The Tricky Relationship Between Auditing and Ethics

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We should all do the right thing. Yet the wrong thing often gets done. Indeed, you can’t always trust everyone to do the right thing.

And so we have evolved enforcement mechanisms – laws, guidelines, agreements, protocols, commandments. Frequently, those mechanisms depend on some form of auditing – pop quizzes, random drug testing, probable cause. And videotaping.

Enforcement is typically put in place to augment trust, or to take over where trust can’t do the job alone. The implicit assumption is that by having some form of auditing in place, the net amount of ethical behavior will increase.

But what if it doesn’t work that way? What if auditing for enforcement destroys trust? Can the medicine be worse than the disease?

The Filmmaker’s Dilemma 

Kevin Breslin is a filmmaker and location scout for commercials in New York. From a New York Times article about him:

I used to be able walk into a building, talk to a guard downstairs and say: “You know, I’m here. I’m scouting a commercial. I need to get to the roof. I need a shot.” He’d say, “Ah, the building is closed.” I’d say, “I need two minutes,” hand the guy a $20 — and you’d be on the roof. You got the shots.

Now with surveillance cameras everywhere, no one can help you in any way even if they want to. Now it’s impossible. You have to call — speak to the building manager, speak to the real estate agent, speak to the public relations department, speak to this one. So, now you’ve got to make 40 calls just to do anything.

The cameras aren’t just auditing, they’re recording full-time. Their data isn’t a sample, it’s a complete survey. Their enforcement power is huge.  Yet so is the destruction of trust.

The results are lower social efficiency – and an atrophying of the trust muscles of a citizenry. Yet another possibility of ethical decision-making is taken away from the level at which the ethical issue arises, and replaced by a cold, bloodless policy. An opportunity to practice trust is lost.

The Convenience Store Manager’s Dilemma

I once did a consulting assignment for a convenience store chain. They had 150% store manager turnover, and wanted a better profile for recruiting. Recruiting, however, turned out not to be the problem.

The problem was that the chain gave every store manager a lie detector test every month. After being tested this way for months, clearly store managers were deciding that many of their peers were getting away with something, and proceeded to pocket store funds. Then they were caught, and terminated.

The lie detector tests were audits, imposed regularly and frequently. Their net effect was like the Heisenberg Principle – the testing for trustworthiness altered the level of trustworthiness itself.

The Leader’s Dilemma

Creating an environment that encourages ethical behavior is desirable – up to a point. Beyond that point, social engineering begins to negatively affect the very thing it was designed to help. So – how can a leader determine the right balance between personally driven trustworthy behavior and auditing for enforcement?

Here are three guidelines:

  1. Be a role model. Role modeling of all desirable behaviors by leaders is a good thing, but when it comes to trust, I think the importance doubles. Hypocrisy kills trust – but exemplifying it creates even  more trust. Live the values yourself.
  2. Use random sampling, not regular surveying. Bernie Madoff might have been caught earlier had spot auditing been practiced rightly. And the convenience store would have had less turnover if they didn’t remove all ethical decision-making power from the managers.
  3. To get trust, give it. One of the best ways to make people trustworthy is to trust them. Don’t engineer trust out of interpersonal situations – leave some room for humans to act humanly.

Why We Don’t Trust Companies Part IV: The Solution

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Solving The PuzzleMy last three posts – here, and here, and here – were about why we don’t trust companies. To review the bidding, I’ve said it’s because:

  • Trust is predominantly personal in nature – a fact most companies don’t recognize
  • Corporate missions, motives and mindsets are all tainted by zero-sum, competitive ideologies
  • Trust requires risk, while companies abhor risk.

Stripped down – companies see trust as impersonal, ideologically suspect, and too risky.

Now, if I am right about that, then we would want to see solutions in the business world that recognize the personal nature of trust, incorporate trust-enhancing ideologies, and embrace risk-taking to enhance trust.

Surprise surprise – that’s not what we see.

The dialogue about corporate trust is consistently mis-framed. It is not companies that trust, or are trusted. It is the people in the companies who trust, or are trusted. The challenge is not to make companies trust or be trustworthy – it is to create corporate environments in which people can trust and be trusted.

In the trust game, the company is an agent, an enabler – not a primary actor.

The Usual Recommendations to Increase Corporate Trust

I spend a lot of time reading reports on how trust in business can be improved. Here are a few examples;

Believe me, there are hundreds more.

These are all reasonably good pieces of work (there are certainly worse). But even from these top-drawer sources, the top-line recommendations are bloodless, abstract, and cold – because they’re focused at the corporate level. (Curiously, the right answers in all four of these cases are in fact contained in the reports – they’re just buried deep.)

Typical topline recommendations look like these (taken from the sources above):

  • Increase adherence to ethical codes and standards
  • Create a set of values that define and clarify what your enterprise and its people are at root, and work to ensure that these values are adhered to consistently across your enterprise.
  • A well-defined, repeatable roadmap for the conversation…more transparency about fees and costs
  • Communicate frequently and honestly on the state of the business.

Again – there’s nothing wrong in these recommendations. But taken alone, they are sleep-inducing; they sound like Charlie Brown’s teacher’s Mwah, Mwah, Mwah.

