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The Trusted Advisor: Still a Top Ten Business Book After Ten Years!

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Late in the year 2000, The Trusted Advisor was published. It was my first book (Galford’s too), and lead author Maister’s 3rd. We had high hopes for it–but so does every author.

It did well over the years. I think somewhere around senior associate level in accounting firms, 6th year associates in law firms, 5th year managers in consulting firms, some old partner takes the youngsters aside and says, “You should go read a book called ‘The Trusted Advisor.’ You’re ready to need it.”

How else to explain that, 11 years after initial publication, the estimable 1-800-CEO-READ book seller rated The Trusted Advisor number 7 on the March 2011 list of Top 25 Business Books.

And that’s not all. March 2011 was not a fluke. That number 7 ranking was in fact an increase from 2009, where it ranked #12–for the entire year 2009.

Today is typical: it ranks number 4,229 on Amazon’s all-book list as of 9PM. That’s pretty good for any business book, up against Harry Potter and Tina Fey. For a ten-year old business book, it’s quite unusual. Cialdini’s book on influence is of the same vintage, and does even better. And of course Steven Covey’s Seven Habits is a Monster.

But that is nosebleed territory company to be in.

I am humbled and honored to have co-authored The Trusted Advisor. I hope you’ll forgive me a little crowing about it, and I hope the upcoming Trusted Advisor FieldBook can achieve a fraction of its success.

Are You Just Selling a For Sale Sign?

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For sale by OwnerKierkegaard described philosophy as, “You see a sale sign in a store window. You go in, but find it is only the sign that is for sale.”

I sometimes feel that way in our increasingly online world.

I got a notification that I had a new twitter follower—let’s just call him Mr. X. I usually give those notices a quick glance. In this case, the person is “following” 11,844 others, and has 13,253 “followers.” (For comparison, my numbers are each under 2,000).

Punch line: he has written a grand total of one tweet, made back on August 28 (thanking Nattisco Artists for all their hard work). That tweet was then re-tweeted by 8 others whose ability to perceive value clearly exceeds mine.

Now, I’m an active twitter fan: I use twitter to point my readers to trust-related content I think is interesting, and to follow similar ideas from others. But this is different.

One might ask what he’s doing “following” 11,844 people; a much better question is, “what do 13,253 people think they’re doing ‘following’ him?” Not to mention the eight re-tweeters.

On the TweetLevel rating service, this makes Mr. X (a self-described actor in Sydney) even more popular than Tony Iannarino, who just won the Annual Top Sales Awards for best sales blog (congrats, btw, Tony!).

In fairness, TweetLevel rates Mr. X far lower in effectiveness and trust—as one would hope. But–then again, the highest-trust-rated twitter users on TweetLevel are Justin Bieber and Kim Kardashian (sis Khloe lags at number 3). That’s not TweetLevel’s definition of popularity: that’s their definition of trust in an online world.

The Kardashians are the modern-day equivalents of Zsa Zsa Gabor, the first one I think of as having been “famous for being famous.” They’re selling For Sale signs and calling it sales. You too can be like them. Just Do It. (And stop asking what ‘it’ is, it’s not important).
“For Sale” Signs Abound

Enough shooting fish in a barrel: Twitter, much though I love it, is fully of quirky adolescent silliness like that. But the Kierkegaard critique doesn’t just apply to Twitter.

The logic of social media is simply mimicking the recent logic of business—the gospel of first-mover advantage. Don’t worry about what you’re selling—get the For Sale sign out there. You can pick up the expertise after you’ve been labeled an expert. Ready, Fire, Aim is too damn slow. Just Fire.

It was 1968—ancient history—when Andy Warhol first said, “In the future, everyone will be world-famous for 15 minutes.” Later, that concept came to be known as “so 5 minutes ago.” Oops, I’m dating myself.

The sales vs. For Sale issue is most notable in the media. It wasn’t that long ago that newspapers published what were meaningfully called “letters to the editor.” At some point, I suppose they worried about whether to print emailed letters before snail-mail letters had had chance to arrive. In any case, they were carefully written, and then they were vetted by real ‘editors.’

