Archive for category: Uncategorized

One great thing about paradoxes is that they keep on teaching.

Looking at a paradox, you’re first struck about the confusing, “wrong” nature of it. And you must rediscover how to get out of it.
Think of an optical illusion—the old lady young lady vase, an Escher print. Think of the Cretan Epimenedes’ paradox, “all Cretans lie.”

Or, think of Trust-based Selling®.

How can you trust someone if they’re trying to sell you? If I get you to trust me in order to sell you, aren’t I being untrustworthy? How can you trust someone who says ‘trust me?’ If you’re getting paid a commission or a quota for selling me, aren’t your interests in conflict with mine? How can trust exist between two parties, one of whose job it is to convince the other to give him his money?

What I do for a living is explain that and similar paradoxes to others—and, to teach it, I must rediscover it for myself every time. Paradoxes are slippery.

The “answer” to the trust-based selling paradox is to accept it as paradoxical—like the apparent paradox of quantum physics. Is it a wave, or a particle?

Yes.

The best way to sell is to stop selling. The best way to influence others is to stop trying to influence them. The best way to get what you want is to help others get what they want.

Put that way, it’s not hard to “get.” The Beatles got it (“the love you take is equal to the love you make”). Henry Ford got it (“the secret of success lies in the ability to get the other person’s point of view and see things from his angle”). Dale Carnegie got it (“You can close more business in two months by becoming interested in other people than you can in two years by trying to get people interested in you.”)

But the majority of businesspeople, I think, don’t get it. Even many in salespeople don’t get it. Here, in part, is why.

Consider some of the accepted-wisdom mantras of today’s business gurus, magazines, exec ed programs, and business schools.

• Define people development in terms of behaviors, not motives or feelings.

• Define measurable skills gaps, develop programs to augment skills, and measure their behavioral impact.

• Claim that if you can’t measure it, you can’t manage it.

• Align rewards and goals—particularly with extrinsic, financial rewards.

• Pay for performance—defined as financial contribution to the firm.

• Examine all processes to maximize efficiency, effectiveness and profit.

• Examine customer acquisition, loyalty, retention and customer profitability, through highly detailed metrics. The aim is to improve your profitability. Then refer to it as “customer-centricity.”

• Make sure all behaviors, expenditures, human “capital” development and processes are continually monitored to maximize their return on shareholder investment, and their contribution to sustainable competitive advantage.

Consider the collective impact of that set of beliefs when they come up against a concept like “do the right thing for the customer.”

“Do the right thing” has a snowball’s chance in hell.

Here’s what usually comes back:

“OK, but we need to make sure it’s working.”

“The right thing can’t be code for charity.”

“If the right thing is profitable, then let’s incent it.”

“We need to be careful about how we define “right.”

“We need 2nd and 3rd order metrics for ‘the right thing’.”

“You can’t let them take advantage of you.”

“That’s OK when times are good…”

“Great, but you still need to up the closing rate for this quarter.”

So: should you do the right thing? Or should you close the sale?

Yes.

The paradox is—if you truly do the right thing, you will close more sales, be more profitable, get higher loyalty. But only if you do the right thing for the customer.

If you do the right thing in order to close the sale, etc.—it’ll blow up on you.

A Wall Street broker once told me, “Trusted Advisor? Sounds good. Anything that’ll give me greater share of wallet, I’m all for it.” You can pervert anything with bad intentions.

If a boss yells "quarterly quota" in your ear, remember: the best short-term results come from long-term customer focus—not from forced closing.

If you are a boss yelling quarterly quota in your salepeople’s ears, try retuning the message—“I want you all to do the right thing by your customer. If your numbers are bad, I’ll assume you’re doing the wrong thing by your customer; and that hurts us too.”

The best sales come from trust. It helps to rediscover that paradox every time.

I’ve just returned from a week in Buenos Aires—my first time back in 20 years. My trips to South America generally haven’t gotten that far South.

Like most Americans, I’m first struck by the blend of European appearance and Latin feeling. I had the added delight of spending two evenings with four wonderful friends from the past, Argentine expats of a sort who have found themselves back in the homeland. Among other things, we talked about trust.

To American eyes, Argentina can appear untrustworthy. It has had several military governments; in 2001, it had four presidents in a matter of weeks, followed by a 60% devaluation.

While I was there, the vice-governor of one of the provincial governments accused the governor of corruption, and said he was taking over the government as a caretaker. There was a bit of shooting, and it took a few days and police to roust the governor from his offices. Also last week, the president took away air traffic control from the military and gave it over to civilian control. Not quite ho-hum stuff for the Argentines—but considerably lower-key news than if the liuetenant general of, say, Massachusetts, took it upon him- or herself to declare the governor ousted and bring on the state police.

