Trust Me

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Courtesy of The Financial Brand comes the story "A Failure of Trust:"

"On Thursday, September 4, an ad from Silver State Bank asked, “Why do so many of Nevada’s strongest businesses trust Silver State Bank?” The answer? “Security” and “protection.”

The next day, the bank was seized by federal and state regulators.…In the two months prior to the bank’s seizure, customers pulled $264 million of the $1.7 billion on deposit at Silver State."

There are no more trust-destroying words one can say than “trust me.” Googling “trust us” gets more than 5 million hits. Interestingly, well over half appear to be of the cynical phrasing, e.g. “Trust us, we’re experts: How Industry Manipulates Science."

In other words, most of us are “on” to the con.

Yet the self-delusion (and occasionally cynicism) continues. I periodically Google “your trusted advisor” to see who still thinks advertising “trust me” is a good strategy. I won’t name names—you can do it yourself: just search on “your trusted advisor” (don’t forget the quote marks), and decide for yourself whether the advertisers really are your trusted real estate agent, your trusted financial planner, your trusted land developer—or not.

Most people who use the term “trust” or “trust me” or “trusted advisor” in advertising mean well. In a few cases, they’re even right. But they miss the point.

The point is, it’s inherently contradictory to advertise your trustworthiness. It’s like bragging about your humility. Trust is supposed to be largely personal, and about serving the customer. Trust ads are intrinsically non-personal, and inherently self-serving.

George Burns once said, “Sincerity is the most important success factor; if you can fake that, you’ve got it made.” The joke lies in the implausibility of faking sincerity. Ditto for trust.

Unsolicited testimonials are fabulous. Solicited testimonials, quoted in mass media, are quite another thing. The difference lies in the motives.

Talking internally about how to be trusted is great; talking to clients about it is good to the extent you do it one on one, in small groups, with blank notepads and a willingness to learn. Talking to clients about trust via statistically valid online surveys that don’t let you expand on the “other” checkbox and that are designed solely to be converted into incentivized behaviors—not so much.

Trust advertising is a personally critical issue to me, given the name “Trusted Advisor Associates.” I need “trust” in the name to describe my content and subject matter, but I have on occasion cringed when a client went off-script and introduced me at a speech as “the trusted advisor.”

Our website always says “we help build trusted advisors…” and never “we are trusted advisors.” Even with that, we get occasional snide comments about the insincerity of calling ourselves “trusted advisors.”

I don’t blame them a bit. The currency of language is frequently debased in business (think ‘loyalty,’ ‘customer focus’).

Given the current state of cynicism about trust, the best any of us can do is to be careful about our own language, and to let our integrity and trustworthiness be their own advertisement.

After all—that’s how trust really gets built.

In Search of the Bottom Line of the Wall Street Implosion

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I have been reading a lot of opinion pages in search of the perfect insight about what’s happening on Wall Street, because it affects the world financial community and the economics of everyone globally.  This being written days after Lehman’s demise, and the morning of the AIG bailout, take-over, whatever.

John McCain and Joe Biden have both denounced Paulson’s decision re AIG. Knee-jerk reactions, and somewhat tone-deaf.

Jim Cramer says he had it right a year ago in his TV meltdown; that the worst is over, and that Paulson did the right thing because he had no choices.

Thomas Friedman calls it a bubble  and makes the case for systemic rewrite of regulations.

The Today Show led with Gordon Gekko clips—it’s all about greed.

Joe Nocera combines the bubble and greed themes and reminds us about denial—Wall Street is just Main Street, where home buyers keep hoping they can sell for more than the outrageous price they could have gotten (or, worse, bought at) two years ago. We are all Lehman.

These are all sensible–all blind men correctly sensing one part of the elephant.  But one person–I think–just flat nails it. No surprise, when you think about it—Tom Peters.

In 450 words, he cuts to all the chases. Peters is at that point in his career where his value to society is enormous. He’s seen this movie before—many times. He’s smart. He’s articulate. He’s still learning. He’s still got every one of his marbles.

And that’s what makes him wise.

