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Covey on Trust

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I am remiss in reviewing Steven MR Covey’s The Speed of Trust: the One Thing that Changes Everything. 
Remiss because it came out over a year ago, because the book (and associated events) has been quite a success—and because it deserves that success.

The book itself is organized according to “waves”—from self-trust, to relationship trust, then on to organizational, market and societal trust (at this last level, it echoes  Francis Fukuyama’s seminal work, Trust, from a decade earlier, subtitled "the social virtues and the creation of prosperity.")

Covey’s section on self-trust—what I would call the realm of “personal trust”—centers around credibility, which he suggests consists of integrity, intent, capabilities and results.  This covers territory similar to my own (with Maister and Galford) in The Trusted Advisor:  (credibility + reliability + intimacy, all divided by self-orientation), except for his inclusion of integrity.

His linking of integrity and credibility remind me of another interesting piece of work—Integrity: a Positive Model…, by Michael Jensen and Werner Erhard.  Both take an end-run around “ethics” toward a more practical approach which still yields similar results without the whiff of theology.

But while Covey is theoretically sound, his real focus is on the practical, as befits someone who ran his father’s highly successful business (as in  Seven Habits of Highly Successful People).

Most of the book, and I suspect most of his lectures and seminars, are aimed at corporate audiences—in particular, what people can do to become more trusted. He lists 13 behaviors, all of which make perfect commonsense (which is not to say they are common): listen first, talk straight, meet commitments, etc.

It goes without saying—though I’ll say it—I couldn’t agree more with him.

I think Covey’s greatest contribution, however, may lie in his forcefully advancing the simple proposition that Trust Matters.  In one of his emails promoting a webinar, he rhetorically asks, “Is Trust more important than Vision? Strategy? Systems? Structure? Skills?” and proceeds to answer in the affirmative.

Linked with some effective framing (don’t pay a trust tax, earn a trust dividend), he makes a case that business hasn’t heard often enough: trust pays off, not just in some mufty-flufty New Age calculus (though that’s true too), but as well in the conventional, traditional business language of ROI, efficiency and effectiveness.

I have some minor quibbles—his emphasis on measurement, for example—but they are not critical to his contribution.  It’s a fine piece of work that moves forward our understanding and appreciation of the critical role of trust, particularly in business.

Larry David, Seinfeld and Social Networking

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The technology of social networking is overrated. You still have to be able to communicate. Cartoons notwithstanding, in social networks everyone does know you’re a dog—and it doesn’t take long to learn it.

Might there be learning in studying those who are not good at networking with others?

A recent New Yorker item describes how workers with the mentally ill have discovered a powerful tool: the comedic stylings of HBO’s Curb Your Enthusiasm, by Larry David (co-creator, with Jerry Seinfeld, of the hit TV show Seinfeld).

Those being studied represented several forms of alienation from society at large (they were schizophrenics, if memory serves me). The researchers discovered that the patients responded to situation comedies portraying social ineptitude. They could relate, it turns out.

The logical endpoint of that insight was Curb Your Enthusiasm. For those who don’t know Larry David’s brilliant show, picture Seinfeld if HBO did it, and every episode had George at its center.

Jason Alexander (Seinfeld’s George) describes an early-season reading where he questioned George’s motivation for something: “I don’t know anyone who would do that.” Larry David responded brightly, “I would.” And Alexander says, “suddenly I understood the George character. It was all Larry.”

Larry David (he plays himself on Curb) is cheerfully, honestly, forthrightly neurotic and self-centered to the nth degree. It’s not that he’s proud of it; he’s just saying that’s what he is.

The fun, of course, is that David is merely more honest than the rest of us. We can laugh at him without directly facing the social pain that his behaviors cause us when we commit them—which we do, all the time. He is our public court jester. He speaks the truth in a socially acceptable manner—as comedy, with a subtext we needn’t publicly acknowledge. But we know it. He’s doing public self-psycho-analysis, and we’re along for the ride.

That’s why he’s a hit with mental patients—and with the rest of us too. We’re not qualitatively different—it’s just a matter of degree. “Sanity” is a wispy line; it’s hard to say where the hill ends and the mountain begins.

It’s an old sitcom formula. Nearly every I Love Lucy episode begins with a prank gone wrong, spiralling out of control. The comedy consists in watching Lucy lie about what’s happening, until the lie is unsustainable, and she must surrender to reality. We relate to her frantic mania, knowing that Ricky will forgive her in the end. On TV, that is. In real life, Ricky rarely forgives—or so we fear.