Where is the personal? The belief system? The risk-taking? Where’s the people?

The Right Answer for Increasing Corporate Trust

Again, not that there’s anything wrong with the suggestions above, but they don’t get to the heart of the matter. Here are some recommendations that do.

1. Trust is personal – so lead by example.

Role model it. Everyone, not just the top leaders.  And to be sure what “it” is, identify hundreds of situations and the appropriate responses for each (not to memorize, but to ensure understanding). Talk about them – endlessly.  Get coaching. Do brainstorming sessions. Talk about what you’re doing with employees, and with customers. Identify key vocabulary terms you’ll use, and use them. Publicly praise and private counsel appropriate personal examples of trust-based interactions.

The way to get a trust-based company is not to fix the company – it’s to fix the people and the environment they live in so that the people can trust and be trusted in all their affairs.

2. Articulate and preach the trust ideology.

Reject zero-sum thinking. Think long-term relationships, not short-term transactions. Make transparency a default state in all conversations (except where illegal or harmful). Emphasize win-win solutions with customers, employees, and other stakeholders. Believe that trust relationships are more profitable over the medium and long-term, that they are complementary not opposed to corporate success.

3. Teach Social Risk-taking

People can’t learn to trust if they have no degrees of freedom to do so. People are more likely to be trustworthy if they are trusted. Human relationships are formed by the constant reciprocal taking of small risks; the result is long term risk mitigation.

There are personal relationship skills that drive trust. They can be taught, and the teaching of them gets to the heart of a trust-enhancing organization.

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The route to a high-trust organization is through its people. That route starts not with corporate policies per se, but with human interactions.

 

 

A Better New Year’s Resolution

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iStock_000014342439XSmallI wrote a good blog post at this time six years ago, and haven’t improved on it yet. Here it is again.

Happy New Year.

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My unscientific sampling says many people make New Years resolutions, but few follow through. Net result—unhappiness.

It doesn’t have to be that way.

You could, of course, just try harder, stiffen your resolve, etc. But you’ve been there, tried that.

You could also ditch the whole idea and just stop making resolutions. Avoid goal-failure by eliminating goal-setting. Effective, but at the cost of giving up on aspirations.

I heard another idea: replace the New Year’s Resolution List with a New Year’s Gratitude List. Here’s why it makes sense.

First, most resolutions are about self-improvement—this year I resolve to: quit smoking, lose weight, cut the gossip, drink less, exercise more, and so on.

All those resolutions are rooted in a dissatisfaction with the current state of affairs—or with oneself.

In other words: resolutions often have a component of dissatisfaction with self. For many, it isn’t just dissatisfaction—it’s self-hatred. And the stronger the loathing of self, the stronger the resolutions—and the more they hurt when they go unfulfilled. It can be a very vicious circle.

Second, happy people do better. This has some verification in science, and it’s a common point of view in religion and psychology—and in common sense.

People who are slightly optimistic do better in life. People who are happy are more attractive to other people. In a very real sense, you empower what you fear—and attract what you put out.

Ergo, replace resolutions with gratitude. The best way to improve oneself is paradoxical—start by being grateful for what you already have. That turns your aspirations from negative (fixing a bad situation) to positive (making a fine situation even better).

Gratitude forces our attention outwards, to others—a common recommendation of almost all spiritual programs.

Finally, gratitude calms us. We worry less. We don’t obsess. We attract others by our calm, which makes our lives connected and meaningful. And before long, we tend to smoke less, drink less, exercise more, gossip less, and so on. Which of course is what we thought we wanted in the first place.

But the real truth is—it wasn’t the resolutions we wanted in the first place. It was the peace that comes with gratitude. We mistook cause for effect.

Go for an attitude of gratitude. The rest are positive side-effects.

 

Butt-Kicked by the Universe

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Oh man, did I do something stupid, embarrassing and untrustworthy today.

A colleague forwarded me a calendar invite originally sent by a client. I NEVER respond to an actual calendar invite as if it’s an email; I always respond to the actual invitation using the buttons “accept,” “reject,” or “tentative.”

But today, for reasons unknown only to whoever is in charge of the universe, I replied (I thought!!) to my colleague, regarding the client (Fred).

I wrote:

“…I’m so mad at Fred…seems like he hasn’t sent out all the materials we worked on last week.  I am trying not to be pissed.  I’m really frustrated. I’m trying to hold off getting too irate in case he did send stuff out…”

You guessed it. My response went straight to Fred.

He wrote back, “Hi Sarah, was this meant for me?”

That Gut-Punched Feeling

Ughh. As I had been writing that email, my gut was screaming at me: “You always say not to put in writing anything you wouldn’t be comfortable having the whole world read.”

You could say – I would – that the universe intervened because I had violated the “Inner Voice” rule.  The Inner Voice Rule is, “Say the things you’re thinking but don’t share.”  It’s where truth lies, and turbo-boosts the Intimacy component of the Trust Equation.

The Inner Voice Rule.

I groaned. Then I immediately wrote back to Fred:  “I am so embarrassed.  The email was meant for Julie, not you, and I’m sorry.  Are you somewhere I can call you?”  We spoke five minutes later.

