When Things Go Wrong

On a public show such as this, there is a tendency to focus on the positive, to highlight successes, to inspire you the listener to greater heights. On today’s show we’re talking about one of the darker sides of being in business. But as Jim Collins, the author of Good to Great says, you must confront the brutal facts. That’s what we’re going to do today.

Earlier today I got a phone call from another investor. He's a good friend and we’ve known each other many years. He’s a good person with strong values and strong ethics. The story he told was so sad. Sad because it happened to him. Sad because it’s happened to me. Sad because nearly everyone I know who has been in business for a while has a similar story. 

On today’s show we’re talking about what to do when you face a theft in your business. Often the victim is a high profile individual. A few weeks ago I was speaking with a high profile author and he was describing the times when he was a victim of theft. A month ago I was speaking with a high profile jeweller. The jeweller was the victim of employee theft. When the employee was confronted, their response was “You didn’t seem like you needed the money, and I did, so I took it.”

My friend had hired a general contractor. The contractor asked for draws on the construction in advance of the work being done. The contractor had lots of good reasons why the funds should be advanced before the schedule said they were needed. Inconsistencies started to appear between the story being told by the contractor and the facts on the ground. When everything was eventually laid bare, it was clear that the contractor had in his words “borrowed funds” and in the end far more than the borrowed funds were missing.  The subcontractors had not been paid, and the jobs had been under-bid. The net result is a project with a contractual commitment that cannot be fulfilled and then there are stolen funds on top of the situation. 

I’ve encountered a very similar situation several years ago. The crooks who do this are very adept at establishing trust and using a fabricated web of evidence to create that trust and support their stories. 

I’m sorry for my friend. I feel for what he is going through. While what happened is not his fault, he still is responsible. That’s where the painful part hits home. You can do everything right, and if someone on your team does something wrong, you’re still responsible, even if you’re not at fault. 

Every employee at Boeing is sharing responsibility for two jets that crashed, even though the actual fault probably lies with only a handful of people who made a hasty decision.  When you put diligence in the context of approving an aircraft’s control software, the standards are pretty clear. But what about hiring a general contractor? The stakes aren’t as high. Or are they?

You don’t need a crook in your midst. Innocent mistakes can be as dangerous. We all make mistakes. I certainly do. They’re embarrassing. They’re painful, and they’re a necessary part of learning. Mistakes are not to be avoided altogether. The only true way to avoid mistakes is to do nothing at all. Mistakes are to be expected. They are there to learn from and to be caught and corrected before the consequences are catastrophic.