Crime, Fear and Trust

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Most casual readers of the general press know three things: crime is up, public safety is down, and trust is declining.

The problem is: the first two are flat out wrong, and together they cast doubt on the third.

Crime and Fear

(The following data are compiled from the Atlantic, March 2015, Be Not Afraid).

Fear: In the US, Gallup annually asks if crime is up or down from the previous year. Every year, and usually by large amounts (73% vs 24% last year) the public says crime has risen.

Fact: Violent crime has declined by 70% since the early 1990s. The homicide rate has been cut in half, and three years ago hit the lowest level since 1963. Rape and sexual assault rates declined 60% from 1995 to 2010.

Fear: 58% of the public fears another US terrorist attack, down not much from one month after 9-11, when the number was 71%. The Chairman of the Joint Chiefs of Staff declared the world “more dangerous than it has ever been,” and that was two years ago and before ISIS.

Fact: Despite the horrific stories of ISIS, you’re four times more likely to drown in your bathtub than from a terrorist attack. Armed conflicts in the world are down 40% since the end of the Cold War.

And so on.

The point? Fear of crime and of danger are not necessarily linked to actual rates of crime and danger. In fact, myth is often negatively correlated with reality.

I’m fond of the saying, “Just because you’re paranoid doesn’t mean they’re not out to get you.”

But as ee cummings said, sometimes a cigar is just a cigar. And sometimes paranoia is just irrational.

Trust and Statistics

What’s this got to do with trust? Good question.

First of all, ask yourself what the headlines say: Is trust in business generally up? Or is it down?  You all know the ‘right’ answer.

But trust has a definitional problem that crime doesn’t. Determining whether crime is really up or down is simple: look at the crime rate.

When it comes to trust, however there are three conceivable measures:

  1. Trust, the verb – are people more, or less, inclined to offer their trust in principle?
  2. Trust, the adjective – is business more or less trustworthy?
  3. Trust, the noun – is the resultant state of people’s trust in business up, or down?
Verb x   adjective  =  noun
Propensity to trust of trustor x trustworthiness of trustee = Level of trust achieved

All too often, the business press is guilty of mass confusion. When you see precise statistics from sources like the high visibility Edelman Trust Barometer, saying ’Trust in XYZ industry is up (or down)’  – ask yourself just what that oh-so-precise percentage is referring to. Does it mean:

  • People are X% less inclined to trust a given industry or company?
  • Industries/companies have gotten X% less trustworthy?
  • The state of consumer-to-industry trust has undergone an X% decline?

Presumably it means the last – the state of trust has declined. But here we have a problem – because we can’t tell which driving factor drove the decline.

  • Do we have a problem of paranoid consumers?
  • Or do we have a problem of endemic industry untrustworthiness?

If consumer fear-driven low propensity to trust is the root issue, then the financial services industry has got a public relations problem on its hands, and they should hire Edelman.

But if industry misbehavior is the root issue, then we’ve got a social, regulatory and political problem – throwing PR solutions at it won’t help, and may hurt.

Parsing the Data

There do exist some data. Every year the General Social Survey asks some trust questions, which are clearly of the “verb” type, assessing people’s general propensity to trust strangers in principle.

Here there is a clear trend: across the world, and particularly in the US, there is a secular decline in the level of propensity to trust.  So we have part of the answer: paranoia is increasing.

The question is: is the paranoia justified? Has trustworthiness declined, or has it increased?

I only know of two data sources that speak to that, and only partially at that. One is Trust Across America’s FACTS database, which gathers a number of data-points and aggregates them into measures of corporate trustworthiness. And while the TAA data does an excellent job of facilitating cross-company comparisons over time, its five years of data isn’t yet enough to speak clearly to aggregate trends.

The other source is our own Trust Quotient, or TQ, which overtly measures trustworthiness at the personal, not corporate, level.  We have noticed, both anecdotally and statistically, a gradual rise in the average level of TQ over the past 7 years. However, the data is self-reported, and is not a controlled valid sample of a broader population; it may just be grade inflation, or it may be comparing apples and oranges.

The conclusion? Except for the propensity to trust, which is clearly down on average, most trust data is either very specific and qualified, or definitionally vague.

I confess to some irritation on this topic. Trust is a serious issue, with many people seriously studying it, and doing so carefully. There are many more, however, who feel qualified to spout generalities and truisms about trust with no definitional clarity. Simply put, there is a lot of non-sense out there.

Next time you read something about trust being up or down, be critical. Ask whether the ‘trust’ being measured is a verb, an adjective, or a noun.  Ask whether pessimism is justified by data, or whether paranoia is overwhelming reality. Ditto for trust on the upside: if a company tells you their trust levels are up, push for definitions.

Don’t just nod your head: be a discerning student of trust data.

 

 

 

Lost Wallets, Trust, and Honesty

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I lost my wallet.

Somewhere between a golf driving range and a supermarket, in a 30-minute period, it went missing. I turned things upside down, retraced my paths, left notes with wanting-to-be-helpful staff.

I monitored accounts for three days; no bank charges, no credit card hits, so I held off canceling the cards, calling the DMV etc. I shudder at the thought of replacing it all.

At dinner on day three, the sheriff’s department calls; I meet the officer at a gas station. All the cards are there, as well as the original $140 in cash intact. He says, “Good thing you left your number at the driving range, that made it easy to confirm it was you.”

I say, “I know you can’t take a reward, but how about the guy who turned it in?” The cop says, “That’s between you and him; here’s his name and phone number.”