I started: “Fred, I’m so sorry.  I knew as I was typing that email that I needed to pick up the phone and call you…I’m aware I have been avoiding a conversation with you.”  Fred was extra-gracious, acknowledging that he hadn’t met his commitments and that he understood where my frustration came from.

He then said, “And we’ve both been to Trusted Advisor programs,” which created a clearing for us to deal in an authentic way with the trust breakdown.  We worked through things; we both left the conversation having said what we needed to say, and feeling complete (and a commitment on my part to talk to Fred next time instead of complaining to my colleague).

He sent out the materials within 15 minutes.

The Universe Kicks Butt

I’m a bit fearful of calling myself a hypocrite on a blogpost destined for internet eternity. But if I’m real about it, what I salvaged from my mess du jour is that I talk a big game about clear speaking, using Inner Voice, and sharing constructive feedback – while the truth is, I’m woefully out of practice.  I choose to believe that the universe intervened today to give me a butt kick wake up call; to call me on being real and not a poser.

There, I said it.

So: what did I learn from the Universe today?

  • NEVER, EVER put in writing anything you wouldn’t want shared with the world
  • When what you have to say about another serves to diminish them, it’s time to either:

a) admit you’ve been a jerk and have a conversation with that person, or

b) own up and end the relationship.

  • The courage to have un-had conversations leads to growth, learning and deeper trust.
  • If we think of constructive feedback as “scary, bad, judgmental or otherwise” then we don’t share the most important stuff.  Then all that stuff builds up and – we send stupid emails.
  • If you make a mess – make it Priority One to clean it up immediately.

A Contingent Offer

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It was a beautiful fall in Blacksburg…but I was quite nervous…my senior year in Mechanical Engineering at Virginia Tech was now underway and reality was setting in fast…I had to find a job.

I had racked up a massive $11,000 in loans for school from my Mom and Dad – I was expected to start paying it back right after graduation to help pay for my 5 younger siblings to go to college. On top of that, I was engaged to be married in July. I needed a job – I really, really needed a job.

I was nervous. Although the market for new engineering graduates was strong, I was unsure about my job prospects because…how do I say this delicately…I had not exactly distinguished myself academically.

There was not much I could do at this point to change my grades in Calculus or Thermodynamics…so I focused intensely on my job search.

I signed up for the usual campus interviews – but after the first round I was disappointed. I only received 2 invitations to visit plant sites for second round interviews.

My first visit to a company in West Virginia did not go well. A week later I received The Letter – Thanks but no thanks…dinged!! I was getting very nervous. I attended a “how to interview” session at the career center, where I learned I needed to sell myself and be confident – even though I was not.

On my trip to “Acme Chemical” in early November the interviews seemed to go much better – I was not that crazy about the company, or the job or the location….but I needed a job and was hopeful. In the meantime, my campus interviews had turned the corner – I had scored 4 more company visits after Christmas.

The Letter arrived from Acme…I opened it with caution – it was an offer! A very good offer – $17,800 a year! I was so excited….until I read further.

It was a “contingent offer” – contingent upon a position still being open at the time I decided to accept it. Huh??? I was quite confused. I called HR – they were going to hire 4 engineers and they made 7 offers. The first 4 to accept the offer got the jobs –and the other 3 would no longer have offers.

What?!! I had 4 upcoming interview trips with companies and locations I liked better than Acme. I did not want to accept this early offer and miss out on other potential choices. At the same time I really needed a job and $17,800 was a good offer. The job was OK, the location was not that bad…a bird in the hand; it was a real dilemma.

I decided to call Dad. At this point I had emerged from my “independent and confrontational teenage years.” But I could not say that Dad and I  were close; it was the first time that I remember turning to him for advice.

I explained my predicament.

Dad answered without hesitation, “Accept the job.”

When I started to explain that would preclude other options, 
he interrupted me.

 “No – it doesn’t.”

“What do you mean?”

“Accept the job – a contingent acceptance – contingent upon you not accepting another job someplace else.”

“Can I do that?”

“I don’t see why the hell not!”

“But what if they get angry and withdraw the offer?”

“Then I am not sure it is a place you want to work anyway.”

It was brilliant – my Dad was becoming smarter every day. I felt this huge burden had lifted.

First thing Monday morning I called up Acme and told them “I accept…” But when I added my conditions they were not happy. They said I was being “impertinent.” (I didn’t even know what that meant!)

They explained they did not accept my acceptance….they had recruited at the School for 10 years, and they were going to let the Dean know about my little stunt.

My cute plan had backfired; I was feeling sick again.

The next day I was summoned to the Dean’s office. I was fairly certain it was not because of my stellar academic performance.

The Dean was a scary man. He carried a permanent scowl on his face like Miss Gulch (Wicked Witch) in the Wizard of Oz.

“Mr. ____ – Acme has been recruiting here for years – I understand you accepted their offer contingent upon not accepting a job someplace else?”

“Yes sir, I did. I did not mean to be disrespectful but…”

“Excellent. They have no right pressuring my students. I let them know that either all 7 offers stand or they won’t be welcomed back.”

I walked out relieved and with a small measure of renewed confidence.

I ultimately had 4 job offers. I accepted a job someplace else and started calling my dad more often.

