The Power of Brutal Honesty
1. Performance
Matthias Rothmund left a surgical clamp inside a patient, which is the kind of thing you’d think would hurt a surgeon’s reputation. But he managed the opposite.
Rothmund blamed no one but himself, corrected the mistake, and asked his insurance company to offer the patient a quick settlement.
He hoped that was the end of it, but it wasn’t. The patient returned five years later, requesting Rothmund to perform an unrelated surgery.
'Rothmund was surprised,' Gerd Gigerenzer wrote in his book Risk Savvy. 'The patient explained that he trusted Rothmund and his clinic precisely because Rothmund had immediately admitted his error and corrected it.'
2. Relationships
This highlight’s two points -
- Everyone is in sales whether they realise it or not. You may not sell shoes or insurance, but you sell something, and that something is usually “trust.”
- The best way to build trust isn’t to convince people that you don’t make mistakes. It’s to convince them that you’ll be honest and corrective when you inevitably do.
I’m increasingly realising that we haven’t fully grasped the decades-long shift away from industrial jobs where you made stuff toward service jobs where you make decisions.
For most of history the economy’s top product was labor. Grunt work. Brute force. It was impersonal and mindless, which is why 90% of it is now relegated to machines.
3. Honesty
That’s not the case today. Now people sell services, which are basically short-term relationships. If you sell financial advice, or accounting, or design, or childcare, or nursing, your product is your ability to make good decisions, which rests entirely on customers’ willingness to trust you. It’s hard to grasp how important trust is, because for most of history businesses and employees could get away without much of it, since they weren’t selling it. But trust is becoming the global economy’s top product.
Nike figured this out when it was a startup, competing against Puma and Adidas. Nike’s early shoes were seriously flawed. But it was brutally honest with customers, admitting its shortcomings and asking for feedback. That built trust, which was easy to discount but made all the difference to Nike’s real product: Its brand. Nike founder Phil Knight recalls in his book Shoe Dog how blown away he was with runners’ interest in Nike even when its samples were falling apart.
4. Investing Honesty
I’ve seen this with investment managers. Clients love when presentations emphasise investments that went poorly before mentioning successes. Few complain about the losers. They appreciate the honesty because – maybe without knowing it – what they’re buying is the investment manager’s trust. Bessemer Venture Partners publishes its “anti-portfolio,” a group of successful companies it passed on. “[Our] long and storied history has afforded our firm an unparalleled number of opportunities to completely screw up,” it writes.
Rothmund, Nike, and Bessemer Ventures have successes that vastly outnumber their screw ups. But it’s easy to overlook that success relies on your customers’ willingness to trust you, and trust means openly admitting that you’re not always successful. Trying to give the impression that you don’t make mistakes is interpreted as overoptimism at best, and more commonly what Nike’s first customers called “bullshit.” Customers, employees, and bosses can recover from occasional imperfection.
5. Conclusion
An important point here is defining what brutal honesty means. A culture of honesty is usually seen as the ability to call out your co-workers – especially those below you – when they make a mistake. This is good, but can backfire if taken too far. Excessive criticism smashes morale, causes defensiveness, and is often rooted in your own insecurity.
Something that took me a while to grasp but now seems obvious are simple points like -
Trust the investor who talks about his mistakes. Avoid the one who doesn’t, as his are likely larger.
Trust the news source that is constantly issuing corrections. Avoid the one who doesn’t, as its are likely larger.
Back the business that admits its future is uncertain. Avoid the one who doesn’t, as it truly has no idea what’s coming.
Trust the new employee who admits to being confused. Be skeptical of the one who doesn’t, as he likely has no idea what’s going on.
And as Rothmund might say, trust the surgeon who admits his errors, not the one who claims he doesn’t make any.
The Brutal Honesty in Investing - Simple - Rather than betting Short Term on that extra special fail-proof business over and over again, how about getting creative and finding other Long Term Opportunities like $TSCO (Tractor Supply Co)$PUB.PA (Publicis Groupe)$SIRI (Sirius XM Holdings Inc)$UPM.HE (UPM-Kymmene Oyj) and $BALL (Ball Corp)smartblogger.com/wp-content/uploads/2017/07/brutally-honest.jpg
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