Honesty is the best policy

Last night I watched the 60 Minutes episode about why Greg Smith left Goldman Sachs – because the firm’s culture was degrading and the bank was being dishonest and ripping off its clients. This ignited some thoughts in my big noggin about how honesty and openness impacts a person’s and company’s success.

Over the last few months that I’ve been involved in startups and entrepreneurship, I’ve had many conversations with entrepreneurs about the companies they are building, their experiences in the past, and their lessons learned. What has awed me is how brutally honest they’ve been and how candidly they speak about their travails.

I think entrepreneurs HAVE to be brutally honest to have any chance to succeed. First, they have to understand what skills they lack and find co-founders and employees to fill those gaps. Once a team is built, they have to test their idea and iterate repeatedly to find product/market or service/market fit, many times completely scrapping the initial idea they were so passionate about. If there are problems with the product/service, team, or market, they have to be able to recognize this and change accordingly (like I did). Entrepreneurs need to be frank with their investors, advisors, and board members about their progress and need to communicate frequently and sincerely with their customers and employees to keep them. Not all of these entrepreneurs (nor I) are guaranteed success in the end, but being open and honest will give them the best chance.

It shouldn’t be any different for employees in large corporations, but we’ve seen many examples of dishonesty and deception, such as the Goldman Sachs story above, and the fall of Lehman Brothers and other financial institutions during the subprime mortgage crisis. Maybe it’s the pressure to maximize sales and profits that larger companies face from investors and shareholders that causes this dishonesty. Maybe senior management is corrupt from the start and fosters a culture of deception, which trickles down to lower-level employees. I’m not sure what it is, but I do believe that if you’re open and honest, both with yourself and others, you’ll be more successful in business and in life. And if you’re a company with an open and honest culture, you’ll find the same success.

I’d love to hear some other examples where dishonest companies and employees faltered, while honest ones succeeded.

P.S. I have read articles (like these in Forbes and NY Times) saying how Greg Smith’s story isn’t believable. Yes, the irony that this blog post is about honesty is not lost on me. 🙂

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