Story Time: Innovation, Trust, and the Freedom to Fail

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Our Story Time series brings you real, personal examples from business life that shed light on specific ways to lead with trust. Our last story proved that he who eats with chopsticks wins. Today’s shows how trust can impact innovation, productivity, and staff retention.

A New Anthology

When it comes to trust-building, stories are a powerful tool for both learning and change. Our new book, The Trusted Advisor Fieldbook: A Comprehensive Toolkit for Leading with Trust (Wiley, October 2011), contains a multitude of stories. Told by and about people we know, these stories illustrate the fundamental attitudes, truths, and principles of trustworthiness.

Today’s story is excerpted from our chapter on making the case for trust. It vividly demonstrates how providing the freedom to fail, take risks, and build on others’ ideas increases a team’s ability to innovate.

From the Front Lines: A Trust-Based Business Unit

In 2005, Ross Smith became Director of an 85-person software test team within Microsoft. His team had great technical skills, passion, and excitement, but felt underutilized and unchallenged. Ross set out to improve innovation and productivity. Exploring options, they ran across a University of British Columbia study by John F. Helliwell and Haifang Huang that equated the impact of high organizational trust to significant pay raises in terms of creating job satisfaction.

The team suddenly realized that innovation required freedom to fail, risk taking, building on others’ ideas—all behaviors grounded in high trust. That cognitive snap, that a high-trust organization would address underutilization and latent talent, was the beginning of the solution.

In a high-trust organization, individuals could apply their skills, education, and experience at their own discretion. They could take risks and change processes themselves because managers would trust them. The question was this: how to do it?

Ross asked the team to identify behaviors they felt influenced trust, positively or negatively. They realized that trust was subjective, situational, and very individual, and there was no single behavioral answer. As a result, the team put together a detailed playbook describing simple principles with discussion about how to implement.

They also modeled risk-taking and trust-building by using games to approach problems; everyone was allowed to play, experiment, and fail.

Microsoft is a heavy user of metrics, for Ross’s team as well as throughout the company. The first noticeable difference was a higher-than-normal level of retention. After two and a half years, other things started to change dramatically—new test tools and new techniques were developed, and a high level of collaboration and partnership was working. Productivity numbers started to rise. As the project finished, the team was rated at or near the top across virtually every Microsoft productivity metric.

When Ross and several others from the original team moved to another division, they set out to introduce the trust-building ideas and practices which had worked so well before. Once again, they saw a high retention rate, a broader application of talent, and higher productivity numbers.

The metrics followed the changes in mind-set and behavior—not the other way around.

—Ross Smith (Microsoft), as told to Charles H. Green

Find out more about Ross’s experiments in management innovation and trust, or read his blog on productivity games.

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Read more stories about trust:

Real People Real Trust: Transforming a Business from the Inside Out

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Ron Prater has worked in government consulting firms for almost 20 years, including three years with Arthur Andersen LLP. In 2007, he set out with partner Alan Pentz to create a company that would apply real entrepreneurial curiosity to find new ways to solve the U.S. government’s biggest problems. The result is Corner Alliance. Find out how this organization, triggered by a crisis in its formative years, applied the principle of collaboration to devise a new and different kind of corporate culture.

Leadership Lessons

Ron and I have known each other through other people for years. A few months ago I was talking with Corner Alliance Director Sarah Agan, a mutual colleague and veteran consultant. I was intrigued by the unusual ways she described a recent all-hands meeting. “We practice ‘inner voice’ all the time,” she said. “And we have an explicit value to eat our own dog food.” Needless to say, I was intrigued by Sarah’s word choice and even more so by her animation. I wanted to find out more. So I set up some time to talk with Ron and Sarah together.

Ron explained it to me, “‘Eating our own dog food’ means we operate the way we advise our clients to—we follow the same processes and approaches we recommend to them.” “Essentially, we practice what we preach. It can be harder than it sounds when you’re trying to balance helping clients succeed while also trying to grow a sustainable business. And it hasn’t always been that way, even in our company’s short life.”

Learning the Hard Way

Corner Alliance had some growing pains in its early years. “We had a really tough time a few years ago when we lost a project that led to a serious financial struggle,” Ron confided. “I, along with my partner, Alan, and our Director of Operations, Brandi Greygor, responded in typical ways. Privately, we talked daily about how much money we had left in the company’s line of credit and what to do if we maxed out what the bank would loan us. Publicly, we sent a general message to staff that we all needed to ‘increase billability’ but we were afraid to state the full reason.

“We thought we were doing the right thing by keeping the true stress from our staff. The MBA books say it’s important to protect the people from the stress of running the business. And the HR consultants told us we had to follow proper procedures to avoid lawsuits if we did have to lay people off. So we kept things hidden.”

Going contrary to conventional business wisdom, Ron and the other principals listened to their own inner wisdom. “It’s not how our guts said to handle it. We faced a real inner conflict every day for months. How do you form a company of trust and transparency when it seems like all the advice you get—from grad school, friends, lawyers, and more—says to withhold information?

“Looking back,” Ron said, “I grew more personally from that very tough time than from every great year I had. While it was hard, the learning from those six months led to one of the most positive and significant turning points for Corner Alliance.”

