Technology Transformation vs. Trust

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Is technology killing trust in your organization? Are we heading for a dehumanized, low-trust business world?  Can technology itself come up with trust-enhancing ways to guard against this trend?

I’m getting asked these questions lately. And while there’s some merit to the question as framed, the news is not nearly as bad as it sounds – provided we remember a few basics.

The Technological Threat to Trust

Think of your own business – how is it being affected by:

  • Social collaboration
  • Big data/analytics
  • Mobility
  • The cloud
  • CRM
  • Process automation
  • Robotics
  • Internet of Things
  • 3d Printing
  • Cognitive systems
  • Blockchain
  • Digital wallets
  • P2P lending
  • Crowdfunding
  • RoboPlanning

Since trust is largely personal – so the logic goes – and the thrust of most of those technologies is to reduce the human connection, if not eliminate it entirely, then we must be heading into a dangerously low-trust future.

  • How can you trust a robo-planner the way you trusted a CFP?  Alternatively, maybe the robo-planner is actually more trustworthy?
  • How can you establish customer relationships when the customer has walked themself through half the buying process online without speaking to anyone? And what if the customer no longer wants those relationships?
  • What happens to trust when my firm automates a process? Doesn’t going from trusting a person to trusting a process create an inherent reduction in trust?

What We Forget

In this way of framing the problem, we forget two major offsetting benefits of technology – each a significant cause for optimism.

The Tradeoff.

The most obvious is that there is trust, and there is trust. In particular, there is “soft” and “hard” trust. These correspond to the Trust Equation components as follows:

“Soft trust” — Intimacy and Self-Orientation

“Hard trust” — Credibility and Reliability

In many of the technologies we talk about, there is a direct trust trade-off. What we lose in human contact, we often gain in reliability (in particular). It wasn’t that long ago that people stood in lines to get cash from their checking accounts. You had to walk a distance; banking hours were restricted; and you never knew how long the lines would be.

Would anyone – bank or customer – ever want to give back the freedom that ATMs gave us? In trading off the polite chit-chat with your friendly neighborhood teller, you got reliable convenience, reliably availability, (pretty) short lines, and reliable accuracy.  A net plus.

Such is often the case with automation, CRM, the cloud, and other technologies. What we lose in one part of trust, we gain with another.

The Multi-part Solution.

The least obvious offsetting benefit is that all the technologies above have not affected by one iota the basic biology of humans. We still are complex,  non-linear, and emotionally-driven in our fundamental approach to people, risks, relationships, and business. Neither Steve Jobs nor Stephen Hawking have come anywhere near close to rewiring humans.

And humans have always resisted purely logical reasoning. Whether you prefer the observations of Daniel Kahnemann or of StarTrek’s Dr. Spock, we like to make decisions based on emotion – then rationalize them after the fact with linear logic.

–We buy with the heart, and justify it with the brain.

–We don’t care what people know until we know that they care.

–The fastest way to make a man trustworthy is to trust him.

What does this mean for the technology v. trust conundrum? Plenty. It means that it’s impossible to engineer out all “soft” trust in most situations – we humanly resist it.  And if we have less of an opportunity for ‘soft trust’ creation, then the entire weight of the soft trust creation will rest on the few remaining opportunities for interaction.

In other words – fewer trust opportunities does NOT mean lower trust – it means more trust weight and emphasis being placed on fewer personal interactions. The trust-importance of those interactions is actually increased, not decreased.

Trust Design Implications

What’s to be done? There are two false solutions, and two better ones.

  1. The technical temptation. It’s tempting to ask technology to solve its own problem, but it’s nearly always the wrong answer. More metrics won’t help if your values are wrong (see Fargo, Wells). Customer sat surveys are as bloodless as the technologies they’re deployed to measure. And no matter our Hals, Siris, and Alexas, we know they’re not ‘soft,’ they’re just software. You can’t get intimate with an avatar (yet, anyway).
  1. The specialist temptation. Similarly, it’s tempting to view technologists as hopeless cases, and to bring in a special squad (group, team, unit) whose job it is to do trust. Wrong: you’re far better off training technologists to get a little better at trust than you are training poetry majors to talk to technology clients. Anyway, you can’t fix a technologist’s low trust by pointing to someone else’s high trust.
  1. The transparency solution. However, technology can help in two particular ways. One is simply to leverage the informational power of technology, and move radically in the direction of transparency.

The reason is simple. A big component of people’s trust is whether they think you have something to hide. That is true at the personal and the institutional level. If we sense that the person, process or organization has no axe to grind, no hidden agendas, and no secrets, then we are inclined to trust them.

This kind of transparency is evident even before we meet someone – in our website designs, in our employee and customer policies, in our public responses.  In an evolving world, when we start by assuming confidentiality, we are setting ourselves up for failure. The right beginning question is “Why shouldn’t we be sharing this?”

  1. The design solution. A technical world is one in which users have power. Users include employees, customers, suppliers, neighbors. Most cases are not like the ATM, where zero contact is required. In most cases, some contact is required.  The key is to give the participant maximum power over the timing and nature of that contact.

In a sales process, this means make everything feasible available without personal contact – eg. online. Then, when the customer gets to the inevitable point where they actually need, and want, a real-person interaction, make that interaction available:

  1. immediately (e.g. within a click for text support, two rings if phone)
  2. with high quality (i.e. a qualified, unscripted support person authorized to talk.

Digitization is not immutably opposed to trust – we’re just not thinking about it rightly. The challenge is for us to get better at trust in the remaining interpersonal situations, and to design the non-personal interactions in ways that respect our analog nature.

 

 

 

Trust Takes a Long Time to Create, a Short Time to Destroy. Not.