Today’s NY Times has an interesting piece from the Public Editor about what it’s like to keep up with the tsunami of commentary that comes in online these days. And the Times’ letters are nothing compared to the instant psychic-dumping that fills so many megabytes on so many news-and-commentary websites these days.

For Sale signs are all over the place: the logic and thought and reasoning behind what is being sold—not so much.

The publishing industry is about to undergo what the newspaper industry is already feeling—a meltdown of the curating function that institutions used to play. When “publishers” and “books” lose the social arbiters of how we define such terms, the first thing to happen is grade inflation.
Everyone becomes an author. Everyone can write a book. There’s a book out now on how you can write a book in a weekend. The For Sale signs are out all over. There’s just nothing being sold.

Grade inflation confuses the thing being measured with the measurement itself. For years now, the website TheWiseMarketer.com has un-self-consciously documented the slide of “loyalty” marketing from something vaguely resembling an emotion to an entire industry based on behavioral price-driven statistics. “Loyalty” itself is no longer being sold: it’s been inundated with For Sale signs.

David Brooks cites this work:

In 1950, thousands of teenagers were asked if they considered themselves an “important person.” Twelve percent said yes. In the late 1980s, another few thousand were asked. This time, 80 percent of girls and 77 percent of boys said yes.

The great thing about empowerment is that you free a lot of good people who have great ideas to tell and to sell.

The bad thing about empowerment is that you free a great deal more fools who think they’re selling when all they’re doing is holding For Sale signs.

And Good Luck trying to explain the difference to them.

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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Dr. Eric Uslaner on the Nature of Trust (Trust Quotes #3)

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My guess is not many TrustMatters blog readers recognize the name Eric Uslaner. Nevertheless, it would be hard to overstate his importance in the field of trust. Dr. Deborah Nixon, a trust academic herself, says, “Uslaner is arguably the leading academic in the field.”

A professor of Government and Politics at the University of Maryland, Eric is the author of The Moral Foundations of Trust: in my opinion, a superb work. There’s more, much more, but you can get it at his website.

Now, let’s talk trust.

CHG: Dr. Uslaner, thanks so much for taking the time to be with us. I’m delighted to be able to share a taste of your work with TrustMatters readers.

Let’s start with something deceptively simple: what is trust?

EMU: There isn’t one concept of trust. Most of the time we talk about trusting someone to do something specific—do I trust my doctor to take care of my health? I don’t ask if he can be trusted to paint my house.

But there is also a form of trust that doesn’t depend upon evidence or experience—what I call “moralistic trust.” This is the belief that we can trust people whom we don’t know and who may be different from ourselves. This is the sort of trust that helps societies solve key problems. It is more based upon our belief that we ought to trust people—the Golden Rule—than our experiences with people we know well and who may look and think like ourselves.

CHG: Why does trust matter and why should we trust people we don’t know?

EMU: Trust leads to many positive outcomes. Trusting people are more tolerant of people unlike themselves. They are not more likely to have friends or to join groups—misanthropes have friends too and we all tend to join groups of people just like ourselves. But trusting people are more likely to give to charity and to volunteer for causes that help people who are different from themselves.

And trusting societies are less corrupt, have lower crime rates, are more open to trade, and have higher levels of economic growth. They are more open to globalization and new technologies. Such societies also have higher levels of internet usage and scientific innovation. Trusting people are more accepting of risk. They may be more vulnerable to risky situations, but they are also in the best position to profit from taking greater risks. Mistrusting people may protect themselves by avoiding risk, but trusting people are the ones who will reap the biggest profits.

CHG: Aren’t we safer trusting people like ourselves?

EMU: If we only trust people like ourselves, we miss out on the best opportunities. Many years ago Mark Granovetter wrote about “the strength of weak ties,” where we are more likely to prosper by dealing with people we may not know well. Ronald Burt has written about “structural holes,” where open networks lead to far better outcomes than closed networks.

