This week I’d like you to recall Hans Christian Andersen’s fairy tale, The Emperor’s New Clothes. This story has a lesson that every business owner needs to consider.
The tale tells of two weavers who promise an emperor a new suit of clothes. But what makes this suit unusual is that it is invisible to those who are unfit for their positions, stupid, or incompetent.
When the weavers complete his suit and pantomime putting it on him, the Emperor parades before his subjects in his new clothes. The nobility see nothing but play along with the charade, not wanting to be shown unfit for their position. The commoners say nothing because they don’t want to be found stupid. No one dares to say that he doesn’t see any suit of clothes. At last a child cries out, “But he isn’t wearing anything at all!” The shocked emperor regains his composure and continues to walk through the crowd as though nothing has changed.
After hearing more than one executive speech, several of us would comment, “This emperor has no clothes.” But not wanting to appear disloyal (or lose our jobs), we feign a certain disingenuous level of support of the latest executive pronouncements.
How might business owners not get caught in this trap?
Warren Buffett’s wisdom about handling mistakes that could blemish Berkshire Hathaway’s brand and reputation are just the antidote.
Buffett has the daunting task of getting 330,000 employees to buy into his approach. When asked how he “controls” all of them, he says that every 2 years he sends a page and a half letter to his 70 CEO/managers outlining principles everyone would agree with:
I tell them that my reputation, Berkshire’s reputation, is in their hands. We’ve got all the money we need. We’d like to make more money but we’ve got all the money we need. We don’t have an ounce of reputation beyond what we need. We can’t afford to lose it. We never will trade reputation away for money.
He has given each CEO tremendous freedoms and tremendous responsibility. They do have a prime directive, however: they are to safeguard the reputation of their part of Berkshire Hathaway. They are to lead their people so that each employee acts as though whatever they say or do will be posted on Facebook or Tweeted to their spouse, kids, mom, grandma and every person important to them.
So, when employees make mistakes, what is that CEO to do? He may be tempted to put on his new clothes and keep up appearances. But I believe Buffett has it right when he says,
“When you find bad news, I say get it right, get it fast, get it out, get it over.”*
Get It Right
Admit the mistake and take full ownership for it. Don’t play the blame game.
Get It Fast
Rather than doing damage (remember GM’s delay in responding to the ignition recall?) address the problem quickly and intelligently.
Get It Out
Take action to resolve the issue—don’t let it linger!
Get It Over
Put it in your rear view mirror as soon as possible. Refocus on where you’re leading your business.
There are many situations when it’s easier to keep pretending your firm isn’t naked. Some of the most common situations business owners tell me about are:
- A smoldering “small” compliance issues;
- not firing an “OK” employee;
- ignoring a so-called non-strategic “issue” in your firm (e.g., having non-mobile ready websites by April 21, 2015);
- tolerating a culture of fear, white lies and in authenticity.
Leadership is about truth-telling and acting quickly and appropriately. You can’t have it both ways—your firm is either naked or properly attired!
*as quoted in http://www.farnamstreetblog.com/2015/04/buffett-on-behavior/
What area in your firm may be wearing the emperor’s clothing?
Originally posted 2015-04-22 12:24:59.