The Origin
In 1982, James Q. Wilson, an American political scientist and professor at UCLA and Harvard University, and George Kelling, an American criminologist and professor at Rutgers University, published an article in The Atlantic titled “Broken Windows: The Police and Neighborhood Safety“.
In it, they observed that disorder and crime were inextricably linked and described their work on methods to improve neighborhood safety, based on studies they conducted in Newark, New Jersey.
The premise was that if a window in a building was broken and left unrepaired, the remaining windows would soon be broken as well, for an unrepaired window signaled to some members of the community that no one cared.
People then assumed that breaking additional windows carried no consequence, making the next act of vandalism more likely. One broken window would soon become many, and the deterioration would gradually spread to the building, the street, the neighborhood, and eventually the entire community. What changed outcomes was not where people lived, but what they believed the environment allowed.
Wilson and Kelling also observed that this phenomenon was independent of location, proving true in both affluent and distressed neighborhoods. Their insight was profound. People adjust their behavior based on cues around them, and signs of disorder can quietly reset expectations for what is acceptable.
A Universal Pattern
In 1969, Philip Zimbardo, a Stanford psychologist, conducted an experiment, testing what would later be known as the broken-window theory. He placed two automobiles, both without license plates and with their hoods raised, in two separate neighborhoods, one affluent and one run-down.
In the run-down neighborhood, the car was attacked within ten minutes, and everything of value was removed within twenty-four hours. In the affluent neighborhood, nothing happened to the car for a week. Zimbardo then smashed one of its windows, and within a few hours, the car was completely vandalized.
This demonstrated that vandalism could occur anywhere and confirmed once again that behavior deteriorated quickly when people perceived that no one cared.
Lessons Learned
Wilson and Kelling asserted that this phenomenon also applied to neighborhoods, driving a process of urban decay, from broken windows to accumulating litter, to unintended behaviors and rising crime.
The remedial approach was straightforward: by promptly fixing a single broken window, neighborhoods could interrupt the sequence of events and prevent the predictable but undesirable deterioration of the building and its surroundings.
Even better, assigning foot patrols to establish rules of behavior with community members and enforce the laws helped prevent new broken windows.
Although less efficient logistically than patrols in cars, the on-foot approach removed physical barriers to communication, such as car doors, between officers and community members, fostering better and more direct interaction.
The Business Perspective
The Broken Windows Theory describes how neighborhoods and communities, much like employees within an organization, respond to visible and manageable cues.
The theory suggests that neglected and disorderly environments foster further neglect and disorder in a self-reinforcing vicious cycle: signs of neglect lead to undesirable behaviors, which lead to deteriorating environments, which in turn generate more neglect signals.
The concept Wilson and Kelling described applies just as clearly to businesses. Organizations that address signs of poor behavior or performance early are rewarded, while those that fail to do so are penalized.
In business organizations, an unwanted employee or management behavior is a broken window. A neglected or dysfunctional process is a broken window. A violation of company guidelines is a broken window. So is a poor customer experience, or a subpar work environment, among many others.
All these broken windows foster environments where lax governance becomes the norm, where employees perceive that “no one cares,” and where the next, predictably larger violation would carry no consequence, making it significantly more likely to occur.
When employees feel that no one cares, they leave or their performance declines. And when that happens, customer experience suffers, customer defections increase, and the company’s brand and results are negatively impacted.
Evidence from Business
The business application of Broken Windows Theory is not theoretical. Companies that ignore early warning signs demonstrate measurably worse outcomes than those that address minor operational issues promptly.
Wells Fargo’s trajectory illustrates the consequences of leaving broken windows unrepaired. As early as 2002, employees began creating unauthorized customer accounts to meet unrealistic sales quotas. By 2011, the Wall Street Journal documented the aggressive sales culture. In 2013, Wells Fargo fired approximately 30 employees for opening accounts without authorization, yet the COO claimed to be “unaware of any overbearing sales culture.” The small, broken window went unrepaired and, between 2002 and 2016, unchecked behavior expanded into millions of unauthorized accounts.
When the scandal became public in 2016, Wells Fargo paid over $3 billion in fines and settlements. The CEO resigned, multiple executives faced lifetime bans from banking, and the Federal Reserve capped the company’s asset size, effectively blocking its ability to grow. Under new CEO Charles Scharf, who joined in 2019, Wells Fargo embarked on systematic remediation. By June 2025, after six years of intensive reform, the Federal Reserve lifted the asset cap, signaling restored confidence in the bank’s governance.
At Microsoft, the company was struggling with cultural stagnation and declining market relevance when Satya Nadella became CEO in 2014. Rigid silos and a competitive “know-it-all” culture stifled innovation while competitors gained ground in cloud computing.
Nadella focused on what appeared to be a cultural detail: shifting from a “know-it-all” to a “learn-it-all” mindset. He eliminated the forced-ranking performance system, promoted cross-functional collaboration, and modeled a learning culture by publicly acknowledging his own mistakes and correcting them. These seemingly small cultural changes cascaded through operations. Employees reported 30 percent higher satisfaction between 2014 and 2022. Microsoft’s market value grew from $300 billion in 2014 to over $2.5 trillion by 2023, and Azure became a leader in cloud computing.
Both cases demonstrate the same principle Wilson and Kelling identified in neighborhoods: small signs of disorder, when left unaddressed, signal that standards do not matter and larger violations will follow. Wells Fargo’s tolerance of minor ethical breaches cascaded into systemic fraud requiring years of intensive remediation. Microsoft’s focus on seemingly minor cultural issues transformed its entire operation. The outcomes validate the theory’s application to business: ignoring broken windows leads to predictable deterioration, while addressing them early yields measurable improvements.
The Leadership Imperative
As in the original experiments, remediation in business benefits from direct communication rather than overly formal settings that create distance. Removing those barriers helps managers, employees, and customers surface issues sooner and share insights more openly.
Finally, as Wilson and Kelling’s research shows, preventing broken windows or swiftly remediating them will significantly improve employees’ behavior and company performance. Leaders who act early, consistently, and visibly set the tone for the entire organization.