JANUARY 25 — 1. If I have never written a word of financial strategy, I must not ever presume to decide on the fate of any staff (no matter how low down the chain) who has spent months analysing spreadsheets, industry averages, comparing financial methods and so on. This is skin in the game: We bleed first, then only talk.
2. Our right to be a key player, critic or leader in any area is only as strong as the teeth we have cut in that area; if you have no experience in, say, Microsoft Powerpoint, never criticise or participate in criticism or endorse any criticism of anybody’s slides; if you’re glib but you’re required to give comments, then for every line of negativity, let there be a page of humility and I’m-no-expert-here apologies.
3. This is why it is not worth listening to the opinion of anyone who has not suffered (or is not willing to suffer) for it, especially if his/her opinion inclines others to take more risks. It is even more foolish to pay attention to the opinion of anyone who is rewarded for stating said opinion. This would be like asking a restaurant manager if his food tastes good.
4. I’m not a cyclist. This gives me absolutely NO RIGHT to tell my friend to shake things up and do wheelies on the way down. But I do have the right to tell him to be careful. This is the asymmetry of skin in the game: Caution and conservatism are always more legit than exposure or hazard.
5. If, as leaders, we are not willing to take more risks and do more work and sacrifice more of ourselves than those we lead, then we shouldn’t lead; there is an example (attributed or linked to Warren Buffet) about corporate managers who are required to buy stock in the very companies they manage i.e. if they do a bad job, they’d be the first to lose.
6. Isn’t it the case that many corporate managers (especially those who love to kiss ass) put other people at risk while they themselves reap the rewards? In other words, the skin of others (usually the subordinates) is placed in the game whereas their own skin remains safe from harm.
7. Two approaches to leadership, Servant and Shepherd leadership, embody the principle that with more power and rewards come not merely more responsibility but more risk. The servant works harder than everyone else in the household; the shepherd will put his neck on the line to save the sheep. Such behaviour flies in the face of the typical “financial adviser” who gives out advice like free cookies, pocket the (rather lucrative) fees regardless of the outcome. Naturally, if the outcome is favourable to the client, the oh-so-wise consultant will lick up all the credit. But if everything goes south, will the Sultan of Cons admit he was wrong, let alone return his fees? Such charlatans will normally declare that, sigh, the “market performed below overall expectations” or the “generally pessimistic economic climate has affected most industries.” Translated: I ain’t taking no heat for this s***e, I’m taking my money and getting the heck outta here.
8. A sure indication of charlatanism: They’re always giving recommendations which require other people to take risks. Anti-charlatanism does the opposite: They’re always cautioning others, telling them what NOT to do, advising them to avoid risks. Sounds like good parenting, doesn’t it?
9. If you’re hiring consultants but they’re only selling abstractions (like a “plan” or a “strategy”), make sure there is a clause somewhere which requires them to compensate you should things go south. If not, treat them like a friend: Take their FREE advice and buy them lunch as a Thank You.
10. Only pay consultants (or senior managers) if they deliver a clearly specified result; never pay them for a mere idea.
11. Why do doctors make more professional mistakes than pilots? Why is there a real problem today of over-prescription, over-medication and often unnecessary and dangerous surgical intervention? In contrast, disastrous flights continue to be extremely rare — why is that the case? Gerd Gigerenzer points out that the main reason is because pilots are the first to suffer the consequences of mediocrity or incompetence, whereas doctors are usually the last (if at all). Pilots, as opposed to doctors, thus have a “vested interest” in ensuring the plane gets to its destination in one piece. That’s skin in the game.
12. Are managers more like pilots or doctors? The smart organisation would seek to ensure that the former applies. More often than not, “doctor-like” managers are fast to take credit but very slow to admit error (let alone pay the price of their failures).
13. Fight for those you lead, and they will fight for you; bare your skin in the game, and they will put themselves on the line, too.
* This is the personal opinion of the columnist.