Tell the Truth: Does Your Company Play Liar’s Poker?

Finance

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I glanced at the New York Times list of nonfiction best-sellers and was pleasantly surprised to find a business book, Michael Lewis’s The Big Short, near the top of the heap.

Lewis’s current book examines the forward-looking folks who saw the financial crisis coming and made billions from it. One of his earlier books, Liar’s Poker, also details Wall Street mind-sets – and, in doing so, also happens to describe what’s wrong with the traditional budgeting process.

Really.

Traditional budgeting’s customary give-and-take generates the same sort of dynamics and behaviors as a game of liar’s poker. In his previous book, Lewis describes the thinking of liar’s poker players: Is this a smart risk? Do I feel lucky? How cunning is my opponent? Does he have any idea of what he’s doing, and if not, how do I exploit his ignorance? If he bids high, is he bluffing, or does he actually hold a strong hand? Is he trying to induce me to make a foolish bid, or does he actually have four of a kind himself? Each player seeks weakness, predictability, and pattern in the others and seeks to avoid it in himself.

Now, if your budgeting process resembles this game of bluffing, sandbagging, and shading of information in any way, I promise your company is creating mini-crises that are completely unnecessary. If that’s the case, it’s time to tell the truth.

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