Strategically a major function of the CEO is to look for bad news and courage the organization to respond to it. Employees must be encouraged to share bad news as much as good news.
Gates argues that a chief executive has a particular responsibility to seek out information that challenges comfortable assumptions. Bad news can reveal competitive threats, product weaknesses or changes in the market before their consequences become severe. For this reason, employees need to feel able to report problems openly rather than filtering information so that senior leaders hear mainly positive developments.
Gates’s 1995 The Internet Tidal Wave memo provides a useful example of this approach. After concluding that the Internet posed both a major opportunity and a serious challenge to Microsoft’s existing position, he urged the company to make Internet capabilities a priority across its products and businesses. The broader principle is that leadership involves not merely receiving difficult information but organising a rapid response to it. The quote can therefore be applied to executive decision-making, organisational transparency and the early recognition of strategic threats.