His comment on greed? “Duh.”

On capitalism? “Good ideology run amok.”

On AIG? “Thank God for Paulson: it’d be worse without him.”

On hubris–he lists five deeply flawed beliefs that drove this debacle, each of them dead-on.

For a coherent view of things, just go read Tom Peters post of today.
 

Balancing Logic and Emotion in Trust and Politics

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Readers of this blog know that a common theme is the over-valuation of the rational in business. Deductive logic, process definition, behavioral psychology and rational persuasion are often over-emphasized in sales and in the professions, while the power of emotions and intuition are under-appreciated.

But lately in politics, we’ve got the opposite problem.

The trust equation (see the book  The Trusted Advisor) defines trustworthiness as:

Trust Equation

 

In that equation, credibility and reliability are the largely “rational” elements, while intimacy and self-orientation are more emotional or intuitive. 

US Presidential politics are now characterized not by a diminution of discussion about credibility and reliability, but by their near absence.

Maybe it began with Clinton blowing the sax on the Arsenio Hall show. But was that as much of a stretch as McCain on the Rachael Ray show?

The idea behind representative government, as opposed to a pure democracy, is that in a complicated world, you need to entrust decisions to others as a full time job. Issues like qualifications and experience, one would think, are relevant.

Yet in this election, the very concept of “experience” is either not defined, badly defined, or defined only to be reversed a day later.

Only four years ago, “flip-flopping” was an epithet. Now it’s barely worth yawning over. The concept of logic has been demoted to a mere nice-to-have, subordinated to the need to match the demographic-du jour.

The idea of someone you could have a beer with is an important aspect of trust. Necessary? I suppose arguably so.  But sufficient?  No way.

Does mankind advance through history? Read the Lincoln-Douglas debates, and then think of Obama on SNL, and McCain on The View. There’s your case for societal regression.

Fear and smear work because they appeal to the more primal, base level needs to the exclusion of higher-order issues. Hunger crowds out freedom of expression. And fear trumps hunger. Focus on fear limits the upside of political dialogue.

As in business, a reduction of all things to the lowest common denominator certainly works. It also dehumanizes, borrows against the future, and limits what people can become.
Can we talk? When it comes to politics, not very well, it seems.
 

Outsourcing Loyalty, and other Oxymorons

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I am on vacation this week, and will be going back to the vault for some ‘oldies but goodies’ posts.  I hope you enjoy them: I’ll be back in a week or so with new material.

Outsourcing loyalty. Think about the absurdity in that phrase.

Oh, we know what it means, all right. There are businesses whose specialty is executing frequent-customer programs. They handle strategy, research, program design, even fulfillment. It’s no different from any other outsourced business process.

But still. Think about the contortion of language implicit in combining those two words. Loyalty—that emotional quality that binds one person to another, to a clan, a country, or a set of ideals—can be mechanically crafted by a third party for hire. And we still call it loyalty.

Googling “outsource loyalty” turns up a few entries, like Ernex, which offers "a complete real-time points management solution for loyalty program or member-based loyalty databases." Cap Gemini, a major global IT firm, has a website that advertises its “loyalty factory.”

Hey, why not? You can outsource confidants (they’re called shrinks). You can outsource sex (the oldest profession). You can outsource phone calls (“your call means a lot to us…please hang on the line”). Why not loyalty?

But in our rush to turn business functions into business processes, then modularize and outsource them, we occasionally overdo it. A major casualty is the faux language of relationships. “Loyalty” programs are but one example.

Another oxymoron is “human capital.” Note which word became the adjective, and which stayed the noun.

“Relationship capital,” its close cousin, goes it one better. It isn’t just people that are financially fungible. Ditto for the relationships between people. Long live love. If it pays, that is.

“Customer focus,” as a practical matter, is often oxymoronic. It amounts to “inspect, dissect and reject” so that you maximize customer profitability per unit of financial investment. Customer profitabilty to the seller, that is; not the customer’s own profitability. Vultures are focused in that sort of way. If you’re a customer, "customer focus" can feel like you’re in the crosshairs of somebody else’s scope.

