Corporate Culture: Your Competitive Advantage

David Maister has written almost despairingly of the absence of trust and other aspects of enlightened management in the business of law (e.g. in American Lawyer earlier this year). He suggests only shifting client needs will change things:

Many firms have collections of great lawyers. The time may be coming when clients will expect them to go beyond this and become effective organizations. Without a prior, explicit agreement on minimum standards, and the resolve to enforce them, many law firms will not function well as firms but will remain what they are today: bands of warlords, each with his or her followers, ruling over a group of cowed citizens and acting in temporary alliance—until a better opportunity comes along.

So it’s especially intriguing to run across the occasional exception to the pattern.

Trust and Law Firms

I had the pleasure of speaking last weekend to the partners of Bennett Jones LLP, Canada’s 13th largest law firm at about 300 lawyers, plus staff.

They ranked number 6 on Hewitt Associates’ list of Best Canadian Employers. That puts them ahead of other Top-50 Canadian employers like Enterprise Rent-a-Car, Johnson and Johnson, and Procter & Gamble.

Their #6 ranking was up from #18 in 2005; up from #26 in 2004; #34 in 2003. And, I believe, no other Canadian law firm has ever made it to number 50.

Hewitt makes clear the financial implications of best employer practices. In Canada, best employers have 20% better five year total returns to shareholders than do their industry comparables. In Australia, growth rates of best employers are double that of the rest, and in Asia, they’re 50% higher. Lower employee turnover, higher engagement rate, etc. Others have also written at length about such issues—again, Maister, as well as Jim Collins and Marcus Buckingham.

Bennett Jones’ partners are visibly collegial. Chairman John Cordeau and Managing Partner Hugh MacKinnon lead their speeches with statements of the firm’s values, and their commitment to enforcing them—particularly collaboration—for growth from their original regional and energy-industry base. As they put it, “we used to think that our competitive advantage was energy. We now think it’s our culture.” I think they’re right.

Bennett Jones doesn’t prove Maister wrong, they probably support his point. Market-based realities—the need for talent attraction and retention, the need to grow into new markets and to integrate—can drive even law firms to embrace management practices shown to work elsewhere, if they have leadership willing to make the commitment.

Who’d a thunk it, eh?

UPDATE: On December 29, 2006, Bennett Jones was voted #4 in Canada’s top 50, up from #6 the year before when the above article was written. An even more remarkable performance. Congratulations to them.

Marketing Myopia and Selling Revisited

One of Harvard Business Review’s all-time best-selling articles is Ted Levitt’s “Marketing Myopia.” It sold 850,000 reprints from its 1960 publication to Levitt’s death earlier this year.

Re-read today, it looks more like strategy than marketing. His claim that the railroads failed to see they were in the transportation business is bigger-picture than what most marketing has become.

The article has aged well—except for Levitt’s aside about marketing vs. sales. Listen to how he defines selling:

“The difference between marketing and selling is more than semantic. Selling focuses on the needs of the seller, marketing on the needs of the buyer. Selling is preoccupied with the seller’s need to convert the product into cash, marketing with the idea of satisfying the needs of the customer…”

Now here’s a fairly typical quote from 2006: Ann Armstrong, in a B2Bonline.com interview about the role of sales at her company:

MB: FCW has an unusual setup for selling integrated media, with general managers for print, online and events working with seven media consultants. How does this work?
Armstrong: The term media consultants reflects a real change in the role of the salesperson. Their first job now is to listen, to find out the customer’s goals and objectives. Then they come back and create an integrated media plan that’s tailored to that particular customer."

The Evolution of Sales and Marketing

Sales has taken a 180-degree turn in the 45 years between those two quotes. Because all products now have major services components, and because of mass customization, sales has usurped the customer focus role from marketing, and the product development role from R&D or engineering. Sales, not marketing, is the source of connection to the customer.

An updated definition of “sales” would position it as the critical interface between seller and buyer in a commercial relationship—not the agent of product flogging in a competitive relationship. Willie Loman, peddlers and hustlers are well out of date, even if many hang on.

