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Honesty serves our interests, both personal and business, in 2 main ways. Firstly there is intellectual honesty, which is the policy of being rigorously honest in one’s grasp of reality and conscientiously trying to improve one’s knowledge. This allows us to formulate realistic goals and decide best how to achieve them. Secondly there is social honesty, which is the policy of being honest in one’s dealings with others. This enables us to build and maintain trust, which is essential to our relationships – with customers, suppliers, employees, and friends.In both of these areas, dishonesty is harmful to the person who attempts to deceive. In order to achieve our goals we need to have a very firm grasp of reality. We cannot build our goals on fantasy. The edifice we build by fooling others will eventually collapse and we will be the ones fooled in the long term. By evading facts, we damage ourselves. “Honesty is the recognition of the fact that the unreal is unreal and can have no value, that neither love nor fame nor cash is a value if obtained by fraud.”[1]

Conrad Hilton warns against dishonesty in his biography Be Our Guest, published in 1957: “Once you start it, there’s no place that deception can stop – and of course it has to start with self-deception, even if it’s only the self-deception of believing that we can get away with it.”[2]

In order to arrive at knowledge, we must be ruthlessly honest in our observations and reasoning. “A man willing to fool himself will collapse – and does – in his first attempt at thought.”[3]

David Ogilvy, founder of the highly successful advertising firm Ogilvy and Mather, understood the value of honesty. He wrote “I admire people with first-class brains, because you cannot run a great advertising agency without brainy people. But brains are not enough unless they are combined with intellectual honesty.[4]

An example of intellectual dishonesty with horrific results was related to the 1986 Challenger explosion. Morton Thiokol, the company that built the booster rockets, and NASA, were aware that the rubber O-rings could cause a fatal accident. They had noted damage to the O-rings on previous launches and had found that the damage was greater in lower temperatures. The company set up a team of engineers to remedy the defect. Before the doomed launch on a day when the temperature was about 20 degrees lower than previously, the engineers and NASA held a telephone conference. The engineers strongly recommended that the launch not proceed. NASA asked for the recommendation in writing, but the company’s management overrode the engineers saying that there was no firm data on which to base the recommendation. The shuttle exploded just over a minute into the launch[5].

The long-term success of a business depends on honesty. Andrew Carnegie said “I have never known a concern to make a decided success that did not do good, honest work.”[6] Part of the reason for this is that trust is crucial in business. The great financier J.P. Morgan said in 1912: “...a man I do not trust could not get money from me on all the bonds in Christendom.”[7]

Although it can be tempting to be less than open at times, it is better to acknowledge problems at the outset. Then you can focus fully on solving the problems, rather than trying to maintain illusions. A very refreshing example of this was provided by Ken Iverson, the CEO of Nucor. In response to an angry shareholder’s demand to know why the company was performing so badly, he said “It’s a rotten company, what can I say?”[8] Others may have tried to blame the company’s low profits on economic conditions, but then they would have had to maintain this pretence, instead of getting on with the job of revitalising the company.

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Footnotes:

[1] Ayn Rand, Atlas Shrugged (Signet 1992) p. 937

[2] Krass, P (ed), The Little Book of Business Wisdom (Wiley, 2001) p. 212 quoted in Greiner and Kinni, op. cit. p. 95.

[3] Harriman, D (ed), Journals of Ayn Rand (Plume 1999) p. 261

[4] Krass, P (ed), op cit p. 50 quoted in Greiner and Kinni, op. cit. p. 97.

[5] Refer to McConnell, M, Challenger, A Major Malfunction (Doubleday, 1987) and Lewis, R, Challenger, The Final Voyage (Columbia University Press, 1988) referenced in Donna Greiner and Theodore Kinni, op cit p. 99.

[6] Hacker, L., The World of Andrew Carnegie (Lippincott, 1968) p. 354 quoted in Locke, E. A., The Prime Movers – Traits of the Great Wealth Creators (Amacom 2000) p. 159

[7] Quoted in Chernow, D., The House of Morgan (Simon & Schuster [Touchstone], 1990), p. 154 referenced in Locke, E.A., op cit p. 162

[8] Preston, R, American Steel (Prentice Hall 1991), p.73 quoted in Locke, E.A., ibid p. 161

 

 
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