At Fortune's Leaders Forum this month, a recurring theme was that as AI takes over more of the routine work, judgment becomes the scarce resource at the top of a company. I agree with that. But it leaves out something I have learned the hard way over thirty years of running businesses.
Judgment is only as good as the information it runs on. And in most companies, the information that reaches the top has been quietly edited on the way up.
Good news travels fast. Bad news gets softened, delayed, or buried. By the time it reaches the person who could have fixed it cheaply, it has become expensive.
Nobody in this story is a villain. That is what makes it hard.
A store manager has a rough month and wants to fix it before it shows up in a report. A department head knows a project is slipping but thinks one more week will get it back on track. A regional leader rounds a problem down because the last person who delivered bad news in that meeting got torn apart.
Every one of those decisions makes sense to the person making it. Together, they create a company where the CEO is the last to know.
I saw this early in my career running multi-site operations. The locations that worried me most were never the ones with visible problems. They were the ones where everything always looked fine. Every business has problems. When you never hear about them, it does not mean they are not there. It means someone decided you should not hear about them.
Here is the uncomfortable part. In almost every company where bad news moves slowly, the cause starts at the top.
People are watching how you react. If the person who raises a problem gets grilled, blamed, or embarrassed, everyone in the room learns the lesson. The next problem will reach you later, and it will be bigger.
I tell leaders to think of it as a price. Every time someone brings you bad news, you are setting the cost of doing it again. If the cost is high, people stop paying it.
That does not mean you lower your standards or pretend a miss is fine. It means you separate two things: how you react to hearing the problem, and how you hold people accountable for fixing it. Thank the person who surfaced it. Then get into what happens next.
Over the years, across turnarounds, startups, and established companies, a few habits have held up.
Ask a better question. "How are things going?" invites a polished answer. "What is the one thing you are most worried about right now?" invites a real one. It is one of the most useful questions I know.
Reward the early warning. When someone flags a problem while it is still small, say so in front of the team. People repeat what gets recognized.
Go look for yourself. Walk the floor. Visit the site. Sit in on a customer call. Reports tell you what someone decided to write down. Being there tells you what is actually happening.
Watch for the too-clean dashboard. If every metric in a business is always green, the metrics are measuring the wrong things or someone is managing to the metric.
Admit your own misses first. When I was wrong about something, whether it was a hire, a market call, or a plan that did not work, saying so plainly in front of the team did more for candor than any speech about transparency.
This is where the AI conversation comes back in. AI tools can pull numbers together faster, flag anomalies, and summarize what is happening across a business better than any weekly report I ever received. That is useful. Used well, it can shorten the time between a problem starting and someone noticing it.
But AI mostly works on the information people give it. If the culture teaches people to smooth things over, the AI summarizes the smoothed-over version, very efficiently, with nice formatting. A faster pipe does not help if what goes into it has already been filtered.
The tools can help surface bad news sooner. Only the leader can make it safe to say out loud.
Think about the last three times someone in your company brought you a real problem. How did you react? What did they learn from your reaction?
Then think about the last time you were surprised by a problem that someone below you had known about for weeks. That gap is the real measure of how much your people trust you with the truth.
If the gap is long, you do not need a new reporting system. You need to make bad news cheaper to deliver. Start with your next conversation.
Connect with Steve: linkedin.com/in/stevepurban