"Customer focus” has for too long been turned by marketing types—who increasingly look like finance types—into code for increasing returns to the seller. Meanwhile, in industry after industry, it is the customer relationship contact—a.k.a. sales—which ends up translating the voice of the buyer.

Is Sales the new Marketing?

Update: This post was featured in the Carnival of Capitalists.

Trust Tip #27-How to Prevent Useless Conflicts

I want to make sure to get tactical and practical every few posts. This is Tip #27, but I’m publishing it first, out of sequence, because I think it’s so provocative.

First the rule: then examples: then explanation. Here we go.

Rule 27a: get rid of the verb "to be" in all its forms;

Rule 27b: speak only in the first person, or in the third person impersonal.

That may sound a little weird; let me give you some examples.

Instead of, "That was a lousy movie," say, "I didn’t like that movie." (rule 27a)

Instead of, "You’re not getting my point," say, "what we have here is a failure to communicate." (rule 27b)

Instead of, "It will not be acceptable to them," say, "I’m concerned about the odds of them accepting it." (rule 27a, 27b)

Preventig Useless Conflicts

These simple rules help prevent useless conflict. 27a (if you’ll pardon some philosophical jargon) basically says "all ‘is’ statements are metaphysical, and unprovable." They are bald assertions with the potential to inflame argument rather than to help collaboration.

27b helps us remember that the only inarguable statements we can make are those about our own feelings, or about inanimate objects. Statements about "you" or "him" invite unnecessary confrontation, because someone so inclined can read blame or judgment into it.

Combined, the two rules make us speak in a way that takes responsibility, and invites others to do the same. At the extreme, "You’re an idiot!" becomes "wow, we really see this differently, don’t we? Tell me more about your view?"

Then, as Portnoy’s shrink finally said, perhaps we can begin.

Full disclosure: I didn’t invent this, I heard it—as best I can recall—about 15 years ago on National Public Radio, and can’t recall who the originator was. I’d be grateful if anyone knows the origin.

 


 

 

 

Trust and Risk—Ronald Reagan Redux

Ronald Reagan, speaking of diplomacy and the Soviet Union, famously said, "trust—but verify."

The statement never made sense to me (except as politics). If you’re going to resort to verification, you’re not dealing with trust, but with risk management. Trust without risk ain’t trust.

Something related comes to us from a fascinating interview with Stanford’s James G. March in the October Harvard Business Review. (Thanks to the 1-800-CEO-READ blog for the link).

HBR: In your film on Don Quixote and leadership, you say that if we trust only when trust is warranted, love only when love is returned, and learn only when learning is valuable, then we abandon an essential feature of our humanity. How do we lose part of our humanity?*

 

March: We justify actions by their consequences. But providing consequential justification is only a part of being human. It is an old issue, one with which Kant and Kierkegaard, among many others, struggled. I once taught a course on friendship that reinforced this idea for me. By the end of the course, a conspicuous difference had emerged between some of the students and me. They saw friendship as an exchange relationship: My friend is my friend because he or she is useful to me in one way or another. By contrast, I saw friendship as an arbitrary relationship: If you’re my friend, then there are various obligations that I have toward you, which have nothing to do with your behavior. We also talked about trust in that class. The students would say, “Well, how can you trust people unless they are trustworthy?” So I asked them why they called that trust. It sounded to me like a calculated exchange. For trust to be anything truly meaningful, you have to trust somebody who isn’t trustworthy. Otherwise, it’s just a standard rational transaction. The relationships among leaders and those between leaders and their followers certainly involve elements of simple exchange and reciprocity, but humans are capable of, and often exhibit, more arbitrary sentiments of commitment to one another.


March doesn’t use the word "trustworthy" the same way I do; for him, it smacks of the "verification" part of Ronald Reagan’s formula. No matter: the core of his message is that reliance solely on "consequential justification" (I love that line) strips trust of its essence.

Makes sense to me!

Paint by Numbers Management

Ten days ago, the Wall Street Journal headlined HP’s boardroom clash between no-longer-chairman Patricia Dunn and Director Tom Perkins. It’d be a great made-for-TV movie.

There’s venture capitalist and Silicon Valley legend Tom Perkins (as in Kleiner, Perkins, Caulfield), an early HP employee himself, used to getting his own way, his reputation apparently exceeded only by his own self-image.

