When you’re building a new home and it looks well on the way to your family being able to move in, you really don’t want to be told that there are serious problems with the foundations that may require stripping it back to the bedrock.

On the other hand you don’t want to move into a home that is likely to collapse taking you and your family with it.

When a company is planning for growth based on shaky foundations it’s tempting to try and soldier on, papering over the cracks as fast as they appear and putting on a good front for the shareholders.

A challenge for any leader is to determine how open and direct they should be in their communications. Should they advise the investors (who have agreed to and financed the foundations) that these are already cracking and will fail if building continues? Or should the leader do the best they can with their team and bolster the failed base with additional struts, braces, processes and fudges?

It’s hard to admit that poor decisions have been made, that what looks like a shiny success from outside is actually coming apart on the inside. However, eventually a company based on poor foundations will fall – and the shareholders will lose their money. The staff will lose their incomes and suppliers will suffer from unpaid accounts. Nobody wants that.

So at what point does the leader lay it on the line and tell the shareholders the plain unvarnished truth?

The answer should be ‘as soon as you know there are serious problems’ and not ‘only when it’s impossible to hide the problem any longer’.

It takes guts, it takes courage, but someone has to step up and warn the foundation builders (shareholders) that they’re in danger. Leadership is about being brave as well as inspiring and visionary. ‘Mushroom management’ is never going to rescue the situation, whereas courage and honesty give the organisation the best chance of a successful rebuild.