Armstrong’s fall has many lessons for business

Jeff Whalley
January 21, 2013
Herald Sun

Disgraced cyclist Lance Armstrong has finally ‘fessed up but others in business and sport are likely to make similar mistakes.

THE corporate world has a thing or two it can take from Lance Armstrong’s humbling, a leading economist says.

The same psychology of risk-taking and lying that characterises Armstrong’s undoing is prevalent in many of the more notorious tales of corporate disgrace, University of NSW school of business fellow Tim Harcourt says.

And he said Armstrong’s global disgrace won’t put paid to cheating in sport.

“I don’t think Lance will be the end of drug cheating in cycling,” Mr Harcourt says.

“And I don’t think Enron or Lehman will be the end of egotistical, greedy people flouting the rules in business.”

Mr Harcourt says that, for some people, the financial incentives to cheat will outweigh the fear of the disgrace that can follow.

Armstrong revealed he lost $US75 million ($A71 million) in sponsorship in one day, including lucrative deals with Nike and Trek bikes.

Mr Harcourt pointed to the work of Freakonomics authors Steven Levitt and Stephen Dubner, who studied mass cheating in sumo wrestling.

He said people cheated to get a competitive edge and then created a “prisoners’ dilemma” that silences all the complicit parties.

“But like sumo wrestlers and Enron executives, the great Lance did eventually get caught,” he said.

“As they say in Freakonomics, if you wondered whether business executives cheat because they think they have a sense of entitlement, then ask how they became business executives in the first place.”

Mr Harcourt said he believed special events such as the Santos Tour Down Under could survive.

“Despite the obvious effect of drawcards, Test cricket survived without Bradman, golf without Tiger Woods, AFL without Wayne Carey and Tour Down Under will be sustainable even without Lance Armstrong.”