From Management to Influence

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The business world is moving from an environment of management to an environment of influence.

The drivers are simple: globalization and outsourcing.

Digital drives global, which makes for scale economies at the global level. Outsourcing is driven by many things, but boils down to buy vs. make.

When global meets buy vs. make, the strategists tend to focus on levels of competition or number of competitors. But the interesting thing is the change in the nature of relationships—from managerial to influential.

The VP of Benefits used to report to the SVP of Human Resources.

Now the SVP of Human Resources buys benefits services from Benefits-R-Us.

And yes, Benefits-R-Us has greater global scale, so benefits cost less, etc. But it’s the other change I find more interesting.

-From an employer relationship to a commercial relationship.
-From an internal relationship to an external relationship.
-From boss and employee to buyer and seller.
-From a managerial relationship to a relationship of influence between peers.

Multiply that by a billion, and that’s our new world.

It’s not a command-and-control world, it’s a horizontal world where people get along well, or not so well. Those who get along well with others, do well. Those who are more comfortable in a hierarchy—not so much.

Of course that’s a simplification, things move slowly, etc. But I think it’s directionally right. And to that extent, things like trust and the ability to influence those over whom you have no direct control become much more important.

What are the implications?

Do Non-Solicitation Clauses Pose Conflicts of Interest?

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I would sincerely like to ask my professional services readers, and particularly those in the legal profession, for some help. I’m not being snarky or sardonic this time, this is a genuine request for perspective.

Professional services firms commonly have several clauses affecting relationships with their employees and subcontractors. The list includes non-competes, intellectual property restrictions—and non-solicitation clauses. It’s this last one I want to focus on.

Most such clauses boil down to something like “as long as you work here and for X time after you leave (typically up to two years) thou shalt not approach a client (or future client, or anything vaguely resembling one who ever breathed the same air as you) with the intent of selling work ‘similar’ to what you did for us.”

Or, in simpler terms: hands off–that client belongs to the company, not you, and we’ll sue if you try to steal ‘our’ client from us by doing what we hired you to do.

As you can tell, there is something that rubs me the wrong way about this. Yet I also have a feeling I’m missing something. Most things in life exist for a reason. I may be missing a big fat reason on this one.

Here are the arguments against such clauses, as I see them.

• Firms requiring this clause position their clients as property to be bartered over. The phrase “who owns the client” has to be somewhat offensive to the putatively owned client.

• There is an inherent conflict of interest with the principle of client service. Say an ex-employee or subcontractor develops a better product, at a lower price, offering greater value, and meeting a need clearly expressed by a client of the existing firm. Non-solicitation clauses mean the employing firm is preventing their client—to whom they are presumably devoted to giving great service—from even hearing of the potential better deal. This is a “dog in the manger” strategy. It may not be legal restraint of trade, but isn’t it a violation of basic client service principles?

But, what’s the other side? What’s the social rationale for non-solicitation clauses? Can someone offer an explanation of how they are, on balance, in the best interests of client, employer and employee together in the long run?

Thanks in advance for any enlightenment; I look forward to the dialogue.

Great Selling by Truth Telling: A Best Buy Tale

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I was in Best Buy the other day.

The sales guy was excellent. He was open about what he knew and what he didn’t. He advised us to spend more, or to spend less, depending on what we wanted and needed in the several product lines we were exploring. He was candid. He spoke quickly and directly, in short, to-the-point sentences.

When we finished, I asked him, “You’re not on commission here, right?”

“No, not here. I’ve sold on commission before, though.”

“Which do you like better?” I asked.

“Oh, I prefer this. You can tell the truth.”

“You can tell the truth?”

“Yup. The other way, sometimes you’ve got to make the month, or bend it around for some other reason. It’s hard. Here you just tell the truth. It’s a lot easier.”

Just tell the truth–it’s a lot easier.

Let’s parse that: then evaluate it.

Why is it a lot easier?

1. There’s only one version of the truth—an infinity less to remember.
2. It’s easier to answer questions—it requires only short-term memory, not creative license.
3. It’s easier for people to tell you’re not lying.
4. People buy more from you if they feel you’re telling the truth.
5. People tell their friends; truth-telling is good marketing.