How about you? Can you add to the list? Got any oxymorons about the human dimension in business? Share them here; enquiring minds want to know!

 

 

Lawyers Overdrawn at the Trust Bank

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To watch TV, you’d think cops and prosecutors are pretty much sworn mortal enemies of criminal defense lawyers. And, according to Scott Greenfield, a distinguished lawyer and author of the blog Simple Justice, you might not be wrong.

But it didn’t used to be that way. In Greenfield’s When the First National Bank of Criminal Law Closed Its Doors, he describes how it used to work, in the Bronx court system of just a few decades ago (described by Tom Wolfe in Bonfire of the Vanities).

…one of the first things you learned was the sanctity of a “contract.” When you sought a favor, you owed it back. If you didn’t pay on demand, your name was mud and no one would ever do you a favor again. In fact, people would go out of their way to burn you. It was a matter of internal honor.

[talking to young lawyers recently]…not one of them knew what a contract was, or how you banked one or how you made a withdrawal…They couldn’t believe…those of us who worked in criminal law were actually able to cooperate with each other. They couldn’t fathom the existence of an unwritten honor code where we trusted each other to return the favor, or conceive of a virtual bank where our contracts were held, awaiting the day we needed a favor in return.

 

“Competition” used to mean the healthy thing you learned to do on the ballfield that carried through somehow into business. It made for an efficient systemic approach to commerce. Then, sometime, the approach became the goal.

The adversarial legal system presumably used to serve the higher goal of justice. Now, apparently, the legal equivalent of the invisible hand needs no help from its mortal agents to arrive at justice. Or—more likely—justice is not quite the goal it used to be.

The day Tiger Woods denies a competitor a gimme putt in a casual game we’ll know it’s all over.

Until then, make a few deposits in others’ trust banks. And honor the deposits made in your own.

Re-Engineering Michael Hammer’s Legacy

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Michael Hammer died last week, at the sadly young age of 60. He made Time Magazine’s Top 25 Most Influential people in the mid-90s.

His name will (rightly) always be associated with the concept of business re-engineering. For me, it was one of those brilliant insights that you instantly “got” when you heard it, along with the spreadsheet, competitive strategy and the Byrds’ Mr. Tambourine Man.

There will be many articles written eulogizing Hammer, and he deserves every one. I’d like to touch on one small point: how a great idea can be misused by those who come later.

His insight was simple, yet profound. The Industrial Revolution worked by specialized division of labor. But at scale, specialization creates massive vertical bureaucracies. Re-engineering looked at processes, not tasks. Shift focus from marketing and production to order fulfillment and supply chain management. Hammer took a vertically organized world and saw a need for the horizontal. The impact of that simple insight has been enormous.

Then came the perversions.

Stage 1. Re-engineering became associated with downsizing. Redesign the company to get rid of workers and enhance shareholder value. Hammer’s work was used to justify the Gordon Gekko era of excesses. As the Wall Street Journal put it:

“It is astonishing to me the extent to which the term re-engineering has been hijacked, misappropriated and misunderstood,” Hammer told Time, saying that ideally, re-engineering should promote greater production and create more jobs.

Hammer may have originally been a bit naïve about the difficulty of getting people to change, though not for long; he became quite articulate about it.

Re-engineering survived the era far better than some dot-coms and i-bankers. But today, it faces another misuse—and again, it’s a misuse that dehumanizes business. It’s the belief that viewing the world through process lenses is an end, not a means.

The process revolution has been massively successful. Originally applied to manufacturing, we now see it in HR, in non-profits, and in education. I would argue we saw it at scale in the recent financial markets’ breakdown (see my post on the view 12 years before the subprime mortgage meltdown )

The process view has been used to maximize efficiency by expanding scale. The more you can break things out into modules by redefining out-sourceable processes, the more you can achieve scale by specializing modular components and outsourcing them at larger scale. That lowers costs, makes markets bigger and more fluid, and in theory makes for less risk.

