Trust and Corporate Change

Close your eyes and make a mental list of models for corporate change.

There are models of “what is needed.” One such model posits three needs: pressure, vision and first steps.

There are models of “types of change.”  For example, linking participative management to incremental change, and directive leadership to transformative change.

There are models of tools to leverage for change: a favorite of mine is People, Structure, Systems, Culture.

There are "how to" models.  One  emphasizes leadership; another, vision or intent; a third, alignment.

Then there are descriptive models—they use OD frameworks, or industrial economic models, to classify and distinguish types, levels and genres of corporate change.

But you don’t hear much about linking trust to corporate change. Nor is corporate change the first thing most of us think of when we think of trust in business.

Which is curious, because the presence or absence of trust within an organization can greatly affect a company’s ability to change.

Let’s say you need to make an acquisition; or enter a new business; or up your growth rate by four percentage points. How would a low-trust organization go about it?  How would a high-trust organization go about it?

Low-trust organizations are typically run on the basis of either consensus, fear, or contracts. All three have their problems.

—Consensus-based organizations can be very thorough, but slow to adapt—since trust doesn’t exist between parties, it has to get re-created by consensus each time.   If fast change is required, that’s a drawback.

—Fear-based organizations can be efficient at implementing change, but there is a big burden on the few fear-drivers to be right—they are deprived of the value of direct input from others, who fear them. The more complex and fast the change, the greater the risk of the leader getting it wrong.

—Contract-based organizations substitute a market in place of consensus. For any given transaction it may be more efficient than consensus.  But there get to be an awful lot of contracts and transactions made, all of which require time and people to track them.  It’s an expensive model to maintain, and even more expensive to tweak.

Then there are trust-based organizations. In such an organization, if your partner says he’ll do something, that’s it.  You don’t need a consensus session. You just trust he’ll do it. And your partner  will do what he said, because that’s how you get to be trusted.

You also tend to trust your partners’ judgment—because you trust they will tell you if they don’t know something. You take their word at face value.

Unlike a fear-based organization, you trust that you partners will raise issues that need raising; and they won’t raise issues not worth it.

Best of all—unlike a market-based organization, you trust that everything your partners think and do will have your interests at heart for the long run; they will not be distracted by the short-term transactional commissions, bonus points or other "incentive" schemes based on the improvement of an individual’s own short-term self-interest.

In such organizations, you don’t need nearly as many contracts to make sure your partner will do what he says. You don’t need so many measurement systems to track and distribute agreed-upon incentives and outcomes.  And the whole organization is not hostage to the judgment of a few people.

Which kind of organization will most easily change on a dime, and get it right? The answer is pretty clear.

Trust pays off when it’s time to change.


When Business is Incontinent

No, not that kind of incontinence.

The term is also used in philosophy to describe a certain situation (I’m reaching back a few decades on this one, so someone check me) roughly like this:

He knows what the good is; he knows that he ought to do the good; there is nothing standing in the way of his doing the good; and he wants to do the good. Yet he does that which is wrong.

As I recall, Aristotle’s explanation was, roughly:

That’s silly. If he didn’t do it, then it’s just because either he didn’t really want to do it or something prevented him from doing it.

Plato’s—which I greatly prefer—was:

That’s life. That’s the beauty and the idiocy and the pain of being human.

David Maister’s recent post What Gets Fat Smokers on the Diet? reminded me of this issue. David’s topic had to do with what prevents organizational change.

My take on the subject is that both personal and corporate change are similar to dealing with addictions: it takes repeated attempts, which in aggregate show improvement, but which in particular instances are weak. And there are no guarantees.

Best practices, in personal as well as organizational life, probably include:

> envisioning—constantly keeping in mind goals, outcomes, tangible pictures of the desired to-be state of affairs

> specific next steps—tactics, mantras, tips and tricks that move the ball in the generally right direction

> no-no’s—things that are warning signs of "bad" behavior, a la if you don’t want to get hit by trains, don’t play on the tracks

> values—a clear set of guiding principles, enunciated frequently by people who understand them and practice them

> a medium-to-long-term view of the world that infects all behaviors—negotiating, pricing, relationship management, compensation, investment evaluations

> a strong preference for intrinsic motivational approaches over extrinsic approaches. Getting people to behave in ways that support others by giving them money (in effect, paying them to be unselfish) is as close to oxymoronic as you can get.

> at the suggestion of Stuart Cross I’d add one more: A sudden shock – for an organization this may be a decline in profits, the loss of a customer, the entrance of a serious new competitor, a price war, or a rise in costs. In addiction, it’s a divorce, a disinheritance, a DWI, a death in the family (ever notice how many disasters being with the letter D?).

For change in corporate life, the challenge is to generate the powerful motivational effects of, say, a tragic car accident—but through genteel, socially acceptable means like corporate training programs.

The mother of the new boy in kindergarten says to the teacher, "Johnny is very sensitive. If he does something wrong, just slap the child next to him—he’ll get the message."

But Johnny Adult isn’t quite so sensitive. And the Adult Next to Him tends to hit back. It’s hard to change habits; it’s hard to change thinking; it’s hard to change incontinence.

It’s almost enough to believe Aristotle.


But not quite.