New leadership keeps discrediting the previous team's record, exaggerating the mess it inherited and crediting old wins to luck, so ordinary results look like a turnaround and early misses get blamed on the past.
An example
Two months after a private-equity firm replaced the chief executive of its commercial-cleaning portfolio company, the new chief executive presented to the board. His first eleven slides covered what he had inherited: undisciplined pricing, a sales team built on relationships, an unreliable forecast. He took a $14 million charge for receivables and contract reserves, more than the auditors had required. The holdover chief financial officer, who had built the old forecast, noted that the prior team had grown margins three years running; the deck credited that to post-pandemic demand. Nobody showed the prior-period numbers. Four quarters later, EBITDA was up 12 percent against the depressed base and roughly flat against the pre-charge run rate. The board extended the chief executive's contract and replaced the finance chief.
Why it works
Lowering the starting point makes every ordinary improvement look like a turnaround, so the new leader's results look better. The predecessor's real wins are reattributed to luck or tailwinds, which weakens the alternative of judging against the old record, and defending the prior team becomes costly, since the defender is associated with the failed old team. The frame also buys a forgiveness window for early misses. It depends on a predecessor who has left and cannot rebut, weak institutional memory, a board that wants a clean story, and one or two real failures to anchor the caricature. Done early, before stakeholders form their own view, it is hardest to undo.
The thinking behind it
Daniel Kahneman In Judgment under Uncertainty: Heuristics and Biases (1974), Amos Tversky and Daniel Kahneman described anchoring: people estimate by adjusting from a starting value, and the adjustment is usually too small. A depressed baseline at a leadership change is an anchor, and later results are judged against it. That is why the defense is to preserve the prior-period numbers early, before the anchor sets.
Lee Ross Lee Ross's The Intuitive Psychologist and His Shortcomings: Distortions in the Attribution Process (1977) named the fundamental attribution error: observers explain others' behavior by personal traits and underestimate their situation. A smear trades on that habit by describing a predecessor's failures as traits, such as undisciplined or relationship-driven, while crediting the wins to market tailwinds. Independent comparators restore the situation the account leaves out.
Erving Goffman Erving Goffman's Stigma: Notes on the Management of Spoiled Identity (1963) describes how discredit spreads to people associated with a stigmatized person, a courtesy stigma. Once the previous team is painted as a failure, anyone who defends its record shares in the discredit. That is why the defense sticks to numbers and avoids a personal defense of the predecessor.
Warning signs
Successive leadership communications use the predecessor's record as a foil. Early briefings list inherited failures without prior-period baselines, sometimes alongside an unusually large write-down. Earlier wins are credited to market tailwinds or to people further down. Results are reported against the depressed base. Anyone defending the old team is treated as part of it.
How to defend yourself
Fix the baseline before the story sets, and argue in absolute terms.
- At the transition, preserve the prior-period numbers: multi-year audited results, forecasts, pipeline, and reserves as originally booked.
- Report current results against both the old run rate and independent industry comparators.
- Request a written explanation of which charges were required and which were judgment calls, and what each assumes.
- Find long-tenured employees, customers, or the predecessor, if still active, who can supply the contradicting record.
Speed matters more than eloquence: once an anchor sets, later corrections fall short even when people know the anchor was wrong. Stick to numbers, since a personal defense of the predecessor invites the guilt by association the frame relies on.
How a leader shuts it down
Commission independent diligence of the inherited state at every leadership change, before the new leader's narrative arrives, and judge later results against it. Set incentive targets from the pre-charge baseline. When a new leader's early communications are mostly about the past, ask for the comparison numbers.