Harmless white lies and more damaging forms of deception are increasingly more frequent events in society and in the business world, if you follow the business press. Consider the following joke:
An elderly gentleman had serious hearing problems for a number of years. He went to the doctor and the doctor was able to have him fitted for a set of hearing aids that allowed the gentleman to hear 100% The elderly gentleman went back in a month to the doctor and the doctor said, "Your hearing is perfect. Your family must be really pleased that you can hear again."
The gentleman replied, "Oh, I haven't told my family yet. I just sit around and listen to the conversations. I've changed my will three times!"
This form of deception or white lies is often more frequent in society then most people suspect. Does this dress makes me look fat..asks a wife or girlfriend? Well you know the answer to that one.
Start-up entrepreneurs are often forced to pretend (to be something they are not yet or to know someone that they don’t to gain customer acceptance and to develop a needed perceived reputation) . Deception is not a single point but a continuum along a spectrum. It can range from supposedly “harmless” white lies and deception on one end, where no one is hurt (see Canadian billionaire example below) to deliberate deception and scams where there are real victims (Think Ponzi schemes and Bernie Madoff, who made off with billions of clients’ dollars) . It also surfaces a range of ethical questions, such as.... Under different circumstances and cultures, will these tactics be more or less acceptable?
Several professors are studying the question of entrepreneurial deception or pretending. The research was initiated by Miroslav Pivoda in the Czech Republic, and joined by Frank Hoy and Santiago Ibarreche in the U.S.A., and latter by Dan Mosher in Canada. They published partial results of their research at the 2007 ICSB conference in Turku (
From a paper called Tricks of Creative Entrepreneurial Problem Solving (2007) Pivoda and his colleagues remind us:
“New ventures are difficult to start because customers and business partners prefer not work with companies in the initial, risky, developmental phase. Entrepreneurs use creative techniques to overcome this such as: “Optical enlargement of a business”, “Fictitious location of a company” or “Spying on competitors”. These techniques are forms of deception and may be ethically questionable. However they represent effective tools for starting entrepreneurs.” claims Pivoda […these tools are often recommended by consultants and small business advisors, when talking about “bootstrapping” or guerilla marketing —Walter Derzko”. ]
“To understand this issue, we initiated an empirical study. Our long-term intention is to create a “playbook” for the major types of tasks of a starting entrepreneur. Here, we focused on the ethical dimension in our survey.”
They are asking for your help in exploring this field and identifying cases. See 2009 Questionnaire at Survey Monkey: http://www.surveymonkey.com/s.aspx?sm=spYpmR9vwj1PO7_2f6m61ZfA_3d_3d
Entrepreneurs in Pivoda’s business class are asked to evaluate these tactics. Is it ethical? Moral? Well, the answer depends which culture you live in. I love one of their examples:
“In 1994, in a post-communist economy of the CzechRepublic, entrepreneurs Peter and Mark rented a large parking space for their future 120-car auto-bazaar. Unfortunately at that time, they only had 4 cars. They visited a few local banks but without collateral, they were dismissed. As they were unable to obtain any additional financial support to buy more cars, they had to find a new "creatice" way to fill in the empty parking spaces, which is a precondition to make an auto-bazaar more attractive both to prospective buyers as well as to sellers.
Next to the Auto-bazaar, there was a big company. Peter and Mark offered employees free parking in the Auto-bazaar under the condition that while parked, fictitious price tags would be placed on their cars. Fortunately this offer was accepted. From early mornings, Turbo Auto-bazaar was full and by the afternoons most of the cars were gone. Passers-by probably got the impression that these cars were sold there like on a production line. Within half year, Peter and Mark had 20 cars in their auto-bazaar and success followed.”