Eat Your Own Dog Food

Out of the crisis came a big transformation for the company. “With cost-cutting, along with full transparency with our staff, we managed to stabilize our operations,” Ron said, “And we realized that, on the heels of such a hard and painful time, we had a real opportunity to fundamentally re-think and re-vision.

“So Alan and I announced to our staff that he and I would map out a new company strategy,” Ron elaborated, “including our top three strategic priorities. We told people at an all-hands meeting that we’d start by focusing on which clients to talk to and what to offer them. That message landed with a thud. Within the first few minutes of the meeting it was clear we had made a huge mistake and needed to rethink the approach.

“Our people said, ‘That’s not how we advise our clients to develop strategy. So why are we doing it that way?’”

That uh-oh moment led to a dramatically different plan to create the company’s strategy. “We realized we’d be stronger if we engaged the whole company in the company,” Ron continued. “And instead of starting with what we do and where we want to go, we started with who we are and what we wanted to stand for as a company,” Ron explained.


Put Values First

The group put first things first. “We focused first on our values, and to do that we created a conversation rather than creating a task,” Ron said. “We also found a way to make it a truly collaborative process, not just a collaborative process led by one person. We’ve never been about one-person trust—not at our core—so we found a way to define our values that would reflect that we all have to trust everyone else in the company.

“Since we’re a virtual company with staff in five different states, we selected an on-line tool to help us create the conversation. Everyone could contribute real-time, see each other’s inputs, make comments, and vote.”

Take Your Time

The process of defining yourself takes time Ron learned. “We allowed three weeks to generate ideas, and it took us about four months to solidify our values. If we had tried to get results in a one-day strategy session, our output would have been more generic—even with everyone participating,” Ron added. “People needed time to digest and think through what they stood for and then internalize that in relation to the company. The elapsed time allowed people to contribute at their best, and allowed the most important things to materialize organically.”

They ended up with 10 explicitly stated corporate values that are the foundation on which Corner Alliance continues to be built. Not surprisingly, “Eat our own dog food” was on the short list.

It’s a value that Sarah especially endorses. “We live that value even beyond our approach to strategy development,” she added. “Everyone takes turns running our internal meetings—everyone. We share leadership that way, and expand our capacity as leaders and facilitators at the same time. People get to experiment, practice, and learn in a safe environment, and they get real-time feedback. Just like the leaders we serve, we have to be willing to take risks and make mistakes to learn.”

Sarah continued, “It’s okay for things not to go well. What’s not okay is not learning from it. One of the greatest gifts we give each other is feedback. We are deliberate about creating a culture where we all recognize we’re both perfect and imperfect, where we can bring our whole selves—who we are and who we aren’t.”

Tell It Like It Is

Financial transparency is another key value that emerged from Corner Alliance’s collaborative strategy process. “Alan was instrumental in moving us to open-books management,” Ron said. “We now share just about everything with all employees every quarter, the exception being salary information. We have bi-weekly company-wide calls where everyone sees each other’s billability, our revenue, where we are exceeding or falling short of revenue projections.  We don’t hide anything bad or anything good.”

Ron is clear that the effect is palpable. “It has made a massive difference in everyone understanding the business impact of their decisions,” he stated. “It also supports one of our other corporate values, which is sustainability. I believe the whole firm really understands the state of Corner Alliance and can see that we have a really strong foundation for growth right now.”

Be Bold with Clients

That kind of transparency also now extends to Corner Alliance clients—in a bold and differentiated way. The stated value “inner voice” is about people sharing their internal dialog as much as possible, recognizing that’s often where the truth lies. Corner Alliance staff is encouraged to not leave important things unsaid.

“This is definitely not easy,” Ron emphasized. “It takes a commitment to practice over time with our clients and with each other. We actually label it, as in, ‘Using my inner voice, I’d like to say I think there are serious organizational risks associated with what you are considering.’ This makes it easier to do and hear as the person listening now knows that the person speaking is taking a risk.

“Our people know they’ve got the organization behind them every time they venture into inner voice territory,” Ron affirmed. “As Alan points out about using inner voice, ‘It’s a personal risk to reveal what you’re thinking but not saying. It’s a risk to the organization if you don’t.’ But we all also recognize it’s important to apply this value wisely, appropriately, and thoughtfully.”

Perhaps the most unexpected result from this dedication to speaking the truth is that clients have begun to pick up both the practice and the lingo. Ron explained, “When our clients started saying to us, ‘My inner voice is saying xyz,’ we knew we were onto something bigger.”

Reap the Rewards

The list of indicators that Corner Alliance is onto something is long, and now includes growing staff, secure multi-year prime contracts in place, and work with key government executives who have budgets in the billions. “Corner Alliance is poised for an incredible year in 2012,” Ron said with pride. “Not only are we making a difference in the business of government, but we get emails from clients saying, ‘You’ve changed my life.’”

The focus for 2012? “Helping people thrive by doing creative, meaningful work, and living the life they want—not just the work life they want,” said Ron.

The Bottom Line

Ron feels very strongly that what Corner Alliance has created was not led by or done by one person. “Featuring me for this article is actually counter to our culture,” Ron stressed. “Corner Alliance has been led by a collaborative approach using values as our core, and that’s precisely what will lead us into the future.”

