The Disconnect Between Short-term Behaviors and Short-term Results
One of the most frequent trust questions I get is typically phrased as a dilemma: how can we establish trust-based long-term relationships in a culture that values short-term performance?
But rarely have I had the question posed so clearly and sharply as in a recent discussion with an investment banker. Paraphrasing, he said:
“Listen, I make no apologies for being 100% money-motivated. That’s why I’m in the business I’m in. If the firm changed our incentives tomorrow to a weekly basis, I’d be there in a heartbeat – doing what I have to do, week to week. So when you talk about long-term trust, I frankly glaze over. My timeframe is what maximizes my income – period.”
You can trust investment bankers to cut to the chase. It’s their job, and they’re very good at it.
But here’s what he missed.
There’s an unspoken assumption in his stark phrasing of the issue. That unspoken assumption is:
The best way to maximize short-term income is through short-term behaviors.
And that assumption is dead wrong. Here’s why.
The Disconnect Between Behavior and Results
The point is obvious if you think about strategy. Which approach to corporate strategy is likely to be more successful over the next five years?
- Company A, which revamps its entire corporate strategy every quarter, or
- Company B, which sets its corporate strategy over a five-year timeframe, and occasionally tunes it
Pretty clearly, changing a long-term strategy on a quarterly basis is the recipe for long-term bad results. But notice – long-term bad results happen a quarter at a time. Five years of bad performance shows up in 20 bad quarters.
The basis for strong short-term results (quarterly in this case) is long-term behavior – not short-term behavior.
What’s true for strategy is true for relationships as well. If you manage your client relationships by viewing them through the prism of quarterly (or monthly, or weekly) sales and income reports, those clients are bound to notice.
Few things destroy client relationships like a lame, semi-apologetic request like, “Could you maybe move that sale up a few weeks so I can get credit this quarter?” Clients are not stupid, and there’s no way to dress up such a self-serving request for monetization of the relationship so as to disguise what it really is. Such a request will backfire on you.
So will any such behavior that betrays your true objective – if your true objective is to treat your clients like transactional piggy banks, rather than as the long-term relationships we claim to aspire to.
Long-term Greedy
Former Goldman Sachs senior partner Gus Levy is credited with coining the phrase “long-term greedy.” In typical Wall Street fashion, the phrasing was perhaps calculated to sound offensive – but in fact, it expresses something completely commonsensical, and highly consistent with trust. I endorse it myself.
What Levy meant was that the best way to do well in the long-run – and, by implication, in each quarter on the way to the long run – is to behave in a long-term manner. That means: keeping your word, taking care of clients, acting with integrity, putting clients’ needs first – all the time.
If you behave that way – in the long-term, as a matter of habit and principle – then you will actually do far better in the long run (and by extension, in the accumulation of short-terms on the way there) than someone who is constantly seeking to optimize only the next quarter.
Note this does not necessarily have anything to do with ethics. You can be, as my investment banking friend claimed to be, 100% motivated by money, and still act in ways that are largely indistinguishable from someone whose trustworthy behavior is ethics-based. You just have to not be stupid. And Gus Levy was assuredly not stupid.
The next time you hear someone say. “I can’t do that trust stuff because all the incentives around here are short-term,” explain to them why there’s nothing wrong per se with short-term incentives. The problem is stupidly believing that short-term behavior is the best way to get there.
The best short-term results come about from operating on long-term principles – and reaping the benefits every quarter along the way.
Trust Matters, The Podcast: Building Trust When Industry Spirals Into Cutthroat Pricing (Episode 13)
The Easiest Way to Create Trust
I was in a Costco store the other day, and noticed the man whose photo you see attached here. I was struck by his t-shirt: in bold, large font, it reads, “Because I Said I Would.”
That got me thinking. As founder of Trusted Advisor Associates, one of the most common questions I get over the years is some variation on, “How do I go about creating trust?”
There are many variations on that question: What’s the fastest way to create trust? What’s the most enduring way to create trust? What’s the most cost-effective way, the highest-value way, the most accessible way, and so forth.
I’ve written elsewhere about some of those, but this t-shirt reminded me of a very important one – What’s the Easiest Way to Create Trust?
So here it is (and then we’ll come back to our t-shirt guy).
The Easiest Way to Create Trust
The answer (drumroll) is – make a lot of promises, and then keep them.
Here are several reasons I call that the ‘easiest’ way:
- We all know how to make promises; we make many of them every day (“I’ll see you at 10:00,” “I’ll have that done by Tuesday,” “I’ll take care of it for you.”)
