How do you run an honest business? The truth is, I don’t know. We’re still working on it.

Honesty is one of the five founding values of Media Shower, and it’s still one of the most difficult values to put into practice. For example, I was on a sales call a few weeks back. The prospective client asked me about some minor detail, whether a report exported to a certain file format. I said yes, which was untrue. I lied.

Hanging on the wall behind me, along with the other Media Shower values, is a giant sign that says HONESTY. I often go through training with new employees, to talk about the values of honesty. Surrounded by reminders screaming at me to be honest, how is it that I lied about such a trivial, insignificant detail?

Honesty is the Most Difficult Policy

Honesty is about telling the truth. When we talk about honesty at Media Shower, we talk about being honest with our customers, each other, and ourselves. It does not mean sharing everything: as a company, you can still have trade secrets and competitive advantages. You do not need to tell your co-workers about your yeast infection.

But there’s another, deeper meaning to honesty, which is summarized by the phrase: “Confront the brutal facts.” This is taken from Jim Collins’s Good to Great, in which he shows that companies that are committed to reality as it is, not as they wish it would be, are the companies that achieve greatness.

An example may help. About a year ago, we had a customer leave Media Shower because she was unhappy with the work. We gathered the team on a conference call with the customer to hear firsthand why she was leaving. She just berated our company, our platform, and our process. It was not an easy call.

Now, the natural reaction in this circumstance is to say, “Well, that customer was crazy.” There was evidence, in fact, that she may have been mentally ill. But instead, we kept everyone on the conference line after the customer had hung up. Then we asked the question, “What can we learn from this?” We confronted the brutal facts.

The brutal facts, in this case, were that some parts of our on-boarding process did not clearly tell the customer what to expect. There were aspects of our platform that needed improvement. The customer may have been nuts, but she was also kind of right. Out of that brutal call came three or four major improvements that are still in place today. Honesty makes us better.

When we focus on the way things are, instead of the way we wish they were, it’s the kind of honesty that makes us more self-aware as a company, and as individuals. By listening to unhappy customers, by looking for our pain points, and by asking, What are we bringing to the table here? we can see areas of improvement, for both our companies and ourselves.

Honesty brings our imperfections into the light. This is rarely fun, but it’s essential for growth, both as businesses and as people. Company growth and personal growth are intertwined, and honesty — confronting the brutal facts — is a catalyst for that growth.


Honesty is the Most Profitable Policy

A 2000 paper by economists E. Somanathan and Paul H. Rubin called The Evolution of Honesty argues that honesty is not only the best policy, it is also the most profitable policy. “Honesty [is] a form of social capital that can be accumulated,” they conclude, meaning that honesty is a bit like money: it builds trust, which can be accumulated and saved.

When I think of trustworthy companies, I think of companies like Johnson & Johnson, a company that has developed long-term trust through rigorous honesty. When someone poisoned random bottles of Tylenol in the 1980’s — a crime now called the Chicago Tylenol Murders — the company went out of its way to restore trust in the Tylenol brand. Even though they were certain the tampered Tylenol was limited to the Chicago area, the company recalled every bottle of Tylenol in America (over $100 million worth of Tylenol). That was a brutal business decision, but it restored our trust in Tylenol, and gave us even greater trust in Johnson & Johnson.

The report’s authors go on: “Since honesty affects output, which affects physical capital accumulation, and since capital intensity affects the returns to honesty, capital and honesty are co-determined.” In plain English, this means money and honesty are related. If you want to get rich, you will do better in the long run by being honest than by cheating and taking shortcuts.

Forbes publishes a list of America’s Most Trustworthy Companies, and it’s interesting to see who’s on the list. The companies range from Rackspace to Nordstrom to Under Armour. But when you look at these companies, you think, “Yeah, I guess I do trust WD-40.” Chances are you take this trust for granted. But that trust has been built through hundreds and thousands of little decisions toward honesty. Are these companies successful because they’re honest, or are they honest because they’re successful? The answer is yes.

Nor does this apply just to business: the report shows how corrupt governments usually engender dishonesty down the line, which ultimately leads to negative economic growth. Are those countries poor because they’re corrupt, or are they corrupt because they’re poor? The answer, again, is yes.


Honesty is the Most Difficult Policy

There I was on the call with the prospective customer, looking at the HONESTY sign, thinking about my white lie. It was the whitest of white lies, almost transparent. It was an incredibly minor detail, and that’s why it was probably the most difficult thing I did all week: I confessed. “I misspoke,” I said. “I don’t think we output to that file format after all.” The prospective customer said he appreciated the honesty.

I won’t tell you whether we made the sale (trade secret), but I will say that scrupulous honesty is incredibly difficult. Yet as the research shows, it’s also incredibly rewarding.

Sir John Hargrave is the CEO of
Media Shower and author of the upcoming book Mind Hacking. This post is free to distribute under CC 4.0: if you like it, please share it.