But it seems to come at one big cost—the cost of integration. Ironically, this is similar to the flaw Hammer saw in the vertical organization—the left vertical silo didn’t know what the right vertical silo was doing. And didn’t much care.

In the mortgage debacle, the mortgage sales origination process didn’t know what the asset securitization process was doing with the mortgages. And didn’t much care.

There is risk in fragmentation. When no one has a stake in the entirety of a system—no owner, no customer, no regulator—things can go a little crazy, whether you’ve organized vertically or by processes. One answer is, “the market’s invisible hand takes care of that.” But we’re not buying that answer anymore. Markets don’t look omnipotent when Fannie Mae and Freddie Mac are getting taxpayer bailouts.

I didn’t know Hammer, so I welcome comments from those who did. Me, I like to think he was perfectly aware of this issue, and was in his own way working back to rescue the humanistic intent of his original insight—to make organizations work better for the sake of all constituencies, thereby transforming human relations.

Not just more efficient businesses. Not just means, but ends.

I hope that ends up being Hammer’s legacy.

September Carnival of Trust is Up

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The September Carnival of Trust is up, and it’s a great read. 

Our hard-working host this month is Ann Bares, of Altura Consulting Group, who writes at Compensation Force.  For those of you new to "carnivals," the concept is this: each month, a guest host combs the internet for the best blog posts relating to trust: trust in sales and marketing, leadership and management, strategy/economics/politics, and advising/influencing.  Each host adds their own particular perspective and commentary n teh Top 10 choices they made.

Ann has done a terrific job surveying the field–her selections convey the range of situations within which trust is relevant.  She introduces and shares with us posts on trust relations between citizens and local government; the role of trust in social networking; how saying "No" can create trust; and my personal favorite, the use of trust as a substitute for controls in the business world.  Congratulations to all the posts selected by Ann to make the Top Ten List–it’s an honor!

It’s a great read–I recommend the September Carnival of Trust to you.

Past Carnivals can be found here.  If you’d like to enter a blog posting for the next Carnival, click here.  The next Carnival of Trust will be held at the beginning of October.

 

Why Companies Don’t Create Trust Internally

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The Institute for Corporate Productivity (i4cp) sets out to answer that question in a recent survey. They report:

"Most organizations recognize that trust is an important consideration in their company’s success, but many employees don’t feel it is being nurtured internally. The main culprit? Top management…

… A full 40% of low-performing companies feel their organizations do not nurture trust, while only 16% of respondents from high-performing companies feel the same.

“Trust is a core building block in developing a high-performance culture,” says i4cp Leadership Pillar Director Mary Key. “When employees don’t sense an environment where they can trust others, especially the leadership, productivity and morale spiral downward. It’s no surprise that those who reported higher levels of trust also rate their companies as high-performing.”

It’s nice to have empirical data linking trust and economic performance—one of the biggest trust misconceptions in the corporate world is the implicit belief that trust is a costly indulgence, related somehow to charity, a nice-to-have if you can afford it, but certainly not a competitive factor.

Wrong.

The study goes on to say that management credibility is falling—and the biggest reason is “failure of senior leaders to deal with low-performing individuals or teams.”

Let’s connect the dots here.  Phil McGee, a small-company CEO, says nearly all management failures boil down to two failures. The first, he says, is "an inability to confront."

McGee is dead right. Trust comes in large part from courage and from the ability to constructively confront reality. Which leads to high performance. Which leads to trust. Just like the survey respondents said.  (David Maister has written extensively and persuasively about the link between facing hard truths and generating performance and trust).

McGee’s other leading cause of bad management is "a tendency to blame. "  And here I see a dichotomy between the survey-makers and the survey-takers.
In the survey report-out, the authors say:

Despite the issues, there are very few formal programs inside of organizations today to restore trust. A full 87% of respondents say their organizations do not offer training programs that address this issue, 69% don’t utilize an ombudsman program to deal with concerns or complaints, and more than 60% report that employee surveys or audits on trust issues aren’t in place, or are in place to only a small extent.

