Lies, damned lies and running a business

First published in the Financial Times on 30th September 2014.

So often confidence is a euphemism for ‘convincing fibber’

Lying in business is endemic. Of course, lies are not always told with wicked intent – indeed, most are harmless. But it is a fantasy to assume that everyone is always honest.

For example, litigation is a game best played by those who know there are few absolutes when it comes to truth in commerce. Victory is all about the available evidence, advocacy, tactics, financial muscle, balls and perception. If courts dealt only in truth, they would be full of subsequent criminal actions for perjury; instead, judges dismiss liars as “unreliable witnesses” and the system grinds on.

We are rightly more forgiving of start-ups than big corporations when it comes to falsehoods. Entrepreneurs know that almost no one makes it in a highly competitive world except using blarney to bootstrap their business. So often confidence is a euphemism for “convincing fibber”. Founders frequently pretend they have more clients, backing and expertise than they actually do: without such chutzpah most would never survive.

Some large companies have a foolish habit of adopting unrealistic mission statements and advertising campaigns, which are undermined by their actions. Google’s “don’t be evil” is the classic. Many of the marketing efforts undertaken by clearing banks in recent years are laughable, given the various scandals relating to mis-selling of payment protection insurance schemes, interest rate swaps and other regulatory breaches in areas such as money laundering.

Selling is another vital part of business where truth can get in the way of success. Which salesmen ever pointed out the defects of their wares?Exaggeration and a one-sided argument are almost guaranteed when someone is trying to persuade you to invest in their company or buy their goods. Salesmen or women have to be masters of charm, “with affection beaming in one eye, and calculation shining out of the other” as described by Charles Dickens.

Certain industries are essentially built on duplicity – the cosmetics and beauty trade, for example. Customers implicitly conspire with the purveyors of such products: they want to believe that make-up will give them the appearance of being more glamorous and desirable. The self-improvement movement, from fitness to diets to books, is in part fed by the delusion of those who purchase its output. Alternative medicine is another sector built at least in part on hokum and in some cases downright mendacity. As ever, regulation attempts to keep companies strictly trustworthy but often fails because companies are ingenious at working around the rules.

CVs can be laden with misrepresentation. Job interviews are minefields of deception, frequently on both sides. A major industry has sprung up that undertakes thorough employee referencing because there is so much bluster provided by too many applicants. I have come across deliberately hidden criminal records, lies about sackings for fraud, and wildly overstated responsibilities on résumés over the years.

A crisis is another occasion when companies must be – ahem – thoughtful in what they say. If a company is in financial turmoil, the boss is expected to keep morale up among staff, creditors and other stakeholders. I have been involved in companies close to the brink. Open admission of all the problems would have driven most of them into bankruptcy – suppliers, banks, landlords would have fled – and value destruction would have been total. Instead, I and others took the view that the greater good was served by doing what was necessary to save the enterprise, while adhering to the strict letter of the law as to what we did and didn’t say.

Human behaviour is riddled with white lies and half-truths. No parent tells their children the total truth. Most of us make promises we can’t possibly keep, offer bogus excuses, pretend to like people we don’t, and learn how to fake it in order to get along in life. For relationships to work, we all indulge in small untruths.

Experts claim trust is paramount in business. But it isn’t that simple. Groucho Marx was not far off the mark when he wrote: “The secret of life is honesty and fair dealing. If you can fake that, you’ve got it made.” Sadly, when it comes to the truth in business, as they say, only the cynical survive.