Of course, some people feel this is a sucker’s game. It’s sales right? The point isn’t to tell the truth, it’s to not get caught not telling the truth? To look like you’re telling the truth, not to actually tell it.

After all, we’re in business—right?

So let’s have a look at the numbers.

BBY Stock Chart

Here is a 5-year stock chart for Best Buy, tracked against the S&P500, and against Best Buy’s most obvious US competitor, Circuit City. (BBY is the one that ends at the top, by the way).

And sure, you can make charts look any way you want. I’m not trying to be an analyst here. I’m just saying the case is not only intuitive, but very plausibly empirical as well.

(By the way, Bear Stearns rated it underperform back in January. Goldman Sachs rates it a Buy.  Cheap shot? Maybe, but I’m just sayin’…)

Telling the truth is not stupid, wussy, or bad business. Far from it. It’s very good business. And for pretty obvious reasons.

And that’s the truth.

30 Minutes, 30 Cents, 30 Billion: Fragmenting Business

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A few weeks ago I sat next to an investment banker on a long flight. He works hand in hand with some of the super-quants on Wall Street who perform high-wire arbitrage through mathematical techniques so arcane that “I’d have to get two more math degrees just to understand them,” as my seatmate put it.
“Basically what they’re focused on is predicting the next 30 minutes,” he said. (Actually it may have been “the next 30 seconds,” I forget.  Anyway, day-trading for the Big Bucks, with lots of Other People’s Money).

At my destination, I heard a senior exec of one of the world’s high-tech success stories talk about their business model—“30 cents a transaction times billions of transactions, pretty soon you’re talking real money.” (How many of you remember Everett Duerksen, the originator of that line? Hey I’m not old, just well-read!).

30 minutes, 30 cents, 30 billions. Not your father’s bizmodel.

There is no shortage of economists who will gladly tell you the wonderful role these business models play. They mitigate risk; they lower costs; they create greater liquidity; they globalize geographically fragmented businesses.

Gosh, is there no downside? Of course there is. And it’s one of those two-sides-of-the-same-coin things.

The business world of today is heavily driven by two trends—fragmentation of processes, and globalization of scale. Break everything into tinier and tinier processes, and scale them globally. You get all the benefits listed above, but—what happens if no one has the big picture anymore?

You occasionally get myopic consultants and bankers—for a great example see this blog post from last year. 

But more importantly, you get situations where everyone is transaction-oriented, and no one has a stake in the integrity of the entire process.

The airline industry, many decades ago, was largely financed by insurance companies. The insurance companies tended to have ties to multiple airlines, partly to hedge their own risk.  Then the banks got into the business. Each bank picked a favorite—and given the peculiar economics of the airline industry, all the airline-bank pairs began to beat each other into the ground with excess capacity. The industry hasn’t made money for decades.

For a more current example, of course—subprime mortgages. When an industry gets dissected, disaggregated, and disintermediated, there may or may not be a problem. If a regulatory agency is there to see the big picture, that may be OK. If a risk-assessing industry is in place (bond ratings, accounting firms), that may serve to keep things in check.

But if none of those things are true—if Glass Steagall has been eviscerated, financing products escape regulatory purview, if financial institutions are selling off and collateralizing loans and if credit card companies are chasing fees (read transaction) instead of loans (read relationship)—then watch out. No one’s minding the business store.

In such cases, business becomes a combination of Russian roulette and musical chairs. He who gets in and gets out fast wins. He who stays is a sucker.

How fast is 30 minutes? How small is 30 cents? Small, and getting smaller.

Bizarro Customer Service: The Anti Nordstrom

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Ever run across customer service that was just so perfectly, precisely, exactly—wrong? Like Bizarro Superman, or the Seinfeld episode it inspired, a world of 180-degree opposites? My friend Jim entered Bizarro-land this week.

Jim’s an aw-shucks, dumb-like-a-fox Texan: MIT degree, world traveled, he’s currently building a truly special house in a gorgeous location. And when I say “building,” I mean he operated the earth moving equipment and cut the special trees for the special timber-based patio roof himself.

Back home this week, he visited two stores seeking some special pieces of hardware. The first place—Pierce Hardware in Fort Worth—treated him beautifully. It’s not in stock, but let’s go through some catalogs. You need an in-between size? We’ll work with the manufacturer to get something custom. And so on. Jim bought some things, and may buy more.

