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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]

 

 

The Problem with B-Schools is the Problem with Business

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The New York Times’ business section yesterday published an article by Kelly Holland (perhaps her best yet) titled, Is it Time to Retrain B-Schools?

The putative answer was ‘yes,’ and I agree. But what does that mean? From the article:

“It is so obvious that something big has failed. We can look the other way, but come on. The C.E.O.’s of those companies, those are people we used to brag about. We cannot say, ‘Well, it wasn’t our fault’ when there is such a systemic, widespread failure of leadership.” Ángel Cabrera, Dean,Thunderbird School of Global Management in Glendale, Ariz.

“We lived through an enormous extended period of financial good times, and people became less focused on risks and risk management and more focused on making money. We need to move that focus back toward the center.” Jay Light, Dean, Harvard Business School

“The schools suffer from an overemphasis on rigor and an under-emphasis on relevance. Business schools have forgotten that they are a professional school.” Warren Bennis, USC Business School and noted leadership author.

“A kind of market fundamentalism took hold in business education. The new logic of shareholder primacy absolved management of any responsibility for anything other than financial results.” Rakesh Khurana, a professor at Harvard Business School

“Business creates value in terms of services and products. That’s what business delivers, just like medicine delivers a healthy person.” Sharon M. Oster, Dean, Yale School of Management.

“There are extraordinary things taking place in business education, and a lot that is very promising. But what’s the central theorem of business education? It’s wanting.” Judith F. Samuelson, Exec. Director, Business and Society Program, the Aspen Institute.

The bookend quotes have it right. Cabrera when he says there’s an obvious problem, and Samuelson when she says the central theorem of business education is wanting.
Those in the middle, IMHO, are not yet at the core of the answer.

So here’s my take.

The first post I ever did in this blog—October 2006—was looking back from a 30th reunion at Harvard Business School. It was about this very point, and I think it holds up. Here, in part, is what I said then:

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

HBS needs to teach less competitive differentiation and more collaborative value-adding; less how to win supply chain negotiations and more how everyone gains by operating them as a system; less about transactions, more about relationships.

We don’t need more ethics courses—we need an ethos of business itself.

Last I looked, the ethics course at HBS teaches a “balanced” approach to three spheres: competitive, legal, and social.

Meanwhile, down the hall in the core strategy courses, those same students are taught that business at its core is about corporate competition. To define strategy that way is to define ethics as a branch of strategy—how to steer the corporate ship between the Scylla and Charybdis of the law and society.

In that Hobbesian world-view, there is no room for an Other. And where there is no Other, There Just Cannot Be any such thing as “ethics.” “Business ethics” is become an oxymoron.

There can be no ethics until “strategy” reclassifies customers, suppliers and employees as co-equal with shareholders—rather than as categories of “competitive forces.”  Which is exactly what is taught now, and which lies at the heart of the matter. 

The solution doesn’t lie in Dean Oster’s redefinition of value; nor in Dean Light’s move back to the balanced risk center. Nor even in de-emphasizing shareholder value.

The solution lies in modernizing our ideas of how business actually works. Away from an ideology of corporate competition forged in the past. Toward recognizing the collaboration of many in the pursuit of commerce that is fast becoming reality today.

Collaboration is the new competition. We are not isolated anymore. We are all linked. It’s a fact, and one that our mental representations need to catch up to.

We can no longer afford competition-centric thinking—neither in business, nor in the b-schools.

 

Why We Don’t Trust Corporations

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Josh Bernoff asks the “who do you trust” question at the Groundswell blog, based on data from Groundswell.

 

Here’s the chart he’s talking about.

 

Bernoff’s discussion suggests:

  1. The best trust is personal
  2. 60% trust reviews by strangers in aggregate, e.g. “If 100 people on eBags say a laptop bag is great, then it is great. If they say it’s inferior, then it is inferior. Regardless of what a so-called "expert" might say.”

Bernoff then goes on to draw some conclusions for brand marketers: basically, if they like you, let them talk. If they don’t like you, you can’t shut them up; but you can listen to complaints and improve your product or service.

Phrased this baldly, it sounds like a massive dose of the obvious. But if it were so obvious, more companies would be doing it. Let’s break this down.

Trust is Personal

First, the idea that trust is personal. In my own work, trust is massively personal at root. Two of the four components of the Trust Equation developed by myself and co-authors Maister and Galford in The Trusted Advisor are overtly personal—intimacy and self-orientation.

Brands, Corporations and Trust

Corporations, brands and advertising are inherently impersonal and by their nature self-oriented; which is why ad campaigns and PR agencies have an awfully tough time when it comes to getting anyone to trust their messages.

Think about it. What are the two most trust-destroying words you can say? I nominate Trust Me.

And if that sounds blindingly obvious, then who developed these ad campaigns?

  • RCA “the most trusted names in electronics”,
  • Value Line “the most trusted name in investment research”, and
  • CNN “the most trusted name in news”.

(Do you think that’s why CNN has just been supplanted as “most trusted” by—of all sources—Fox News?)

How about Bernoff’s other conclusion: when they don’t like you, don’t shut them up, but address the complaint and improve the product?

It is astonishing how infrequently this obvious piece of advice is ignored. Let’s call it the Watergate catch-phrase: the cover-up is always worse than the crime.

Think of the iconic Johnson and Johnson response to tampering with Tylenol—ages ago. Why does such an old example of corporate ethical behavior still come to mind? Because it’s so rare. How many pharmaceutical industry kerfuffles since have been dealt with so openly?

Remember Monsanto and Dioxin?

How about the tobacco industry’s continued, chronic response to health concerns?

Remember mad cow disease and the US beef industry’s response?

Rarely is it the first instinct of business to follow Bernoff’s “obvious” advice—to hear consumer criticism as inherently constructive, and to do something about it.

Given that response, is it really so surprising that people trust personal acquaintances more than anyone else? Trust abused is trust destroyed. The biggest reason we trust people we know is that people we know are the ones we can trust.

That’s not circular. It means people we know are more trustworthy than companies who pretend to be. Whose fault is that?