Every single Seinfeld episode with George is about the inability to maintain a neurotic fiction he has created in the face of a reality-based onslaught. He is owned by his fibs about Vandalay industries and his casual claims about Hamptons real estate. His only success in life comes when he resolves to do everything the opposite of his instincts.

George, Lucy, Larry—they cannot tell the truth in a socially acceptable manner. We learn by watching their comic misery, because we too suffer from that inability, and are alienated from others because of it.

A lot of coming to trust others is learning how to speak the truth in a socially acceptable manner; to marry radical truth-telling with our conventions of propriety.
We learn much of it not by learning lines, or by watching others do it well, or by learning the principles of effective communication. We also learn by watching social train wrecks, made palatable by humor.

We learn many things—like truth-telling—more by seeing negative examples than by seeing positive ones by themselves. Much corporate training is afflicted by an abundance of softened edges, watered-down empathy and general happy-talk. But truth isn’t truth if it has to be constantly watered down. You can’t enable people into overcoming their addictions to neuroticism.

To get along in the social networking world of the future (or of today), don’t just bone up on good behaviors. Make it a point to study disasters too.

Just make sure you’re laughing most of the time.

 

The November Carnival Of Trust

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Carnival of Trust logo

Welcome to the Sixth Carnival of Trust. As always, we’ve tried to make this Carnival a little bit special, a little bit more value-adding than the average carnival.

Specifically:

  • There are always only ten selections in the Carnival of Trust. They all earned it. They’re good. Or, at least provocative.

  • We’ve added our own perspective to it—this is not a dry list. In some cases, we even take issue with the post—and say why. You may not agree—but at least we offer a point of view.

  • In each Carnival of Trust, a theme emerges; in this one, it’s policy on trust. Issues of policy and trust in health care, in direct marketing, in marketing, in leadership.

Our aim is to make this interesting, educational and profitable. Let us know how it was for you.

With no further ado, let us move to this month’s winning posts.

Trust in Advising and Influencing Logo

Dr. Bleuel has written a gem of a piece about trust and loyalty. I agree with nearly every word he says—a rare thing. Samples: “Trust is built, one transaction at a time,” “loyalty and trust are not passive states,” and “once I trusted the Audi mechanic, the buying process for service is simple: take the car in and describe the problem.” The good doctor from Pepperdine gets it.

Our next post discusses how to make sense of all the clouds of soft-talk around words like integrity, listening, fairness, authenticity, honesty, and transparency. Read Stephen Hopson’s guest-post on the blog Make It Great. In one page, he integrates them all in a way that—to me—feels just right. He’s an ex-WallStreeter, so you sense he knows how to pile on the BS—and most certainly isn’t doing that here.

Don’t miss his vignette on Bob the stunt pilot.

Nagesh Belludi grew up in Bangalore and lives in Indiana. He’s got a Masters in Engineering, and he speaks on personal effectiveness. He’s invested in stocks since age 16, and he reads about Mary Kay cosmetics’ management style. In other words, just the right amount of schizophrenia to describe how to most effectively give advice and have it taken.

Trust In Sales and Marketing Logo

Kaila Colbin noticed a pattern among heavy-hitter reviewers of search engines—they implicitly rated trust, transparency and honesty higher than the non-collection of data. “If trust is more important than privacy, then a company that says up front, ‘We collect all of your search history and use it to target you directly,’ will do better than a company that says, ‘We will not use your search history for anything other than making our algorithm better, and oh by the way those ads today that match your search query from two weeks ago?’ Implication? “one of the single most critical factors for web businesses over the next few years will be the ability to engender trust.”

Next John Whiteside comments on a MarketingProfs article by Lynn Upshaw of Berkeley Business School. Here’s Upshaw’s original:

Marketers need to consider a new calculus: "return on marketing integrity"which can lead to stronger business performance.

Traditional return on marketing investment is calculated using gross margin generated by marketing efforts (GM), minus the marketing investment (I), divided by that investment: ROMI = (GM – I) ÷ I. The calculation for return on marketing integrity is identical, except that investment is replaced with marketing integrity.

Whiteside’s comment:

I am skeptical. I doubt that you’ll ever be able to show much in the way of financial return on something as subjective as "integrity."