Then he visited Company B, a national franchise chain I won’t name. When they found out he wasn’t from the area, the salesperson seemed to him to lose interest. When Jim asked if he could take a very fancy brochure home, the salesperson said she had to ask permission from the Vice President of the franchisee.

So far—no Bizarro, just weak customer service.

Then Jim emailed me, describing the “Tale of Two Stores,” about the contrast between the true customer focused experience he had at one store, and the feeling of being shunted aside because he didn’t live within Company B’s franchise area.

And he cc’d the Vice President at Company B.

Now it gets juicy. Following are excerpts from the email Jim received back from the VP at Company B:

"I am aghast at this completely inaccurate account of your interaction with me and my staff at my showroom.

"As you are well aware, you have completely misrepresented our conversation… I am not sure what you [sic] motivation is for coming into a business and communicating a false recount of your experience.

"What would be of value to you and those few people who may read your email is to do 10 minutes of research on the company that you will be writing about before you attempt to blog about customer service / salesmanship.

"You did not do this so I am going to take a few more mintutes [sic] out of my extremely busy day to educate you on our company…

"… The space you walked into was a showroom for a high-end custom product. Again, listening to what the staff is tellling [sic]you and having a little background on exactly what the business you are critiquing does would have helped you communicate responsibily.[sic]

"In regards to the brochure that our Showroom Liason [sic] so generously handed you is exclusively for our clients that schedule in-home consultations with us and for our trade partners, not designed to hand out to someone walking off the street into our showroom. However, even though you were misleading our employee she gave you the benefit of the doubt and gave it to you in the name of superior customer service, which is our passion at XYZ. Again, if you had done even 10 mintes [sic] of research you would have know that we are a national brand with an unsurpassed reputation for exceptional service.

But the irony’s not over yet. She concludes with:

That brochure costs $12.00 so it is my expectation that you will do the right thing and return it.
FYI – I am cc-ing our corporate office and attorney on this email.

 

To recap: here’s Company B’s response to a customer complaint:

  • You’re a liar
  • I can’t imagine your motives for lying
  • Nobody reads your stupid blog
  • You should research us so we don’t have to waste time selling to you
  • I’ll waste 10 more minutes of my valuable time on you
  • You clearly don’t understand our business model, because—
  • If you did, you would have stopped at the trailer park instead of at our high class joint
  • Gimme back my brochure—after all, it’s only right, it wasn’t meant for you
  • I’ll sic my lawyer on you
  • And I’m sure my franchisor thinks this is a dandy way to handle customer relations!

Hopefully her attorney has by now informed her that (s)he has a fool for a client. And if counsel doesn’t have a gut feel for good customer relations or PR, I suspect the corporate office does. Because XYZ does in fact have a fine and well-deserved reputation and great products, and didn’t get there by boneheaded Bizarro antics like this.

That’s why I’m resisting the temptation to name names here. Ms. Bizarro doesn’t represent this company. Heck, maybe she just had a bad day and normally represents the company very well. I once had a day like that myself. Maybe two…

Reputation matters. It is the result of massive accumulations of daily, truly customer-focused behaviors. Sometimes that’s enough to get you off the hook for even Bizarro behavior. Maybe once or twice. Not much more.

Carnival of Trust for April is Up

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Carnival of TrustThe Carnival of Trust for April is up. This month it’s hosted by Mark Slatin, of TrueColors Consulting.  

A Carnival, if you’re new to the term, is a bloggish anthology, in which a host collects blog postings on a particular subject. The Carnival of Trust, surprise surprise, collects the best posts on the internet on the subject of trust.

Mark has done readers a service by doing a lot of the intellectual heavy lifting–identifying not only fascinating posts, but adding even more value in some shrewd commentary.  For example, click on this month’s Carnival to read about:

  • what trust has to do with airline pilots shooting up the cockpit
  • why and under what conditions patients sue their doctors
  • who’s hot and who’s not in youth brands–and why trust explains a lot of it
  • how your reputation is out of your control, and
  • the Ginsu Knife of Sales Letters (gotta love that title).