And a promising future it is.

Connect with Ron on LinkedIn.

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The Real People, Real Trust series offers an insider view into the challenges, successes, and make-it-or-break-it moments of people from all corners of the world who are leading with trust. Check out our prior posts: read about Chip Grizzard: A CEO You Should Know; Ralph Catillo: How One Account Executive Stands Apart; Anna Dutton: A Fresh Perspective on Sales Operations; Heber Sambucetti: A Learning Consultant’s Approach to Leadership; Janet Andrews: What Trust-based Strategy Consulting Looks, Feels, and Sounds Like, and John Dunn: An Entrepreneur Wins with Partnership.

 

Solving Knowledge Management with Speed Dating: Interview with Clay Hebert

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Most corporate discussions about knowledge management (KM) are about databases, software, and IT. One mid-sized law firm I know took a different approach – getting partners to interact over lunch. It was very effective.

It turns out the 1-to-1 nature of speed dating is perfect for mega-companies that want to improve KM.

That’s the kind of insight Clay Hebert has come up with. I met with him recently in his coffee-shop office so far on the West Side of Manhattan it might as well be in the Hudson. Here are excerpts.

Charlie: We’ll get to the speed-dating thing soon; but first, how’d you get to this point?

Clay: The quick story? I spent ten years at Accenture, a massive consulting company. Even though I was surrounded by smart, hard-working people, the work wasn’t stimulating. I was a “Mac” soul stuck in a “PC” company.

In January of 2009, I had my big break. My business hero Seth Godin offered a unique and exclusive MBA program, and I was accepted. There were more than 500 applicants and I was one of nine who were chosen. For six months, nine of us sat around a table in Seth’s office learning from the marketing master (and each other). It completely changed my life. After that, there’s no way I could go back to corporate America.

Now, I’m building a technology startup called Spindows.com – an enterprise video chat platform that will change the way organizations collaborate and share knowledge.

Sharing Knowledge

Charlie: I hear collaboration, I hear video-chat; I can infer speed-dating, I think. But tell me more.

Clay: After a decade at Accenture, I only knew about 100 colleagues, 1/20th of 1% of the company. This is astonishingly inefficient when you think about the skills and expertise that should be shared across the organization.

The single most valuable asset for most companies is the knowledge of its employees. Most companies understand this, but their current KM solutions consist of clunky file-shares and databases.

It’s a tremendous opportunity wasted.

Charlie: You’re right, it is an astonishing waste; every big company I know reverts to massive databases then worries about incentives to get people to load the data, or hires support staff to do it.  Lately, they’re all trying various social media. But it’s still kind of artificial, or time-consuming, or just not interesting.

So, what’s the answer?

Clay: Well, I’m hoping Spindows will be at least part of the answer.

There are three main problems with the current KM process:

    1. You need high quality information
    2. You need that information input into a system in a timely manner
    3. Other employees need to be able to find it.

In short, the KM process is broken due to quality, speed, and search. Here’s an example of each:

    1. Quality – Here’s a common KM scenario: the lowest level analyst or intern gets assigned the task of uploading project summary documents to a database or file-share. There is limited correlation between these often-insipid documents and the true learnings from the project. The KM process itself is treated like an administrative burden instead of a golden opportunity.
    2. Speed – This process often happens at the end of a long project. If anyone does find the information, it’s outdated at best. In our fast-paced world, knowledge transfer should happen in real-time, or close to it.
    3. Search – The search algorithms to find the knowledge are woefully inadequate. I recently heard that one big consulting firm actually outsourced these searches of their own KM systems to an outside vendor. Think about that for a second. The search algorithms are so bad that they pay a third party to help find their own internal information. Now that’s broken.

Spindows cures these three problems, through a video speed-networking platform where you rapidly meet relevant people in your own organization via a series of quick 1-on-1 video chats.

First, everyone fills out a user profile with simple attributes (tags) that describe their knowledge and skills as well as things like their title, industry and personal interests.

A Spindow is a completely new kind of meeting. Instead of inviting people, you invite these tags or attributes. Anyone matching these tags is invited to attend the session.

In the Spindow itself, the 1-to-1 video interactions are rapid and timed, say 4 minutes each, so at the end of a one-hour Spindow, you’ve met 15 relevant colleagues. By attending just one Spindow per week, over the course of a year, you can meet everyone in a 780 person division.

Spindows reduces friction and increases serendipity by being the easiest way to find and connect with relevant colleagues.

Charlie: Wow, very cool indeed! Where do you stand in terms of status? Have you gotten written up? Funded? Testing?

Clay: Spindows has received some great press from Business Insider, and excellent feedback from events like Startup Riot, Startup Camp, and Under 30 CEO’s startup pitch event, where we scored second place.

We’re thrilled. Right now we’re working with a minimum-viable product (MVP). It’s functional, and we’ve done some testing.

Going forward, we plan to invite a select group of early enterprise customers to try the product at discounted pricing. This is win-win because the early adopters will be allowed to take advantage of this great new technology before it’s available to the public. And it’s great for us because that early customer feedback will allow us to shape the product direction and roadmap.