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There are two kinds of mistakes we make with trust. One is to trust mistakenly – the other is to fail to trust at all. One is a failure of commission, the other a failure of omission.

The former gets all the press – but it’s the latter that is the bigger problem.

Let me explain.

——

One of the bigger myths about trust this one: “Trust takes a long time to create, but only a moment to destroy.” There’s no need to name names here, but you can see examples of it here and here and here and here.

Here’s why that myth isn’t merely annoying, but positively harmful as well.

The Truth.

Let’s start with the truth. Most human relationships, like most emotions, take roughly as long to get over as they took to develop. Marriages or friendships don’t end overnight. There may be a flash point, a straw that breaks the camel’s back. But we cut slack for people we trust. We don’t dump them abruptly.

If trust were lost in a minute, many victims of relationship abuse would leave their abuser at the first incident; but things are often a little more complicated than that.

If trust died quickly, the SEC would have investigated Bernie Madoff when Harry Markopolos first lodged charges against him. If trust died quickly, the steady drip drip drip of evidence at Penn State, Enron, and Wells Fargo would have ended at the first drip.

Most examples of “trust lost quickly” turn out to be either just the last drip in a long series of drips – or a delusion about trust’s existence in the first place (you don’t “violate the trust” of a subscriber to your email list by sending them a worthless referral; the relationship you have with a name on your email list may be many things, but “trust-based” is probably a stretch).

Trust formed quickly can be lost quickly; trust formed at a shallow level can be lost at the same level.  But trust formed deeply, or over time, takes deeper violations, or a longer time, to be lost. The pattern looks more like a standard bell curve than a cliff.

But, you might say, so what?  Why is that harmful? What’s the big deal? 

The Harm.

If you believe that trust can be lost in a moment, then you likely believe you must be cautious and careful about protecting it. You are likely to think about trust as a precious resource to be guarded against being tarnished. You are inclined to institute rules and procedures to protect it and to give cautionary lectures about the risk of losing trust.

Yet these are precisely the kinds of behavior that result in trust lost.

I don’t trust the man who talks with me while pointing a gun at me‬ – partly because he looks threatening to me, but also because he clearly does not trust me.

Trust, at a personal level, is like love and hate: you tend to get back what you put out. You empower what you fear. Those afraid of getting burned are the most likely to get burned.

This works at a corporate level too. I remember vividly the convenience store chain that gave monthly lie detector tests to store managers to prevent theft – and then wondered why the theft kept on happening.

I recently heard from a company wanting to modify the Trust Equation by “toning down” the component called Intimacy to something more bland, like affability or good manners. Why? They didn’t want to be seen as encouraging employees to have sexual liaisons with customers. This falls in the same category with multi-paragraph email signature caveats, and the fine print on retail customer receipts. Fear of trust not only doesn’t save trust – it actually causes low trust.

Trust is a Muscle.

Thinking of trust as something you can lose in a minute makes you cautious and unlikely to take risks. But the absence of risk is what starves trust. There simply is no trust without risk – that’s why they call it trust.

If your people aren’t empowered, if they’re always afraid of being second-guessed, then they will always operate from fear and never take a risk – and as a result, will never be trusted.

Trust is a muscle – it atrophies without use. And the repetition of the mantra “trust can be lost in a moment” just tells people not to use it.

Turns out the stupidest, craziest trust is the trust you never engaged in because you were too afraid of losing it. The smartest trust is the trust you create by taking a risk.

Interview with Barbara Kimmel of Trust Across America – Trust Across the World

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Today’s interview is with a significant player in the world of those who seek to improve trust in the business world – Barbara Kimmel. Barbara is CEO and co-founder of Trust Across America – Trust Across the World. She is also the co-creator of the proprietary FACTS® Framework – a unique methodology measuring the trustworthiness of public companies. We focus on FACTS in this interview.

Charlie Green: Barbara, welcome to Trust Matters, and thanks for sharing your insights with us. First, you founded Trust Across America – Trust Across the World. What is that, and what do you do?

Barbara Kimmel: Thanks for having me, Charlie. TAA-TAW’s mission is to help organizations build trust. We’re in our seventh year now. Our proprietary FACTS® Framework ranks and measures the trustworthiness of over 1500 of the largest US public companies on five quantitative indicators of trust. I also run the global Trust Alliance, am the editor of the award winning TRUST INC. book series and am a Managing Member at FACTS® Asset Management, a NJ registered investment advisor.

The FACTS Model

CG: OK, let’s get into FACTS®. Just what is it (and what do the letters stand for)?

BK: FACTS® is an acronym covering Financial Stability, Accounting Conservativeness, Corporate Governance, Transparency and Sustainability. This multi-factor framework was developed by a cross-silo multidisciplinary team in the wake of the financial crisis in 2008. The Framework evolved by asking the same question of dozens of “siloized” professionals from leadership, compliance and ethics, legal, accounting, finance, HR, consulting, CSR, sustainability, etc. “What do you consider an indicator of corporate integrity or trust “worthiness” that can be independently and quantitatively measured without requiring the input of the organization itself? 

While every professional had a different perspective, the same indicators were repeatedly mentioned within each silo. The governance professionals pointed to board composition and compensation policies. Those in finance pointed to stable earnings, and so on. By blending these indicators of corporate trustworthiness into a spreadsheet, the first quantitative measure of organizational integrity and trust was created.

CG: How many metrics in total are subsumed in all those five major categories? And how did you weight the categories?

BK: In all there are approximately 200 specific distinct metrics. The five categories are equally weighted.

CG: Can you give me a current example of the model’s applicability?