[Shady entrepreneurs and scammer practicing criminal schemes deserve to charged and jailed but they should also be studied and admired for their creative lateral thinking skills, pattern recognition ability and opportunity recognition savvy. If only they would apply their skills and aptitudes in a positive fashion in society..-Walter Derzko]
Other examples from Pivoda's recent survey/questionnaire:
Optical enlargement of an existing or even non-existing business
- Answer from the U.S.A.: “I know of a billionaire who started out selling life insurance and offering financial advice in Toronto, Canada. When he started he borrowed money from his family and spent on $1000.00 suits, leased a Rolls Royce just so people would think that he is very successful. His trick worked, because today he is a billionaire on the list of Forbes Magazine, richest people in the world. When I spoke to him recently, I told him that it is possible that the suits and car was not the trick but his loyalty to his customers; he however swear by the original way he presented himself.”
- “Our business innovation center (BIC) is located inside of a big building. In our promotional materials, we present a photo of the whole building, although our office occupies 4 rooms only there. Then, namely foreign clients may get an impression that the whole building belongs to BIC. We used this trick in latter stages of our business.”
- “We operate our business in a group of companies. Our company can be perceived as the whole group, as the whole network.”
- By aligning your self with another company you can share their brand name. Example: Ask whether you can post a link on a larger company’s web site or become a member of the better business bureau.
- In the total number of our employees, we include also employees of our partner firms as well as our external collaborators.
- “A Czech entrepreneur who owned a few diverse restaurants decided to hit the Czech market also with his own network of coffee bars. He named the prospective network according to a luxurious car model, and decided to place it into an attractive part of Prague. When dealing with a local developer (who was responsible for renting the building space in the attractive place), the entrepreneur successfully pretended that the network had already existed and had been operating under the “world-wide roof” of the well-known car trade mark.
Fictitious location of a company
- "My brother and I at home, we started to manufacture a tapping equipment for the computer keyboard. At that time, it was a unique product in the Czech market. We established a fictitious company located in the U.S.A.and started to sell the equipment on the Internet auctions. Our Internet presentation of the product was more than persuasive. In spite of some inconsistencies concerning identification of our company, we managed to sell a large quantity of our product to unaware customers."
- After signing an exclusive contract with another company, we managed that our product has been offered in various internet shops. Increased sales of the product helped our company to innovate it further and to start new business projects.
- I have nothing against these innocent tricks if they do not break law and, first of all, do not make any harm to customers. Entrepreneurial tricks are fully justified by current difficulty to grasp even a small fraction of the market.
Copying know-how from competitors
- When starting a new restaurant, and also in later stages of our business, we often copied menu of our competitors. To prevent competitors to do the same to us, we forbid taking our menus out of restaurant.
An entrepreneur who wanted to start his own book store investigated the market preferences in a competitor’s shop. In the morning, the entrepreneur walked into the competitor’s shop, and pretended to be a curious customer. He calculated numbers of selected titles on shelves and left the shop. In the evening he walked in the shop again, and did the same calculations. From differences in numbers, the entrepreneur was able to identify the best selling books in the competitor’s shop, and order them without risk for his own starting shop in the opposite part of the town.
Spying on competitors
- Answer from the U.S.A.: When we were interested in buying a piece of property or building, I have done the same tricks (as you describe in your questionnaire), calling for info and giving a different name. One time it back fired when I gave him a different name as he knew the person.
- In another case, we wanted to raise prices of our services. We called others in the same service business. We found that they would do the same to us when we were not there. We were in the dry cleaning business and Real Estate in a small family business with about 75 employees.
Giving incomplete information
- Answer from the U.S.A.: One respondent said that he used either just his name or the title of vice-president. The reason given was that in that way he could get out of making decisions under pressure by saying that he had to consult with “his people” before making a decision because he was the vice-president NOT the President of the company
Makes me wonder....Will Obama's "Yes we can !" campaigne lead to not just to more and bigger ligitimate dreamers but also more schemers, scammers and ponzi artists
Makes me wonder....Will Obama's "Yes we can !" campaigne lead to not just to more and bigger ligitimate dreamers but also more schemers, scammers and ponzi artists?
Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression features 45 opportunity scenarios.
Related posts in this series:
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Walter Derzko -"Changing the world, one idea at a time"©
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