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Trust Summit, Friday October 23, 2009 at the Harvard Club in New York City

On Friday October 23, 2009 at the Harvard Club in New York City, Chris Brogan and Julien Smith, co-authors of the New York Times bestselling book Trust Agents: Using the Web to Build Influence, Improve Reputation and Earn Trust, along with David Maister and Charles H. Green, co-authors (with Rob Galford) of the business classic The Trusted Advisor will be discussing the power of establishing Trust, and how to harness it in today’s complex and connected business world.

The panel will be followed by an open forum for questions and discussions from the audience. To purchase tickets to this invite you may register here. Space is limited; sign up early.

We would like to personally invite you to attend this one-of-a-kind event where you can interact first hand with leading subject matter experts/authors and learn how you can benefit from establishing trust in your business and professional life.

Where: The Harvard Club
When: Friday October 23, 2009 at 7:30am – 9:30am
Tickets: $25 in advance, $30 at the door
Register: http://trustbreakfast.eventbrite.com/

Trust Summit: October 23, New York City

I want to let you know of an upcoming event you might want to attend.

Chris and Julien are co-authors of the current best-selling book Trust Agents. David is my co-author, along with Rob Galford, of The Trusted Advisor.

I first met Chris and Julien as they were writing their book. I found them very engaging, and masters of new social media.

But what has really impressed me is their ability to apply new media technology in service to greater trust in business. They are walking role models in that regard – they walk the talk.

It was Chris’s idea to have this meeting, and I enthusiastically supported it.

We’re looking forward to a great breakfast with spirited dialogue between the four of us, but most importantly between us and you, 300 of our closest friends.

CNBC and BusinessWeek.com: Teeing it Up

As long as we’re on the subject of marketing, let me offer you a couple of links,

First, my BusinessWeek.com article of earlier this week, titled Wall Street Run Amok: Why Harvard’s to Blame.

That intrigued the good folks at CNBC, who put me on October 7 with the header "Is Harvard to Blame?" Host Melissa Francis played up the Harvard angle with mock outrage, but it’s all in fun—and a pretty good (albeit fast) take on how we create business environments that nurture trust.

Both—I think—are good entrees to teeing up the broader issue of trust we’ll be discussing in New York.

Hope you can make it.

Charles Green on CNBC and BusinessWeek.com This Week

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.

The Power of Shame to Fix Low Trust

Randy Schumann Pay Your BillLongtime friend of TrustMatters Shaula, together with hubby Neil, ran across the photo you see on the right here while on the road in Montana. (Click here to see the web version if you’re reading in text).

It seems that one Randy Schumann may have an account in arrears at the local Gas Mart.  And the retailer in question has resorted to a time-honored tradition to enforce some social justice.

Ouch.

Let me suggest, in all seriousness, that we need more Tiger-Town justice, and less Sarbanes-Oxley types of solutions. 

Shame–for lack of a better word–can be good social policy.

Positive Uses of Shame in Creating Public Trustworthiness

The Tiger Town in Montana is hardly alone. 

* Think about the “perp walk,” used by cops and prosecutors quite consciously.  As Wikipedia puts it, “Perp walks are often done to politicians or businesspeople accused of white-collar crimes (whose reputations may be susceptible to damage by public spectacle).”

Rat* The use of the giant inflatable rat as a shaming device is a long-time tool of unions.  But it goes further; the rat is protected legally (I’m not kidding, see here) as a form of free speech.

* Let’s not forget about the (used to be, anyway) power of investigative journalism.  The notion of muck-raking in the US http://en.wikipedia.org/wiki/Muckraker ; the power that the Washington Post put behind Watergate, or the New York Times behind the publication of the Pentagon Papers.

* Local TV news shows delight in consumer protection episodes that go by names like the Wall of Shame, our version of the Puritans’ placing people in the stocks in the middle of town. Cops know it’s more effective to post photos of Johns than of prostitutes (so do town governments, which is why that doesn’t often happen). 

Shame Works by Enforcing Social Standards

It may seem obvious, but let’s take a moment to see why shame works.

Most people intuitively agree with Justice Brandeis that “sunlight is the best disinfectant.”  Transparency is a valuable social vehicle for increasing trustworthiness in our institutions.  Disclosure is a bedrock of legislative regulation—in pharmaceuticals, financial services, and environmental policy.  The idea is that organizations will not put out to the public things that they would prefer not be seen by the public. 

The most powerful thing about shame is that it works by enforcing social standards.  If the behavior that is exposed runs strongly counter to public instinct, then the power of shame is large.