BK: Corporate leaders who want to be proactive about building and communicating trust across all stakeholder categories, or who want to avoid the next crisis can use our data to discover their organizations’ strengths (and weaknesses). Because our data is holistic and does not rely on employee surveys or questionnaires, it makes glaringly apparent where and why the Wells Fargo and Enron-like “risk” often lays hidden in the 1500+ public companies evaluated on an annual basis.  A company might have a high score in 4 out of 5 FACTS indicators and a low score in the 5th. Digging further into our data allows us to identify the cause of the low score and often this is a red flag that should not be ignored by leadership.

Third parties including major consulting firms, investment managers and associations are also requesting information. After 7 years, the FACTS Framework continues to make a solid case for the elusive link between trustworthiness and profitability.

In 2008 The Economist published a briefing paper sponsored by Cisco, called “The Role of Trust in Business Collaboration” stating that “tens of millions of dollars had been spent evaluating corporate governance – but a definition of corporate trust continues to elude us.” We at Trust Across America took on that challenge. What if the most trust “worthy” companies could be identified? That’s what we set out to do.

What FACTS Says

CG: What does FACTS tell us?

BK: Now with seven years of unique and compelling data, FACTS® data tells us which companies are doing more than just “talking trust.” It also shows us high-risk companies that may be the next to make the news. The majority of companies and their leaders still think that integrity and trust are soft and immeasurable skills, and don’t consider integrating trust-related data from one corporate silo to the next.

Balancing long-term value creation against the need to “maximize earnings” and meet the always-looming quarterly numbers is hard work. Waiting until the next expensive corporate crisis will afford leadership the opportunity to talk about the importance of integrity and trust, and how measures will be implemented to safeguard against future missteps. Implementing measures to increase the organization’s level of trust before the crisis is a proactive business strategy requiring both a 21st century mindset and the right tools.

CG: What about the long-questioned link between Doing Good and Doing Well: does it exist? Are highly trustworthy companies more profitable, or more successful in general, than lower-trust-rated companies? Or is it just a soft fluffy wish?

BK: Good question Charlie. With over 7 years of data on the trustworthiness of 1500+ of the largest US public companies, and three years of audited performance against the S&P 500, evidence is mounting that the most trustworthy companies are in fact more profitable over the long-term, and certainly less likely to have a Wells Fargo like blow up. Our data reveals many similar patterns like CEO tenure, board diversity, a commitment to ethical business and all stakeholders, not just shareholders. You may call it Doing Good and Doing Well, we call it “Value with Values.”

Trust Research

CG: Where does FACTS fit in the scheme of trust research?

BK: I don’t know that it does “fit.” Much of the trust research appears to rely on qualitative surveys, not quantitative metrics.  We are unique in that regard.

CG: Well, let me toot your horn for you a bit. I don’t know of any other research that combines rigorous definitions, seriously vetted data, a breadth of subjects and a 7-year-plus timeframe anywhere near as much as does the FACTS data.

In what form do you make it available to researchers, companies or individuals today? How can people reach out to you?

BK: We share many free resources on our website including our findings from our FACTS research. The data itself is proprietary and available for licensing. http://trustacrossamerica.com/about.shtml

CG: What do you see as key issues facing trust in organizations today?

BK: At both the individual and organizational level, trust is not only a tangible asset but also serves as a tiebreaker in every relationship. In most organizations, leaders take this asset for granted, viewing it as a “soft” skill or ignoring it completely. The assumption is high trust simply “exists” at the individual, team and organizational level.

Yet when integrity and trust are considered tangible assets and a business imperative, the following results are achieved:

  • Decisions are made faster and less expensively
  • Employees are more engaged and retention increases
  • Innovation is higher and occurs more quickly
  • Profitability increases

Convincing leaders of this remains a key issue.

CG: Let me push on that. If merely convincing them is the problem, then the FACTS data ought to solve the problem. I suspect that’s not the whole deal, however. Some if also lies in not knowing what to do about it. Can you speak to that?

BK: There is no single “department” that “owns” trust in an organization, so it tends to be either overlooked or taken for granted until there is a crisis. Then lots of money is dumped into trying to “restore” via crisis communications something that never existed in the first place.

But I really do think the main issue isn’t knowing what to do – it is, as I said, convincing leaders that it’s a problem. How hard was it to see that a culture of “hard-selling” retail banking products to unsophisticated consumers at Wells Fargo was trust-destroying and unethical? This is not a problem of insight, metrics or technical sophistication; this was willful moral blindness.

Leadership needs to be proactive about building trust and they need to own it. Only if they, and perhaps regulators, begin to take it seriously will organizations become more trustworthy.

CG: Barbara, many thanks for your time today, and best wishes to Trust Across America – Trust Across the World.

 

 

Tips, Tricks and Trust

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In the spirit of the season, I recently started thinking about a question I used to get asked frequently: what are some tricks to becoming more trusted?

Here’s the thing: Trust is a Treat. Not a trick.

Let me elaborate.

—

When I give seminars or training sessions, I often begin by asking for participants’ expectations. And reliably, at least one of the first few will say, “I’d just like to learn some tips and tricks to become more trusted.”

Tips and tricks to become more trusted.

My first reaction—which I’ve learned to stifle—is to think, “Who do you think you’re kidding! You’re not going to get anyone to trust you with some slick trick!”

Occasionally, if I’m feeling testy, I’ll ask the participant, “Tell me—when was the last time you went to a session like this where you actually got a great “tip” or “trick”—and what was it?” Usually, I get a panicked, blind stare.

But the truth is, who am I to get sarcastic? Because I do the exact same thing myself.  And, some of the most popular posts on this blog have been my  “trust tips” series.

When I listen to others’ DVDs or speeches or articles, I too am looking for that one little “aha!” that will give me some kind of great insight. And if not a great insight, I’ll settle for something that gives me an incremental nudge in the right direction.

