Madoff: Any Good Lessons For Businesspeople To Learn From His Mistakes?

As we read about just how much damage Bernie Madoff has allegedly done, there is much to absorb.  The best "big picture" take on the issue I've seen is from Anne Applebaum. She writes about how Madoff has exposed how much our economic system depends on trust to function. While there are countless areas where we require safeguards and verification (lending is an example, although obviously there should have been a whole lot more verification in that area lately) there are enough areas where American capitalism is completely based on goodwill to make it stand out. We don't have to pay for large transactions in briefcases full of bills, as Applebaum did in Poland in the early 90s.
But when the economy sours, that trust starts to deteroriate, as we've seen with Madoff being exposed and the subprime lending bubble popping. It goes beyond just those big examples though, to affect everyday life. A small businessperson can't let his customers postpone their payments like he used to. A salesman can't make the same promises to a client.

That last example was addressed in an interview I did recently with Randy Illig, author of a new book on sales and developing relationships with customers. But I think his advice goes beyond sales to this greater problem of trust breaking down in a recession.

There's a lot of noise and interference when selling. Let's think about this economy. What kind of pressures are people who represent companies getting right now? They're under tremendous pressure. You're still going to have to hit your quota and pay your bills no matter the economy. These simple distractions become a high level of interference. It causes people to get distracted from serving their clients and too focused on serving themselves. Other human beings recognize that in a millisecond. There are a lot of distractions that prevent it from becoming win/win.

How to return the relationship to one of win/win where the other party can believe that you have goodwill? It's all about communication. Put all your cards on the table, even if it means exposing some things that may seem uncomfortable, and you're going to seem much more trustworthy.  Read the rest of the interview for more, and check out my earlier article on debt collection for some ways to verify with customers.