If you are ashamed by something, it means you fear the judgment of the public.  To be ashamed, on a very personal level, means to feel the rejection of our peers.  It is a powerful effect, and serious medicine when administered at scale.

Shame Should be Part of the Response to Financial Scandals

The popular press is all over Washington to do something to prevent further abuses in the financial sector.  The pressure is building, because so far very little has been done.

Part of the problem is that “what should be done” has come to rhyme with massive, heavy-handed governmental regulation.  Worse yet, most of that regulation has to do a combination of prohibition (Glass-Steagall)  and massive efforts at compliance and disclosure.

The problem with disclosure alone is it rapidly degenerates into mountains of fine-print, while accomplishing nothing in terms of felt social obligation on the part of those writing it.

The problem with structural change alone (think Sarbanes-Oxley) is that it’s expensive, and the opportunity costs are even higher than the outlays.  Just think of the massive price we pay every day in airports because we haven’t figured out a socially acceptable way to keep terrorists from planes other than forcing granny in Dubuque to dump her over-sized tube of toothpaste when she boards a plane.

I’m far from alone in this.  Read the devastating critique by famed Madoff whistle-blower Harry Markopolis.  He suggests that what we do not need is the routinized, predictable box-checking approach to compliance.  Instead, we need randomized, aggressive sampling, followed by publicity. 

Exactly. Unexpected audits, followed by the application of shame.  Bring on the judgment of the people who own the society, who are the ultimate source of the approval of whatever goes on in our society. 

Enough with laws and regs; up with enforcement and shame.

And Randy—about that account.  The Rat is next.

October Carnival of Trust is Now Being Served

 

 

Scot Herrick, author of the delightful blog Cube Rules, is this month’s host of the Carnival of Trust

For those who don’t know, the Carnival of Trust is a monthly collection of the most interesting and noteworthy posts from the Kingdom of Blogs over the past month.  Each month, the Carnival is hosted by an experienced blogger–not myself.  The definition and selection of "interesting and noteworthy" is left to the host; each host infuses the selection and commentary with their own point of view.  The result is a great chunk of reading for you.

This month Scot has collected some terrific blogposts that answer the following questions:

– Would you rather fix your customer’s problem, or be right?  Think carefully now…

– Can you break promises with your employees, or not?  And if so, how many?

– What’s a great acronym for remembering the components of RESPECT?

– How can you get your parents to trust you?

– Would you rather hire a relative, be hired by one, or recommend one?

– How can you market yourself as being trustworthy?  (It’s not a trick question).

 You don’t get this much concentrated good stuff anywhere else.  Treat yourself to a choice bit of edutainment; you’ll love the way it tastes, honest!

Many thanks to Scot Herrick for hosting this month.  If you liked this month’s Carnival of Trust, you might enjoy looking at past Carnivals as well.  And if you’d like to see your blogpost up there in the lights, please do contribute your blogpost (or someone else’s you’d like to nominate) at this site

Again, enjoy the October Carnival of Trust.

 

 

 

The Butterfly Effect Redux

Doug WarrenIf a butterfly flaps its wings in Hong Kong, will there be a monsoon in Hawaii?

Stewart’s Story.

About 6 years ago, I was doing a lot of networking, and met someone who needed a temporary CFO in the Boston area. One of my long-time clients and a networker in the 500+ class on Linked-In, Dallas-based attorney Peter Vogel introduced me to Steve Crane, an avid networker and then a partner at a national firm that provided just that service.

Although I never spoke with Steve directly, through Peter, he introduced me to a Boston-based partner.

I called the Boston partner, and connected him to the potential client. The story could have ended there, but it did not. The Boston partner invited me to meet others in the group in the Boston area. When we met, I shared my view that people in business should treat each other with trust, caring and respect.  One of the partners, Doug, said to me: “You sound just like my B-school classmate, Charlie. You ought to talk with him.” He offered an introduction.  I accepted.

Turns out Charlie was Charles H. Green, now CEO of Trusted Advisor Associates LLC, and co-author of the then recently published The Trusted Advisor. We talked, and did indeed sound alike. That was the start of our valuable and continuing relationship. It’s been great for each of us. All this from doing a favor for someone in Boston seeking a temporary CFO!

Charlie’s Story.

Many years ago, I went to Harvard Business School. I didn’t have long business experience, so initially felt a little outside the group. But I did quickly form bonds with a couple of really great people, including Rob Galford and Doug Warren, both of whom were in "Section H" with me.  Blessed with extroverts’ gift of gab, I found both Rob and Doug refreshing to hang around with, and a great antidote to my own shyness.