Something that’s pretty easy to do.

So, it would seem that my attendees and I are all looking for the same thing. Ideas that are low investment and fast payback. In fact, we value those over high return. Fast, easy, and directionally right beats high ROI – if it requires high I.

But I’m not sure I’ve got it right, and I don’t want to give in too easily to the desire for “fast, easy and directionally right.” Not entirely anyway.

I do believe that becoming trustworthy is at least as much about mindset as it is about skillset. You actually have to change your attitude. You can’t fake it ‘til you make it, or just act your way into good thinking.

But since I’m guilty of the same desire—let me take the cotton out of my ears and put it in my mouth, and listen to you.

What’s the role of tips? What are some great “tips” you have heard? What made them great? And what is the right balance between serving up “tips” and the harder work of becoming trustworthy? Let’s get some dialogue going.

How (Not) to Ask for Recommendations, Referrals and References

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A while back I met a first-time author, who gave me a copy of their book. Shortly after, I got an email from the author’s publicist, saying:

“…We’d appreciate it if you would post your 5-star review of the book on Amazon…”

Now:

  • I don’t mind being asked to post a review of a book (though this ask was poorly done)
  • I don’t mind being asked by a publicist, as opposed to the author, if it’s done well (this was not)
  • But what frosts me is being told by a publicist what rating to assign the book – without even asking whether I’d read it, or even intended to read it.

Let’s break it down: what are the rules governing recommendations, referrals and references? And how many did the publicist violate?

How To Ask for a Favor

Rule Number One: Don’t ask for a favor – ask for the repayment of a favor already done.

The ideal way to promote your book is to start 6 months in advance by deciding whose help you’re going to want – and immediately start promoting them.  Comment on their blogposts; tweet their material; introduce them to others.

That way, when it comes time for your ask, they are simply discharging an obligation of etiquette, a favor they are more than happy to grant. (And lest this sound coldly utilitarian, note this is a description of what friends do for friends).

What’s true for books is true for referrals.  Haven’t done any favors for others lately? Then you’re going to come up short when you start trying to ask for favors.  Life is like that. Favors earned are favors granted.

Think that’s not fair? Wrong: it is very, very fair. It’s the essence of the matter.

 

Rule Number Two: Assume absolutely nothing.

Remember the saying, “Assume makes an ass of u and me.” Do not assume the person has the time, or the interest, or the inclination, to do you the favor you want.

In fact, make it clear you have no clue whether what you’re asking is reasonable. Say something like, “I realize this may be an inopportune time, or more complex than I realize, or there may be other reasons you can’t do this, and I assure you I don’t mean to be asking for an unnatural act on your part….”

By explicitly saying you’re not making assumptions, you give the other person all the degrees of freedom. You grant them several outs, should they choose to take them; you willfully give up the guilt-trip approach; and you humbly recognize that you are not in a position to judge them.

Let a favor be a favor, not a guilt-tinged, calculated script. A favor freely given is worth vastly more than an extracted behavior.

 

Rule Number Three: Don’t over-specify the favor. “Would you consider writing a review on Amazon?” is a perfectly reasonable statement. Asking that my review contain five stars is just insulting: it implies either that my ratings are for sale, or that I needn’t read the book to determine its value, both of which rankle the would-be favor giver.

“I’m not sure what the right next step would be, but would you mind having a look at Joseph’s resume?” That’s fine.  Compare it to, “I’d appreciate it you’d take Joseph’s phone call and meet with him, just for a half hour or so.” That’s over the line.

(A tour guide on the canal in Bruges, Belgium, after a delightful ride, said to me, “May I remind you the ten-franc tip is not included in the admission price.”).

 

Rule Number Four: Treat it like a big deal.  Because presumably it is. Which means, you won’t often ask it unless you’ve earned some favors in the favor bank already (see Rule Number One).

And if you have earned some favors – say so. You want to convey very clearly words to the effect of, “I value our relationship; it is strengthened by our mutual collaboration and reciprocal favor-doing. I don’t ask this favor lightly – and I don’t want you to treat it lightly. If you agree you can return this favor to me – or do this favor and I’ll owe you big-time – then we will be that much closer going forward. That’s how I look at this favor; how about you?”

Of course, those are not the words you’ll use; you’ll use words that are right for you.  But they’d better convey that kind of intent.

————-

A favor asked and given is an invitation to a deeper relationship. Don’t be cheap in granting favors; and don’t be promiscuous in asking for them.

Referrals, references, recommendations; all follow another “R” word – reciprocity. What you give, you get. What you don’t give, you won’t get. To get, give. Pay it forward isn’t some dumb movie line – it’s how it all works.

Finally – a word to those of you still reading who are rolling your eyes upward and saying, “Charlie, you don’t get how ratings are done these days – the agent is just playing the game the way the game works, and you’ve got to play it to be in it.”

  • Yes, that is how the game works – for the masses. But being like everyone else is inherently un-strategic; you succeed only in failing to differentiate yourself.
  • And no, you don’t have to play that game to be in it.  The Trusted Advisor, to my knowledge, never once made it to the top of the best-seller list – any best-seller list.  And yet – sixteen years after it was published – it still ranks about #5,000 on Amazon on any given day. Not bad for a business book up against Harry Potter and Fifty Shades of Gray. I’ll take 16 years in the #5,000 slot any day of the week against a one-shot “number one” ranking. Which is all the ‘game’ does for you.

Really being “in it” means consistently playing a long-term game of substantive favors given and favors received. That’s the only game ultimately worth playing.