The companies that perform the best generally bring together people of different backgrounds so that each can learn from each other. If we only trust people we know—or people like ourselves—we risk the problem of “groupthink,” where we become convinced that our positions are correct because our friends and colleagues agree with us. There is no corrective for bad advice. Putting trust in people who are different from us is a stronger path to innovation and prosperity.

CHG: Are all types of trust equally good?

EMU: Aside from “strategic trust” (or trust based upon evidence to do specific things), we also have generalized trust—trust in strangers who may be different from ourselves—and “particularized trust,” when we only trust people like ourselves. This in-group trust is far more common in the world—and it has negative consequences.

CHG: Negative consequences–interesting.  So not all trust is positive?

EMU: That’s right–particularized trust as a substitute for generalized trust is a negative for a group.  If a group limits its trust, it results in closed minds, cultures, and economies.

CHG: What first drew you to the topic of trust?

EMU: I first got interested in trust when I was looking for an explanation as to why there is so much incivility in Congress. Congress, I argued, is much like the rest of us—the incivility in Congress reflects the declining trust among the public.

CHG: Are some groups of people more trusting than others?

EMU: The most trusting people are the Nordics—both in the Nordic countries and here (in Minnesota and the Dakotas). The Nordic countries have a long history of greater equality and that is why they are the most trusting.

CHG: What does the Bernie Madoff saga tell us about trust?

EMU: Not that much about trust in people, but more about trust in institutions—especially trust in financial institutions (banks, brokerage firms) and to some extent trust in government (for not being on top of the case).

CHG: Is it true that we live in a time of declining trust? Trust in what?

EMU: There has been declining trust in government for many years, but trust in government is cyclical. It was very low in the 1970s but revived under Reagan, then fell, and came back under Clinton, and then fell. Trust in government reflects our level of satisfaction with the economy and our international stature. Trust in people has been declining since the 1970s and has not revived at all. Trust in people tracks the increasing level of inequality in the US very strongly.

CHG: What can be done by business or government to increase trust?

EMU: Focus on two key things: Inequality and education. Business isn’t going to like the argument that it must take steps to reduce the gap between the rich and the poor, but this is the single biggest factor in whether societies are more or less trusting—over time in the US, across the American states, and across countries.

People don’t see a common fate with each other when inequality is high. Business can take a small step in the right direction by limiting the huge disparities in salaries. The huge bonuses investment houses have been giving their employees after getting government bailouts bring inequality to the forefront of people’s attention. These firms are creating social tensions that may come back to bite them.

Government needs to focus more on inequality. Education is the single biggest individual factor leading to greater trust for two reasons.  First, higher education brings us in contact with people of different backgrounds and exposes us to the roots of different cultures.  So more highly educated people are more willing to accept people of different backgrounds because they understand cultural differences. 

Second, universal public education leads to lower levels of inequality–and also to lower levels of corruption (as I show in my book, Corruption, Inequality, and the Rule of Law).  Greater equality and lower corruption foster trust in people who may be different from ourselves.

CHG: What’s the biggest misconception about trust that you find people have?

EMU: That trust is fragile, or that it can be reestablished easily. Moralistic (or generalized) trust is learned early in life, from your parents, and it remains stable for most people throughout their lives. So you can’t break trust easily.

But neither can you build it so easily. You need to do it early, and you need to get kids to interact with people of different backgrounds.

CHG: Eric, thank you so much for taking the time to share your research and thoughts with us; it is poweful stuff, and I deeply appreciate it.

This is the third installment of Trust Quotes, our series featuring interviews with leading thinkers and practitioners in the world of trust: people who apply trust in powerful ways in business and society.

This is number 3 in the Trust Quotes series.

The entire series can be found at: http://trustedadvisor.com/trustmatters.trustQuotes

Recent posts in this series include:
Trust Quotes #2: Robert Porter Lynch on Trust, Innovation and Performance
Trust Quotes #1: Ross Smith of Microsoft on Trust and Innovation

Robert Porter Lynch on Trust, Innovation and Performance (Trust Quotes #2)

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Robert Porter Lynch may be one of the best trust thinkers you haven’t heard of.  A long-time thought leader in strategic alliances, he has written several books on collaboration and innovation. He quotes Robert Frost, has studied how the Greeks created trust, and counter-balances Machiavelli. He is equally at home with high tech companies and with laborers in the trenches.

