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I have blogged about this before as a part of Bob's Rules. Bob was a former boss of mine and he offered sage advice to those who worked with him, in the form of a set of rules. One of his favorites, and mine, was the classic ... "when you are in a hole, stop digging"! Bob did not suggest that he developed the rules himself, merely learned and sometimes "tweaked" them based on his experiences.
We ALL will find ourselves in this situation from time to time ... sometimes it will be a part of harmless banter, and sometimes it will be a more important situation. It is how you react that matters the most!
The rule applies in ALL cases, STOP DIGGING ... of course (a) you have to recognise that you are in a hole; and (b) you need to want to repair the situation.
At the end of the day it is all about credibility. EVERYONE finds themselves "in a hole" from time to time, so while it can be a little embarrassing for a few minutes (hours or days sometimes) its no big deal, IF you react correctly.
However some people just won't let go and keep digging ... they try to bluster their way out of "the hole", they try to talk their way out of the hole, they sometimes BELIEVE that they are "in the right". Those people have REAL problems, because EVERYONE around them can see "the hole" ... but they can't. Their only hope is if they are willing to accept the wisdom of others .. but in some instances they just don't want to hear it.
The person in the hole, who keeps digging ignoring the fact of his situation ... leaves himself a big credibility hill to climb.
So ... remember the rule! Try not to be the idiot who ignores all the signs ... but if you are that idiot, at least listen when people tell you that you are in a hole!