- Most promises aren’t really that difficult to fulfill: most of us don’t wildly over-promise, or promise things that are massively outside our ability to complete.
- Kept promises are easy to see, and easy to credit. They go into an account often labelled “integrity,” a not-so-trivial attribute to be credited with.
- Kept promises fall squarely within one of the four Trust Equation components – Reliability. In fact, kept promises are pretty much the main way we establish our rating of someone’s reliability.
- It’s not that hard to come up with a list of viable promises you can make, which then offers you a list of promises you can keep. Most of our client relationships (indeed, all relationships) have frequent components of timeliness, or of quality of delivery.
But notice: if it’s so easy to keep promises, and so valuable to keep them – then why aren’t we all paragons of Reliability virtue? Because let’s be honest – we’re not.
Where Promise-Keeping Falls Down
There are three areas where we fall down in promise-keeping.
Fear. Ironically, the biggest failure of promise-keeping is failure to make a promise in the first place! Nobody can fault you – or credit you – with a promise you never made to begin with.
Why do we fail to make promises in the first place? Usually, because we fear being held accountable. It feels safer to say, “I’ll get it to you before the end of the week,” or “I’ll be there around ten-ish,” because it leaves you lots of wiggle-room. That way – we like to kid ourselves – there’s sufficient vagueness that no one will blame us.
We forget that the failure to be blamed for something that didn’t happen doesn’t rank nearly as high on the trustworthiness list as the fulfillment of a promise made. It’s a classic case of avoiding a risk, and thereby incurring a larger, longer-term risk – the risk of never having taken a risk. And remember – without risk, trust never exists.
Optimism. Another failure of promise-keeping is our own well-intended optimism. We really want to get that document to them by close of business Wednesday, because we sense that they’d really like it by then. So, we optimistically say we’ll do something that frankly, isn’t realistic, and then rationalize missing it later by telling ourselves it really wasn’t that important.
Sand-bagging. This one is pernicious. Are you a believer in “under-promise and over-deliver?” Because if you are – and let me put this provocatively – you believe in lying. Either you are lying in knowingly making a false promise, or in knowingly confounding the Other’s expectations. Or both!
The problem with sand-bagging is that it compounds. You may generate delight the first time, but when you do it again, the Other party figures out your game. Even if it doesn’t annoy them, they begin to discount your promises by the amount you lied the first two times. You are no longer believed. Which means your promises can’t be trusted. (Ask any firm that has tried to consistently sandbag Wall Street with calculatedly discounted earnings estimates).
The Costco Guy with the T-shirt
Back to our friend. When I saw him, I asked if I could take his photo; he readily agreed. I was very curious about whether he intended his t-shirt to mean what I would mean by that phrase – which is all the trust stuff I wrote about above.
Here’s what he said.
“It’s a personal statement to myself. I wear it to remind myself to keep my word. That’s really important to me, in all things.”
Pretty much what I’d hoped he’d say. I agree with him. And while we just went our ways, my guess is that if I’d talked to him further, he would probably have agreed with me that:
- Promises come up a lot, every day
- Keeping them isn’t all that hard – if you just focus on keeping them, and not be distracted by all the little temptations to let them slide, or to avoid making them in the first place
- A lifetime lived by making a lot of promises, and pointedly keeping them, is a terrific way to create trust in our relationships with others.
Anyway, that’s my take on the easiest way to create trust: make a lot of promises and keep them.
And, since I stupidly forgot to ask the gentleman’s name, if you know him, please reach out and send this blogpost to him – with my thanks, and my congratulations.
The Single Biggest Thing an Advisor Can Do
Most of you reading this are advisors, in some form or another. That’s obvious if you’re a consultant, accountant, or lawyer. Also if you’re a financial planner, account manager, executive searcher, and certainly if you’re in sales.
It’s less obviously, but equally, true if you’re in one of a thousand customer-facing roles with titles like customer (-experience, -service, -success, -relationship), delivery service, pre-sales, technical support. Even if your job has a title like operations specialist, or technical project manager, or product manager, your success hinges heavily on your ability to offer good advice – and to have that advice taken.
So what’s the Single Biggest Thing an Advisor Can Do for his or her client/customer/advisee?
It’s not “add value” (almost always a narrow financial concept, and not one that guarantees acceptance of the idea). Nor is it to “challenge” the advisee (again, a challenging idea unaccepted just annoys the advisee).
Let me suggest that the Single Biggest Thing you can do for an advisee is to help them reframe their problem definition – in a way that increases value, clarity, and commitment.
