The large cost of small lies

Lying is the No.1 reason businesses fail.

Recently I caught up with Peter, an Angel investor in Hey You.  Peter does life well: he’s a successful businessman with a string of hit ventures who lives with his young family between his New Zealand beach house and yacht in the Mediterranean.  He follows Buddhist teachings and his demeanour is that of a Zen rocket scientist. I asked him, “What’s the secret?”  He leaned back in his chair and grinned. “The one secret to success in business and in life is to never ever tell a lie.”

What?  I was expecting “dream big”, “focus”, “never give up” or some such truism.  I knew that lying was bad and telling the truth was good; we learn that as children. But the secret to success?  Peter nodded and reiterated: “Absolute honesty is the key to ultimate power.” I took little notice of his advice because I consider myself an honest person.  I never tell lies; well, hardly ever.

Enhancing the truth

The following week, I pitched to a prospective client. As I rounded up one of our company metrics to make it look better, I heard Peter’s voice ringing in my ear. This wasn’t technically lying, just enhancing the truth. I was stricken with unease; had I made a fatal mistake?  Would I miss out on the deal because I lied? I wanted to understand more about Peter’s philosophy so I called him up. “Why is lying so bad? Is this a superstitious karmic idea or something else?”

Peter invests in lots of start-ups. He said, “Every time an entrepreneur gives me a pitch, I wait until the end and ask them, ‘Where’s the lie in what you just told me?’ And there always is one. Once we know what it is we can work together to solve the problem. Most entrepreneurs never address the lies they tell. Their businesses collapse because they don’t discuss and solve what they knew was wrong.”

After speaking to Peter, I began to notice my daily dishonesties: glossing over small problems, exaggerating success and underplaying failures. Sometimes I’m not as transparent as I know I should be and I felt a tinge of panic. Am I the only one According to a study by the University of Massachusetts, 60 per cent of adults can’t have a 10-minute conversation without lying at least once;  31 per cent of people lie on their resumes; 40 per cent lie to their doctor and a whopping 90 per cent lie on their online dating profile. People commonly lie to shift blame, save face, avoid confrontation, get their way, be nice and appear more likable.

Waste of time and resources

At home, most small lies are harmless, but honesty is vital at work. Every six weeks, our team debates the features that our development team should build next. Each department has a list of priorities and shares the impact they expect each development path might have on the business. If someone exaggerated a problem or over-reached on an opportunity, we wouldn’t know. We could spend precious time and resources on the wrong thing.

Peter maintains that lying is the No.1 reason businesses fail. The problem is not a moral one: telling lies derails progress by plucking you out of the present and preventing you from dealing with exactly what is going on in your world. Every time you tell an untruth, you create a false reality and start living in it. “If you know the right path and choose another, you lose control of the situation. Rather than tackling the problem head on, you now need to manage the fallout from the lie,” he says.

In my gut I knew we wouldn’t land the deal I pitched for, and we didn’t. As soon as I exaggerated the metric, I started thinking about what I’d need to do to make it true. I was distracted and found it difficult to be creative and present.

The challenge

Since my meeting with Peter, I’ve focused on being completely honest and transparent. Every time I’ve wanted to round up when I really should round down, or underplay a problem, I’ve stopped myself. At first I felt vulnerable – would people accept things exactly as they are? After a while, things started to change. I felt lighter and more stable. My team became more transparent too: people flagged problems upfront, and with all the information at hand we’ve addressed every issue immediately.

Truth and its relationship to peace, creativity and success have played on my mind recently. If you’ve read this article and thought, “That’s not me, I always tell the truth,” then you may be lying to yourself. I challenge you: for two weeks, try being honest and transparent about everything. I’m confident you’ll find it both difficult and worthwhile. And it will make a difference to your business.


CATEGORY: Australian Financial Review, Leadership, Personal Development

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