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September 15, 2005
“I Don’t Know”: Use It Often and Without Reservation
Not long ago I read an article in Business 2.0 about a little book written by Bill Swanson, Chairman and CEO of the Raytheon Company. The book, Swanson’s Unwritten Rules of Management, started as a list of important management lessons and advice which Swanson had jotted down over the years.
Swanson used the list in a presentation within his company, and over time it begin an underground hit, being copied and passed around both inside and outside Raytheon. Eventually the "Unwritten Rules" became popular enough that Raytheon printed them in a bound little book, which is available free of charge through the company’s website.
I got a copy of the book and it’s a gem. It’s practical, jargon-free, and tremendously relevant. Those three characterizations don’t apply to many books on management. I urge you to read and enjoy them.
Swanson’s rules don’t seem to be in order of importance, but Rule Number One is as important as they come: "Learn to say, ‘I don’t know.’ If used when appropriate, it will be used often."
Have you ever heard a universally respected person, accomplished in their field, say "I don’t know" in response to a question? Moreover, have you heard them say, "I should know, but I don’t"?
What was your reaction? Didn’t your respect for that person grow?
We respect them because admitting ignorance is not a reflexive answer. It often implicitly means admitting that the questioner is raising a point you hadn’t thought of. That’s hard to admit, isn't it?
That’s when reflex takes over for most people, particularly those not secure in their knowledge, or more importantly, their belief system. They’ll either ramble on and never directly answer the question, or worse yet, make up whatever they believe they questioner wants to hear.
For investors, hearing "I don’t know" is fundamentally imperative. As investors we often place too much stock in people seeming to have all the answers; in truth, nobody (or one company, for that matter) has all the answers.
We love the smooth, confident presentation from a CEO who’s "knocked it cold." We believe such a person is really on the ball because they’ve got all the answers.
In truth, they don’t, because nobody does. Smart managers such as Swanson realize that their career is one of development and adaptation. Swanson’s Unwritten Rules, for example, originated, as he writes, because he’s "a believer in life-long learning" and wrote down ideas which would help him improve.
Such a manager can make you a pot of gold.
On the other hand, be wary of the manager who won’t admit ignorance. If they won’t admit it to you, they may be fooling themselves.
This tendency, taken to any extreme at all, is extraordinarily dangerous. Management which misleads on this point won’t hesitate to deceive on anything.
The point applies, by the way, not just to corporate managers. It applies to investment professionals as well. They, in fact, may be the worst offenders of this rule.
Practice Swanson’s First Unwritten Rule, and watch for it in those you’re trusting your money with.
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