Strong stuff for those of us accustomed to a certain level of stability and rectitude in our civic institutions. A tear in the social fabric of trust, etc.

And yet—trust is absolutely alive and well in Argentina. Seeing why says a lot about the nature of trust.

It is one thing—and a glorious thing indeed—to be able to trust a system based on law. Courts, precedent, police, prosecutors, defenders, regulations, legislatures, and respect for the law. There is a certain kind of trust that comes from that.

But all that does nothing to create another kind of trust. The kind of trust that is expressed in a handshake, that comes from a personal sense of honor, which is that much stronger for being internalized in a way that legal compliance can never reach.

My friend Oscar told of a man who offered to guarantee a price for some real estate for a month to an American woman. The woman’s daughter insisted that her mother get a receipt as a guarantee; the man, quite rightly, said there was no guarantee in this world a receipt could provide, but that his word of honor was as close as one could get.

A Singaporean friend of mine worked for ten years to help make a Chinese multi-millionaire into a mega-millionaire, and did well himself in the doing. All ten years were based not on a contract, but on a handshake.

I’m no expert in Argentine (or Singaporean) politics or social affairs, and there are thieves and honorable people in every country. My point is that, in the absence of institutional trust, the power of personal trust becomes very apparent. It is so in Argentina in dozens of little daily ways.

Here are the interesting questions; I don’t claim any great basis for my own answers to them.

• Does having trusting and trustworthy people guarantee high-trust social institutions? That is, is individual trust sufficient to create institutional trust? I think not; Argentina may prove the point.

• Can a country gain high-trust social institutions without trusting or trustworthy individuals? That is, is individual trust a necessary condition for institutional trust? I think it is necessary—though sometimes it seems as if the US is trying to disprove that theory by treating personal situations as social or legal cases.

• Can’t we aspire to both? I don’t see any reason why not.

But if I had to pick one excess to live in, my heart would incline toward a world of high personal trust and sloppy institutions, rather than the reverse. Own some property in France or Miami, keep some cash in Geneva; but live in Buenos Aires.

It’s a personal thing.

Un abrazo a Oscar y Beth y Ambrosio y Maureen.

In his classic best-seller Influence: The Psychology of Persuasion,  Robert Cialdini lists the main forces or dynamics which explain how we come to be persuaded to believe what another tells us or asks us to do.

Chief among them is the idea of reciprocity: if you do for me, I will do for you.

For those in sales or advice-giving roles, It’s tempting to read this as a suggestion to exchange favors.  But it would be wrong.

Michael Lindemann tells of his experience on a suicide prevention hotline in Manhattan.  Earnest volunteers, eager to help those in arguably the greatest need, must be trained to contradict their instincts.  Those instincts are to persuade and convince the person of the value of continued life.

Turns out, those instincts are what drive jumpers to jump.  The average call lasts twenty minutes—that is, if you spend the first ten minutes listening, which is what volunteers are trained to do.  Listen, then offer advice.  Only then. Reciprocity.  If you listen to me, I will listen to you.

Thomas Friedman (New York Times columnist, author The World is Flat),  said in his commencement address at Williams College in 2005,  "people often ask me how I, an American Jew, have been able to operate in the Arab/Muslim world for 20 years, and my answer to them is always the same. The secret is to be a good listener… Never underestimate how much people just want to feel that they have been heard; once you have given them that chance, they will then hear you."  Reciprocity.  If you listen to me, I will listen to you.

John Gottman, author of The Seven Principles for Making Marriage Work, says “understanding must precede advice. You have to let your partner know that you fully understand and empathize with the dilemma before you suggest a solution.”  Reciprocity. Let me know that you have heard me, and I will then listen to you advice.

Reading Cialdini, it’s hard to doubt that the principle of reciprocity is at the heart of trust, influence, and successful selling.

What’s easy to miss is the most common and powerful form of reciprocity—listening.

Want to persuade/sell/influence someone? Then stop trying to persuade/sell/influence them.  Just listen.

Then let nature take its course.

In 1994, Jerry Porras and Jim Collins wrote “Built to Last--” which it certainly has, ranking #935 on Amazon, lo these thirteen years later. (Collins’ later “Good to Great” ranks even higher). The aim was to diagnose “landmark,” “outstanding,” and “exceptional” companies (adjectives from the bookflaps).

Almost all great books get something very right. In this case, it was the characteristic of “visionary” that they identified. The “vision thing” is as important as ever.

But often, even great books don’t age well. Time reveals a flaw in the foundation, maybe not critical, but a source of confusion—something just not quite right, something that begins over time to annoy.

In this case—it’s the title itself.

The book picks twelve matching pairs of companies—e.g. Westinghouse vs GE, Merck vs. Pfizer, Ford vs. GM—and explores why we think one is better than another. “Better” is also defined in stock market performance terms, so we’ve got long-term value creation as a criterion, along with brand power, and a few others.

