The Importance of a Doubting Mind
“I used to work for an old-fashioned rainmaker,” a client of mine once told me. “He had that ‘take-no-prisoners’ approach to sales and customer relationships. His motto was, ‘Sometimes wrong, never in doubt.’”
Never in doubt, indeed. It’s one thing to have deep-seated conviction about your views, quite another to obscure the truth with overconfidence and bluster—something that clients today won’t put up with.
The right sort of doubt is important. If you want to be a highly effective client advisor, cultivate three varieties of it:
(Meryl Streep and Philip Seymour Hoffman in the film version of “Doubt”)
- External doubt: Skepticism that what your clients tell you about their problems is really true, and a willingness to challenge conventional wisdom
- Internal doubt: The ability to step back and recognize that you may be wrong.
- Doubt about outcomes: The willingness to suspend judgment about a particular event or outcome being “good” or “bad,” based on the realization that we often cannot fully predict the consequences something may have.
Here’s a good example of the value of doubt:
In the London financial markets, there was historically a strict separation between investment banking (securities underwriting and issuance) and brokering (distribution and trading). In the early 1980s, these walls were removed. It was the accepted wisdom at the time that if you were a merchant bank without this distribution capacity, you would have to build or acquire it or else you’d lose your competitive edge and go out of business
In fact, virtually every merchant bank (Warburgs, Kleinwort Benson, etc.) rushed into stockbroking in order to hold onto its market share and client base. But there was one notable exception: Schroders, one of the big three merchant banks, decided to stay focused on its core advisory business. I was part of a strategy consulting team working with Schroders, and my boss at the time, James Kelly, felt strongly that it would be a mistake to follow the herd and enter the broking business. He was right: One by one, Schroders’ competitors tried to become full-service banks, and one by one, they stumbled and were picked off by larger institutions at bargain prices. Sixteen years later, Schroders’ market value had increased more than 25-fold and, at the peak of the market, the family that controlled Schroders sold its highly valued investment banking business to Citigroup for a large sum (the fund management side remained independent).
Interestingly, today the model of the independent advisor in investment banking has more currency than ever. Moelis & Company, which recently did a very successful IPO, is a notable example. Small wonder: In a world where a spot on the New York Times bestseller list can effectively be purchased, people crave objectivity and independence more than ever.
Does your client tell you they have the best customer service in their industry or that their product quality is better? Don’t blithely accept their assertions. Check them out for yourself. People say and believe all sorts of things that aren’t objectively true.
If investors had doubted Bernie Madoff’s extravagant claims for patently unbelievable investment returns (and some analysts did doubt them), there would not have been so many fortunes sadly lost when Madoff’s house of cards collapsed.
Trust, but verify.