He’s currently working with Paul R. Lawrence (Professor Emeritus, Organization Behavior at Harvard Business School) on Lawrence’s new book: Driven to Lead, and his own book: Leadership and the Architecture of Trust (to be published)

Excerpts from our Interview:

CHG: Welcome to the Trust Quotes series, Robert. You cover a range of trust-related topics, but let’s start with one. You talk about the strong link between trust and innovation. Can you explain that link to us?

RPL: Absolutely. All innovation comes from people who think differently — that is, one perspective meets another, and something new can be born. If two people in the same room think alike, one is unnecessary when it comes to innovation,. The eminent psychologist, Carl Gustav Jung wrote: The greater the contrast, the greater the potential. Great energy only comes from a correspondingly great tension between opposites.

But two differing perspectives don’t automatically create something new, and all too often the differences become destructive: like Republicans vs. Democrats, old vs. new, my way or the highway.

So the art becomes: how can you increase the creative aspect of interactions between opposites? And the answer is trust. When this tension exists in a trusting environment, people’s creative juices are aligned, and they become jointly innovative, thus trust is an alignment of human energy. This aligned energy is also referred to as synergy – something that is so often elusive in organizations and relationships.

CHG: That’s fascinating. Earlier in this series, Ross Smith of Microsoft said very much the same thing. Are you two in cahoots?

RPL: Nope, never heard of him, but that’s how memes work. That and he’s obviously an insightful man!

The Trust-Innovation Link

CHG: Well, how does creating greater trust enable greater innovation?

RPL: Turns out that’s a great question. Let me re-tweak it a bit, if I may. The question is: how can teams act at the highest level of performance? And the reason I phrase it that way is that there’s solid evidence to show that the highest team performance comes from trust. So high performance teams ought to know something about trust.
CHG: Where did you look, and what did you find?

RPL: I spent 2 years looking over the worst-to-first instances in sports: such as Vince Lombardi’s Green Bay Packers of 1960 going from the bottom of the league to the Superbowl, or Pat Riley taking the L.A. Lakers to the NBA championship, or the most exciting of them all — arguably the greatest worst-to- first performance of all time, the 1980 American hockey team that won Olympic Gold against all odds, culminating in a win over the monstrously dominant Russian team.

One thing people forget is that Coach Ross Brooks — a man who had himself had been turned down from an earlier Olympic team — turned down a player who himself had more talent and better credentials than probably any other player on the team.

Why would a coach refuse a superior player as you’re heading into the Olympics? Well, the player was asked to practice with the team, and the team confronted the coach unanimously, saying ‘you can’t hire him.’

‘Why not?’ asked the coach.

“Because he doesn’t give 100%,” the team said.

“But he’s more talented than anyone else, even at less-than-full effort, he’s arguably the best player on the ice,” the coach protested.”

“But coach,” the players said, “if you never know what effort he’s going to give, you can’t trust what he’ll do. You never know how much game he’s bringing. You cannot depend on him to be reliable.  He wasn’t a collaborative kind of guy, he’d rather try to score himself than pass the puck to someone better positioned.”

That’s why in hockey they still call Wayne Gretzky the “Great One:” because he not only scored more goals than any other player, he also had more assists – he was the ultimate team player.

And it is this sense that permeates all great teams. They trust each other; they trust each other to give the utmost to the team. Which means, everyone can rely on everyone else’s motives, and everyone can trust the results. Unqualified commitment by each member of the team drives trust, and trust enables high performance.

That’s the link.

CHG: I get it. So, where are some lessons for business?

RPL: Well, you’d think way more businesses would grasp the obvious economics of collaborating — cross functional teams, innovative supply chains, alliances and joint ventures, for example. But very few companies do them right—because they don’t trust, because they don’t know how trust is created or destroyed.

CHG: How does that play out?