I meet the good samaritan the next day – let’s call him Ishmael. Why did Ishmael do it? He gave the Kantian reason; “If it was me, I’d hope someone would turn it in.” I offer him $100 reward; he demurs; I insist; he graciously accepts.

But my big question: why did he wait three days? Had it laid unfound for so long? Was it a struggle with his own conscience?  Enquiring minds wanted to know.

His answer: “I didn’t feel right turning it in to the proprietor at the driving range; I guess I just didn’t know if I could trust him. I meant to call the police, but I worked late the next day, and wasn’t sure who to call at the police. But my girlfriend, she cleans houses; one of her clients is a cop. She asked him who to contact, and he said, ‘call this number.’ So she gave it to me, and I called, and now you have your wallet. I’m glad.”

Whom Can You Trust?

Clearly, Ishmael turned out to be highly trustworthy. But let’s note a few other trust decisions along the way.

Ishmael trusted a cop – note he didn’t trust ’the cops,’ but he did trust one cop. He trusted his girlfriend’s due diligence to find out which one. I wonder how Ishmael would answer an Edelman Trust Barometer survey asking if he trusted the police?

Ishmael didn’t trust the driving range proprietor. I initially didn’t either, though I met a second driving range employee on day two whom I trusted more.

The police didn’t have to trust anyone in this case. Their role was limited to being trustworthy – or not. In this case, they were. One cop gave a correct phone number; the other responded. He checked out the information, made the phone calls, and most obviously the wallet didn’t ‘disappear’ while in his custody. I would add he was pleasant, and also expressed the Kantian view when I apologized for keeping him waiting a bit – “Hey, no worries, I know how worried I’d be if it was my wallet.”

What about the bank? I trusted the bank’s systems in two ways. First, I trusted that any use of my debit or credit cards or withdrawal from my checking account would show up quickly, and I’d find out about it online.

But second, I ‘trusted’ that the bank wouldn’t trust me very far – at the first hint of a suspicious charge, or at my first suggestion of it, I knew the bank would drop the iron curtain on all my accounts. (US laws limit the liability of individuals in such cases, so banks will pull the trigger quickly on a false positive). So, I could afford to wait a bit.

And, I had some sort of trust in Ishmael – without even knowing who he was, or even that he existed. The clue was the lack of activity in my accounts. I figured either the wallet was still in my possession, or it had been stripped of cash by an addict and dumped (or, by a Kantian addict who had then put the cashless wallet in the mail – hey it used to happen that way in the 70s with cabdriver theft in NY).

Or, there was some Ishmael out there. But what was he waiting for? I confess I didn’t have an answer to that.

Past Lost Wallets

There is a pattern here.  Actually, two patterns. One is that clearly I have an issue with losing things. I’ve lost my wallet once before, in Copenhagen.  I’ve also managed to leave my MacBook Air computer on the plane – not just once, but twice.  The first was at O’Hare; the second, in Charlotte.

So yes, clearly I’ve got an issue with carelessness. But there are other things to note here as well, even though this is all anecdotal.

In the first wallet case, it was returned within the hour by a taxi driver. This was calmly and confidently predicted, both by my client and by the hotel; it’s the norm in Denmark, not even worth commenting on, they said. But you know, I’ve heard many stories about the same even in New York.

And in the airline cases, it all came down to individuals, taking personal responsibility far outside the system.

How Can We Trust Institutions?

The quick answer is, institutional trust is by its nature shallow. I can trust Chase bank’s systems (or not), but if I need something truly out of the ordinary, I’d better find a real person. Trust of the type that returns wallets is an individual thing – or, as the case of Denmark points out, a cultural thing.

It is a kind of misnomer to use the word ‘trust’ in the sense of ‘I trust an institution.’ But that doesn’t mean institutions have no role in trust. They have a huge role. The role is to establish an environment within which people can behave in trusting and trustworthy manners.

That is non-trivial. In fact, it’s vital. An organization that fosters bureaucracy, suspicion, and conformity is not going to attract, and certainly not sustain, trust-operating people.  By contrast, an organization that celebrates trusting and being trusted among its people will greatly influence the amount of trust that is created.

And our job, as we go about our daily lives, is to be open about when other people might surprise us – and, hopefully, to do the Kantian thing ourselves when the opportunity presents.

 

When Others Abuse Your Trust

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Has your trust ever been violated? Did someone, once upon a time, abuse your trust? Have you ever placed your trust in someone or something, only to discover – painfully – that your trust had been misplaced?

Yes, almost certainly, you’ve had experiences like that. And they are unsettling – to say the least. The bottom drops out of something. You feel betrayed. Having been fooled, you feel foolish. You’re left with a pain, a void, a bitterness – and a resolve to do something differently going forward.

But what?

It turns out there are two strategies for dealing with broken trust. And one of them is far worse than the other.

Broken Trust: the Dynamics

Let’s remember what’s going on when trust is broken.

Trust is an asynchronous bilateral relationship. That’s a fancy way of saying that trust consists of a trustor and a trustee. What defines the trustor is the willingness to be vulnerable by taking a risk. What defines the trustee is the response to that vulnerability and that risk.

If the trustee chooses to take advantage of the trustor’s vulnerability by seizing on the risk and turning it to his advantage, then trust is broken, or stalled. If the trustee not only does not take advantage, but also then responds in a similarly vulnerable way (i.e. adopting the role of trustor), then the trust relationship is established, or advanced.

Trust relationships are built by continuous iterations of this risk-taken, risk-respected reciprocal behavior. And trust is broken, or stalled, when one party fails to reciprocate.

Setting up the dynamics of broken trust this way is important, because it allows us to see two ways that trust fails.