Some have critiqued the choices—ditto for "In Search of Excellence"—-for not being valid over time (both Ford and GM today are candidates for the dustbin of history, for example). But the choices stand up pretty well—if your game is to be lasting.

But—what precisely makes “lasting” the criterion for describing a company as landmark, outstanding, or exceptional?

What used to be valuable about continuity over time was:

• stock market performance for investors
• employment and economic stability for workers
• community involvement for host governmental units
• a dependable brand for consumers.

Let’s see how well these criteria have stood the test of thirteen years.

• The vast majority of owners these days are not shareholders looking to hitch their wagon long term to a particular organization. They are pension and other funds looking for performance, managed by hired guns ready to swap equities at the drop of a quarterly hat, or leave them entirely for the latest hot category, e.g. private equities—hardly bastions of vision.

More importantly—financial instruments have evolved enough that shareholders don’t need to buy a corporate package—they can create the virtually the same performance through a blended mix of instruments reflecting currency, geography, industry and risk profiles. This is not at all a bad thing: it greatly enhances the ability of investors to pick precisely what they want. Which is not, frankly, a lasting organization.

• Employees of a lasting organization are not likely to be well-served unless that organization is participating in most of the global trends affecting its business. Those include outsourcing, globalization and technological investments. Job security at the cost of growing irrelevance is the short-term opiate of the unions.

• Community involvement doesn’t necessarily require a sustained physical presence—the core values an organization carries with it ought to be recognizable quickly with a given locality or other community.

• Branding is a funny thing—it is usually the word we use to describe the retail B-to-C feeling we get when we know what a name stands for. But test yourself: who owns Jif Peanut Butter? Skippy? If a brand clearly conveys something over time, we don’t much care about the visionary nature of the company producing it. The consumers of YouTube don’t seem to be terribly concerned about whether it will last into next month—but it was visionary, and it did what consumers wanted, at least yesterday.

The truth is: focusing on “lasting” as an attribute of a company these days is likely to confuse rather than enlighten. The continued existence of a particular corporate organization is a pretty un-inspiring goal, when you think of it.

Ironically, the continued existence of a particularly corporate instantiation probably requires high turnover in shareholders, employees, geographies and even consumers. So who exactly cares if it’s lasting?

The point is not to last. The point is to do great things for all your constituents. Where continued existence helps, great. Otherwise, standing water stagnates. The visionary thing works; but these days, the vision had better be to change, morph, grow, evolve, turnover, shift.

Built to last is not a desirable adjective anymore, it’s likely a critique.

And you thought it didn’t exist.

Well, pretty much it doesn’t. But it’s interesting to explore why.

A delightful blog, The Epicurean Dealmaker, dusts off an old paper by Harvard Business School academics Bob Eccles and Dwight Crane, which describes the path of trust failure in the investment banking world.

E.D. summarizes it nicely as follows:

1) Markets for capital and strategy get more diverse and complex, leading to more threats and opportunities

2) Formerly monogamous Company XYZ begins to talk with more than one investment bank to identify, analyze, and take advantage of these market threats and opportunities

3) Investment banks which have never had a shot at breaking into Company XYZ before gladly start lobbing in ideas and golf trips to get XYZ’s business

4) XYZ’s CFO and finance staff get smarter about the markets and cleverer at playing the i-banks off against each other for better deal pricing, better ideas, and better golf trips

5) I-banks begin to see they are getting played and begin to play back, lobbing completely unoriginal Ideas of the Week in on a regular basis on the chance one of them will hit and pestering XYZ’s CFO to let them visit the CEO with A Really Big M&A Idea

6) XYZ’s CFO realizes the i-banks are no longer really paying attention to him and gets pissed, doing everything he can to prevent the i-banks from getting into the CEO’s office and screwing them even harder in pricing negotiations

7) Both XYZ and the i-bankers start bitching to The Wall Street Journal and anyone else who will listen that the other is no longer interested in building relationships, but only wants to do deals

As E.D. suggests, skip steps 1 and 2 and you have the story of private equity.

For the prosaic rest of us, this is the script for your friends on Match.com who bemoan the dearth of relationships (and it’s not just women).

I have also seen this script play out in the paper merchant industry; the brokerage industry; the real estate industry; the commercial banking industry; the consulting industry; the auto supply industry; and a good deal more.

As Step 6 in the progression points out, the end-game is unhappy bitching about how short-term, transactional, and generally untrustworthy the other one is. A crummy ending.

Question 1: at which of the 6 Steps could the provider have done something differently, and turned the cycle toward trust?

Question 2: at which of the 6 Steps could the client have done something differently, and turned the cycle toward trust?

Hint 1: Questions 1 and 2 have the same answer.

Hint 2: The answer rhymes with “all of them.”