Authenticity Practice #6: Comparing explanations for contribution to purpose

The test for fact is proof; the test for explanation is value. Given our purpose, how valuable is this explanation?

• Practice: Comparing explanations for contribution to purpose
• Practice: Comparing explanations for contribution to purpose

During the global financial crisis, an entrepreneur went bankrupt. His company specialized in matching real estate developers with financing sources and taking either a commission or, as he preferred, a percentage of ownership in the real estate. As real estate values rose he, on paper, became quite wealthy. All that apparent success led to taking even bigger ownership percentages that came with some liability for the financing repayment. When the real estate values collapsed, banks called in the loans. He could not meet his obligations.

The man had to keep working, but doing what? Who was looking to hire a bankrupt, failed real estate entrepreneur?

His first move was to name a purpose: making a unique, useful, and profitable contribution. Then, with people he trusted, he brainstormed ways of explaining his situation:

• Bankrupt real estate owner
• Person desperate to make money
• Bad judge of economic opportunity
• Idiot who treated a dollar borrowed like it was a dollar earned
• Someone with a lot of experience in bad real estate deals
• Someone who knows a lot of bank officers
• Someone who knows a lot of land owners in trouble.

After crossing out the “no value to my purpose” explanations, the list looked like this:

• Bankrupt real estate owner
• Person desperate to make money
• Bad judge of economic opportunity
• Idiot who treated a dollar borrowed like it was a dollar earned
• Someone with a lot of experience in bad real estate deals
• Someone who knows a lot of bank officers
• Someone who knows a lot of land owners in trouble

What could a person with that experience and those relationships do? He decided that he was a bad real estate expert who knew lots of bankers and land owners. How might that help him make a unique, useful, and profitable contribution? He decided to pose that question to a few bankers who were forced to foreclose on his properties but who still respected his good intentions. After a few discussions about the bad real estate loans banks were still trying to collect, the entrepreneur noticed something—each bank had strong areas of experience and expertise and its fewest problem loans were in those areas.

The most worrisome loans tended to be outside of the bank’s area of experience and expertise. The entrepreneur had an idea—what if banks could exchange a problem loan in a real estate area they did not know well (e.g., office buildings) for a problem loan in a market they did know (e.g., retail shopping centers)? He positioned himself as a “Problem real estate loan specialist” and he helped banks all over his geographic region exchange at-risk loans in areas they did not know well for loans in areas in which they were well-connected. He took commissions for the loan swaps, the percentage of loan problems solved went up, his credibility went up, and he was making a unique, useful, profitable contribution. He says, “I recovered by helping people swap piles of trash. One bank’s trash was another bank’s treasure.”

Many people do not look at explanation as a creative act and that is a mistake. When facing your vitality imperative, if you are stuck with your first explanation, then get help from other people. Keep purpose present and generate explanations until you see some that inspire useful action.