Building the Trust-based Organization, Part II

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In last week’s “Building the Trust-based Organization Part I,” I suggested that approaches to trust at the organizational level fell into several categories. Like the parable of the blind men and the elephant, all captured some part of the puzzle, but none grasped the entirety of the issue.  The five categories I listed were:

1. Trust as communication
2. Trust as reputation
3. Trust as recipe
4. Trust as rule-making
5. Trust as shared value.

I suggested a holistic approach would have a Point of View, a Diagnosis, and a Prescription.  Here is my attempt at offering such an approach.

Organizational Trust: A Point of View

Trust relationships are asynchronous – one party, the trustor, is the one who does the trusting, and who takes the risks. The other party, the trustee, is the one whom we speak of as being trustworthy (or not). “Trust” is the result of a successful interaction between these two actors.

Trust is largely an interpersonal phenomenon. Trustworthiness is mostly personal, though we do speak of ‘trustworthy’ companies as having a track record or being reliable. Trusting, however, is a completely human action, not a corporate one.

Risk is necessary to trust: if risk is completely mitigated, we are left only with probability.

It follows that the most powerful meaning of “organizational trust” is not an organization that trusts or is trusted, but an organization that encourages personal trust relationships:

A trust-based organization is an organization which fosters and promotes the establishment of trust-based relationships between various stakeholders – employees, management, shareholders, customers, suppliers, and society.

Organizational Trust: Diagnosis

What is needed to create a trust-based organization? Since ‘trust’ is such a broad concept, it’s clear that themes like communications, regulations, and customer relationships will have a role. But to avoid a mere laundry list, what’s needed is some kind of primus inter pares relationship; or perhaps some necessary vs. sufficient distinctions.

My nomination is simple: an agreed-upon system of Virtues and Values. Virtues are personal, and represent the qualities sought out in employees and managers. Values are organizational, and reflect basic rules of relationship that ought to govern all relationships within the organization.

Some typical trust-based virtues include: candor, transparency, other-orientation, integrity, reliability, emotional intelligence, empathy.

I have suggested elsewhere Four Trust-based Organizational Values. They are expressed below in terms of customer relationships just to be specific, but they apply equally to relationships with suppliers, fellow-employees, and so forth.

  1. Lead with customer focus – for the sake of the customer. Begin interactions with other-focus rather than self-focus.
  2. Collaboration rather than self-orientation. Assume that the customer is a partner, not in opposition to us.  We are all, always, on the same side of the table.
  3. Live in the medium-to-long term, not the short term; interact with customers in relationship, not in transactional mode. Assume that all customers will be customers in perpetuity, with long memories.
  4. Use transparency as the default mode. Unless illegal or hurtful to others, share all information with customers as a general principle.

Advocates for Values.  I am not alone in citing Values as lying at the heart of the matter.McKinsey’s Marvin Bower put values at the center of his view of business, and McKinsey for many years was run from his mold. As Harvard Business School Dean McArthur said of Bower, “What made him a pioneer was that he took basic values into the business world.”

In 1953, Bower said, “…we don’t have rules, we have values…”

In 1974, he wrote, “One of the highest achievements in leadership is the ability to shape values in a way that builds successful institutions. At its most practical level, the benefit of a managed value system is that it guides the actions of all our people at all levels and in every part of our widespread empire.”

Bower’s biographer noted that Bower believed that “while financial considerations cannot be ignored, business goals must not be financial; if they are, the business will fail to serve its customers and ultimately enjoy less profit.”

The alumni of McKinsey – some, anyway – learned well. Harvey Golub said, “[values are] a powerful way to build a business…it worked for McKinsey and it worked for IDS and for American Express.”

IBM’s Lou Gerstner said: ‘“I believe that I learned from [Marvin] the importance of articulating a set of principles that drive people’s behavior and actions.”

[Note: McKinsey itself had some noticeable hiccups post-Bower. In my view, this is not an indictment of values-based management, but a sad example of how it requires constant values-vigilance].

The Case for Values.  The use of values as the basis for management is well-suited to the subject of trust, and this advantage shows up in numerous ways.

  • Values scale, in a way that performance management systems never can do.
  • Values are about relationships, in a way that incentives never can be; this makes them highly suitable to the subject matter of trust.
  • Values are infinitely teachable, in a way that value propositions or communications programs alone cannot aspire to.
  • Values are among the most un-copyable of competitive advantages.

Organizational Trust: Prescription

Managing a values-based organization will center around keeping the values vibrant. This is pointedly not done mainly through compensation and reward systems, corporate communications plans, or reputation management programs. Instead, it is done through the ways in which human beings have always influenced other human beings in relationship.  To name a few:

  1. Leading by example: trustworthy leaders show the way to their followers by their actions, not just their words
  2. Risk-taking: trusting others encourages them to be trustworthy, and, in turn, to themselves trust others
  3. Discussion: principles undiscussed are principles that die on the vine. Discussion, not one-to-many communication, is key to trust
  4. Ubiquitous articulation: trust principles should underpin many corporate decisions and actions; trust-creating leaders seize the opportunity for teaching points in every such case
  5. Recognition: Public praise for values well-lived is intrinsically motivating
  6. Confrontation: Trust-building leaders do not hesitate to overrule business decisions if they violate values, and to do so publicly in ways that teach lessons. Values, not value, are the ultimate arbiter of all actions.

To sum up: it’s a simple concept. Trust in a corporate setting is achieved by building trust-based organizations. Trust-based organizations are built to consciously increase the levels of trusting and of trustworthiness in all organizational relationships. The best approach to creating such an organization is values-based management and leadership. This is different from most approaches to management and leadership in vogue today.

The quotes about Marvin Bower were taken from:
Edersheim, Elizabeth Haas (2007-12-10). McKinsey’s Marvin Bower: Vision, Leadership, and the Creation of Management Consulting. Wiley.

