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Upcoming Events 5/7/2010

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Following are upcoming events being given by Trusted Advisor Associates in various markets in which we operate. 

Keep your eyes open for events near you; we’ll make this a regular Friday feature.

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Wed. May 5th          Global           Charles H. Green

"Trust Across America" airs live every Wednesday from 12-1pm EST on the Voice America Network. Charlie was interviewed on Wednesday and his interview can be found at voiceamerica.com.

Tues. May 11th          Boston, MA          Stewart Hirsch

Stewart Hirsch will be a guest lecturer at a class entitled "Becoming a Trusted Advisor" at Emerson College. The class is part of a professional services marketing course taught by Prof. Silvia Hodges, PhD.

Wed. June 9th          Boston, MA          Charles H. Green

HBS Association of Boston: Charles H. Green speaks on "How to Win Sales and Influence People: the Art of Trust-based Selling." 6PM. Location: Hawes 101 on HBS campus.

Tickets are available here.

    

    

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The MBA Oath: Interview with Peter Escher, Executive Director

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Springtime of the second year in an MBA program is when students turn reflective.   For the class of 2009, it was also a year in which the job market for MBAs looked daunting, to say the least. With the economy in the pits and the degree in some disrepute, several members of the Harvard Business School class of 2009, encouraged by faculty members Rakesh Kurana and Nitin Nohria, developed an earlier version of an “MBA Oath,” and began to publicize it.

In late May 2009, when the New York Times caught wind of and wrote about it, roughly 20% of the class of 2009 of Harvard Business School had signed the MBA Oath. On June 8th, when I wrote about it, the numbers had jumped significantly.
By June 11, when BusinessWeek wrote about it, over half the class had signed. Today, in November, 65% of the HBS graduating class has signed.

Perhaps more importantly, the Oath has become something of a movement. It has a permanent home, at http://mbaoath.org/ . It is a 501(c)3 organization, and has an Executive Director, Peter Escher (signer number 5 of 1704, as of today). It has spread well beyond Harvard Business School, and in fact the mission is to develop chapters globally.

I sat down (virtually) with Peter Escher to chat. Excerpts follow:
CHG: What’s the essence of the MBA Oath?

PE: It’s an embodiment of our belief that things have changed over the past few decades, and that business has responsibilities to do things right, and obligations to society. Mechanically, it’s a preamble about the role of business, and eight specific tenets. A key part of the statement is “my purpose is to serve the greater good.” A sample tenet is “I will act with utmost integrity and pursue my work in an ethical manner.”

CHG: It has really taken off; were you surprised?
PE: Candidly, yes. It turned out we were part of a very big wave. It’s humbling, as well as exciting.
CHG: What drove you to do it?

PE: The spring was a time of reflection—the role of an MBA was very much on our mind, what with Harvard MBAs in leadership positions at so many Wall Street institutions, and the indictment of business leadership in general. Rakesh and Nitin pointed us to some early versions of the Oath that had been developed, along with the World Economic Forum. We took it from there, aiming just to get 100 signers. Of course it went well beyond that.

CHG: On the face of it, the Oath sounds unobjectionable. But you have gotten objections, yes?
PE: Oh yes. The top ones are:
1.    I don’t need an oath to be ethical; in fact, this implies I’m not.
2.    I won’t sign because there’s no enforcement mechanism.
3.    It’s all just Harvard spin.
CHG: And how do you answer those?

PE: To the oath/ethics connection, we note that law and medicine have very similar oaths. We are trying to get business to emulate those models.

To the enforcement issue, the oath won’t prevent bad actors from acting badly; but it can give aid and comfort to those who want to do the right thing by saying it publicly, along with others.

To the Harvard spin, we want to make this very much not about Harvard, but about business and MBAs in general. As to spin in general, well that’s a sad indicator of how big a hole we’ve dug ourselves as MBAs and businesspeople.

CHG: What activities are you undertaking to move forward?

PE: We have oath signers from over 250 MBA school programs at this point, and have active participation (attend our conference calls and the like) from over 25 campuses. We’d like this active participation to grow to even more schools. We want to expand our Board membership to other schools.

We held a Fall Summit, with representatives from 9 business schools, and from the Aspen Institute and the United Nations Global Compact.

CHG: What are your ambitions?

PE: We’d like to get 10,000 MBA signers by next year at this time. Since the top-55 US-based MBA programs (according to US News & World) generate roughly 12,000 graduates annually, it implies that we need to focus on US and non-US programs, and alumni as well.

CHG: How do you wish the MBA Oath will be used?

PE: As a touchstone, a guideline for discussion, and a tool for education.  It is a way for like-minded people to identify each other. We’re not out to codify rules or procedures for every situation. We want to productively guide discussions, and to enable signers to have guidelines in mind before they go into challenging situations.