The cool thing about the Carnival of Trust (I think) is that each guest host (the host rotates each month) must limit him- or herself to only 10 choices; the Top Ten of the month. Secondly, each host must succinctly add value in their commentary—think of those great one-paragraph movie reviews in the New Yorker.  Heck, just go read Mark’s reviews, they’re great.

And if that whets your appetite, by all means have a look at past Carnivals.

Next month, R. David Donoghue will be hosting the Carnival of Trust at The Chicago IP Litigation Blog ; entries are open for that carnival  now at http://blogcarnival.com/bc/submit_1693.html

And if you’d like be a future host of the Carnival of Trust, write us at carnivaloftrust-at-trustedadvisor-dot-com

Are Your Great Ideas Just Knee Jerk Reactions?

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You know how the doctor checks your knee for reflex by tapping it with the rubber hammer? Is it possible our greatest ideas are similarly predictable? And is that depressing? Or just boring?

Case 1. The Governor Paterson to-do. Governor Spitzer goes down in flames, whereupon the newly appointed governor confesses to his own giant-sized passel of moral turpitude. (For the humorous angle, check my last posting).

On the serious side, here are two letters to the editor of newspapers: Match the opinion to the geography of the writer:

A. We Americans are a more forgiving lot than you’d think when it comes to sexual morays; what we can’t abide by is getting conned.

B. So Paterson and his wife have told the public of their infidelities. So what? Is that supposed to make it better or go away? Cheating is like pregnancy—you’re not a little bit cheater. You is or you isn’t.

OK, which writer was from (1) Redwood City, California (on the peninsula, near Palo Alto, and which from (2) Califon, New Jersey (central NJ, 60 miles outside of NYC). (Answers: A1, B2 just in case).

Too easy? OK, Case 2: the subprime mortgage debacle. Match the editorial opinion to the publication:

A. Maybe financial regulation will mean less financial innovation. Maybe that’s not such a bad idea.

B. Do not ban financial instruments. The pariahs of one age—program-trading, short-selling, junk bonds—are usually reborn in respectable garb in the next. The system…rarely makes the same mistake twice.

Which was (1) The Economist, and which (2) Newsweek? Not too hard either, I suspect. (A2, B1 in case I’m wrong).

I’m not saying this predictability is surprising. I’m reminding us it’s not.

Pollsters know this well. So does anyone who cares to take note of his commonsense observations. We are all quite familiar with the notion that others’ opinions are linked to other patterns, hence easy to predict.

Yet we’re also very fond of the idea that our opinions are different. We hold the Keys to the Truth.

(Or to be more precise, I hold the keys to the Truth. You, on the other hand—not to be rude about it, just stating the facts—only have opinions. Which, given who you are, are quite predictable. No offense—I’m just saying.)

And of course we (me too, in this case) tend to prefer the company of those whose opinions are enlightened (i.e. resemble ours). If you can’t remember which bloviator is O’Reilly and which is Limbaugh, then you probably don’t hang out with those who do. I mean, why bother listening to the unenlightened, right?

And when the inability to see others’ perspectives is brought face to face with our tendency to behave very predictably, we all get bent out of shape about it. Because while we see consistency on big issues as a virtue, we see predictability on said issues as an insult.

Case in point: Obama’s recent comment about “typical” white people. Let me be clear about my own opinion: he was speaking about the belief systems of the majority culture, which happens to be white—and in that sense, he was completely, 100% correct about what he described. Hence, typical. (Bad majority culture politics, but quite accurate use of the English language).

“Typical” majority culture behavior is to equate majority norms and perceptions with “normal.” And it is equally predictable—typical, you might say—that this view drives minority culture people nuts. ("You tell me that’s a Top 40 song? And just whose Top 40 did you have in mind?")

It drives them about as nuts as majority culture people are driven when someone points out to them the utter predictability of blind spots in majority culture people.

Part of the reason racism is so intractable is that we so easily impute beliefs to others—with a great deal of accuracy, by the way—at the same time we resist so strongly the idea that another person’s idea might be as legitimate as our own.

To a majority culture person, it is hard to imagine Obama equating in the same paragraph his grandmother’s mildly racist statements to his minister’s outrageous comments. Yet to a minority culture person, it is hard to imagine how someone could ignore the minority/majority context—Grandma’s mild reaction was proportionate to the mildness of her experience of racism; Jeremiah Wright’s response was equally proportionate to his far-more violent personal experience of racism.