 

Trust is Not Reputation

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Four words can have a big impact: Trust is not reputation.

But what does that mean? This year especially it seems the two words have been thrown around interchangeably for some time.

I took a look back at the last time I addressed the difference of the two words and how their definitions got confused along the way.

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I trust my dog with my life – but not with my ham sandwich.

That is but one of dozens of humorous ways to indicate the multiple meanings we attach to the word “trust.” It’s remarkable how good we are at understanding the word in context, given its definitional complexity.

One interesting aspect of trust is its relationship to the concept of reputation. This issue is coming to the fore in the so-called “sharing economy” or “collaborative consumption” movement.

Who can you trust on the Internet to deliver the goods they said they would deliver (think eBay), to leave your apartment in good shape if you lease it on Airbnb, to not be a creep if you call an Uber?

It’s tempting to look at the concept of reputation as the scalable, digital badge of trust that we might append to all kinds of transactions between strangers, rendering them all as trustworthy as your cousin. (Well, most cousins.)

Tempting, but not exactly right.  Because trust, it turns out, is not reputation.

Greenspan’s Folly

William K. Black has written about the dire consequences of Alan Greenspan confusing trust and reputation, saying:

Alan Greenspan touted ‘reputation’ as the characteristic that made possible trust and free markets. He was dead wrong.

Greenspan believed that Wall Streeters’ regard for their own reputation meant that markets were the best guarantor of trust – because they would perceive their own self-interest as aligned with being perceived as trustworthy.

Unfortunately, Greenspan’s belief was probably based more in ideology than in history or psychology, as the passion for reputation was overwhelmed by the passion for filthy lucre, immortalized in the acronym IBGYBG (“I’ll be gone, you’ll be gone – let’s do the deal”).

Early Social Reputation Metrics

Think back, way back, to November, 2006.  A company called RapLeaf was on to something.Here’s how they described their goal:

Rapleaf is a portable ratings system for commerce. Buyers, sellers and swappers can rate one another—thereby encouraging more trust and honesty. We hope Rapleaf can make it more profitable to be ethical.

You can immediately see the appeal of a reputation-based trust rating system. And with a nano-second more of thought, you can see how such a system could be easily abused. (“Hey, Joey – let’s get on this thing, you stuff the ballot box for me, I stuff it for you, bada-boom.”)

Then there’s Edelman PR’s pioneering product, TweetLevel. It does one smart thing, which is to avoid a single definition of whatever-you-wanna-call it. Instead, it breaks your single TweetLevel score into four components: influence, popularity, engagement, and trust.

Edelman says:

having a high trust score is considered by many to be more important than any other category.  Trust can be measured by the number of times someone is happy to associate what you have said through them – in other words how often you are re-tweeted.

According to TweetLevel (back in 2012), here were my scores:

  •             Influence        73.4
  •             Popularity      70.1
  •             Engagement   56.4
  •             Trust               46.9

So much for my trustworthiness.

Guess who owned the number one trust score on TweetLevel that year? Justin Bieber. Now you know who to call for – well, for something.

The KLOUT Effect

It’s easy to poke fun at metrics like TweetLevel that purport to measure trust; but in fairness, because trust is such a complex phenomenon, there really can be no one definition. What TweetLevel measures is indeed something – it’s not a random collection of data – and they have as much right to call it ‘trust’ as anyone else does. Indeed, I respect their decision to stay vague about what to call the composite metric.

KLOUT raised a more specific question: it directly claimed to measure Influence, and is clear about its definition, at least at a high level:

The Klout Score measures influence [on a scale of 1 to 100] based on your ability to drive action. Every time you create content or engage you influence others. The Klout Score uses data from social networks in order to measure:

  • True Reach: How many people you influence
  • Amplification: How much you influence them
  • Network Impact: The influence of your network

I find that to be a coherent definition. If I’m a consumer marketer, I want to know who has high KLOUT scores in certain areas, because if they drive action, I want them driving my action.

Note that Klout doesn’t mention reputation at all – just influence. Where does trust come in?  Klout says, “Your customers don’t trust advertising, they trust their peers and influencers.”

Well, I wouldn’t go there. On TweetLevel, the top three influencers were Justin Bieber, Wyclef Jean, and Bella Thorne. Influencers – definitely. People to be trusted? What does that even mean?

Trust Metrics

One problem with linking trust to reputation is that it can be gamed. One problem with linking trust to influence is that notoriety and fame are cross-implicated. Bonny and Clyde were notorious, so was Bernie Madoff and the Notorious B.I.G. – that doesn’t make them trusted.

Take Kim Kardashian. Is she influential? You betcha: her Klout score was a whopping 92 (Back then! Juts think about today). Does she have a reputation? I bet her name recognition is higher than the President’s.

But – do you trust Kim Kardashian? Well, to do what? (By the way, TweetLevel gives her a 70.1 trust score – way higher than mine. Now you know who to ask when you need a trustworthy answer; I’m referring all queries to her).

So here are a few headlines on trust metrics.

  1. They’re contextual. You can’t say you trust someone without saying what you trust themfor. I trust an eBay seller to sell me books, but I’m not going to trust him with my daughter’s phone number.
  2. They’re multi-layered. Both Klout and TweetLevel correctly recognize that social metrics can’t be monotonic – a single headline number is useful, but it had better have nuances and deconstructive capability.
  3. Behavior trumps reputation. You can get lots of people to stuff the ballot boxes for you; it’s a lot harder to fake your own  behavioral history. Trust metrics based more on what you did, rather than just on what people say about you, are more solid.
  4. Good definitions are key. When people say ‘trust’ and don’t distinguish between trusting and being trusted, they’re not being clear. There’s social trust, transactional trust – it goes on and on. Good metrics start by being very clear.