Then there’s Dunn. Dunn had a very tough life, her career success a tribute to her strong will. But her route to the top was mastery of “the book,” as in “doing things by…”

“Failure avoidance has been a large motivator my whole life,” Dunn says in the article—an astonishing comment from any leader, much less one in the tech sector. “She became fascinated with the way Wells Fargo used academic theories to whittle away the role of human judgment in investment decisions.”

Indeed. Those pesky humans gum up the works every time. HP’s board was clearly dysfunctional, but the impact of leaks on Dunn was outsized. She set about making things orderly again, seeking salvation in process. The Journal says, “adamant in her desire to ‘fix’ the leak problem, she succumbed to tunnel vision.”

She’s not alone in the tunnel. The dominant thinking in business today reinforces her instinctive attraction to things quantitative, impersonal, process-based, statistically measurable, and susceptible to management-by-procedures.

No surprise, then, that Dunn said, before Congress, “I do not accept personal responsibility for what happened.” The absence of a sense of the human in business leads almost inexorably to the denial of personal accountability. (See Tom Peters’ blog for a refreshing rant of outrage at Dunn’s comment).

How can you trust someone who appears not to grasp the concept of accountability? Responsibility can be delegated; accountability cannot. It is a distinction apparently lost on Ms. Dunn—and again, she’s not alone.

From “management by numbers” to “paint by numbers management” is a slippery slope. Perkins may have his flaws, but he apparently has the great virtue of being human.

You can trust people. You can’t trust human calculators.

Update: This article was also in the Carnival of Business.

Faking Trust

Today’s issue of The Wise Marketer suggests that corporate honesty will be the number one key alternative marketing trend for 2007. Here’s how they put it:

"While marketers are constantly watching for alternative methods that can give them a competitive edge in over-crowded markets, Drew Neisser, CEO for Renegade Marketing explained to us the ones that will rise fastest in 2007. First among Neisser’s observations in looking for the key trends for 2007 is the idea that corporate honesty will take centre-stage, helping brands and products recover from potential disasters…"

On the one hand, a plus for increased trust in the business world. Transparency, openness, honesty, etc.—can’t complain about that.

On the other hand—check the motives implicit in the way it is positioned. When honesty is portrayed as the best policy in order to achieve self-oriented goals, we have to wonder about the depth of trust implicit in the honesty we’re offered.

The Value of Honesty and Trust

Honesty—or trust, even moreso—built on nothing but contingent results doesn’t resonate with us much. If the only reason someone isn’t lying to me is that they might get caught otherwise, then I "trust" that person only insofar as the enforcement mechanisms are in place. I’ll make sure to stay out of dark alleys and private conversations with such a person, because—you never know.

Good motives have a lot to do with trust. Which is why the preferred mode of motivation these days—behavioral short term results linked to incentive compensation—rings so hollow when it comes to issues of trust. If you behave the way you do because you get more money for doing it, then I’ll only trust you so far.

Motives matter—fake it and you won’t make it.


Listening and Trust: Are You Losing your Ability to Connect?

I had my hearing tested the other day.

The examiner told me that with a minor low-end exception, my hearing was quite good—“excellent for my age,” she added (which brought me down off my temporary jolt of pride).

“But let me ask you, “ she said, “do you use a blackberry?”

“Yes—but what’s that got to do with my hearing?”

She explained, “I’ve been noticing a lot of people 40 and older who come in with concerns about their hearing. They test just fine.
But these are people who are in project management type jobs. They are constantly juggling between choices about where to place their attention. They all have blackberries, but that’s just a symbol. Their whole lives are about multi-tasking. ”

“And what’s happening,” she went on, “is that these people have lost the ability to pay attention for more than a few seconds. When the conversation requires more attention, they zone out, and lose connection.”

“When they zip back, a nano-second later, they realize they’ve missed something. And they blame their hearing. It’s not their hearing, it’s their multi-tasking.”

“So,” I asked, “are you telling me that the real A.D.D. problem is not in kids, but in adults?”

“It’s worse,” she said. "They’re losing the ability to connect."

