I have been thinking about the real message of the financial and economic meltdown. There are some obvious ones:
- The management of risk
- Use of historic models to predict economic and financial outcomes
- Level of ethical behavior within international financial institutions
- Level of trust we give to commercial and financial counterparties
I could of course go on, the list is long, and there will be many books published and academic courses written relating to these and other results of the financial meltdown we have experienced, and the uncertainty we are likely to have to suffer.
My bottom line is somewhat simpler, and can be applied across the board by almost anyone in business, and many of those who are not.
Humility as a business tool sounds somewhat counter-intuitive, at least it does to me. When we think of Gordon Gekko from the film "Wall Street" that is not the first characteristic that springs to mind. In fact, that is also the case when I think about most characterisations that we are familiar with in modern culture in relation to business and financial leaders.
As investors in growth companies we expect our founders/managers to have confidence, not to say exuberance about their capabilities and the heights to which they can lift their companies. We would probably not invest in them if they did not possess these qualities.
The problem seems to be that this confidence and optimism has been replaced by a pervasive hubris leading to a feeling that we are untouchable and basically financial and business geniuses.
This was true at least until the last year or so. For me the world is now splitting into two categories of managers:
- great managers, but have realised that they are not "Kings of the Universe"
- the rest!!
The ability to be at least a little humble should not in any way decrease one's abilities to build companies or create shareholder value. It can however lead to a situation whereby you do not believe you have a monopoly on wisdom or all the answers. Other people inside your company and without may have a real contribution to make, with ideas that you had not thought of etc.
One way to detect humble behaviour is shown by a person's ability to admit mistakes. A great example of this appeared at the weekend with the publication of Warren Buffett's annual letter to Berkshire Hathaway's shareholders. On several occasions Buffett not only admitted his investing mistakes for 2008, but also castigated himself for making them, taking personal responsibility for these acts. Let us remember that Buffett's not the CEO of a failed or nationalised financial institution; it is still the most liquid of all the financial or investment companies, and will be so for some time to come. (By the way the letter is highly recommended reading - make sure to do so each year).
I had the enormous privilege of having a Father who possessed great skills in business, but also never over estimated his own personal abilities, allowing him to enjoy the contribution of others in the creation and building of Sage.
I hope that I am able to take this lesson for myself this year, and that you have the confidence to think about this, without worrying that it may diminish your business success!