RPL: Todd Welch and I researched this; and the one thing we found was that unless there is trust at the top of the organization, collaborations don’t work. When trust is lacking, legal agreements are erroneously expected to fill the gap. And, of course, the longer the legal agreement, the stronger the distrust, because nearly all legal agreements actually generate more distrust, exacerbating fears and thus making it less likely the venture would succeed. You could make book on it.

CHG: You told me a story of a client who does major huge deals on a handshake basis. What’s the real story behind that one?

RPL: That is the real story. The only thing surprising is that the rest of us consider it surprising. The company is Daymon Worldwide, which provides private label brands to the grocery industry. I’ve seen Du Pont and Merck put a billion-dollar joint venture together on a handshake, and the legal agreements followed a year later. I witnessed Fleet bank enter a multi-million construction of their headquarters on a handshake with Gilbane Construction company. Handshake deals are far more common than many think.

CHG: You have developed a couple of models for thinking about trust; can you tell us briefly about them?

RPL: One of the primary reasons trust has been an elusive mystery is because we have either ambiguous or complicated understanding about why humans act the way they do. Recently Paul Lawrence has cracked the code on human behavior and provided a very elegant way of explaining what others have made so convoluted. Anyone from senior execs to high-school students grasps it in about five minutes: Here’s a brief explanation.

Trust and Ethics

CHG: What’s your view of the connection between trust and ethics? And what’s the state of ethics in business these days?

RPL: It goes without saying that ethics are in an abominable state of affairs, but I’m not sure that’s really different. Washington is better now than it was in the 1870’s, and business is probably no worse than it’s ever been. That’s an empty compliment because poor trust is very, very expensive. The biggest problem with ethics is the illusion we all have that good ethics would cure the problems of distrust.

Ethics actually creates a dilemma for building trust. While the lack of ethics will definitely destroy trust, the presence of ethics may only bring trust to a neutral point. Good ethics implies “I won’t do something wrong;” it takes the fear out of the picture. But it doesn’t mean “I’ll be effective,” nor “use sound judgment,” nor “be collaborative,” nor “compassionate,” nor “spontaneous.” Other things are necessary.

We all know ethical people who are ornery, dispassionate, inconsiderate, self-righteous, or uncooperative; thus while “trustworthy,” they are still not able to generate a trusting relationship. Trust embraces far more than ethics.

Real trust comes from people who are willing to be highly cooperative as well as ethical. Trust manifests when three things are boldly present: good character, good competence, and good collaboration. When we see great trust, we see people who know that their self-interest must always be put into a bigger picture: what’s in the mutual interest of the relationship itself.

Just yesterday I was asked to help rebuild a relationship between two business partners where the trust had broken down. The older of the two partners said it so well:

“For me at this stage of my life, I find it very difficult to separate friendship from business. The qualities of a great friend are quite similar to those of a great partner. Frankly, I don’t know where the dividing line is any more. The qualities of trust, integrity, mutuality, loyalty, and commitment to a larger mission are inherent in both a friendship and business partnership. As we embark on the threshold of a noble destiny together, I want these qualities to be present between us. In fact, this is more than a “want,” it is an “essential ingredient.”

This is the second installment of Trust Quotes, our new series featuring interviews with leading thinkers and practitioners in the world of trust: people who apply trust in powerful ways in business and society.

Previous Issues:

Trust Quotes #1: Ross Smith of Microsoft on trust and innovation

What a Trust-based Company Looks Like

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The tone of this blog is frequently critical. That’s probably because I believe we all learn much better from negative examples than from positive.
But if you don’t have any positive examples with which to contrast, we can easily forget why negative is negative. So the occasional positive blogpost is especially important. And this one is a real upper.

PSA: Pediatric Services of America

Last week I had the privilege of working with a very fine small company, PSA Healthcare. They deliver home health care for medically fragile people, mostly children. They have about 3,500 private duty nurses, operating from 50 locations in 17 states. What they do can make an enormous difference to families, allowing them to lead normalized lives under difficult conditions.