  • One is that the trustee abuses the vulnerability of the trustor.
  • The other is that the trustor stops taking risks.

Those Untrustworthy %$#!’s

What do we call those who abuse our trust? Vile, conniving, two-timing hustlers. Lying, two-faced, deceiving charlatans. Con artists, heartbreakers, depraved and immoral cowards. Essentially, we characterize them as lacking in character or virtue.

The implicit problem statement becomes, “How to protect myself from The Untrustworthy?” And the implicit answer is a two-parter:

1. Identify the untrustworthy in advance; and to the extent that is infeasible,

2. Take fewer risks in general.

It’s one thing say, “Never trust Joe again to make the restaurant reservations.” But as humans, we generalize.

  • “If you want something done right, do it yourself.” Ergo, don’t trust anyone to make reservations.  Or,
  • “Once burned, shame on you; twice burned, shame on me.” Ergo, don’t trust Joe to do anything.

If you’re a human being, that gets translated into things like, “Don’t trust emails from Nigeria offering inheritances,” or “Beware of strangers who give you candy,” or “Cross the street if you see black teens in hoodies approaching.”

If you’re a company, that translates into things like, “Show me your ID,” or “Sign this non-compete agreement before we hire you,” or “Click here to acknowledge you’ve read the Terms of Service agreement.”

What has happened here?

  • We’ve gone from identifying untrustworthy agents to a wholesale reduction in risk-taking.
  • To prevent bad things from happening, we’ve cut down on the possibility of good things happening.
  • While blaming others for being bad trustees, we cut back on our role as trustors.
  • In the name of increasing the probability of trust (by screening the untrustworthy), we guarantee the reduction of trust (by refusing to play the trustor role).

In fact, this all-too-human response is all-too-common. Ebola? Close the Mexican border. Significant other cheated on you? “I don’t know if I can ever trust again.” Somebody sued you? Demand an indemnification clause in all future supplier contracts.

At a national level, this is why the TSA is what it is: far better we distrust everyone than try to identify the untrustworthy. At a personal level, this is why Twitter and country music are full of ‘done me wrong’ themes – and why they are so popular.

Three-Step Strategy for Dealing with The Untrustworthy

Yes, Virginia, there really is evil in the world, and just because you’re paranoid doesn’t mean they’re not out to get you. But it’s also true that we systematically over-estimate the level of danger, and over-react by taking fewer risks.  So here’s the three part solution.

1. Soberly Assess the Risk. So she broke up with you. Get. Over. It. So your pride was hurt; how much is that in dollars and cents? So a customer burned you; what will it cost to bring in the SWAT team to deal with a mosquito?

Pain is inevitable – suffering is optional. Tough cases make bad law. The perfect is the enemy of the good. If it didn’t break your bones, or break your bank account – then really, how much harm was done? And we almost always over-estimate the damage.

It takes thoughtful maturity to not over-react. But trust is a thoughtful, mature relationship; if that were not so, every Neanderthal would be doing it.

2. Name It and Claim It, Then Trust Again. Don’t boil in the juices of your own resentment – explain to the other party what it felt like, and offer them another shot. Remember, the fastest way to make someone trustworthy is to trust them.

The highest customer satisfaction ratings come from customer dissatisfaction turned around. The winning strategies in game theory consist of giving people two chances, not one.

Trustworthiness is not solely a static quality, a matter of virtue alone. It is also situational, the result of interactions with a trustor. If you withdraw from the trustor side of the game, you guarantee lower levels of trustworthiness on the other side of the relationship.  (This alone explains much of the dysfunction in the financial services sector).

3. Be Proportional in Your Response. Of course there are bad apples, Bernie Madoffs, and chronic hustlers. But don’t stop dating because of one bad date. Don’t enact protectionist tariff policies to halt one abuse. Don’t put all your employees through lie detector tests because one stole from you.

The tendency to overreact is natural; but the ability to fine-tune our initial instincts is what makes us human. It doesn’t take much in the way of brains or moral courage to shut the barn door after the animals have escaped; it takes both to intelligently assess the situation, and to think it through.

————–

It’s tempting to view this as just a personal issue, but it’s one of the major trust issues facing corporations. In most Fortune 100 companies, the implicit belief is that the only good risk is a dead risk.  When you hear “risk,” you immediately hear “risk mitigation” and “risk management.” Risk departments are given enormous veto power, and virtually no one challenges corporate lawyers when they pronounce why the company can’t do this or that.

This inability to see risk-taking as the critical, essential role in trust creation is a major reason we don’t trust companies. It belongs right up there with the selfish, zero-sum, Hobbesian, shareholder-value-driven model of the company.

If a company doesn’t trust you and me, then we all have very good reason to say, in return – why the hell should we trust you?

Brain Science: Reductio ad Absurdum

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Neuroscience is the hot new kid on the science block. And not without reason; the ability to map the brain’s inner workings offers huge medical potential.

But along the way, neuroscientists – and their fans in business and society in general – frequently commit a basic error that wouldn’t pass muster in a philosophy 101 class. It’s called the error of reductionism, and its most recent incarnation is in the pages of the NYTimes.

Why Powerful People Lack Empathy

The article cites interesting research showing that powerful people lack empathy. The question is why? The authors (associate professors of psychology at McMaster and University of Toronto) say this:

Why does power leave people seemingly coldhearted? Some, like the Princeton psychologist Susan Fiske, have suggested that powerful people don’t attend well to others around them because they don’t need them in order to access important resources; as powerful people, they already have plentiful access to those.
We suggest a different, albeit complementary, reason from cognitive neuroscience…when people experience power, their brains fundamentally change how sensitive they are to the actions of others.  [emphasis added]

Note: they cite one answer to the question “why,” and then proceed to offer a different answer. Or, what they claim is a different answer.

