Hoping for short memories may not be the best way to regain trust once it is shaken. In this Tough Things First podcast, Ray Zinn discusses the unfortunate knack some leaders have for rosy outlooks on everything without realizing they may lose support in the long run. (Watch Now…)
Rob Artigo: President Trump has recently tried to be encouraging, but what appears to be too much exaggeration, and that’s kind of his leadership. So that’s been his personality for a long time. And it’s kind of, I don’t know, people are responding, it seems, with losing trust in him because he says, “Oh yeah, it’s going to be the greatest thing ever,” or, “This is going to end right now.” And it’s not really panning out. Is this something that you’ve been thinking about a lot lately as you watch these ups and downs in the market, but also what’s going on on the world stage?
Ray Zinn: Yes. When we talk about giving encouraging outlooks, we got to be careful because if your outlook is not able to come to pass, in other words, if you’re not having a predictable outlook, then people start not believing what you’re saying. And since this podcast is for many listeners, I remember when we would, at Micrel, when we have our conference calls once a quarter, we would give an outlook, and that outlook was difficult to do because you’re looking into the future and you can’t predict the future really well. So on one hand, you don’t want to be discouraging or give a bad outlook because the stock is going to take a hit. And by the same token, if you give a really optimistic outlook and it doesn’t pan out, then they’re not going to trust you. And so they’re not going to give you a credit for your wonderful outlook. And so because sometimes your outlook is good, sometimes they’re not so good. I should say we did this once a month, not once a quarter.
But anyway, the outlook that President Trump has been giving on Iran has been more optimistic than actual. Even though he’s accomplished a lot, the outcome looks favorable. The timing of it is not panning out like it should. So that’s just an example. I mean, this podcast is really not about President Trump. It’s more about how do we, as leaders, how do we encourage or keep our employees encouraged, but not giving them some exaggerated outlook that we can’t bring to pass. While we think that people have short memories, certain things that they remember very well, and you have to be careful that you don’t exaggerate the outlook. Otherwise, if it doesn’t happen, your employees are going to lose trust in your judgment.
Rob Artigo: Yeah. Like you said, it’s not about politics. It’s about the timeless principles of effective leadership that people that listen to this podcast know very well. When a leader uses exaggeration to encourage people, even if there are good intentions behind it, the long-term to trust, I mean, it can be far beyond what you imagine. Like you said, people have short memories. In politics, they always say this. People have short memories and they go, by the next election, they will have forgotten this. But that’s not necessarily true when it comes to the way that they feel. If they lose trust in you, it’s really hard to get that back. I know we’ve talked about that on this podcast.
Ray Zinn: Yes. It’s interesting that … We hope people have short memories, but if the outcome is not good, that sticks in their mind. And so what comes around, goes around, you’re going to pay the penalty for it. So the future is very hard to predict. While we want to be optimistic, while we want to be encouraging and not deliver questionable news, by the same token, we want to be realistic. And that’s the key. The key is be realistic in your projections so that you don’t over-promise.
Rob Artigo: You often emphasize honesty and integrity as you call it a non-negotiable in those areas. It has been part of the culture at Micrel. It’s how you have operated as a CEO for so long. How do those ideas play into this as honesty and integrity be non-negotiable.?
Ray Zinn: Well, that’s part of it. Giving a realistic outlook is being honest. Let’s take an example. Let’s say that everything looks great, the quarter looks wonderful, the quarter going forward, I should say, is looking wonderful. And you really want to be very optimistic because you’ve got good news, the backlog is great, but then something happens. Somebody drops a bomb somewhere, some customer declares bankruptcy, and now you’ve given this outlook, even though at the time it looked realistic, but now you’ve got this dilemma that you’re facing, and you get blamed for that. I mean, honestly, the buck stops here, you’re going to get blamed. Even though it was something you didn’t know at the time, people don’t know you didn’t know that. And so they assume you knew it, even though maybe you didn’t, and you’re going to get penalized for it.
So we talk about caveats. They say God-willing or weather it doesn’t change or we don’t have this problem happen, we don’t lose a customer or important employee to leave the company. We have this one with Microsoft … I mean, with Apple where Tim Cook is now leaving and they got a new leader because that’s new and that’s going to be a concern for those next few quarters is how well the new CEO’s going to handle the company. So people don’t like to deal with unknowns. They hate unknowns. But unknowns are with us.
So what we want to do is have an honest reputation so that if when bad news happens, when we have a dotcom implosion, that people will recognize and understand that that’s an incident that happened. And now as long as you’re viewed with honesty and integrity, there is some forgiveness if the outcome is not as you projected it. Because as Murphy’s law is, that which can happen will happen, as you would. Bad things are going to happen. You’re not always going to have wonderful revenue projections and good news for your customers or your investors. You will have downturns and you will have difficulties. And the way we migrated through those eight downturns that we faced at Micrel was we were honest and we had a reputation of having integrity and our investors and customers stuck with us through thick and thin.
Rob Artigo: I guess the thing is to pause before commenting on something. And I think that’s what CEOs trying to protect their stocks also have to realize that there are analysts out there that are going to comment on those. It’ll sort of balance out what you say. But the idea being there’s got to be a better way to encourage without risking a loss of trust. You got to maintain that trust to stay there.
Ray Zinn: That’s why I said don’t exaggerate. Look at a more neutral position as opposed to exaggerating and then having to deal with that exaggeration. So the trees don’t go all the way to the sky. I mean, at some point you’re going to have a call to Jesus time where you’re going to have to own up to the projections or the outlook that you projected. Don’t underestimate or don’t mislead by not being truthful because then they’ll just say, well, you’re sandbagging. So don’t sandbag and don’t exaggerate. Just be known as an honest person with high integrity. And regardless of what happens, your customers and employees will stay with you.
Rob Artigo: I know that one thing I think about sometimes is Scotty from Star Trek. He said that he would say, tell the captain on the Enterprise, “Captain, I need six hours,” when he actually only needed four because that way when he came in under the six hours, he would sound like he did some kind of miracle and looked really good. So maybe downplaying it a little bit is a good way to show that you’ve had this great success because, hey, it was a tough fight. That’s that. That’s the Star Trek reference for the podcast for today.
So I hope the listeners will rate this podcast on their favorite platform. If you’re facing tough leadership challenges in your own organization, visit toughthingsfirst.com for more information and wisdom from Ray Zinn, including his books and resources. If this episode resonated with you, subscribe, leave a review and share it with a leader in your life or take it in for your own leadership challenges. Until next time, do the tough things first, starting with telling the truth. Right, Ray?
Ray Zinn: Exactly. Go truth.