The sensation of trusting someone can be driven many ways: one of the most powerful is the sense that the other person cares about us. And as a proxy for caring, most of us use “paying attention.”

If we cannot pay attention, others get the sense that we don’t care. And they don’t trust us. Why should they? We wouldn’t either.

Anyone listening?

Harvard Business School 30 Years Later: Bring Back Joe

I attended my 30th reunion at Harvard Business School 2 weeks ago.

I learned some trivia; e.g. the only student from the prior year (class of 1975) who took his graduation picture without wearing a tie was one George W. Bush.

More importantly—the changes in HBS are a reflection of the changes business in general took in the last 3 decades. They don’t bode well for trust, at the individual, corporate or socio-economic level.

30 years ago, HBS viewed itself and was viewed as graduating leaders of industry. Management consulting and investment banking together were the “hot” new segments in which graduates took jobs, rather than traditional industry.

30 years ago, there were a limited number of courses, with emphasis put on cross-referencing concepts among the courses. Many of the faculty had significant business experience.

And 30 years ago, most cases (remember, HBS uses the case method) personalized the manager’s role. They’d begin with something like, “As Joe gulped down his first coffee, he pondered the situation of…” and ended with, “What should Joe do? What would you do?”
3 cases a day, 5 days a week, for two years, this was the intensely pragmatic lesson HBS taught: what’s the problem, and what should you do about it?

30 years later, the percentage of graduates going to consulting, investment banking and private equity is up quite a bit—a third or more. More interestingly, the sources of incoming students are parallel—about a third now come from those same investment banks and consulting firms.

Today, HBS offers many more courses, but they are more stand-alone, with less cross-referencing—the experience is less integrated. Faculty are more likely to be professional academics—and not with degrees in business, but in other disciplines. They are less likely to have business experience.

But most interesting, Joe is reportedly gone from the cases. In his place? Structural analyses—of competitive power, economics, strategies.

HBS is a microcosm. Its view of business is less about commerce, more about competition. Less about managers, more about management. Less about relationships, more about systems and processes.

Business itself remains much the same—except for the MBAs and exec ed graduates who are being trained to believe it can be conducted through mental constructs, rather than through human interactions.

The academicization of business has been critiqued before by Warren Bennis and James O’Toole in Harvard Business Review (How Business Schools Lost Their Way, May 2005). What has gone unnoticed is that the world is starting to go in precisely the opposite way.

The biggest single characteristic of business in future is that everything is getting connected. In a connected world, a focus on competitive relationships isn’t useful. What we need is an emphasis on connectivity, trust and collaboration.

HBS needs to teach less competitive differentiation and more collaborative value-adding; less how to win supply chain negotiations and more how everyone gains by operating them as a system; less about transactions, more about relationships.
Trust is the new glue; and HBS has lost some ground in the last 30 years in teaching it.

Where’s a good place to start? You could do worse than to bring back Joe.

Update: Thanks to Martin Calle at Advertising Age  for choosing this article for the Carnival of Consumer Marketing.

Welcome to Charles H. Green’s Blog: Trust Matters

Let’s get right down to it. Here’s how to tell if this blog is right for you:

It’s a serious business blog—but done with taste, irony and wit.

It’s about building trust—for:

  1. Those who want to be trusted advisors
  2. Those who want to instill trust in their selling
  3. Those who want to enhance trust within and between organizations.

It aims at two extremes:

  1. Big picture thoughts on trust in business and society
  2. Very practical tactical advice for practitioners
  3. Not so much at the intermediate ground of programs and analyses.

My name is Charles H. Green, and I write this blog:

  1. I wrote Trust-based Selling, McGraw-Hill, 2005
  2. I co-wrote The Trusted Advisor, Free Press, 2000, with David Maister and Rob Galford
  3. I spent 20 years in general management consulting
  4. For 10 years, I have done seminars, speeches and consulting for large complex relationship businesses on the subject of trusted relationships

If this sounds good to you, then welcome! I’ll do my best to offer you a consistent diet of thoughtful, provocative ideas from my own work and from that of others. I hope you’ll chime in on the comments pages and contribute to a dialogue that raises the value of the site for everyone.