The Error of Reductionism

Suppose I described a television series plot to you. You might ask me why a certain character acted a certain way. And I might answer in several ways, including reference to the character’s personality, or a parallel plot line, or the motivations of another character interacting with this one. All of those might be good explanations, or answers to your ‘why’ question.

But suppose I answered in terms of the changing phosphors on the television screen when you watched the episode in question. Suppose I “explained” the character’s action by enumerating the sequence of LEDs firing in the back of the TV set. (I’m sure I’m wrong on my TV technology, but you get my drift).

You wouldn’t for a moment accept that as an “explanation.” By reducing a phenomenon to some underlying set of physical phenomena (typically chemistry or physics), you succeed in an powerful act of translation – but not of explanation.

You don’t “explain” history by reciting events. You don’t “explain” a French movie by translating it into English. You don’t “explain” genetics by mapping the human genome. And you don’t “explain” why powerful people are cold by pointing to parts of the brain. Such mechanical knowledge is critical to medical intervention, to be sure – but the broader world isn’t asking a medical question, it’s asking a human one.

Reductionism in Business and Society

When the likes of the New York Times and Harvard Business Review go all gaga over our increasing ability to “understand” or “explain” complex phenomena – and are committing the reductionist fallacy – well, Houston we have a problem. And it’s deeper than just scientists being un-educated in the liberal arts.

There is a strong inclination toward the reductionist fallacy in business in general. The wish to break things down, deconstruct, compartmentalize, and quantify is deeply embedded in management theory. Delegate, establish metrics, and manage by the numbers.

This is fine when we’re dealing with supply chains. It reaches absurd levels when we try to “manage” complex human behaviors, social interactions, leadership, corporate culture and the like. The reductionist tendency closely correlates with behavioralism; in training, we see it in the focus on skills to the exclusion of beliefs and mindsets.

We’ve seen a massive failure of the reductionist tendency in the world of education. The No Child Left Behind movement is, more than anything else, about teaching to tests; the mastery of thousands of specific components, in the mistaken belief that if you map enough details, the whole will emerge from the sum of the parts.

It’s not true. Sometimes you lose the forest for the trees. Sometimes the soul is not to be found in the electron. Sometimes the explanation is not to be found by reciting the brain chemistry at play. We require something more to qualify as an answer to the question “why.”

If Trust is So Far Down, How Come –

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Everyone knows how to complete this sentence – “Trust these days is __up __down.”

You can’t throw a brick into the Googlenets these days without hitting some survey that bemoans the current low state of trust in society. And while there’s a lot of truth to those surveys, there’s far more uncritical thinking and sloppy theorizing.

The truth is, there are some powerful ways in which trust has actually increased in recent times, and even more in which trust has stayed broadly the same.

Some Basic Trust Definitions

Much writing on trust neglects to make two simple distinctions. The first is that between trusting and being trusted; both are required for trust, and they are quite distinct. I’ve written separately on that.

The other is between personal and institutional trust. Personal trust is by far the stronger of the two. You may trust Amazon, but it’s only to send you books; you wouldn’t let Amazon the company babysit your infant or search for imported food contaminants. And you’re a lot more likely to put your life on the line for your children than for your Coke/Apple/favorite brand. (A notable exception is national patriotism).

Most of the surveys that decry the decline in trust are talking about institutional trust. And it’s true: our “trust” in the judiciary has declined. Ditto for most professions, congress, the police, banks, retail stores, and established religion.

And yet…

If Trust is So Far Down, How Come—

  • – you entered your credit card number online last week – at least once
  • – some of you entered your credit card number online last week – from your mobile
  • – some of you use auto-complete on your mobile to fill in forms, perhaps even including your credit card number
  • – you share so much private information on Facebook
  • – you use Uber, Airbnb, Breather, or another sharing economy app
  • – you paid your property taxes online
  • – you hired a babysitter from Care.com

These are all small examples of how the world has become far more linked. Many of us wouldn’t have considered doing these things ten, even five years ago. These are examples of increased institutional trust. And, they are examples of trusting, the propensity to trust; at the same time, they suggest pretty high levels of trustworthiness.

At the same time, there are many examples of both personal and institutional trust that have remained largely the same, without much fanfare. For example, you probably still:

  • Ask your neighbor to hold your mail for a few days
  • Fly on planes
  • Don’t look right or left when the light turns green (though you should)
  • Drink the coffee / eat the food at nearly every restaurant in the world without thinking
  • Ask a stranger at the beach to watch your stuff for a minute while you go to the bathroom

In fact, an enormous amount of daily life consists of little examples of trust: mostly social and personal, but also institutional. Don’t let the headlines make you forget it.

Where Trust Really Is Down

That said, trust really is down in a few areas, and it’s important to be clear about just where.

First, there are indeed some ways in which people are less inclined to trust institutions than we used to be. But even here, read with a grain of salt. When people say they don’t trust Target (for example), they often mean something like “I don’t trust Target’s IT systems to ensure that my credit card doesn’t get compromised.”

Note this is an issue that didn’t even exist a decade ago. Also, it’s an issue affecting pretty much any large organization involved in financing. Also, and most important, check how many people have stopped shopping at Target because of concerns about credit cards – I’d bet very few.

Saying “trust is down” without specifying “trust to do what?” is silly. You might as well say “love is down” without grounding the statement in divorce rates, dating sites or something else concrete.

