Two worlds seem to exist; one where all businessmen are evil and one where all businessmen are geniuses.
Yet entrepreneurs don’t go from an average Joe to a caricature ruthless boss overnight. Many of them start with dreams of changing the world for the better and small decisions move them away from their original principles.
Google famously included “Don’t be evil” in their code of conduct in 2000. Then they removed it in 2017.
Warren Buffett stands out amongst his billionaire peers because he has maintained his grounded image for over half a century. The Financial Times called him “capitalism’s kindly grandpa” and he seems far less ruthless than Jeff Bezos, Bill Gates, and Steve Jobs in their primes.
While he isn’t in the running for the next Nobel Peace Prize, for entrepreneurs there are few better role models than the Sage of Omaha. He highlights integrity as the key to unlocking successful management:
“You look for three qualities: integrity, intelligence, and energy. And if you don’t have the first, the other two will kill you. You think about it; it’s true.” — Warren Buffett
Yet there isn’t a tape measure on Earth we can pull out to simply measure someone’s integrity. Often it’s hard to even judge our own ethics and whether we are doing the right thing. So how does Warren test people to determine whether they meet his standards? There are two key questions he has shared over the years which provide insight.
1. The Eros question
In 2014, two businessmen paid $650,000 to have lunch with Warren Buffett. It’s ridiculous but it went to the Glide Foundation to help homeless people so the money is in a better place now.
At this lunch, Warren explained his beliefs on integrity in-depth to their eager ears. It’s unsurprising the businessmen needed to learn about it considering they spent hundreds of thousands of dollars on a single meal.
Warren posed this question:
“Would you rather be considered the best lover in the world and know privately that you’re the worst — or would you prefer to know privately that you’re the best lover in the world, but be considered the worst?”
We instinctively know the answer we are supposed to say here. Either way, people are being misled but it feels better to underplay our talents than to have wrongful adoration. If you hesitated before answering, don’t worry it goes against all our survival instincts.
Warren calls this the “inner scorecard”, where what matters most is our opinion of ourselves according to our values. Rather than an “outer scorecard” which measures the points other people give you because you are living up to their values.
While Warren’s question is more memorable, on a more realistic level, are you doing something because you think it is right or because you want others to praise you? I ask myself this regularly and sometimes I don’t like my answer.
Social media has distorted many of our minds into thinking about how to impress people we barely care about. It’s no different when acting as an entrepreneur and wanting to show off about success all the time. For some, it’s a strategy and for others, it’s just ego.
Only you know your true motives so you are the only person who can hold yourself accountable.
2. The newspaper question
Students at the University of Nebraska-Lincoln didn’t need to pay hundreds of thousands of dollars to ask Warren Buffett questions in 2005.
Berkshire Hathaway’s tentacles spread wide across industries and individual managers often run parts of the company larger than what many entrepreneurs ever manage. The students wanted to know how Warren ensures ethical standards across them.
His solution was simple, he would ask them how they “would feel about any given action if they know it was to be written up the next day in their local newspaper”.
If you are ok with your choices being public then it passes and you uphold your principles. Yet there’s a problem when you make a choice which you’d be ashamed to see on the front cover the next day. If you consistently make decisions that make you feel queasy then maybe you’re lying to yourself about what your principles are.
Transparency is proven to improve employee happiness and consumer loyalty. It makes sense logically as if you want to hide details then you can’t be proud of them. Sooner or later people will realize this and your reputation will suffer.
As with the previous question, there are flaws.
“Any publicity is good publicity” is an old cliché but one some businesspeople still believe. The question is completely neutralized when a leader’s narcissism is more important than the success of the company. When you don’t care who you hurt with your decisions then everything passes the test. Donald Trump is a master here, whatever newspapers print about him is good because he can flip it to work in his favor.
Business is not easy despite what you may read online. Sometimes no path is positive and the lesser of two evils must be chosen. The short term nature of Warren’s question can obstruct good decision making. It may be better to announce 20% job losses today and save the company than to go bankrupt in a year out of “integrity”.
A change to the medium of the question could be more illuminating. I have immense respect for Guy Raz’s podcast guests as he asks awkward questions about the less glamourous parts of their lives. He refuses guests who demand censorship of specific events.
If you were scheduled for a probing interview, would you feel the need to block a subject? Unlike the newspaper test, you have a chance to justify a superficially immoral decision. When you can’t then it tells you everything you need to know about your integrity.
The truth is we don’t live in a perfect way and even Warren Buffett has made some questionable decisions. His questions can help to determine your underlying motives for the choices you make. Yet beware of applying them too literally and be mindful that life is usually more nuanced.
I’ve simplified the questions for you to use the next time you find yourself in a moral quandary.
- Would you make this decision if someone else got all the credit?
- Would you feel comfortable explaining your choice in an interview?
And finally, a reminder to be kind to yourself. We all do things we later regret, we’re human. What’s important is how we handle our next challenge.