Trust Works

Charlie: Let’s talk about why this makes so much sense. In my view, it’s allows super-high bandwidth – human interaction – in a socially acceptable casual wrapper. You can be ‘promiscuous’ with your interactions, and still get far deeper than if you just relied on databases and social media. You’re talking to real people. This has tons to do with trust.

Clay: Exactly. You’ve nailed it. I believe people will be more open and trustworthy when talking directly to their colleagues. We’re combining high bandwidth human interaction with big data and analytics. Companies will be able to track how many Spindows someone has participated in, who they have met and, who they still need to meet.

We’re working with PhD’s at Wharton to design valid tests to track how quickly the expertise tags are spreading throughout the organization, effectively proving that trust leads to better KM.

Charlie: Speaking of trust: you’re a heavy user of Airbnb, a Sharing Economy business whereby you rent out your apartment to others, and vice versa. Do you worry about people trashing your apartment? How do you prevent that?

Clay: It’s all about trust. Before they arrive, we establish a personal bond with the people who use our place. Before they come, we ask them what DVD’s they’d like us to get for them on Netflix. We leave a bottle of wine and neon Post-It notes all around the apartment encouraging them to drink the wine, read our books, surf the internet, etc.

We write notes to people on our white board and they always leave us notes when they leave, usually describing what they did on their trip. Airbnb is extremely safe in general, but these extra steps make the interaction inescapably, richly human.

Charlie: This is great social proof of “the best way to make someone trustworthy is to trust them.” Trustworthiness and trusting-ness are intertwined –

Clay: – You get what you give –

Charlie: – and each is both cause and effect.

Clay: – and you want to give what you get.

Charlie: Clay, no wonder you’re a leader in some of the new social media arenas. Next time we’ll talk about your experiences in some of the New York incubator labs for new technologies.

Clay: Can’t wait!

Attract! Attract! Why Attract is the New Retain

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The mantra of “attract and retain” has been around the HR community – and its general management constituency – even longer than the unfortunate rush to refer to people as “talent.”

It used to make sense. But it doesn’t anymore and the implications are significant.

Why Retention?

It’s been awhile since anyone dusted off the basic retention rationale, so let’s review the bidding. Here are some commonly stated reasons why companies should pursue employee retention:

  1. It costs more to hire than to retain people
  2. The more experienced the hire, the more it costs to retrain replacements
  3. Experienced employees know the ropes, the lingo, how things are done
  4. Experienced employees form deeper relationships with customers
  5. Retained employees are motivated, which helps customer relationships.

Of course, a few of these tenets were always subject to qualification – number 5, for example. Longevity can just as easily drive complacency and myopia as well as it can drive motivation.

But that’s not the Big Story. The Big Story lies in the assumptions underlying all five of those beliefs. Those assumptions are:

  1. the benefits of retention increase in direct proportion to longevity, and
  2. the pace at which new employees become productive is relatively fixed.

Both beliefs are looking a lot less true these days.

What’s Changed?

Two things have changed: work and people.

Work. Work has become outsourced, modular, plug-compatible, horizontal, contracted, bite-sized, for-hire, project-based. Employers shun fixed costs and value flexibility.

This is partly because they can: technology has made work-sourcing a global phenomenon, freed from space and time. It’s also partly because they have to: global sourcing means competitiveness is also global. The global economy has undergone a massive make/buy analysis and has come down heavily on the “buy” choice. If you’re not working with the world’s best/lowest cost doer of some key task, then you’re at a disadvantage.

The nature of work has shifted from a “job” focus to a “project” or “task” focus. Employers no longer need “someone who can do…” but rather “someone who has done, and will do…”  The new work model is not semi-permanent vertical employer silos of people; it is the model used by the film industry and by consultants, a constantly shifting nexus of tasks and resources.

Recruitment comes to resemble an ongoing speed-dating event.

People. I think we’re finally past decrying the lack of employee “loyalty;” it’s so last millennium.  People are “loyal” to their professions, their technologies, maybe their customers – but not to the constantly morphing corporate entities that sign their paychecks.

The skills of the new generation have evolved to fit the new workplace. The Facebook generation, adept at mass-scale peer relationships, doesn’t relate well to authority, no matter which side of the relationship they’re on. Geography? Twitter is everywhere and while not every 20-something can afford time in Europe, they all know someone who can and does, and can all Skype it and tweet it 24-7 in the meantime.

The oldsters may not like the verbal promiscuity of “friending,” but it fits perfectly with the new workplace. While society may pay a price in the dearth of deep, vertical relationships, the market place is demanding breadth.

Attraction and Retention Redux

Let’s put these trends together. What the economy needs, and what people are organizing to offer, is the ability to form relationships at the speed of transactions.

To companies, the attractive employees are not those with deep potential; they are those who can hit the ground running in a plug-compatible world, instantly connecting with thousands of like-minded peers within the company and without.

To people, the attractive employers are not those who offer long-term “commitments” (usually just relationship-disguised transactional offers anyway) but those who offer the ability to be instantly productive, while offering personal growth opportunities in the form of autonomy and new activities.

There is an obvious match here. What is no longer obvious is the relevance of “retention.”

Why would an employer want to retain people when the changing market requires ever-changing skills that can be bought quickly with precision rather than trained over time with generality?

