Never compound or try to bury your mistakes.
“Everybody makes mistakes, errors in judgment, and bad decisions. When you do, face up to them, try to make things right, and learn from your mistakes. Do not make matters worse by concealing what you did or covering up what you messed up. Many false statements are worse than the underlying misconduct. At the same time, it is never too late to admit your mistakes, or even wrongdoing.”
The pharmaceutical giant, Pfizer, is a classic example of taking a long time to learn lesson No. 8. In 2009, it agreed to pay $2.3 billion to settle civil and criminal allegations that it had illegally marketed one of its products. Commenting on the large amount of this fraud settlement, Michael K. Loucks, acting U.S. attorney for the Massachusetts district, said, “Among the factors we considered in calibrating this severe punishment was Pfizer’s recidivism. This was not the first time that the company had been fined. In 2004, it paid $430 million for illegally marketing another product. At that time, it also signed a corporate integrity agreement – a companywide promise to behave. Five years later, company officials agreed to sign a second such agreement. In this one senior company officials are required to annually certify legal compliance and mandates.” (New York Times Business, October 3, 2009)
The dynamic implied in Lesson No. 8 seems to be: We fail. We repent. We learn (hopefully). We promise to do better in the future. We regulate. We try again. Calgary-based Executive Coach Mary-Ann Owens lists five ways to be a better leader:
- Be humble and authentic
- Keep learning
- Remember that mistakes are learning opportunities
- Remember that we are human and all make mistakes
- Don’t be afraid to admit you don’t know
Learning from mistakes can be seen in economic cycles as well, including the following examples:
Following the 1929 stock market crash and the revelations about the many shell corporations whose financial status was unclear or misrepresented, there was a loss of public trust. The Securities Act of 1933 and the Securities Exchange Act of 1934 were passed as response to many of the financial disclosure failures that helped lead to the crash. The Boesky/Milken era (junk bonds) influenced Congress to pass the Insider Trading and Securities Act of 1988. The savings-and-loan-collapse of the 1980’s led to reforms through the Financial Institutions Reform, Recovery and Enforcement Act of 1989. The Sarbanes Oxley Act set its sights on accounting, corporate governance, and financial reporting following on the collapse of such corporate giants as Enron and World Com. The latest, the Dodd-Frank Act of 2010, followed on the near collapse of the world financial system in the fall of 2008; it imposes regulation for the first time on so-called, “black markets,” like the enormous trade in credit derivatives.
Commenting on this aspect of economic history, Professor of Business Ethics John R. Boatright writes: “Many landmark enactments were passed by Congress in response to public outrage over the well-documented failure of (some) American businesses to act responsibly” (Ethics and the Conduct of Business, 6th edition, page 17). Ah! But we humans have short memories. As soon as times get tough again we want to de-regulate, claiming regulations hinder growth, proving that learning from our mistakes can be challenging.