Methinks the i4cp is falling here into the trap of modern management practices—the belief that, if you have a trust problem, you need surveys, training, processes and programs. The default corporate response to a complex issue has come to be:

a. Design a survey instrument
b. Use it to execute a needs analysis
c. Identify competency models, complete with levels and behaviors that indicate them
d. Train employees in the new behaviors
e. Implement measurement and reward systems to incent the above.

I can’t say strongly enough what hokum this is when it comes to trust. A competency model does for a low-trust company what a report card does for a recidivist criminal—just about nothing.

What would be the effect of doing a “needs analysis” of people walking into church? (“How well would you say you’re doing on the 4th commandment? OK, sit in the 3rd pew, front, left. And how much reward will it take for you to behave unselfishly this quarter?”).

Low-trust organizations don’t need more of the same stuff that makes for "best practices" in process design.   They need values, principles, passion, introspection, leaders who actually believe what they say and aren’t afraid to say what they believe.  They need inspiration, a conversion, ah-ha moments, and a hard kick in the soul.

But i4cp does good work, and they also report out the answers of those surveyed:

…most respondents said that better communication practices, both informal and formal, need to be implemented across all levels of the organization. Many also specifically cited the need for better top-down communication from upper-level management and management’s need to “walk the talk” on trust issues.

Exactly.

This is McGee’s “tendency to blame and inability to confront” themes being echoed by the real people in the trenches. Don’t blame the process; don’t passively wait for others. Step up to the plate. Be a mensch. Earn your pay.  Do the right thing despite the incentives, not because of them—then fix the incentives later. 

The only thing left is to remind all the employees that the same advice applies to them as well. “I can’t do it until it’s led from the CEO’s office” is more of the same: a tendency to blame, and an inability to confront.  It doesn’t smell any better just because you’re lower in the organization. 

You don’t need your boss’s permission, a business process, or a quarterly incentive program to be more trustworthy. Just do it. It’s not just good karma, it’s good business.

Trust and Noah’s Bar Mitzvah

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I’m asked frequently what organizations can do to increase their perceived trustworthiness in the market. Part of the answer is to increase trust within the organization itself; after all, why should a customer or supplier trust an organization whose employees don’t even trust each other?

Which is why it’s interesting to look at practices of high-trust organizations.

Which brings us to Noah G.

I was privileged to be a guest at Noah’s bar mitzvah this past weekend in San Francisco. It was a moving event for many reasons. And that’s part of the lesson.

Being “moved” is a bonding event, creating a shared experience. Shared significant experiences are a basis for understanding each other—if it’s significant for you, and I’ve been there too, then to that extent I “get” you.

The bar mitzvah—like other bonding experiences–enhances that sense of unity, cohesion and collaboration among a group.

The service refers to the group’s shared values—in this case, embodied in the Torah. Which is written and read in the identical language used about 3,500 years ago. The values are literally—physically—walked around the room for all to touch—again, literally and physically.

As an observer, for me the heart of the bar mitzvah service involved Noah being asked to describe the meaning of an ancient piece of text for today’s world. Think values-driven management. Think demanding that even 13-year-olds learn and share how time-tested values are applicable to today’s world.

The dimension of time, I think, is critical for trusting experiences. Without something common that bridges time, we have nothing but a sequence of transactions (a great number of “best practices” these days in business are focused on transactions without reference to a time-based relationship). Relationships by definition presume constancy over time.

In Noah’s case, the after- party featured a slide show of Noah in relationship over time—Noah with his brother, his parents, his cousins. And, strikingly, photos of Noah’s father at his own bar mitzvah—and Noah’s grandfather at his.

The service, being held on the Sabbath, contains the Kaddish—recognition of those who have passed on but are still part of the Relationship—specifically including those for whom no one any longer exists who can speak for them directly. (Does your company actively cultivate “alumni”—or do you force them to sign non-competes and “leave the building?”)

Did I mention the ceremony was moving? My own tradition is that of ‘God’s frozen people,’ as Garrison Keillor puts it. To hear parents speak openly in public of their love for their child feels shockingly, achingly personal to me—both as a child and as a parent.