But having a great mission alone doesn’t make for a fine company. A lot of what makes PSA fine is that they are intentionally and consciously using trust principles to run the business. They are not only making a lot of people very happy and proud, they are doing very well by classic business measures. A fine case of doing well by doing good.

Let’s start with the metrics, go on to the principles, and end up with the real punch lines.

The Numbers. Jim McCurry started as CEO a little over a year ago, when PSA had been declining in revenue, market share, and profitability. Previous management was a classic top-down, measure-by-the-numbers team that had, simply put, failed.

The old style was that each month the bottom-performing offices were required to ‘justify’ themselves on a conference call to the top management. At the annual meeting, office heads were required to double-up on hotel rooms. Orders were given, decisions had to be approved up the line, and the style was management by FIN—fear, intimidation and numbers.

By the end of McCurry’s first year—at the tail end of a recession—revenue steadily increased, reaching a 20% annual rate of growth by year-end, all of it volume-based. The company increased profitability, more than doubled total profits, and turned the market share decline into market share gain. Staff morale is up enormously. Expenses are down.

Bottom line: really solid business results.

The Principles. How did McCurry do it? It was not the classic MBA turnaround medicine of tightening up, taking control, and cutting expenses. Instead, Jim told the staff the following:

“From now on, this company is run for the customer. The office heads work for the customer, and the rest of leadership works for them. Make your own decisions, and we’ll help you make them. Don’t wait for us to tell you what to do, you figure out what to do and do it—we trust you. No more intimidation, no more review boards.

“Our new mission has three parts: Action-oriented, Care-giving, and Trust-based.” (It spells ACT: coincidence? Of course not).

The annual meeting I was privileged to be part of was full of hokey-yet-fun skits, honesty, mutual helping, and positive energy.

The Punch Lines.  McCurry is an MBA. A Harvard MBA, actually, from a year after Dubya’s vintage.

The company’s owners are two private equity firms; the head of one of these is dedicated to the business in large part because his mother had been born so prematurely that she likely would have died were it not for the in-home nursing care she received in the first weeks of life.

This is a profitable business, not a charity. It is being run like a real business; like a real business ought to be, I should say, because too many businesses are being run the way PSA used to be run.

It’s refreshing to see an example of the much maligned du jour—MBAs and private equity—using modern, “squishy” leadership and management principles to improve life and the bottom line in parallel.

Collaboration, ethics, trust, openness, honesty, integrity—these are not fuzzy phrases, uttered by bureaucrats, wealthy Hollywood stars, or mega-rich Googlish do-gooders. These are utterly workable principles that deliver the best results around. They give capitalism a good name. Collaborative capitalism, I like to call it.

McCurry and PSA Healthcare deserve their success.

 

The Purpose of a Company Is…

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Thinking that the purpose of a company is to make a profit is like believing that the purpose of living is to eat.

Now that we’re clear about where I stand, and that this is going to be a bit of a rant, here we go.

The Purpose of Living is Not to Eat

I’m with whomever it was that said the ‘purpose-of-a-company-is-to-make-a-profit’ thing is back-asswards.

But let’s not start at full rant level. Let’s start by actually parsing the word “purpose.”

May I suggest that the statement “the purpose of [whatever] is…” does not actually mean anything unless given a context. And there are many contexts.

A sociologist (structural-functionalist variety) would look at a company and ask, ‘what social role does that kind of entity fulfill?’ Here are just a few answers.

• From the point of view of a state or local government, one role of companies is to fund a tax base and employ local citizens;
• From the point of view of a federal government, a corporation is a vehicle for implementing tax collections, health care policy, and vaccinations;
• From the point of view of the Supreme Court—at least recently—a company is indistinguishable from a human being when it comes to contributing to electoral campaigns and free speech;
• From the point of view of shareholders, it is to provide a return on shareholder investment;
• From the point of view of customers, the purpose of a company is to create customers (this in fact was the view of Peter Drucker).

A religious person might look at a company and say, “The role of a company is to allow man the means to fulfill God’s mission on earth.”

