Where Leaders Fail, Part Two: Credibility Capital

Posted on March 6, 2003

As a kid, I was a member of the Civil Air Patrol, the youth auxiliary of the Air Force. (At the time I thought I was going to grow up to be a fighter pilot… a not-terribly-unusual fantasy for an Air Force brat living in an Air Force town.) After a while I worked up in rank to become an NCO, and I was put in command of an element of a few other cadets. I was spectacularly, explosively, bad at it. No matter how hard I tried I couldn’t get these kids to straighten up and fly right.

Frustrated and out of ideas, I asked one of the senior officers, a grown-up volunteer from the base, what the key was about leading people. He seemed to have the knack, so I figured it couldn’t hurt to see if he knew something I didn’t. He told me something that I’ve never forgotten. “You want to be a leader?” he asked. “Just remember this. Don’t ever ask your men to do something if you wouldn’t be willing to step in and do that thing yourself. And don’t ever decide you could step in unless you’d be willing to do that thing twice as hard as any of your men have to.”

All the experiences I’ve had since then have pointed up the wisdom of his words. One of the keys to leadership is credibility — your people need to believe that you’re not asking them to do hard work or make sacrifices just because you’re afraid or unwilling to do so yourself. And when you do step in and work alongside them, you need to always work harder and longer than you expect them to. Always.

Putting these two ideas together results in what I think of as “credibility capital”. Credibility capital is something you earn slowly, over a long time, as your people watch the decisions you make. Each time you demonstrate that you’re willing to lead from the front, to only ask them to make sacrifices when you’ll do the same, you earn a little credibility capital. Each time you ask your people to work late while you punch out at 5 to catch a game or have dinner, however, you lose a lot of credibility capital.

Credibility capital is like real capital: dearly won and easily lost.

Leaders that fail often do so because they don’t understand this. Their misunderstanding tends to fall into one of two general categories:

• They underestimate how hard it is to earn new credibility capital.
• They underestimate how easy it is to spend down their existing credibility capital.

The first kind of mistake is demonstrated when leaders realize that their people don’t take them seriously, or when new leaders take the reins of an existing team, and they try to magically max out their credibility capital overnight. Typically they do this through empty symbolic gestures (“Employee of the Month” programs, coffee mugs with the company logo, etc.) or stupid attempts to trade money for credibility (giving everyone a bump in pay, a spot bonus, an extra vacation day, etc.) These always fail because no matter how generous the bribe is, its impact is too immediate and transitory to address the core problem. Give an unhappy employee a $5,000/year raise and you can count in weeks how long it’ll be till they are unhappy again. You’d have to double or triple their salary to buy them off for good — an absurdly high price to pay.

Trading money or goods in exchange for credibility makes no sense because the trade comes at an abysmal exchange rate. It’s like trading in a fortune in peso for American dollars: you find you quickly have to redefine your definition of “fortune”!

The other type of failure comes when leaders don’t realize how easy it can be to lose credibility capital once you’ve accumulated some. You think the stock market is risky? You think Vegas is risky? With credibility capital you gamble most of it every time you lead your people into another day. And if your gambles pay off, you only win a little more — but if they fail, you can kiss much or all of it goodbye.

To understand how this works, consider the case of Gary Hart back in 1987. (For those of you whose memories don’t run back that far, he was a Democratic candidate for President that year.) He seemed to have it all — personal magnetism, bold ideas, a forceful presence and a reputation for solid leadership in the U.S. Senate. Of course, there were rumors that Hart had some personal “issues”, mostly regarding fooling around with women other than his wife, but the media were respectful and kept their distance from those rumors throughout his career — until ’87, when the rumors got loud enough that some reporters from the Miami Herald began looking into it. As you probably know, they found that the rumors were true, and that was the beginning of a period in the political wilderness for Hart that continues to this day.

However, while the revelations themselves were damaging to Hart, they aren’t what sank him. What sank him was — well, himself. The day the Herald ran its expose on Hart, the New York Times ran an interview with the candidate in which he was asked if there was any truth to the rumors of womanizing. Hart fatally replied, full of bluff and bluster, “Follow me around. I don’t care… If anybody wants to put a tail on me, go ahead. They’d be very bored.” He didn’t know that the Herald had done just that, and they had been anything but bored.

Why is this relevant to credibility capital? Because, as I said above, I don’t believe the revelations themselves sank Hart. Sure, they were bad, but he could have battled back from them if he’d been able to seize the moral high ground. However, his remark in the Times seemed so arrogant, so haughty — after all, he certainly knew when he made it that he had a lot to lose if the rumors were investigated! — that it demolished any claim he had to moral legitimacy. The man who dared the press to follow him around is going to lecture America on the need to provide privacy to public officials? Oh, puh-leeze.

Hart’s blunder illustrates how quickly credibility capital can bleed away. All it takes is one ill-timed remark or ill-considered action. Smart leaders continually toil to build more credibility capital and jealously guard the amount they’ve already banked away. They come in early and stay late, even if there’s nothing for them really to do, just to let the troops know that if they have to stay late the boss is going to as well. Dumb leaders like Hart gamble wildly with their credibility, putting it all on the line in situations where the stakes don’t have to be that high. By the time they realize that the house always wins that game, it’s usually too late.

Whenever I’m leading a team, I think about my credibility capital. Is it low or high? Is the net change that day positive or negative? And if it’s negative, what am I doing tomorrow to get it back up again? I don’t think that way out of ego or ambition — I think that way because if you want to get something done in a leadership role, you either learn to think that way, to lead from the front by reflex, or you spend your time wondering why your projects always fail and your people always desert you. That’s a lesson that darned few leaders in the world seem to have picked up. Maybe they could have used a stint in the CAP too.