I felt the same ages ago sitting in the choir loft next to my Irish Catholic girlfriend at her father’s funeral, as she played Danny Boy on the flute and the congregation wept openly with every note. Personal.  Real.  It has to be personally moving, because relationships are personal.

And paradoxically, that’s one of the most important parts of building trust in an organization. Trust may be encouraged institutionally, but it has to be built personally. If you’re not moved yourself, how can you expect others to be moved by you–to trust you?

Trust minus passion leaves only statistical probabilities; not the road to building a trusted organization.  We don’t trust organizations very much; we trust the people in them—or not. Organizations who would be trusted had better not fear to get real, to get personal.  Like the bar mitzvah.

 

Do People Trust Rationally?

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In the Q&A session of the webinar I gave yesterday, someone asked an interesting question: do people come to trust in rational ways? He didn’t mean “is it rational for people to trust the things they trust?” His question was about the ways in which we come to trust, not the choice we end up trusting.

The answer at first blush seems “clearly not.” After all, look at the success of con men, the concept of love at first sight, and, for that matter, the charisma of some politicians. Rational? Hardly.

And yet—if the way we come to trust isn’t logical, careful, thoughtful, cognitive and evaluative—then why do we act otherwise? Why do lawyers focus so much on briefs, consultants on proposals, and politicians on platforms? For many in business—particularly the professions—the belief that trust comes from rational argument is so deeply held that it’s enough to prove the opposite.

From a bastion of rational argument—Science Daily—comes more fuel for the non-rational side. In Extreme Appeal: Voters Trust Extreme Positions More Than Moderate Ones, Study Finds
we read:

Trying to appear moderate is not always the best strategy for capturing votes during an election, reveals a new study. Extreme positions can build trust among an electorate, who value ideological commitment in times of uncertainty.

[this is a] challenge to the widely accepted median voter theorem…in which voters who are fully informed will…choose the platform that is closest to their own beliefs. Thus…to attract the majority of votes, parties should try to appeal to the majority of voters.
The researchers argue that in the real world, few voters are “fully informed” or anywhere near it—thus the real persuasion happens not through individual voter policy analyses but through a comparison of the relative attractiveness of competing ideologies.

However, I think even this understates the non-“rational” approach to voting. Sure, to some extent we think “I’m more of a lib-social-democrat-cum-conservative-economics.”

But there’s more. There’s the power we all feel in the face of someone with certainty. Like confidence, it’s catching. It’s compelling. We may deplore sound bites, but they work—the war on poverty; government’s not the answer, government’s the problem. The Big Lie works because it’s simple: Saddam was behind 9/11, Obama is a Muslim. The less we know, the more awed we are by those who do know—or seem to.

Want to win an election? A (very) few voters swill tudy platform planks. A few more will “vote Democratic.” But more yet, I suspect, will vote for the guy who sounds like he’s got a simple answer to a complicated question.

From the same article:

"The current political advantage of the Republican Party stems from the ability of its candidates to develop ‘signature ideas.’ This strategy is rewarded even when the electorate has ideological reservations," says University of Southern California economist Juan Carrillo, adding that this poses a challenge for the Democrats.

 

Years ago, Herman Kahn of the Hudson Institute articulated the role of hypocrisy in social situations. A father in a small town, he said, doesn’t want his daughter to have access to pornography. And—if she finds it anyway—he wants to be able to say he didn’t know about it.

How can you talk about rational decision-making in a species that lies to itself?

The human mind is certainly complex. We like simple answers, but for complicated reasons. Sales author Jeffrey Gitomer says, “people buy from the heart, and then rationalize their decisions with the brain.” Often our brain arrives at rational decisions by bypassing “rational” thinking.

Do we come to trust rationally? No. It’s far more complicated than that. To describe human decision-making in purely rational terms is to under-estimate human nature.

Which means—if you want to be trusted, you won’t get there on powerpoint slides alone. Unless it’s just one slide. And real simple.

And you read it like it’s Revealed Truth that only you have access to.