How many problems are visible in your company? A well-known study from 1989 called the "Iceberg of Ignorance" identified that top executives were aware of only 4% of an organization's frontline problems. Supervisors saw more, middle managers more still—but the people closest to the work saw nearly all of it.

The other 96%? Invisible to executives, yet still there. Or sometimes not even recognized as problems at all because the workarounds have become the norm.

The study is nearly forty years old, but the dynamic it captures has only grown more relevant. Today's organizations are larger, faster, and more distributed. And in my work with companies around the world, the number one barrier employees and leaders at all levels name — the thing that keeps people from taking responsibility for solving problems and contributing their ideas — is fear. Psychological safety, and the perceived lack of it, remains paramount.

You can't solve a problem you can't see.

Why do so many problems stay invisible to leaders? Ultimately, it's because leaders—from senior executives to frontline managers—haven't created the conditions for the people who see them to make them visible. And often that comes back to our own attitudes and responses to problems in our teams and organizations.

Think about the last time someone on your team made a mistake or brought you a problem. What was your first reaction: Welcome the problem, or blame? Did you provide support to fix it, or ignore the employee's suggestion for improvement? Because that reaction is what teaches people whether to bring you the next problem or bury it.

Welcome Bad News

High-performing companies—from Toyota to GE Aerospace to Alcoa—approach problems differently. They build a culture where "no problem" is treated as a problem, and where they welcome “bad news.”

When I set out to write Learning to Lead, Leading to Learn, I spent years in conversation with Isao Yoshino, a Toyota leader whose 40-year career spanned the late 1960s to the early 2000s. Across all of that career, the idea he returned to most is Toyota's culture of improvement built on two mottos toward problems: “Bad news first” and “No problem is a problem.”

Yoshino’s career was replete with examples of how Toyota's leaders at all levels embraced this approach—including his own mistakes and failures, how his leaders responded and how he later helped build the same culture by teaching that a leader's response to bad news is the linchpin of psychological safety and improvement. (You can read these stories in Learning to Lead and hear Yoshino reflect on them on my Chain of Learning podcast.)

Of course, no one wants bad news. But this mindset recognizes that the bad news likely already exists—the mistakes, the safety issues, the rework—it's just hidden. And if leaders don't create the conditions for people to surface the problems, the organization can't fix them or ensure they don't recur.

Larry Culp, CEO of GE Aerospace and former CEO of GE, shared with me on stage at the Association for Manufacturing Excellence conference that this same mindset has shaped how he leads and builds companies. Years ago, evaluating a company his team was considering acquiring, he heard a leader say: “We no longer talk about bad news. It has been deemed bad for morale. His reaction: “We should buy this company.”

As Culp told me, the company's bones were good; it was only "up on the rocks" because of that mindset. Fix it by creating a culture that makes the bad news visible, and everything else could be turned around.

But as Culp admits, when bad news does actually surface, it’s important to be intentional with your response: “Do you shoot the messenger, or do you listen even if you are unhappy? [Listening is] a lot easier said than done.”

When Paul O'Neill became CEO of Alcoa, he famously told his board his No. 1 priority wasn't profit or efficiency; it was worker safety. And it wasn’t just a slogan on the wall. He built the conditions for people to report a safety issue the moment they saw it, and for leaders to respond right away. And because the same culture that makes it safe to surface a safety problem makes it safe to surface any problem, everything improved—quality, cost, productivity. Over his tenure, Alcoa's market value grew by billions.

When you create the conditions for people to signal problems, high performance follows.

It all comes back to our response—the thing that reinforces whether problems get highlighted or buried.

Thank You for Making This Mistake: the Paint Shop

Yoshino's very first experience of this culture came in his first months at the company. In the late 1960s, he joined Toyota as a new university graduate, hired for a role in the back office. As was typical then, and continues today, his orientation included several months on the factory floor, standard for every new hire regardless of role, so they could learn the value-creation work of the company firsthand.

His job was simple: Pour a can of paint and a can of solvent into a large mixing vat, so the mixture could be sprayed on the cars as they came down the line.

One day, the plant manager came running into the paint shop with an urgent problem: The paint was literally dripping off the cars as they came down the line. The line was stopped. A hundred cars needed to be repainted.

All eyes went to Yoshino. He had made a huge mistake.

Think about what would have happened if this were you, at your first job or your current company. What would your manager's response have been? In most of the organizations I work with, and when I share this story from the keynote stage or at leadership retreats, the answer is the same: You'd have been yelled at, blamed, maybe even fired.

That's not what happened to Yoshino. His manager came over and asked him to walk through the process of what he'd done. Yoshino picked up the cans, and it was clear to everyone how nearly identical they were—he had grabbed the wrong solvent, an easy mistake for someone so new. They did some problem-solving together, on the spot, to make sure it wouldn't happen again.

And then his manager said something Yoshino continues to be astounded by nearly 60 years later: “Thank you for making this mistake. It showed us that we, as the leaders, had not set up the conditions for your success. And that is our responsibility.”

Thank you for making this mistake.

What a powerful response—and how different from what most of us would expect. That response is exactly what turns bad news into a moment of learning and improvement.

Reflect: How Will You Respond to Bad News?

The next time someone brings you a mistake or a problem, notice your first reaction before you say a word. What does it teach the people around you — to surface the next problem, or to hide it? And what would change if you met that mistake with a thank you?