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  • Writer's picturePeter McKenzie

Look stupid? Admitting you don´t know is a Leadership strength

Updated: Mar 17, 2022

Transcript produced by AI

No one likes to look stupid, especially when they're leading a team. We like to look like we're in control and we know what's going on. But of course, it's impossible to always know everything. Sometimes a leader needs to admit that they do not know something. I learned that many, many years ago.

When I started work with CitiGroup in London, way back in 1994, I was a trader support person, and the desk that I was supporting was the FX options desk.

Now, FX options is an incredibly complex world. The people that construct these instruments are in fact, quantum physicists. We used to call them quants, and they would sit in their own room with these whiteboards and all these formulae and it was really a completely different world.

Part of my job was to understand what they were doing. I would sit down with the traders and the quants, every couple of weeks to understand how their positions and their books were progressing. They would talk to me in their own language.

The language of options is amazing. They have all these models they have things called calls and puts and straddles and strangles and bear collars and the systems are acronyms a WDA ZDX - they would talk a completely foreign language!

Now I didn't want to look like I didn't know what was going on. So I would take my notes and I understood virtually nothing. But then came a lesson for me because one of our head traders came in one day to see the team and he asked them in a big meeting, what they were preparing for the next customer.

They began to speak about how they were doing all this structure with these options and these bonds and swaps and they began to talk in their language and the Head Trader said,

"Whoa, hold on a minute. I can't understand the thing. Can you make it simple for me? Pretend you're talking to your grandmother, what on earth you're trying to sell to the customer."

Now the traders looked at each other they looked at the quants. They umd and ahd a bit. And one of them said, "Oh, well, it's actually quite complicated this. Maybe we can simplify it because I'm not sure the customer will really understand what they're getting."

The head trader said, "Yep, I need you to speak to me as though I were your grandmother. Keep it simple. If you can't understand it or explain it to me, then we're not selling this to any customer."

I took away a lesson from that.

Obviously, there are some ethics there because a banker there's not going to sell something to a customer that they don't understand. Wow, there's some lesson there. But not just that, the leader was capable of saying that he didn't understand.

In fact, it was a powerful message to his people. For him to admit that gave him strength.

Since then, I do the same with my teams when they talk to me in "gobblygook" with acronyms. I say

"Simplify it. I don't understand!"

Many times they can't actually explain it themselves. And that is always going to be a problem. You see, if you think you look stupid, not understanding something and you just pretend you do, you can get yourself in real hot water and you'll look far more stupid down the line.

So leadership is about asking questions and admitting that we can't do everything. If you do that, if you're willing to admit you don't know and ask the other person to explain it clearly...

...that is really good leadership!

If you want to discuss your leadership challenges, contact me for coaching at my mail below.

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