Why would an employee want to be retained, when (s)he can find ever-changing opportunities to gain experience in a world thousands of times bigger than one employer alone could ever hope to offer?

Attract! Attract! Three New Strategies for Companies

The above are massive trends. The trend is your friend. The challenge is to ride the trend, not fight it. Here are three strategies for doing so:

1. Aim for zero cost onboarding and training. Zero works well as a stretch goal, but it’s not enough. How can you get people to pay you to join your company? (This is not as crazy as it sounds: how much do people pay to go to Harvard? So, become the “Harvard of YourNiche.”)

2. Reverse-hire search firms. Tell Russell Reynolds you want every employee to get one bonafide offer from an outside firm every year to keep them motivated. If they stay with you, they have re-upped, and become re-attracted. If they leave, you can choose either to recalibrate your attractions program, or wish the employee well and let them tell the market how employee-dedicated you are. (This is not as crazy as it sounds; Tony Hsieh already does a version of this at Zappos, paying people not to take a job offer).

3. Up your knowledge management game. Tenure is such an expensive way to gain company knowledge. Figure out how to make it available to every employee, from day one.

And don’t assume that means AI and databases. Try the same thing that works in the outside world: massive horizontal networking. Invent intra-LinkedIn and Intra-Tweet. (This is not as crazy as it sounds; Clay Hebert is working on SpinDows)

Attract and retain? That sounds like a motto for a roach motel. The new mantra is Attract! Attract!

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Many Trusted Advisor programs now offer CPE credits.  Please call Tracey DelCamp for more information at 856-981-5268–or drop us a note @ [email protected].

25 Warning Signs You Have a Low-Trust Organization: Part 5 of 5

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If your customers and clients tell you they don’t trust you, things have gotten bad. But you could have seen it coming. There were many early-warning signs of low trust in your organization.

This is the last in a series of five. The other posts address warning signs of low-trust organizations coming from:

How Your Clients and Customers Tell You You’re Low-Trust

It’s almost inconceivable that a high-trust organization will have low-trust relationships with its clients or customers. And that works in reverse: low-trust buyer relationships are a tip-off that something is amiss internally as well. Sometimes it’s easier to read the external signals, so here they are:

1.    Your colleagues speak disparagingly of your customers.

  • “They’re trying to pull a fast one on us; we can’t let them get away with it.” Whoa, simmer down. People who ascribe negative motives to customers’ actions without data, will generally do the same within the organization.  With all due respect to Andy Grove, paranoia is rarely a good corporate value to promote.
  • “I’ll believe it when I get it in writing.” If your people insist on contractual, legalistic relationships with customers, they’ll do the same internally. And since trust greatly reduces time and costs, that attitude is costing you dearly, internally as well as externally.

2.    You haven’t gotten a new referral client in 6 months.

  • This is such a key concept that it has been quantitatively refined (brilliantly) in the Net Promoter Score first developed by Bain’s Reichheld and Markey. At its heart: the single metric that best correlates with success is your clients’ tendency to promote you.
  • If you have great referrals, you almost certainly have delighted customers and energized employees. And that rarely happens without great levels of trust within the organization.

3.    You’re losing customers and don’t really know why.

  • Look at your customer list: is it basically growing or shrinking? Come on, you know the answer, pick one.
  • Now ask yourself: do I really know why that is? Or do I have a list of anecdotal, seemingly unrelated reasons? The CEO left; that guy’s a complete jerk; they decided to go with the low-price provider; they’re rationalizing suppliers.
  • That is not an unrelated list, after all. The common denominator is, they don’t trust you. And if your customers don’t trust you, the odds are remote that you live in a high-trust organization.

4.    You’re being asked to submit bids and respond to RFPs for long-time clients.

  • We don’t want to be dogmatic about this one: there is a long-term, secular trend toward professional procurement. That trend is not Evil incarnate; the procurement people are your new clients. Treat them as such, respectfully.
  • However: if YourCo seems to be singled out for this treatment, if it’s not a slow trend but a landslide for you, then maybe the market is telling you something. It’s telling you you’re not trusted. If you were trusted, you’d be seeing many fewer RFPs, you’d be getting sole-sourced where reasonable, you’d be getting in to define some RFPs, and you’d be getting some very personal coaching from the customer about how to operate in the new procurement world.
  • That’s not happening? Then odds are, your customers don’t trust you. They’ve never been shown the difference between genuine concern and manipulation. They’d prefer to deal at arms-length, with professional buyers who are immune to emotional bullying and enticement alike. They prefer to deal on price, because they haven’t been shown any good reason to deal on any other basis.
  • And if you’re quoting on price, using self-oriented sales tactics with your customers, then you probably don’t respect your own products, value and organization. Sounds like low-trust.

We hope you’ve enjoyed this little series on warning signs of a low-trust organization. Writing it has reminded us of two things:

1.    Trust is infectious. A high-trust organization is highly correlated with high performance on so many dimensions: innovation, people, leadership, products, and markets.

2.    Trust begins at home. Correlation is not causality, but causality is clearly at work in trust. Furthermore, it flows more in certain ways than in others. In very broad terms, the five factors we’ve discussed move in the following manner to create a high-trust organization.

It generally starts with leadership; but that’s a different series for another time.