiosity or “tell me why?.”
Reality Always Has the Final Word
The ultimate responsibility of leadership is not simply to produce successful outcomes. It is to ensure that the organisation remains capable of recognising reality, particularly when reality is uncomfortable.
That means encouraging challenge, protecting independent expertise, ensuring that bad news travels upwards, and understanding the assumptions behind the numbers rather than simply accepting the numbers themselves.
Because however sophisticated the organisation, however impressive its technology, however powerful its management team and however successful its track record, there is one stakeholder that cannot ultimately be negotiated with reality.
And reality, as Enron and Challenger demonstrated so tragically, and as the still unresolved Manchester City case reminds us in a very different context, has a habit of catching up.
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