So what’s the link between reputation, influence, and trust? There is no final arbiter of that question. Language is an evolving anthropological thing, and as Humpty Dumpty said, words mean what we choose to say they mean. So job one is to be clear about our intended meanings.

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Full disclosure: I have a small interest in a sharing economy company, TrustCloud. I have written more about the sharing economy and collaborative consumption in a White Paper: Trust and the Sharing Economy, a New Business Model.

(This post was originally published on TrustMatters)

Trust Between Seller and Client Must Be Mutual

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Would you like your clients to trust you? Presumably you would. And in order to trust you, they must feel that trusting you is a low-risk proposition. They must feel you are trustworthy. Most firms get that.

So, most firms go about trying to appear trustworthy. (The better ones, of course, actually try to be trustworthy, since trust is a hard thing to fake.) This often translates into things such as values statements, corporate social responsibility, efforts at transparency, and programs to enhance customer focus.

All of that is well and good, but those efforts are missing a critical element. Because if all you focus on is trustworthiness—cosmetic or real—then you are forcing your client to take all the risks. And if your client is the one always taking the risks, after a while your client will notice and say, “Wait a minute. I appreciate all of the Boy Scout virtues and so forth, but I notice you never take any risks. And that’s not fair. And so I don’t think I trust you.”

You can be trustworthy to the max, but if you never trust your client, then before too long, your client won’t trust you. And as goes their trust, so goes their business with you.

Trust Is Reciprocally Risky

“The fastest way to make a man trustworthy is to trust him.” That statement is credited to President Franklin D. Roosevelt’s Secretary of State, Henry Stimson, and he expressed a powerful concept: trust is a reciprocating exercise in risk-taking. First one party takes a risk, and the other reciprocates. Then the roles reverse, and the exercise is repeated.

Take the simplest of all trust gestures: the handshake. Smiling I extend my hand to you and say hello, signifying good intentions. You almost certainly return my handshake, smile, and greeting. But you don’t have to.

You could, after all, spurn my gesture, refuse to extend your hand, frown, and turn away from me. I would feel embarrassed, upset, and dismissed. And that would be the end of our budding trust relationship. You probably wouldn’t do that, though. Instead, you would meet my risk-taking gesture with trustworthiness, and our relationship would be off to the races.

Corporate Risk Mitigation

This is not an exercise in corporate anthropology. Think about the context in which you hear “risk” in modern-day business. It is almost always in a negative sense.

Risk is seen mainly as something to be mitigated. Post 2008, financial institutions have laid off layers of employees—except in risk management. The contracting process in nearly all companies has added layers of risk indemnification to its documentation. Lawyers are on hand to ensure not just compliance, but even the appearance of anything that could be considered risky. Insurance businesses are inventing new products to mitigate risk in contracts of all sorts. The last few decades have seen the creation of risk management institutes and certificates in risk management programs.

Despite the protestation that some risk is good (think “risk appetite” or “calculated risk” in the financial world), the emphasis is overwhelmingly on the “calculated” part, not the “risk” part. And once one gets outside of the financial world, it’s hard to find examples of thinking that suggest risk is good.

Execution Risk and Dereliction Risk

The management world is obsessed with avoiding execution risk—the risk of doing the wrong thing. Unfortunately, it makes a pact with the trust devil when it embraces dereliction risk—the risk of not doing the right thing.

We want lifeguards to eschew dereliction risk. If they think someone is drowning, we don’t want them second-guessing themselves. We want them in the water immediately. In basketball, Kobe Bryant is the NBA’s leader in most missed shots. He would rather shoot 4 for 20 than 2 for 5. Another athlete, hockey great Wayne Gretzky, says you’ll never miss a shot you never take—but neither will you make any shots. In all of those cases, they understand the importance of taking execution risks and avoiding dereliction risk.

Yet in business, we are afraid of a hundred execution risks. We fear having the wrong answer, giving offense, looking ignorant, looking foolish, or speaking out of turn. So, we do nothing. And because of our penchant for avoiding execution risk, we absorb dereliction risk, which guarantees failure in the long run.

Trustworthy but Untrusting Does Not Compute

You may be proud of your organization’s record on trustworthiness. But ask yourself these questions to see if you may have some work to do on trusting:

  • Do you have onerous non-compete clauses for your employees?
  • Do your sales pitches hedge their bets or lead with strong hypotheses?
  • Do you make your subcontractors insure you against general liability with no limits?
  • Do your salespeople refuse to answer direct questions about price?
  • Do you ever admit you don’t know something when asked a straight question?
  • Do you insist on client non-disclosure agreements (NDAs) beyond your industry’s norm?
  • How many ex-employee lawsuits has your firm been involved in in the past five years?
  • Are your tardy account collections handled by accounting or by account managers?
  • Would you ever recommend a competitor to a client if the competitor were clearly the better candidate for the job?
  • Do you use lie detector tests for employees?
  • Do you encourage your salespeople to comment on their own and others’ feelings?
  • Do you share your cost information with clients?
  • Do you share your supply-chain information with suppliers or clients/customers?
  • How many paragraphs of fine print are in your client agreements? And how fine is the print?
  • Are your standard client agreements longer or shorter than your biggest competitor’s?
  • How do you handle overruns by you with your clients? How do you handle overruns by your suppliers with you? Which is more onerous?

You can be as trustworthy as a Boy Scout, but if you force your clients to take all of the risks, then before too long, they won’t trust you.

 

Clinton, Trump and the Trust Equation

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Those of you following US presidential politics have been treated to a truly unique process this year. The role of the personal, of perceived character – and trustworthiness in particular – hasn’t been this central in decades.