A pox on Upshaw, and a raspberry to Whiteside for getting caught up the whirlpool of absurdity that marketing folk sometimes construct.

Hello—If you make increased quarterly margins the measure of integrity, you just lost all integrity. I don’t know how to say it any simpler than that. So read Whiteside’s piece—which does after all do a good job of laying out the trust in marketing issue—and see if you can figure out how to get the message through. To Whiteside’s additional credit, he also suggests integrity might be an end in itself. All is not lost.

Nancy Arter, direct marketer, believes the following:

…it is imperative for us to market ethically — otherwise, we lose the trust of our current and potential customers. …We strongly believe in creating trust through direct marketing — and that by doing this, you build more profitable customer relationships.

Precisely. Interestingly, she agrees with NY State Attorney General Cuomo, who expanded his student loan investigations to include direct marketing.

But—hold on to your seats—the Direct Marketing Association also agrees with Cuomo.

The Direct Marketing Association (DMA) came out quickly in support of this investigation saying that "illegal marketing activities erode trust for the entire industry." In fact, Jerry Cerasale, SVP of government affairs for the DMA, went further: "If these actions violate the law, then they should be stopped. Legitimate marketers need to have trust in the marketplace, and violating the law undercuts that trust. This is not retail, where you can walk in and touch a product and buy it. With direct marketing, you don’t hold the product until after you’ve bought it, so trust is essential.”

I’m going to have more to say about trust and the role of industry associations. Meanwhile, kudos to Arter, and to the DMA.

London-based marketer/facilitator Johnnie Moore offers two mini-corporate chilling-thrillers about the power that leaders wield, the deference given them by others, and the numbingly bad results that can result. Read it and hope it’s just those chaps in the UK.  ‘Cept you know it’s not.

Can corporate change happen without personal change? Can leaders lead without experiencing? Can a coach be effective without undergoing a consonant change?

Dave Crisp says no, in a concise way. Methinks he’s right.

Trust in Strategy, Economics and Politics Logo

“One of every nine Americans is a member of a WellPoint health plan,” according to Wellpoint’s website. They are joining hands with Zagat’s (yes, that Zagat’s—the restaurant guide people) to create, again from the website, “a new online survey tool that will allow consumers to share their physician experiences with others.”

I think this is a very cool idea. It speaks to the truth about medical decision-making, which is that bedside manner matters enormously compared to technical ratings; and it offers transparency.

Niko Carvounis, on the other hand, thinks it’s a terrible idea, and does a thorough job of making the case. It’s an important issue, and deserves the thoughtful approach Carvounis brings it. It’s a great way to access some fundamental ideas about the upcoming healthcare debate.

Maggie Mahar helps us educate ourselves for the healthcare debate, arguing against health care maven Regina Herzlinger and consumer-driven healthcare. Who is Herzlinger? What is consumer-driven healthcare? Is it right or wrong? Why should you care? Because it also has a lot to do with sales, marketing and trust, that’s why.

Mahar answers all. Except maybe right or wrong; Herzlinger would argue the consumer is a lot smarter than Mahar et al say. Hey, you decide—this piece will help you. (Full disclosure: Herzlinger was a professor of mine, and I’ve written about her previously in Trust, Politics and US Health Care Policy .)

Thank you to these talented authors for providing great insights into issues of policy and trust the sixth Carnival of Trust. I hope you’ll enjoy these articles as much as I have. If so, please leave a comment for the authors on their sites or recommend these articles to others who will appreciate them.

My aim is is to make the Carnival of Trust interesting, educational and profitable. I always appreciate your feedback; let me know what you think in the comments.

For more discussions of the nature of trust, you can check out the Carnival’s previous editions:

Steve Cranford at Whisper hosted Carnival of Trust #5;

David Maister at Passion, People and Principles hosted Carnival of Trust #4;

the anonymous but trusted Editor of Blawg Review hosted Carnival of Trust #3;

Carnival of Trust #1 and Carnival of Trust #2 started of here at Trust Matters.

Have a look at them. If you’re interesting in hosting a Carnival Edition, please let me know. You can contact me at blogging-at-trustedadvisor-dot-com.

The Cancer of Short-term Thinking

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Western capitalism is fighting a form of business cancer. And the most virulent form of it is short-termism.

