Honestly Speaking About Speaking Honestly

Is there an ultimate business strategy that can guarantee success for all companies? Is there a silver bullet guideline for making decisions that generate sustainable, profitable growth over the long-term? Is there a way to cut down on big losses and ensure on-going success?

Before you get too excited, I don't have the answer to these questions. However, it seems to me that old-fashioned honesty is a pretty darned effective corporate strategy that covers every industry and business situation. By "honesty," I mean you tell the truth.

Here's a variety of examples where a lack of honesty costs businesses dearly at the bottom-line:

In the April 20, 2004 issue of The Wall Street Journal, it was reported that two top executives at Royal Dutch/Shell Group "feuded bitterly over how to handle evidence the oil giant had greatly exaggerated its oil and natural gas reserves." Walter van de Vijver, then head of exploration and production, wrote in an e-mail to then chairman, Phil Watts, "I am becoming sick and tired about lying about the extent of our reserves that need to be done because of far too aggressive/optimistic bookings." In the end, four senior executives lost their jobs at the company. The company had overstated its reserves by 22%. In the end, Standard & Poor's Rating Services cut Shell's long-term credit rating and their stock suffered greatly.

In November of 2003, Boeing fired Mike Sears, then CFO of the company, and Darleen Druyun, a top executive at Boeing who was a former Air Force official. They were fired because allegedly Sears tried to recruit Druyun to Boeing while she still worked for the U.S. Government. Sears denied all wrongdoing, but in April of 2004, Druyun pleaded guilty to conspiring to help Boeing land a multibillion-dollar Pentagon contract. "I deeply regret my actions and I want to apologize," she said, her voice breaking slightly.

My source is the USA Today. Of course, even my source has been caught lying recently when several top editors at the national newspaper USA Today were let go after a scandal about a long-time writer making up quotes in his stories.

Andrew and Lea Fastow, both formerly of Enron, have tried both successfully and unsuccessfully to plea bargain their way through the court system. These two are infamous for the massive accounting scandal that rocked Enron, helped to destroy Andersen and set off of the greatest series of corporate scandals in history. What weren't they so forthcoming a few years ago?

I could go on, but the point is that these individuals and corporations have suffered through an enormous amount of pain and financial damage not because they lacked intelligence or understanding. They suffered because they weren't honest.

Why did these people lie? These weren't desperate people starving to death and searching for a meal at the local diner. These were all highly successful, well-paid and well-educated people. I believe the answer is an obsession with short-term success. Rather than just telling people the reality of their situations, they covered up or withheld the truth hoping that they could have short-term success.

Like me, my father is a simple and straightforward man. His entire life philosophy can probably be summed up in ten sentences. But what a ten sentences! One of his favorite sayings is, "Good things come to those who wait." Gosh, I hated hearing that when I was 17 and he wouldn't let me take the one family car we had. I hated hearing that when I couldn't spend my own money to buy a car. I hated hearing it when I was laboring through my early career with no end in sight. Now I'm 41 and I see the wisdom of my father. To achieve something really extraordinary takes time and there are usually no shortcuts. My mom and dad didn't go to college, but they sacrificed a great deal and got all six of their children through private high schools and universities. That took a lot of sustained focus, but they got there through honest hard work over the long-term.

So why tell the truth? Isn't it a whole lot easier to slip in lies here and there. About five years ago, I interviewed Jim Ericson, who at the time was the chairman of Northwestern Mutual Life Insurance. He told me that one of the keys to success is to never lie. He said if you always tell the truth in every situation no matter what the circumstances then you don't have to worry about whom you told what. One of my favorite quotes is, "A clear conscience makes the best pillow." Another favorite quote is from William Shakespeare in his play, Hamlet, where he wrote, "This above all - to thine own self be true." In addition to the personal value of integrity and a clear conscience, another great value of honesty is the amount of money that is saved through honesty. Try sometime to calculate the total financial damage created by lies at Enron, Andersen, WorldCom, Parmalat, Adelphia, Computer Associates, the Olympics, the Catholic Church and Boeing. It's not a pretty sight.

So how do you tell the truth? Here's a step-by-step approach:

   Step 1: Make sure you really understand the truth.
   Step 2: Tell people the truth.
   Step 3: Sleep better at night.

Here's an example. The day the top folks at Royal Dutch/Shell Group clarified that their reserves were dramatically overstated, they should have picked up the phone and called all of the critical audiences and told them exactly what they knew. Put all of the cards on the table and then deal with the ramifications. My five-year-old daughter has been learning lately that there is a big downside to not telling the truth. Somehow certain corporate executives have forgotten that there are negative consequences to lying and those consequences greatly outweigh the positive short-term results that lying got them.

I suggest that Corporate Strategy #1 is "Be honest all of the time."

Republishing Articles

Each month my e-newsletter gets republished in approximately 20 blogs, on-line publications, and internal publications for businesses, universities, and not-for-profit organizations. If you would like to republish all or part of my monthly articles, please send me an e-mail at dan@thecoughlincompany.com with "Republishing Article" in the subject heading. I will send you the article in a word document. All I ask is that you include my name as the author of the article and a short paragraph at the end of the article about me with a link to my website.

Book Recommendation: It's Your Biz: The Complete Guide to Becoming Your Own Boss by Susan Solovic with Ellen Kadin

Recently I read a magnificent book for people who want to start their own business. The thing I like the most about, It’s Your Biz, is the absolute honesty with which it was written. It removes the glossiness and sexiness of owning your own business and breaks in down into reality. Click here to read Dan's review of the book.

Take care and have a great month!

Dan Coughlin

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