Who Controls Your Reputation?

Posted by Jeff Carter
on December 29th, 2012

When I was taking classes at the University of Chicago for my MBA there were a lot of interesting classes. Of course, the regimental numbers classes. Every MBA goes through the core. Economics, Accounting, Finance, Strategy, Statistics and Operations. But, at Chicago we took two other classes that actually help you run a business. One was taught by my friend Michael Gibbs on Personnel. It was a numbers based HR class that I have blogged about occasionally here. The Risky Hire is an example of his class.

UCLA basketball head coach (Photo credit: Wikipedia)

The toughest thing about business is building a great team. Blogpost after blogpost gets devoted to that topic every day. I will delve more into this topic in the future because it is so critical to success. If I am lucky, Prof. Gibbs will assist me!

The other class that I took that really got me thinking was a class taught by Ron Burt. The class was called Strategic Leadership. But because of the world that I had come from, a trading pit and the $CME board room, the class really got me thinking about things differently. Not only that, but it helped me begin to analyze companies differently. Success will not happen if you run an investment bank in the same manner that you run a focused software company. Different cultures and different skillsets are required, and great leaders understand that.

One of the questions Prof. Burt asked, “Who controls your reputation?”.

Ironically, it’s not you.

Your reputation is controlled by what people say about you behind your back. Gossip. When humans get together they talk and interact. When they start talking about people, it’s gossip. Your reputation is controlled by the people you interact with, and what they say about you. Of course, your interactions with them will determine some of what they say, but your reputation preceeds you a lot of the time. Before you walk into a room, many of the people will have already formed an opinion about you-and that construct is terrifically hard to overcome.

Reputation isn’t always about agreeing with someone, or getting along with someone. For example, I know many people I would say have good reputations that disagree with me on a number of things. That’s not the point. Reputation is built over time on actions, trust, gossip and results.

One of the great things about a trading pit was the absolute law, “my word is my bond.”. Break a trade, act like a shiester and you were run out of the business by peer pressure. Today, if I am in a conversation or deal with someone that I traded with, there is an underlying implicit trust that goes into that interaction. The reputation they had in the pit preceeds the deal.

Unfortunately, in my experience outside of the trading pit I find that the opposite is often true. It’s terrifically hard to find someone to trust, so Ronald Reagan’s words of “Trust but Verify” become not just a slogan, but words to live by. Time and time again, I hear stories from other traders that are having the same experiences I am. When you find someone you can trust, they are worth their weight in gold.

I read Fred Wilson’s blog which lead me to rediscovering John Wooden. If you don’t know who he is, he was the basketball coach at UCLA. He won championship after championship. He turned average players into great ones, and great ones into superstars. What is interesting is most of his players were good people off the court, and successes after their playing careers were over.

Wooden has a lot to say about reputation-and building one. He also says that while reputation is important, it is only things other people say about you. What’s really important is your internal character. What’s inside you when you look in the mirror? As humans, we inherently know basic right from wrong. There are gray areas of course, but there are core principles that cross cultures and space just because we are human. Only you control your character. Without good character, you cannot have a good reputation for long.

Wooden simplifies and distills these difficult concepts down to easy to understand sound bites. For example, there is his Pyramid of Success, but it starts with three core rules.

Always be on time, and end your meetings on time
Never use profanity
Always be clean and presentable.

It builds from there. But it’s so simple like the Golden Rule. Easy to write down and say, much harder to accomplish in real life.

The question then becomes, what checklist do you use to figure out if someone has good character or not? Does it match their reputation?

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.