The most important way in which trust really is down is in what Eric Uslaner calls generalized trust. As measured by the General Social Survey for 50-some years, it basically asks, “By and large, do you think people mean well, or can’t you be too careful?” In other words, it is a generalized propensity to trust strangers.

On this measure, there is a very gradual, but nonetheless real, decline over the years. High levels of propensity to trust have been linked to education and optimism. Low levels of propensity to trust have been linked to pessimism and low exposure to out-groups.  It is a true, important, and sad, statement that trust in this sense has indeed declined in the US, and probably in most western world countries.

And that is something to be concerned about, far more than whether “trust” in the pharma industry is down x points on a survey last quarter.

Trust in Nebraska

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Trust in NebraskaI’m back from a four-day Conference on Institutional Trust at the University of Nebraska in Lincoln, where I was one of only two non-academics (the other a most talented Federal judge from Maryland). A few headlines.

First, our hosts – the University of Nebraska’s Psychology Department and its Center for Public Policy – could not possibly have been more gracious and hospitable. Since my parents and grandparents all hail from Nebraska, this was no surprise to me, but still gratifying.

Second, the four days were very enlightening – though not quite in the ways I had expected. This is the first of a two-part series (second part here) where I try to explain what I learned by playing missionary from the Land of Business to the Land of Academia.

Silo City

It was no surprise to me that there’s a huge gap between the business world and academia when it comes to trust. What I didn’t expect was to find silos even within academia. Allow me to explain.

The conference was hosted mainly by the psychology profession, though there were a few business school academics and even a few political scientists in attendance.

The leading model in the psychologists’ view of the world is one produced by David Schoorman of Purdue’s Krannert School, in 1995. I have to confess I had not heard of it, or of him, though the model feels very familiar (competence, integrity, benevolence). Schoorman was in attendance.

Also present was an academic much better known to me, political scientist Eric Uslaner. Uslaner wrote The Moral Foundations of Trust – a masterful and powerful book. It was a delight to finally meet him in person.

One academic not in attendance but whom I’d have loved to meet was Francis Fukuyama, also a political scientist, from Stanford. While better known for his book The End of History, he also wrote a powerful volume called Trust: Social Virtues and the Creation of Prosperity. Not only is it a brilliant book, but as of today, it still ranks number 216,239 on Amazon.

Let me put that in context: that book was by an academic, written in 1996, and that current sales ranking is competing with Harry Potter, Thomas Piketty’s Capital, and Game of Thrones. Not bad. (By comparison, 2006’s Freakonomics currently clocks in at #143,189).

So, about those silos. I’ve already admitted I had not heard of Schoorman. To my shock, neither had Uslaner. In fact, Uslaner suggested he knew only about 5% of the 100 or so people in attendance. As nearly as I can tell, they returned the favor. All this despite all of them toiling in the nominally same trust vineyard.

It gets better. I asked a panel of 8 for their views on Fukuyama, and it seemed that only 1 person was willing to comment (I’m guessing, though can’t prove it, they were not aware of his work). And yet they are all academics.

It goes without saying they hadn’t heard of me before (though I will say for the record: as of 9:59PM on 12 May, 2013, The Trusted Advisor ranks number 8,286 on Amazon – despite being published back in 2001.)

OK, so that’s not so surprising. But I also got blank stares whenever I mentioned Steven M.R. Covey’s Speed of Trust – #1,306 on Amazon, outranking all the rest of us. Ditto the Edelman Trust Barometer survey, which gets presented each year at Davos.

Now, the point is not to dump on academics – after all, I’m sure that in any room of 100 businesspeople you’d probably not even find one person who was aware of any of the above-mentioned academics, whereas there were two or three in Lincoln who were aware of some of the business literature. (By the way, props to the academics for being  more rigorous in their discussion of trust than business people, albeit narrower in focus).

The point is, whether you’re talking within business, within academia, or across the chasm dividing the two, you find a general lack of awareness about what else is being done in the field. Add this to the definitional issues surrounding trust, and you get a pretty disconnected approach to trust in the world.

Six Blind Men and the Elephant

But what’s really interesting  is not that the silos exist – it’s the differences between the silos that are fascinating. It turns out that the way the psychologists think about trust is skewed differently from the way Edelman PR thinks about trust. And that in turn is different from the political scientists, who in turn see things differently from groups like Trust Across America.

And that’ll be the subject of my next post, The Blind Men and the Elephant of Trust, an attempt to very broadly scope out the differing perspectives on trust.

The Limits of Value Propositions

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(This post first appeared on RainToday.com)

The Real Value PropositionValue propositions are unquestionably important in B2B sales, especially for large, complex, or intangible offerings. Some suggest a value proposition is the key component of successful sales. And most would say a value proposition is a necessary condition for success, if not a sufficient one.

But I think we over-value the value of value propositions. Not only are they not sufficient, but sometimes they’re not even necessary. They are frequently less important than classic issues of needs and wants. And discussing value propositions without overtly addressing client confidence in the capability of the seller is not useful.

Value propositions are unquestionably powerful. But if you think nailing down a clear value proposition is going to solve your sales issues, think again.

Thinking About Value

First, some definitions. I’m using “value” in a simple, narrow way to mean economic value. For example, I might offer a client a value proposition that says, “By using a distinctive approach to account development, I can improve top-line revenue by 10% within six months at virtually no cost to margins.” The “value” in that example is “10% of full-margin top-line revenue,” and the total statement includes reference to how I’m going to achieve it and in what realm of the client’s business.