The Trust Equation provides a simple way of articulating the several elements of trustworthiness: Credibility, Reliability, Intimacy and Self-orientation.  In short:

  • Credibility has to do with things we say – accuracy, expertise, capability, credentials
  • Reliability has to do with things we do – predictable, dependable, track record
  • Intimacy has to do with a sense of security that others feel in dealing with us – empathy, discretion, vulnerability
  • Self-orientation has to do partly with selfishness, but more to do with neurotic self-obsession. Being in the denominator of the equation, a high degree of self-orientation serves to reduce trustworthiness.

One of the things we’ve learned about the trust equation over the years is that most of us over-rate the importance of Credibility, and under-rate the importance of Intimacy.

With that as backdrop, let’s look at the key players in the election.

Credibility. In terms of credibility, Clinton has an edge. Her expertise, credentials, and history of responsibility and accomplishments, typically count for a lot. But on another part of credibility – simple truth-telling – she scores not nearly so well. She is perceived as constantly shading and tweaking the truth.

Trump, by contrast, has some business experience but very little relevant government experience, and is widely perceived as massively flip-flopping, telling one after another truth-stretchers, only to walk them back and position them as ‘opening gambits.’

Clearly credibility alone doesn’t explain why Trump is in the ascendance and Clinton in the decline.

Credibility Score: slight edge to Clinton.

Reliability. I don’t think reliability is a differentiator between the two major players. Each probably have reasonable track records.

Reliability Score: tie.

Intimacy. In person, as individuals, both Clinton and Trump are quite personable.  But in their public persona – and by her own admission – Clinton has never managed to project intimacy. She is wooden, stiff, provoking mainly winces and eye-rolls.

Trump – as well as Bernie Sanders – both score much higher on intimacy. Sanders’ frumpiness and evident unprofessionalism make him appear genuine. For his part, Trump’s ability to voice the unspoken fears in so many people connect on a visceral, even subconscious, level.

Intimacy score: Advantage Trump (and Sanders).

Self-orientation. At first blush, Trump might appear the epitome of high self-orientation. He is not only self-promoting, but self-obsessed. But he is so open and unapologetic about his self-focus that it doesn’t hurt him (at least with his core constituency). Intimacy trumps self-orientation.

With Clinton, there is a strong sense of self-serving, disingenuous deception. And the perception of high self-orientation colors voters’ perception of all the other factors as well. If we think someone is highly self-oriented, then we suspect the truth of what they say, are skeptical of their track records, and are skeptical about portrayals of intimacy.

Self-orientation score: Advantage Trump.

If this quick profiling makes sense to you, let me add some more data. 70,000 people have taken the TQ Trust Quotient Self Assessment, based on the Trust Equation (you can take it too). You can read a full description of the results in our White Paper: Think Expertise Will Create More Trust? Think Again, but here’s a headline.

The most powerful factor of the four is not Credibility – which most people in business think – but Intimacy.

It is not surprising that Clinton is having trouble getting traction: she’s on the losing end of the most powerful factor, intimacy. She’s playing her best hand – credibility – but it’s not working. And there’s a lesson in that for all of us.

(By the way, thanks for long-time reader Martin Dalgleish for inspiring this particular blogpost)

 

 

 

 

 

Destroying Trust with Just a Verb

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The Associated Press decided to drop the term “illegal immigrant” from its reporting. Their point: the term ‘illegal’ should be applied to actions, but not to persons. It’s the immigration equivalent of, “hate the game, not the player.”

Of course, that’s red meat to a lion for some. Senator John McCain said, “You can call it whatever you want to, but it’s illegal. There’s a big difference…I’ll continue to call it illegal.” And so the battle is joined. Where one side sees respect, another sees absurd political correctness.

This is a worthless, useless, and totally unnecessary argument. It is also typical of a great many pretend arguments – full of energy and fury, truly signifying nothing.

And who’s the culprit? A verb. To be precise, the verb “to be.” I’m not kidding.

The Tyranny of the Verb “To Be”

In Spanish (and other Romance languages, I think), the English “to be” actually has three forms: estar, tener, and ser. Estar refers to a temporary condition: he is tired, she is in Europe, I’m sick. Tener refers to “having” a passing state – I have hunger, you have thirst, he has luck. Ser, the third form of “to be,” has to do with permanence: he is a man, you are virtuous, she is from the US.

In English, all those forms translate into one word, to be: I am, you are, he is.

Why is that a problem? Consider these interactions:

“The new Bond movie is great.” “No it isn’t, it stinks.”

“He is always negative.” “No, he’s just realistic.”

“You’re not serious.” “I am totally serious!”

“He’s an illegal.” “How can you be so judgmental?”

Because we have only one verb in English to cover so many situations, we end up bludgeoning each other. Since we can’t distinguish our several meanings, we assume others mean the same thing we do.  And when it turns out they meant something else, we chalk it up to obtuseness and  bad will on their part.

Which explains why I always have good intentions – but you! You’re always working some angle.

The American Burden

We’re not about to add two new verbs to American English (I can’t speak for the British or the Strines). But it’s not like we’re handcuffed. All we need is a little clarity of thinking.

1. Distinguish between actions and actors. The AP had this one right. You can still morally condemn people if you want – just don’t be sloppy about your definitions of morality.

2. Distinguish between your preferences and the other’s characteristics. I am not annoying – you are annoyed.

3. Avoid using personal pronouns with “to be” except for “I” and “it.” We have a right to say “I am __.”  We don’t have the same right to say “you are __” or “he is __.”  Only a rocking chair is oblivious to the difference.

I am fairly confident it’ll work for you. Unless you’re seriously pigheaded, that is.

This post first appeared on TrustMatters.