CHG: Trust seems clearly implied in some of the Oath; is that how you see it?

PE: One thing we’re aware of is that transaction costs in the economy are increasing massively. Trust is the scale answer to cutting down on transaction costs. If you didn’t have trust, business wouldn’t happen at all. And if we had more trust, it’d work a lot better.

CHG: You’ve got the bully pulpit; anything more you want to say?
PE: Just read what we’re about; agree or not, please have a point of view. Our website is www.mbaoath.org
CHG: Peter, thanks very much for your time, and best wishes to you and MBAOath.

Charles Green on CNBC and BusinessWeek.com This Week

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GodzillaIt’s been an interesting week for trust.

BusinessWeek.com Article

First, Businessweek.com chose to print an article of mine titled Wall Street’s Run Amok: Harvard’s to Blame.  In it, I argue that the usual explanations for business malfeasance–greed, poor regulation, badly designed incentives–miss a much more fundamental cause.

For several decades now, our business schools have been teaching competition rather than collaboration, and contracted-out processes rather than partnership-based relationships.  With such beliefs at the heart of business, it’s not surprising that we find a dearth of things like trust, ethics, and generally getting along.

In fact, if you design a system based largely on self-aggrandizement (think sustainable competitive advantage, maximum shareholder value) as ends, it’s not just unsurprising–it’s downright predictable.  There’s no such thing as ethics if there is only self-involvement.

These belief systems worked well in the 1980s. Today, in a world where six degrees of separation is a vast overstatement, we can no longer afford ideas that encourage competing with our suppliers, customers, employees and partners.  We need a new belief system.

I’m not teeing off on Harvard Business School per se.  It’s just that, well, it’s the Harvard of Business Schools.  And it had more than its share of the designing of the competitive/contractual/process ideology.  If it can be as successful at teaching the new beliefs as it was at the old, it will continue to fulfill the powerful and positive role it used to.

Watch Me on CNBC Today

The good folks at CNBC apparently read BusinessWeek.com.  They were chatting about the article, and invited me in for today, Wednesday the 7th, on the Street Signs show (Erin and the boys).  The plan is for a slot at about 2:20PM.  Plans, of course, change, but plan to tune in.  And, as they say on the Bravo Channel, watch what happens.  [Later: here is the link to the video–have a look-see, it was fun!]

RainToday Article and Webinar

Also this week, RainToday publishes my article How Poor Cross Selling is Ruining Your Business in today’s issue.  Another very practical example of how the ability to manage trust–in particular, your trustworthiness–is a key driver of effective performance. 

Finally, I’m doing a webinar this week with the good folks at St. Meyer & Hubbard.  You can sign up here, and though the session is aimed at building trust in retail and commercial banking, it’s got a lot to say about other industries as well.

How Does Wealth Inequality Affect Trust?

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An old Frank Zappa lyric went, “What’s the ugliest part of your body? I think it’s your mind.”

Similarly, we might ask, “What’s the lowest-trust place in (corporate) America? I think it’s Wall Street.”

Which brings us to the latest issue of Harvard Business School Working Knowledge.

I find HBSWK a pleasure to read—they identify the coolest topics for study. The treatment of those topics—well, that can be quirky.

One fascinating current item is “The Dynamic Interplay of Inequality and Trust: An Experimental Study,” by Ben Greiner, Axel Ockenfels, and Peter Werner.

Here’s the (partial) synopsis:

We study the interplay of inequality and trust in a dynamic game, where trust increases efficiency and thus allows higher growth of the experimental economy in the future. We find that trust is initially high in a treatment starting with equal endowments, but decreases over time. In a treatment with unequal endowments, trust is initially lower yet remains relatively stable.

Cool! An egalitarian society shows a greater decay of trust than one with initially disparate endowments? The implications for political theory, economic policy and social dynamics are juicy, to say the least.

The “dynamic game” the authors use to add some empirical juice to theoretical discussions involves a trustor and a trustee. In a series of interactions, the trustor offers a sum of money to the trustee, which sum is then multiplied by the game; the trustee then returns a certain amount to the trustor.

As the authors say, “The amount sent can be interpreted as a measure of trust, while the amount returned measures the degree of trustworthiness.”

Then ensues 20 pages of analytical bludgeoning. Did you know about the Wilcoxon Matched Pairs Signed Ranks (WMPSR) test? Me neither. Did you know the lowest Gini factor ever measured was in Bulgaria in 1968?

I am numbed and humbled; you could say I’m numbled.

And sure enough, the graphs show a decrease in trust if all players start equally, vs. a low-trust start with sustained low trust if players begin with inequality.