But usually that’s not how clients start out thinking. In my experience, clients go rather quickly from “we’ve got a revenue problem” to “the biggest reason for our revenue problem is sales force turnover,” from whence it’s a quick hop to “we need a salesforce recruiting solution.” In which case, my highly articulated value proposition about the account development process, even if it’s correct and relevant, doesn’t even get invited to the party.

Their problem (“10% top-line revenue gap”) may rhyme with your value offering (10% top-line revenue growth”), but if the buyer is fixated on sales force turnover, game over. You could argue you need to present your value proposition earlier in the buying cycle, but that’s a problem outside the value proposition per se. Call that the “misaligned diagnosis” problem.

Another problem is relative lack of urgency. A 10% increase in top-line growth, while it sounds great, may produce yawns in organizations that are transfixed by products going off patent, or by R&D rejuvenation, or by M&A activity, or by the urgency of a cost-cutting drive.

A value proposition can work its magic only if the client a) agrees on the issue at hand, b) feels a need to address the issue, and c) wants to use the particular value proposition to address the need.

That is not a radical statement. (The value of a glass of water in the desert is greater than when lakeside.) And yet it is violated all the time. Salespeople keen on articulating value propositions to clients risk making the world look like a nail to match their value proposition hammer. We know better than to sell product vs. solution, but it’s so tempting when the “product” is disguised as a total value proposition.

Note: this can work in sellers’ favor. Over half my clients already see what they want in my offerings by the time they contact me. They articulate my value proposition for themselves. And unless they’ve gotten it quite wrong (not very common), there’s little point in forcing them to tweak it. At that point, the imperative to add value as the opportunity presents itself becomes the key task.

Selling Value And Buying Value

Suppose you haven’t productized the value proposition. You’re engaged in a constructive dialogue with an interested client. You’ve articulated your value proposition, they comprehend it, and it meets their needs. However, the same can be said for two competitors, each of whom isalso talking to your potential client about increasing top-line revenue by changing the account development process.

Several issues then arise, such as the level of detail. (Just how does your approach to changing the account development process differ from theirs?) You could call this a deeper level of value proposition, but below some level it starts to look like just product variations.

But the biggest issue for buyers at this point is often not the value proposition at all, but the confidence or trust the buyer has in the seller. Confidence and trust can not only overcompensate for lower stated value, but they can overturn the value proposition entirely.

Expected Value

Consider two firms competing for a bid, with general agreement on the value proposition that the client is looking for. Let’s say the economic value calculated by each firm is about net $5 million. Sophisticated decision analytics might reveal the client has 90% confidence that firm A will deliver fully on the expected value, but only a 75% level of confidence that Firm B will do so.

That’s 15 percentage points variation in expected value—the same as if one firm had quoted a value of $750,000 more than the other! It’s also a discrepancy often sufficient to entirely wipe out the fees difference between the two sellers. Even greater discrepancies emerge when the issues turn to, “what if things go wrong? What will they be like to work with then?”

Yet this discrepancy virtually never gets talked about—at least not in a direct and quantitative way. The discussions are more along the lines of, “I don’t know. I just don’t feel like when push comes to shove they’re going to be able to get with our program.”

If you lose a bid and are lucky enough to get some post-bid debriefing, you’re not likely to hear, “Well, we just didn’t feel like when the chips were down you’d be able to get with our program.” That would be the corporate version of politically incorrect speech.

Instead, you will hear, “The other guys had a more compelling set of resumes on their team, ” or “We just felt like we had to go with their longer track record in this area.” In other words, the language of value proposition gets cited as post hoc justification even though it was not the basis for the actual decision. More prosaically, people buy with their heart and rationalize it with their brains.

Trust Can Even Overturn a Value Proposition

I’ve been on both ends of this one. I won a job by telling the client they flatly didn’t need to do a significant part of the job they were requesting. I didn’t win because I came up with a better value proposition; I won because I showed I could figure out the right thing to do. And the proof of it was they didn’t bother to solicit other bids around the new value proposition.

Sadly for me, I’ve lost this way, too. It’s not about picking the right game, it’s about picking the person who knows how to pick the right game.

The Role of Value Proposition

Too often it’s assumed that the purpose of the value proposition is so obvious it doesn’t need stating. Doh! We assume clients buy value, clearly expressed, and tightly calculated. After all, that’s what they say they do.

There are seriously valuable roles for a value proposition, of course. They are:

  • To force the seller to have a Point of View: my client may or may not buy what I’m selling, but my statement of it marks a beginning point of discussion, a coherent account—one that suggests other ideas, proves I’ve thought things through, and shows I am worthy of valuable time.
  • To give the buyer “air cover” in justifying a decision internally: a B2B buyer wants to be able to tell anyone who asks, but especially his superiors, that they bought a proven product with a 35% ROI that will provide a 15% CAGR by an experienced-based approach to account management. They do not want to tell everyone they chose vendor A because, gee, they really felt good about them—even if that’s the truth.
  • To undergo a required, universal protocol: like meeting ISO standards, following tax rules, or complying with traffic laws, the tight definitions that come from rigorous thinking about value propositions are an assurance of quality. They may be a little pro forma, they may be subject to some tweaking, and they may not be a guarantee. But if everyone must do them, they form a common denominator by which to compare something of importance—value.

Value propositions are powerful, useful, and often necessary. Typically, however, they are not sufficient. Don’t go to into the sale armed with a value proposition alone.

Can Trust Scale? Interview with Stephanie Ann Olexa

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Getting to The Core of ValuesI recently got to meet Stephanie Olexa, a renaissance woman whose most recent incarnation is as an executive coach, at her company Lead to the Future. She has quite a bit to say about trust, and about two organizations in particular.  Here’s our conversation.