In physical cancer, some cells go haywire and turn viciously against the body. This is also what happens when certain core beliefs are perverted or taken to extremes. Some examples—the beliefs that:

• greed is good (Hollywood simplification)
• individual pursuit of selfish aims yields public good (mis-translated Adam Smith)
• pursuit of short-term corporate goals ends in long-term social success (what’s good for General Motors hasn’t been good for America for some time now).

Those and other beliefs have resulted in rampant short-termism. A few examples, “ripped from the headlines:”

1. The trend in private equity toward front-end deal fees. Gretchen Morgensen’s NYTimes article quotes Michael Jensen, emeritus of Harvard Business School and the “father of private equity:”
“…these fees are going to end up reducing the productivity of the model… People are doing this out of some short-run focus on increasing revenues."
In other words, private equity is good when it subjects bureaucratic managers to the pressure of markets, with say a 3-5 year timeframe. But when the privateers themselves succumb to the lure of instant front-end fees, the greed snake is eating its own tail.

2. The trend in the mortgage industry to convert relationships to transactions—from integrated loan-making and loan-holding, to separating the entire process into various stakeholders—most of whom get their money up front, now. Short term.

3. The IBGYBG mentality in investment banking during several market crashes detailed by Richard Bookstaber in his book A Demon of Our Own Design, that resulted in people making fast deals that would explode on investors down the road, but that paid off nicely up front for the dealmakers, who said not to worry, because—"I’ll be gone, you’ll be gone," it’ll be someone else’s problem then.

4. Young financiers opting out of an MBA because the opportunity exists to make so much more money in the short term:
“With the growth of hedge funds, you’re getting a lot of really smart people who are getting paid a lot very young,” says Arjuna Rajasingham, 29, an analyst and a trader at a hedge fund in London. “I know it’s a bit of a short-term view, but it’s hard to walk away from something that’s going really well.” Yup on both counts.

5. The current residential real estate recession, driven heavily by speculative buyers betting well beyond their means on continued high prices—“I’ll pay off the loan when I flip it.”

6. The longer term trend in business toward “alignment” of processes—which often assumes the only way to long-term profit is to ensure that every short-term measure is itself profitable.

7. Quarterly earnings pressure, which was one of the original drivers of private equity, back when PE was doing some good.

8. Private equity firms selling equity to the public: “a non sequitur in both language and economics,” according to Gretchen Morgensen’s paraphrase of Michael Jensen .
The private equity movement initially shook up stodgy companies that were permanently-funded by stock, where inefficient managers could hang out draining away value for decades. Private equity would buy them and insist on returns in 3-5 years; it left managers no place to hide, and produced real value returns. But when the 3-5 year people themselves start selling permanent stock to investors, they have become what they started out to fight. Which means they’re either stupid or venal. And while I usually opt for stupidity in explaining conspiracy cases, in this one I’d put money on venal.

Is there any relief? Or is this just another case of cheap hustlers exploiting weak human nature that goes with every business cycle?

Three antidotes can work against short-termism. One is pain. Suffering may not be a sufficient condition for social change, but it’s usually a necessary one.

Second is education. Awareness creation can help.

The third is leading thinkers, and there are some hopeful signs. Martha Rogers has begun talking about a lifetime financial perspective on customers:

"Creating maximum value from your customers involves optimization — balancing current-period profits against decreases or increases in customer lifetime values, to maximize your “Return on Customer.”

This isn’t new in finance, accustomed to present-value thinking in pricing financial assets. But it’s new to management thinking, accustomed to quarterly EPS. Robbing future customers robs enterprise value, says Martha. And she’s right.

The aforementioned Michael Jensen announced last month a paper he wrote with Werner Erhard (the controversial founding father of EST training, and more recently of Landmark Forum) on the subject of—get this—integrity.

Here’s a tasty quote from the abstract:

We demonstrate that the application of cost-benefit analysis to one’s integrity guarantees you will not be a trustworthy person (thereby reducing the workability of relationships), and with the exception of some minor qualifications ensures also that you will not be a person of integrity (thereby reducing the workability of your life). Therefore your performance will suffer. The virtually automatic application of cost-benefit analysis to honoring one’s word (an inherent tendency in most of us) lies at the heart of much out-of-integrity and untrustworthy behavior in modern life.

They are right too. You can’t fake trust; trust is a paradox; motives matter. The act of justifying trust by its economic value destroys not only trust, but its economic value. The best economic results come as byproducts, not goals.

Can clearer business thinking beat short-termism? It can’t hurt.