Back to Roots
One of my favorite David Maister epigrams is, “The problem is never what the client said it was in the first meeting.” A tad hyperbolic? Perhaps – but my own experience has taught me that David was far nearer right than wrong.
Let’s take a few basic examples. See if these ring true.
- A potential client approaches a financial advisor, because (s)he is unsatisfied with their own track record of managing their investment portfolio, and hopes a professional can do better.
- A potential client approaches a bookkeeper, because they don’t want to become experts in QuickBooks, but their small business is rapidly demanding more such time.
- A potential client approaches a ballroom dance studio because they want their wedding dance, to their favorite song, to go perfectly.
All three of those presenting problems are reasonable on their face. And all three advisors can probably present competent answers:
- The financial advisor can almost always do a better job of portfolio balancing and risk-profiling than an amateur investor;
- Any bookkeeper is going to be more adept and efficient at bookkeeping software than a moonlighting business owner;
- Any ballroom studio can fit a dance to almost any song.
But if the advisor chooses to respond to those problem definitions as presented, there are three problems:
- Those problems are all defined at pretty low levels of value-added; basically a make-buy decision based on perceived efficiency;
- They may be what the client thinks they want, but not what the client really needs;
- Just giving people what they ask for doesn’t do much to motivate their taking your advice. (For a whimsical but right-on example of this, see Episode 6 of the reality TV-show Sell It Like Serhant).
Redefining the Problem
But what if the advisor in each case succeeds in engaging the client in a way that jointly examines the true root issue? In many cases (OK, all, David would say), the problem definition can change.
- A good financial advisor will also ask the client questions about the names in which taxable accounts are held, about the client’s use of trusts, and about educational plans for their kids. All of those have implications for the portfolio, but each of them also has profound financial implications in their own right. Many clients in such conversations realize that their real goal isn’t just better stock returns, but something more fundamental – financial security, for example.
- A good bookkeeper won’t just demonstrate Quickbooks proficiency, but will also ask about useful managerial reports, interface with the tax accountant, and plans for online payment systems. This gets the customer to think about the use of Quickbooks, not just the efficiency with which one can manipulate software.
- A good dance studio will determine whether the favorite song is really danceable by other-than-pros, and whether something else might better fit the true goal – to receive glowing comments and feel good about themselves at the close of the dance.
Redefining the problem often makes the problem definition larger, or more holistic – like the financial planner example above. But it doesn’t have to.
The point of redefining the problem is not to up-sell – it is to get the client higher value, greater clarity about their own objectives, and thereby greater commitment to actually doing something.
It’s Not About the Advice
The biggest problem advisors have is to stop thinking it’s about the advice. Being right is table stakes, jacks-for-openers. Any subject matter expert can be right – in fact, most are. The truth is, subject matter expertise in this day and age of AI is rapidly becoming automated (think robo-advisers, offshoring, and YouTube videos).
Good advisors remember that, just because the client says the problem is thus-and-so doesn’t mean that’s the problem. Which means the challenge of advising is not getting the better answer: it’s getting the client to accept that there might be a better answer.
The above examples are all from sales, but the problem is the same if you’re implementing a CRM system. The client wants it to do what the old system did: your job is to get them to see that the new system can accomplish much more, of more basic objectives.
Here’s how you don’t do it:
- Tell them you’re the expert and you know better than they do
- Show them a financial comparison of their idea and your idea
- Tell them about all your past clients who successfully took your advice.
Instead, take a page from the one profession that is built on getting people to take advice – therapists of one form or another. (This most definitely includes your best friend, when you go to them for tough life advice).
What do all good therapists do?
- They listen to you; not for clues about how to define the problem or add value, but to understand how you view the problem
- They ask questions: not 20-question-game deductive queries aimed at winnowing down the solution set, but rather aimed at getting you to see your own true objectives and motives
- They care: their objective is for you to get better, on your terms, not theirs.
Because the truth is, most of us are suspicious of our own problem definitions – even as we are defensive about them. It is not easy to get people to take advice: we all are resistant. The solution to resistance is first to find common ground – but first on their ground, not ours. Done right, we become first unthreatened, then open, then grateful and committed once we see and can accept another problem definition.
This stuff is simple. That doesn’t mean it’s easy, by a long shot. In my view, getting your advice taken is a lot harder than getting the advice right in the first place. That’s why good advice can be copied by AI; but human interaction is the provenance of getting your advice taken.
It starts by helping people redefine their own problems – on their terms.