We all graduated.  I had a 20-year career in management consulting, then left to found my own business. I co-authored The Trusted Advisor with David Maister and with the aforementioned Rob Galford.

Doug and I saw each other only at reunions, until about 6 years ago when I got a call from Doug. “I want you to meet someone,” said Doug. “His name is Stewart Hirsch, and I think you two might get along.” I talked with Stewart and we did get along. In fact, I hired Stewart to be my business coach. That led to my tapping Stewart’s skills to help serve TAA clients – and now he’s heading our coaching practice

From Both.

A few weeks ago, Peter mentioned Steve (remember Peter and Steve?) in a conversation with Stewart. Stewart realized that he’d never even talked with Steve, much less thanked him. Stewart then called Steve and shared with him his role in Stewart’s story and his appreciation of for the introduction. Now, they are considering networking opportunities for each other, and starting a new set of links.

Tragically, Doug died several years ago, another too-young victim of cancer. Charlie attended Doug’s memorial service, and another service a few years later at a reunion.  Doug’s wife and children still feel connected to 75-odd members of Section H. Those are wonderful tributes to the power of our shared experiences.

But it has recently occurred to Charlie that, for him, there could be no better memory of Doug than to daily appreciate the living reminder of his introduction of Stewart to Charlie.

If a butterfly flaps its wings in Hong Kong, will there be a monsoon in Hawaii? We don’t know. What we do know is that when you help people, opportunities can appear, and when we seize those opportunities, doors open.

Digital Just Wants to be Analog

You’ve heard the phrase “information just wants to be free?” I’d be grateful to anyone who can actually track down the source of that quotation; my puny efforts have failed.

In the meantime, please accept it as a nice play on words for an introduction.

All Things Digital Seem to Aspire to Analog

Have you noticed, with all the talk about digital this and that, that the actual goal of most digitization seems to be a reversion to analog?
Think about it. What is HDTV about except an attempt to recreate analog? Aren’t video games trying to seem more and more ‘realistic,’ i.e. analog-like?

What are digital sound and movie recordings trying to do?  To achieve higher and higher fidelity to a life-like, very analog, experience.

Cisco Systems  is making great use of a nearly-analog version of videoconferencing.

In the science fiction realm, the ‘coolest’ stuff – I always though- were holographs and transponders. One is a near-perfect image, the other a way of obliterating time and space barriers to sweet home analog.

And don’t forget everyone’s favorite digital creation- robots.   Not industrial robots, of course, but analog robots like R2D2 and 3CPO – robots hopelessly stuck with things like British accents and adolescent attitudes.

Even digital movies are generally about very analog creatures – cartoon versions of ogres and mules, for example.   How much more analog can you get?

Digital just wants to be analog.

Why the Analog World Appeals to Digi-Philes

The basic appeal of digital breaks down to three factors: freedom of space, freedom of time, and freedom of editing. Digital lets you mess with stuff, unbounded by annoying limitations like time zones, protein, and long distances.

But home sweet analog, analog on the range, analog is where the heart is. It’s messy, sloppy, unpredictable, only approximately causal, but gosh it feels awfully real. Sometimes reality bites, but other times it’s all mom and puppies and roller coasters and exultation.  Even pain is drenched in feeling.

The desire to be digital—OK stay with me, I’m reaching on this one- comes from our desire to control.  And the desire to stay analog comes from our desire for complexity and richness of experience.

The adolescent dream, of course, is to tie the two together.  (I call it adolescent not in a derogatory way, but in the sense of a powerful desire to integrate things into one.)  Logically, you can either make digital look analog—or make analog look digital.

Analog, Digital and Business

Business is loaded with examples of trying to turn analog reality into digital form – and it is, indeed, very much about control. Back in the day, the word used for internal accounting systems literally was “control.”

Control was accomplished by the systematic collection, manipulation and analysis of data. When Robert McNamara started at Ford Motors in finance, he said they used to evaluate outstanding receivables by weighing the pile of invoices. That was analog control. He of course moved it to digital.

The digital desire for control hasn’t changed that much. We now have process control meters or processes just about everywhere, and more analytic firepower at our fingertips than we know what to do with. Literally.

We now have digital mantras: “if you can’t measure it, you can’t manage it.”  The ideology of digital has decided to co-opt the field of management. I wonder what Peter Drucker would think of that (it’s his 100th birthday this year)?