But wait a minute! What happened to Frank Zappa?

The appendix lists the instructions given to the players in this game. Here they are:

Welcome! You can earn money in this experiment. How much money you earn depends on your decisions and the decisions of the other participants…it is guaranteed that you do not ineract with the same participant in two subsequent rounds…The identity of the participant you are interacting with is secret, and no other participant will be informed about your identity.

OK, so I want to measure the role of trust and inequality in an economy. Where should I go?

Los Angeles? Omaha? Detroit?

Nah. Let’s go somewhere people aren’t distracted by entertainment, or meat-packing, or cars.

Let’s go where people interact solely around money. Anonymously. And never with the same person twice. (Blindfolds and knives might make it even more interesting).

And let’s call that a trust experiment.

If this game had a geographical correlate, it would have to be the Land of Gekko, where Fear and Greed are baseline hiring criteria—Wall Street.

Not exactly where I would have suggested one go searching for insights about trust.

What’s the ugliest part of that trust? I think it’s the game.

 

Business Ethics and Self-Orientation

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The Harvard Business School Working Knowledge series has a track record of picking fascinating topics, even if I’ve occasionally accused them of over-analyzing the obvious.  Not so in a current article.

Why We Aren’t as Ethical as We Think We Are, by Tenbrunsel et al, is not only a terrific topic, but—in my humble opinion—it’s treated very provocatively. It raises big issues well.

Here’s HBSWK’s abstract:

People commonly predict that they will behave more ethically in the future than they actually do. When evaluating past (un)ethical behavior, they also believe they behaved more ethically than they actually did. These misperceptions, both of prediction and of recollection, have important ramifications for the distinction between how ethical we think we are and how ethical we really are, as well as understanding how such misperceptions are perpetuated over time…Key concepts include:
• All individuals have an innate tendency to engage in self-deception around their own ethical behavior.
• Organizations worried about ethics violations should pay attention to understanding these psychological processes at the individual level rather than focus solely on the creation of formal training programs and education around ethics codes.

That second conclusion contrasts with the usual business approach to "ethics."  Many corporate “ethics” initiatives amount either to probabilistic analyses or to brainwashing about political correctness.

Harvard Business School’s own ethics program is, if I recall, built around analyzing three constituencies: business, the law, and society (the latter including prevailing norms and mores).  The manager’s job is to intelligently balance the response.

This approach doesn’t distinguish between “ethics” and corporate strategy.  If the overriding goal is the long-term survival and success of the company—which it nearly always is (think "sustainable competitive advantage")—then "balancing" is just another exercise in corporate optimization.  The concept of a “conscience” in such models is a curiosity that seems to exist solely in others—just another data point or constraint to be optimized.

Yet how can “ethics” be discussed absent a treatment of the formation of conscience?

It can’t.  To their credit, the authors suggest conscience is individually meaningful, and affected by emotional processes. They say the psychological angle may be heretical to some ethicists—but I think the personal angle is even more heretical to most business thinkers, stuck in modes of alignment and processes, where "conscience" is an alien concept.

The article has meaning beyond ethics.  Look at this pattern.  People think they are more ethical than others; and they rewrite their past (and future) ethicality relative to current actions.

This is also a pattern not just of ethics, but of self-orientation.

A study asked faculty and students to rate how often they thought about the other group, and how often they thought the other group thought about them.  Yup—students and faculty alike thought mostly about themselves—but students assumed that faculty were also absorbed by their thoughts of students.  And faculty assumed that students were consumed by thoughts of faculty.  Everyone projects their own levels of self-absorption on to others, no one noticing the true similarity—self-absorption itself.

In its low-grade form, this is human nature.  In extremis, it is narcissism.  Another extreme form is encountered in alcoholics.  In both cases, the individual projects an over-inflated sense of one’s own importance on to others. (For narcissists, the projection is always positive—for alcoholics, it’s an oscillating  sine wave of positivity and self-revulsion).

Narcissists and alcoholics—I suspect—aren’t high on ethical behavior charts either.

Which suggests the ability to get out of oneself and to see things as they are are prerequisites both for accurate observation of the outside world, and for ethical behavior.  

Which suggests that strategy and ethics actually share something—an innate focus on the Other.  Self-centered strategies, those built around optimizing selfishness, are ultimately self-destroying; good strategies are intimately bound up with markets, customers, employees, suppliers.   Ditto for ethics; an ethics built solely on corporate success is an oxymoron.  Ethics require us to be intimately bound up with others.  

Hmmm…strategic and ethical analyses share an external view…both have a psychological component…business is about people as people, not just as objects of behavioral vectors …

This is not your normal business writing.  Kudos to HBSWK, and to the authors.