Charlie Green: Stephanie, you’re hard to pigeonhole. You’re an author, teacher, entrepreneur, PhD, patent-holder, scientist, professor, angel investor – and that’s not even half of what you do. How did you come to be so multi-faceted?

Stephanie Olexa: You might say I haven’t figured out what I want to do when I grow up.  But in reality, I followed my curiosity.  I started as a teaching and research scientist in a medical school, then evolved to work in the business of science at two Fortune 100 companies, then jumped into entrepreneurship by forming my own company in a scientific field, followed by a short time applying business principles to nonprofit organizations and now using everything I learned along my journey to work as an executive coach, consultant and teacher.

C. You and I met through Trust Across America, and we got to talking about the issues of increasing trustworthiness in business. You had a fascinating story about how decisions get made in a Pennsylvania company you know; could you tell us about that?

S. I met one of the co-owners of the business at a dinner sponsored by the Delaware Valley Family Business Center.   (I asked, but he prefers not to be mentioned by name or company).

He, his brother and brother in law are equal owners of the company and equally share the title of President.  All major decisions are made by consensus.  Of course this goes against everything I learned in Business school so my curiosity was piqued.  I asked him to describe their decision making process.

They have a conference room in the company with a basket at the door.  The word “ego” is on the basket.  This, he said, is to remind everyone to leave their egos at the door. Also in the room is a sign with the company core values.  For every decision, they ask which alternative best meets their core values.  When he told me that after thirteen years they never had a disagreement there was a calm and peaceful look on his face.  I wanted to hug him!

C. The ability to manage like that – doesn’t that come from a homogeneous culture? Isn’t that virtually impossible to replicate?

S. First, I believe that business leaders are responsible for creating and maintaining the culture and that the culture must be based on shared core values. It’s not impossible to replicate, but it is hard to maintain and takes commitment.

C. This sounds like a small, private company. Can you really scale up this kind of management to bigger companies?

S. It is a private company, but not small.  They have over 370 retail outlets spanning Eastern United States from Florida to Maine, with over 5000 employees.  Layer on top of the size the challenges of leading remote teams and it is even more impressive.

C. Wow. So, how do you see what’s going on here? What makes it work?

S. It works because the leaders have consensus on their core values, the courage to live in accordance with them, and the commitment to demand that the business is managed in  a way that promulgates them.

C. So, why can’t we scale up larger companies in the same way? Or can we?

S. We can.  I believe that we need to have the leaders in those companies to commit to shared values and to be proud of those values.  The values can’t be in a strategic plan on a shelf but have to be demonstrated every day.

C. What are some of the benefits of increased trust in business that you see?

S. The literature has statistics on financial benefits but I have witnessed the human benefits, happiness, peacefulness, generosity, compassion and caring.  Trust in business spills over into trust in families, industries and communities.

C. Are there some other examples that come to mind that illustrate the trust opportunities in business?

S. I ran my company, a network of analytical labs, for twenty years.  It was built on shared core values.  We always told employees that if they made a mistake in a test, the problem could be solved but if they hid the problem there could be long term issues.  Mistakes of the hands can be fixed but mistakes of the heart were not tolerated.

A few years ago we hired a young woman right after her  graduation with a degree in Microbiology.  She was near the end of her six month training in a test for total coliforms in drinking water.  The method has strict quality control requirements but this is a test that is dependent upon the analyst looking at the results and recording them in a lab computer.

One Saturday morning this analyst saw that the QC requirement failed.  The correct thing to do was to invalidate all forty samples and recollect them.   She was alone in the lab and could have easily just checked the box that everything was ok.  She didn’t.   She called her supervisor at home, who then called me.  We had to call all of the customers and send out two collecting teams to get new samples and run them that day.  The expense of redoing the work was really high and the young analyst knew it.   I thanked her for her honesty.  Not one employee complained about the inconvenience or increased work.

But the best part is that the following month the young employee was voted employee of the month by her peers, citing her courage and honesty.  They wanted her on the team. So what was the benefit to me of the trust in the company?  I had no doubt that every employee would do the right thing even if nobody was watching.

C. This is timely; I’m just reading a 10-year old book, McKinsey’s Marvin Bower, wherein author Elizabeth Haas Edersheim describes the same utter devotion to values-based management that he instilled in McKinsey. I suspect Bower would completely agree with you what you’re saying, and I’ll note that while McKinsey was far higher visibility, your friend’s organization is larger than McKinsey was at the time.

S. Values-based management is not just a pretty phrase.

C. Not at all. Stephanie, thanks so much for taking time to speak with us, and best wishes to you. Where can people reach you?

S. My website is Lead to the Future, and my  email is [email protected]

 

 

RIP Sammy the Dog

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Lord, let me be the person my dog thinks I am.
The pet-owners prayer.

SammyandReneeKissingSammy was nearly 15 years old when he departed this world in our arms Saturday morning. My ex- was there with me, as she was when we brought him back from the pound in 2000.

You can even see in the pictures, Sammy was special. His lineage – a mix of Samoyed and Chow – triggers that ‘aw…’ response in the human psyche; part teddy bear, part koala bear, with a touch of wolfieness for attitude.

He made literally hundreds of friends in the several locales in which he lived, welcoming them from driveway, porch and yard space with his comehither smile and tail wag. Aggressive dogs did not intimidate him. Small dogs never felt intimidated by him. He addressed all with an air of optimistic curiosity.fEBRUARY 2004 004 for blackberry

He had an unusual way of looking people straight in the eye. In his later months, his arthritic walk was interpreted by others as being regal – or as a FedEx driver said, pimping it.