Fortunately, digital just wants to be analog. The pursuit of digital brings us great benefits, but at the end of the day, it’s only as good as fake analog.  We will revert to the mean, and the mean is analog.

Jorge Luis Borges wrote a charming short story about the end of such searches.   The only perfect map is a full-size representation of the original.  Which makes the map redundant; and worse, boring.

What analog reality are we striving so diligently to represent digitally? And what price are we paying for the illusion of control?
 

Call for October Carnival of Trust Submissions

This blog has some pretty talented people reading and commenting in its pages. I’d like to invite all of you to consider submitting one of your own blog postings to the Carnival of Trust.

The deadline for submissions to the next Carnival of Trust is this Thursday night–midnight. The Carnival will then go live in a matter of days–after our esteemed guest host, Scot Herrick, has a chance to go through them and make his selections.

Here’s what you do to get your 15 minutes of fame and enrich the world. Pick your trust-related post, and submit it here.

Then sit back and roll in the adulation.

OK, seriously, the Carnival of Trust is a fascinating, monthly compendium of blog postings related to trust in business, trust in selling, trust in society at large. It is kept interesting by the vibrant commentary of our esteemed hosts, and their discriminating selection criteria.  If you don’t get selected, it’s no dis. But if you do get selected, it’s a tribute.

So bring out your best stuff, and share it with the world. After all, how’s the world going to get better if you hide those great insights from the rest of us?

(Read more about the Carnival of Trust here).

Is Your Strategy About Winning, Or About Maximizing Success?

Is your company’s strategic objective to win? Or is your company’s strategic objective to maximize success?

‘Wait,’ you say. ‘Which is supposed to be better? And don’t you get one if you get the other? And why are you annoying me with these semantic quibbles anyway?’

Well, I think they may be semantic, but they’re real differences too. And no, if you get one, you don’t necessarily get the other. And yes, one is better than the other.

Let me explain.

Maximizing Success is Better than Winning

In the 2008 Summer Olympics, Jamaican Usain Bolt broke his own world record to win the gold medal in the 100-meter run. He did it while slowing down at the end, to celebrate.

Bolt won, but didn’t maximize his success (intentionally? He later broke the record again). Which suggests winning isn’t everything.  The corporate version of holding back might be sandbagging, managing earnings, putting some cushion in the bank. Not necessarily a bad thing, though it could be.

But earnings smoothing is not nearly as big an issue as refusing to collaborate. The US auto industry, steeped as it was in the au courant teachings of competitive strategy, saw itself as competing with the UAW, with its suppliers, and probably with its dealers.

By contrast, Japanese automakers collaborated with their supply chain. And we all know who won that particular showdown.
It’s hard to prove causality here, though BCG partner Phillip Evans, who has written on collaboration, may be able to make the case. I believe it on principle. It’s simple. The entire lesson of the industrial revolution was that scale matters. He who gets scale wins.

Managing Scale is the New Scale

The thing is, “scale” used to be implicitly defined in regional and national terms. It no longer is. We’re facing a new industrial revolution where ‘scale’ happens globally.  And when you need to outsource things radically and globally, it soon comes down not to who can cut the most deals, but who can manage them.

When you’re dealing with 500 suppliers in a few countries, and your competitors are doing the same, that’s one scenario.  But add a few zeros to the number of supplier/partners you’re working with; make it dozens of countries, not to mention digital and in-transit locations, and the complexity gets quick fast.

The old way of doing things—winning—was based on solitary, siloed, vertically managed, so-called ‘industries’ of a small number of similar organizations. They ‘competed.’ He who won had the biggest market share, lowest costs, and highest profits. And the most success.

The new way of doing things—maximizing success—is based on amorphous (and morphing) agglomerations of supply chains, each similar in some ways and different in others, often competing in one area and collaborating in another. They don’t form neat ‘industries’ anymore. If they waste their time ‘competing’ with everyone, they will lose ground to other agglomerations who are far better at collaborating.

Playing together nicely in the sandbox is the new KSF. Hardball is out; team volleyball and pickup basketball are in. Jack Welch’s old term ‘boundarylessness’ is achieving new meaning—maybe GE thinks it still ends at the corporate boundary of GE, but other firms are applying it beyond the legal ‘firewall.’

Caution: competing is hazardous to your economic health. Even winning probably messed up your chance to achieve still-greater success by collaboration.

Teams always were capable of more than Lone Rangers; now the stakes are even higher.

 

Trust is Down: But, Like, So What?