As an evolving species, my guess is the way to “I’m OK, You’re OK” must first go through “I’m an Idiot, You’re an Idiot.” The first step is to admit there’s a problem. That requires listening to one another. Arguably the hardest thing to do.

Governor Paterson and the Art of Political Confession

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While perhaps not the tone I would use, this ultimate message of honesty of this post is one I more than agree with.  And it’s very funny.

Courtesy of Scholars and Rogues, here’s a little taste of Yes, Larry, I Did F**k that Goat; a Confessional Primer for the Modern Political Aspirant, by Euphrosyne.

"New York Governor David Paterson has the kind of political acuity worth watching… and unfortunately, probably worth emulating from now on. He coolly observed his predecessor go down in flames and silicone. He stepped politely over the writhing corpse, ascended into office and promptly did what Mrs. E has been privately hoping for years a political figure would do: called a press conference, looked the American media in its bloodshot, Internet-porn-raddled eyes and said, in essence:

“All right, bitches, let’s GO there,” spilling a load of personal compost over the next few days that, while not spectacular in scope, was refreshingly honest in a somewhat revolting way. Best of all, his wife did more than (here it comes) stand by her man; she added her own soiled knickers to the flurry of smudged tidy whities Dave was launching at the dazed citizens of New York. Damn. In a grave near Nashville, Tammy Wynette’s carefully embalmed nipples are standing at awed attention."

 

Click through here to enjoy the rest. You’re guaranteed your belly laugh of the day.

Carnival of Trust: Call for Submissions

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This blog has some pretty talented people reading and commenting in its pages. I’d like to invite all of you to consider submitting one of your own blog postings to the Carnival of Trust.

The next Carnival is going live on April 7. That means those of you (us?) with short attention spans can look forward to some instant gratification, should your post be selected. This month the Carnival is being hosted by Mark Slatin, of True Colors Consulting , at Mark Slatin’s Blog.

Here’s what you do to get your 15 minutes of fame and enrich the world. Pick your trust-related post, and submit it here.

Then sit back and roll in the adulation.

OK, seriously, the Carnival of Trust is a fascinating, monthly compendium of blog postings related to trust in business, trust in selling, trust in society at large. It is kept interesting by the vibrant commentary of our esteemed hosts, and by the imposition of a Top 10 criteria on submissions. If you don’t get selected, it’s no dis. But if you do get selected, it’s a tribute.

So bring out your best stuff, and share it with the world. After all, how’s the world going to get better if you hide those great insights from the rest of us?

(Read more about the Carnival of Trust here )

Ode to Distrust

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Charlie:

You trust guys are taking over the Ethernet. You always write as if someone were arguing with you from the other side, but the distrust people are never heard from. It’s about time someone spoke up for distrust for a change.

I mean, if we didn’t distrust other people, we would all still believe in Santa Claus, the Easter Bunny, the Tooth Fairy, Hillary and the Republican Party! If we spent all our time trusting each other, a teenage child saying, “Trust me, dad” would put us at ease, instead of jolting us like an electric shock, putting us instantly on our guard to deal with a life threatening event, as it should.

If we didn’t distrust, the boss saying, “First, let me say that you did a wonderful job collecting for the United Way this year . . .” wouldn’t throw us into evasive maneuvers. And your spouse asking, “What are your plans for the weekend, honey?” might lead you to say, “Nothing, dear” instead of the more cautious, “I’m not sure. Jim hinted that he might dump a big project on my desk.  What’s up?”

We musn’t get so jaded that we give up entirely on distrust. Think of what it would do to the economy!

Think of all the unemployed diplomats, auditors and lawyers! It would hit the lower income worker just as hard with security guards, credit clerks, repro men and many others put out of work and left with inappropriate skills.

Why peace might even break out, threatening the entire military-industrial complex. That would bring our economy to its knees! And as the US economy goes, so goes the world’s. One might safely say then that distrust makes the world go round.

No, Charlie, don’t let the siren song of trust turn your head. If you got too much of it, trust me, you wouldn’t like it.

Ford Harding