The Fatal Mistake

One of our cultural mantras at Nicolet is that you don’t get fired for making mistakes, you do get fired for burying them.

In good times even our bad decisions tend to turn out okay. Most of the time, a bad decision is one you merely have to undo. As country music legend Jerry Jeff Walker was reputed to say, “There are just some driveways in life you have to back out of with your headlights off.” There are times when leadership demands perseverance despite apparent lack of success. There are also times when humility demands that we confront our mistakes and change course. Driving all the way down some wrong roads can be a hard way to develop judgement. Success requires an accurate understanding of when to keep fighting forward and when to withdraw. We need to know when cowardice feigns prudence. Especially in these times, we must watch for pride and stubborness presenting themselves as perseverence. I highly advise that everyone have a few trustworthy confidants to help you think through the ways to balance courage and prudence.

These are unforgiving times. You will pay for the mistakes you have made. It is foolishness to try to bluff your way through. The loan charge offs we have taken this year have been on our “what the heck were we thinking?” loans. Those losses would be larger if we were trying to pretend we don’t make mistakes. The fortitude to admit mistakes and take your lumps is the discipline of the hour.

Estimates are that 500 banks will fail before this crisis is over. Another 1500 are in deep enough trouble that they will have to sell on terms short of outright failure. All banks are dealing with borrowers who are on the verge of financial collapse. 2008 and 2009 have been years to help customers admit their weaknesses and mistakes, address them and move forward. There is a certain freedom and confidence that comes from admitting your problems and adjusting your course. There is a certain bondage that comes from trying to justify your weaknesses.

The vast majority of banks and their customers will get through these times and emerge stronger and smarter for the pain. A wise mentor told me when I was too young to understand that your first mistake isn’t the fatal problem. The fatal problem is the energy you expend trying to convince yourself and others that mistakes are not mistakes.

Maybe 5 percent of banks and borrowers have made intrinsically fatal mistakes. Three times that many will fail or punt because they did not own up to their first mistake in time. If you have made serious mistakes, just name them and join the rest of us in the land of the living. You will find you have a lot of company. We will scrap through these times together and live to laugh about what we have learned.