Trust in One Another is Down: Civic health IndexThe news is full of quotes like this, from the Edelman Trust Barometer:

“In January 2009, every one of the major industries had trust declines…but you see a trust renaissance now [midyear 2009] in a few key industries…we saw increase and stability particularly in auto and in tech….though in France, tech is the number 3…”

This kind of language feeds the perception that ‘trust’ is a unitary phenomenon, capable of being measured precisely, with meaningful small gradations.

Contrast that commercially provided data with a longer-term academic view of trust. Click here for a graph (thanks to the National Council on Citizenship) that shows a nearly uninterrupted steady decline in interpersonal trust for over 25 years. What does a half-year–or a month–mean against that backdrop?

Then throw in, “I trust my dog with my life; but not with my ham sandwich.” 

When it comes to trust, one size definitely does not fit all. It’s remarkable that one word covers so many meanings.

‘Trust’ Has Way More Than One Meaning

The truth is, ‘trust’ covers at least four distinguishable meanings—trust in the general human race (social trust), trust in institutions, trust in particular other human beings, and trust in certain processes (e.g. recommendations from previous buyers on eBay).

It is meaningless to say that I ‘trust’ Apple Computer more, or less, than my dog; or my dog more than my girlfriend; or my girlfriend more than Microsoft. It doesn’t even make sense to say I trust Apple more than Microsoft.  It depends.

It depends what I’m trusting them to do, or how to do it. I trust my dog to love me unconditionally more than Microsoft. I trust Microsoft more than my girlfriend to help me with databases, and I trust my girlfriend more than Apple to–well, you get the idea.

Worse yet, ‘trust’ is an end result, an outcome. It isn’t something that people do, it’s the state of affairs when they’re done doing. It isn’t a behavior. You can measure the outcome—but it won’t tell you what to do. 

Trust is An Outcome: There are Two Action Strategies to Get There

Trust is the result of an interaction between a Trustor and a Trustee.  One does the trusting; one is the one who is trusted.

You can increase, or decrease, trust–but not directly.  You must choose one of two strategies.

1. You can choose to be more trusting of others, which increases the odds they’ll reciprocate, but at high risk.

2. You can choose to be more trustworthy, which increases your attractiveness in their eyes, though it may take longer.

You can’t act on trust itself: but you can act on the actors. 

If ‘trust’ is down, is that because people are less trusting? Or because the one they trust is less trustworthy?

At root, was the problem with Bernie Madoff that we trusted him too much? Or was the problem with Bernie Madoff—Bernie Madoff?

These are non-trivial questions: they have to with corporate and public policy implications of that oh-so-simple-looking data that ‘trust is down.’

Roderick Kramer, publishing in Harvard Business Review,  suggests “Despite deceit, greed, and incompetence on a previously unimaginable scale, people are still trusting too much.”  Too much trust.  Trust is down?  Good; we needed a trust recession.

Kramer’s full viewpoint is much more nuanced than that, but that’s how he and HBR wrote the headline to his article.  And many people do believe that a trust decline is probably a good thing, that we all probably ought to be even less trusting of a lot of things. That’s a strategy of trusting–on the negative side.

Others, like Harry Markopolis,  the Madoff whistleblower, are inclined to blame a combination of Madoff and the regulatory institutions set up to protect us from him. Trust down? Then we need to make the SEC much more effective.  That’s a strategy of trustworthiness, via 3rd party enforcement.

Steven Covey Jr. preaches that in an increasingly interconnected world, we need more trusting, not less.  I agree, but in any case, that’s a trusting strategy.

So–what to do? If I run a technology business, and I learn that my trust level is way up, except not so much in France, over the last few months—like, what am I supposed to do with that?

What Are We to Do About All This Trust Data?

I have a few answers.

Let’s pass on social trust; it moves glacially. Pick your parents well, teach your children, vote, and give generously to charities.  That’s about it.

I’m going to focus on business and interpersonal trust.

In that realm, it is probably true that ‘the fastest way to make a man trustworthy is to trust him.’   That’s a classic trusting strategy.

But don’t hold your breath waiting for that to happen in the litigious, emotionally constipated and largely fear-driven corporate mentality of these these hunker-down recessionary times. Way too many people are way too risk averse.  Trusting, as a trust-creation strategy, appears to them to be just too risky.

The other trust-creation strategy—being trustworthy—has a somewhat longer payback, but with less business risk, and less risk of being executed badly.  For the most part, the trustworthy strategy is the one I recommend to companies.

So here’s what you can do.

1. At the individual level:

2. At the business level:

That’s my answer to ‘so what,’ at least for now.