The day was clearly coming, but the hole in my heart is much bigger than I had expected. And it turns out my reactions are typical. I’ve heard from a hundred people the same thing – Sammy was so nice, and I miss my own dog so much too.

Someone said it’s because, unlike with most people, we can’t discuss with them their imminent demise – they are wholly dependent on us for deploying the power of life and death.

Others note that, just as our dogs are constantly monitoring our state of being, so are we constantly aware of them, even if unconsciously. And I do notice, many many many times a day, his absence.

SAmmyearsandtongue2Sammy was special?  Sure, but so was your dog. And yours. Deeply unique, all of them, yet all with that capacity to love unconditionally.

And don’t tell me (us) “he’s just a dog, that’s not love.” Not buying it. There is a continuum of consciousness, and it overlaps species considerably. ‘Sam in a dog’s body’ is what we called him, and so he was.

I’ve held off writing this for several days, because I wasn’t sure what to say. I want to share my pain, but I don’t want to be all gratuitously self-involved. I also don’t want to claim my experience is unique – clearly, it’s not. And while I’d like to draw some conclusions about what it all means, I also decided not to waste the time on intellectualizing it.

IMG_1894

I had a dear friend. He’s gone. It’s sad, very sad. And I know now, better than before, how many of you have gone there before, and know exactly what I’m feeling – and I, you.

Sigh.

RIP Sam, no longer in a dog’s body.

This Is How I Work (series)

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This is my take on Lifehacker’s This Is How I Work Series. I was invited by Anthony Iannarino to follow up his post on the same subject. Hope you enjoy it.

Location: West Orange, New Jersey, US

Current computer: Macbook Air 13-inch (backup computer iMac)

Current mobile device(s): iPhone 5s, iPad mini

What Apps/software/tools can’t you live without?

Like Anthony, Evernote has to be my number one app. I use Evernote for taking notes on calls; I forward critical emails and documents to it; I scan receipts and tax returns into it; I use it for medical records; I write blogposts in it; and I especially use it to store .pdfs of key documents I frequently mail out, because I can drag and drop them onto an email. Way easier than attaching files the old way.

Two things people don’t mention enough about Evernote: One is that you can add to Evernote by every input mode yet devised by man, including juice cans with string (well, maybe). Another is it’s a great text editor for plain text.

I am always on the lookout for a great ToDo manager. Anthony turned me on to Omnifocus  which is so far ahead of everything else out there that it’s not even close. Yet you don’t have to tap even a tenth of  its abilities to benefit greatly, and it’s not hard to use. It has the best user manual of any software ever, written by the amazing Kourosh Dini, called Creating Flow with Omnifocus. Still, it may be overkill for many people.

Related to the ToDo is the search for the perfect note-taker-on-the-fly. I’ve found it in Captio, a nifty little phone app. Click to open Captio; dictate whatever text you want; then click on “send.”  You can have the resulting text file automatically sent by default to your email, or to your ToDo list – mine goes to Omnifocus.  Bingo, the perfect app for “omigosh I’ve got to remember to…”

I use DropBox as well; it’s essentially my directory in the cloud, obviating the need for files kept on the hard drive. Among all the obvious uses, it serves as an auto-backup for photographs from the iPhone. Should you ever need it, DropBox has good backup recovery tools, or so I hear. I use 1Password as a password manager, to deal with the impossible task of having different passwords for everything.  This software just got massively better by offering a menu bar icon that logs you in with one click to any member site you visit.  Suddenly password security went from a pain to a delight.

On the social side, I use three twitter clients: Buffer is the main one, the original scheduling client, but also Echofon and HootSuite for particular issues.

And on the sales side, I am very excited about two tools that Ago Cluytens just showed me, Salesloft and Postwire. The first generates rifle-shot targeted leads. The second makes for great-looking and almost-instantly customizable sales and marketing collateral.  Stay tuned. 

What’s Your Workspace Like?

My office roams with me. I do a lot of calls from the car (usually parked). My MacBook Air has a new Thunderbolt display and sits on the end of an old dining room table. My iMac is at a traditional desk in the office. The iPad lives in the living room, where I use it to run Aereo on AppleTV (goodbye cable, haven’t missed you a bit – and I still get ABC and HBO on the Apple TV).  I like to move around. My best reading is done in the hot tub.

What’s your best time-saving shortcut/life hack?

I totally echo Anthony here. First, hire a virtual assistant: thanks Tracey DelCamp! Second, outsource the work for which you are not the primary value creator.

What everyday thing are you better at than everyone else?

The older I get the better I get at not being offended by things people say. But then again I’m starting from a low point.

What do you listen to while you work?

I use Internet radio, from Apple TV. For work music, I go for Ambient categories, meditation – massage therapy type music. For real listening, jazz.

What are you currently reading?

Give and Take, a Revolutionary Approach to Success, by Adam Grant

Blind Spot: Hidden Biases of Good People, by Mahzarin R. Banaji and Anthony C. Greenwald

Double Down: Game Change 2012, by Mark Halperin and John Heilemann

Humble Inquiry: The Gentle Art of Asking Instead of Telling, by Ed Schein

What’s your sleep routine like?

11PM to about 5:30AM when the dog gets insistent.

Fill in the blank:

I’d love to see ___________ answer these same questions? He’s got more perspective than I do: David A. Brock (who I am hoping will write his own response and name someone else).

What’s the best advice you’ve ever received?

It’s a tossup between, “Nobody cares all that much about your Big Issue anyway so just get over it,” and, “There is a god – and you’re not it.”