The playwright Oscar Wilde wrote, “A cynic knows the cost of everything and the value of nothing.” By nature, most successful business executives tend to be more optimists than cynical naysayers.
The leaders who are the best of the best, however, have an internal mechanism that allows them to dream, dare and do while simultaneously knowing to challenge and question. The good leaders probably possess a yet undiscovered gene that automatically flashes a yellow warning sign in the back of their heads reading “trust, but verify,” when they’re introduced to the unproven or unknown. Experience, judgment and wisdom are the tools needed to distinguish between dismissing an idea as flaky and accepting it at face value.
Case in point is the now infamous Bernard Madoff, the Ponzi-practitioner extraordinaire, who also had a bit of Houdini in him because he could touch a dollar and make it instantly disappear. His signature pièce de résistance was the vanishing act of putting other people’s dollars in his own pocket by using a sleight-of-hand maneuver, most likely in the form of a glib smile and nifty software program. The software produced a faux monthly statement that recapped the bogus previous 30 days’ perennial successful results. This led trusting investors to believe they could sleep soundly thinking that their money was not only safe but also growing exponentially.
This garden-variety swindler, who makes the Wild West bandit Jesse James look like a saint in comparison, certainly did not discriminate. Reportedly, he purloined more than $50 billion from supposedly savvy fund managers to unsuspecting charities with no doubt a few widows and orphans sprinkled in for good measure.
How could this have happened? First, people wanted to believe. Secondly, most of us have an innate desire to be associated with winners. However, eventually, we all learn the cold reality that if it is too good to be true, then more than likely, it is too good to be true. Worst of all, some professional “money managers” turned over unimaginably huge sums to this Ponzi artist without apparently doing their own due diligence, which is not only an ethical prerequisite but also an exercise demanded by common sense if not common law. Had the unsuspected subscribed to the principle of “trust, but verify,” this scheme would have failed. Instead, decades passed before the genie was out of the bottle, and it took the biggest stock market disaster since the Great Depression to defrock this con man.
How can executives learn from this debacle and translate the concept of “trust, but verify” into a safety net to protect the enterprise without dampening creativity and enthusiasm that could lead to the next great business success?
Every stockbroker must learn the Securities and Exchange Commission’s Rule 405, which is “know your customer.” This same requirement must apply to businesses. At a very minimum, have a sense of whom you are dealing with. Is it coming from a trusted peer or subordinate or the nephew of your brother-in-law’s barber? The best bets are made on those who have done it before and have done it successfully. Some call these habitual achievers “serial entrepreneurs,” but they also can be innovators who toil down the hall from you and constantly deliver on promises and concepts. Good leadership requires the discipline to hear out a proposal yet employ finely tuned instincts and cunning, sometimes indelicately referred to as the “smell test.”
Sniffing out the nuances of the real story to discover hyperbole or worse takes discipline and patience. Once the answers sort of make sense, move to phase two by doing some quick back-of-the-envelope calculations and research to determine if there is at least a snowball’s chance that whatever is being proposed won’t melt away as soon as your check clears the bank.
Finally, talk to others who may have tried something even remotely similar to what has been proposed. You’ll be amazed at what complete strangers and even tangential competitors will tell you when you simply pick up the phone and ask.
To build, grow and succeed, every organization needs a constant inflow of new ideas, be it products, services or a better way to skin that proverbial cat. Somewhere between an optimist and a cynic is a realist who always knows the difference between a quacking duck and a striped zebra.
MICHAEL FEUER co-founded OfficeMax in 1988. Starting with one store and $20,000 of his own money during a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling it for almost $1.5 billion in December 2003 to Boise Cascade Corp. Feuer is CEO of Max-Ventures, a retail venture capital/consulting firm, and co-founder and co-CEO of Max-Wellness, a new health care product retail chain concept that is launching in 2009. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. Reach him with comments at firstname.lastname@example.org.