An anthropological historian might say the role of a corporation is to aggregate capital to fund larger-scale economic activities than could be done by individuals working alone.

I don’t know what Milton Friedman meant when he said it; he could perfectly well have meant, “if a company is making a profit, it’s doing all the other things it’s supposed to be doing, no need to inquire further.”  But it’s clear that Friedman has since been hijacked by those who have a far narrower, and more corporatist, agenda to pursue.

And so on. Without any context, absolute statements about the purpose of anything reveal either intellectual laziness or a political opinion—usually the latter. But let’s continue.

Corporations Are Not Granted Divine Rights

Often what people mean when they equate corporate purpose and profit is to suggest that the concept is primary, fundamental, or very basic, or a core principle; not quite revealed truth, but not far from it.

So it’s worthwhile remembering the source of legitimacy of a corporation. The first were formed in England in the 17th century, e.g. the Hudson’s Bay Company; they were formed by authority of the government.  In the US today, companies are chartered by the States. Again, legitimacy derives from the government. In whatever country we’re talking about, corporations are granted their legitimacy by way of the state.

There is no ‘right’ to profit for a company. There is no Bible that imbues companies with extra-legal status. No tablets were handed down, no assembly of people blessed companies with a ‘purpose’ agreed upon by all.

What about corporate charters that require companies to be responsible to shareholders for earning a return? I’m not a lawyer, but I’m reasonably well-read, and I’m not aware of any shareholder suits that invoke that clause to argue against excessive management compensation. From which I conclude there’s probably a lot of latitude for interpretation.

The Role of Companies

The real role of companies is hardly self-evident; in fact, it’s an excellent subject for public policy debate. The key question is: what do we want the role to be?

A company is a creation of the state, which in turn is beholden to its citizens. The question of the role of a company is on the same footing as the role of any other civic institution; what do we want to be the role of our public schools? Of our prison system? Of our approach to civil rights?

It’s a great question, and very timely. Let’s not shut down the discussion by assuming there’s some pat debate-ending answer.

(For anyone interested in pursuing this line of thinking further, I find the Wikipedia entry on “philosophy of business” to be thorough and thought-provoking.)

 

 

Collaboration: Not Just an Internal Virtue

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We usually think of collaboration as a good thing. But we also usually think of it as something we do internally—in order to compete with the external world. This is a viewpoint which has proven harmful in the past.

The future of collaboration is not just internal, but external as well—with various stakeholders, particularly including customers and suppliers.

Old Collaboration: Us Against Them

As the Deputy Dean of Academic Affairs at Harvard Business School puts it, “Today, more than ever, business is a competitive endeavor. At the same time, management is a more collaborative endeavor.”  That’s the old view–collaboration as a management technique, practiced in service to a competitive-based strategy.

Jack Welch’s term “boundarylessness” captured this introverted form of extroversion perfectly:  it was boundarylessness, right up to the corporate boundary. At that point, it became us vs. them.

The Dangers of Limiting Collaboration to Internal Only

Google recently got slammed for its Buzz product introduction, which seemed blind to concerns about privacy.  The problem was not testing: Google routinely runs massive tests on new product introductions–but it does so internally. Had Google tried to collaborate with some non-Google folks, someone might have clued them in about the suspicious world outside the inner walls at Mountainview.

And that’s not a unique example. Toyota is currently paying the price for low levels of external collaboration—despite excellent levels of internal collaboration.

I remember vividly the first class on my first day of my first year at business school. It was a consumer marketing case, about introducing a new product. I and everyone in the class concluded it was a horrible idea; none of us could envision buying the product.

The joke was on us; the product was a huge success. The lesson? Never do market research on yourself.

Collaborating with your teammates is good for speed and efficiency. But external collaboration connects you with the world outside. Big stakes.

New Collaboration Reduces Risk by Going External

Conventional wisdom declares collaboration to be an internal management tactic. The collaborative capitalist view is that collaboration is no longer a tactic, but a strategy for more successfully engaging the outside world on terms other than solely competitive.
 

Are Book Titles Getting Twitter-ized?

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Have you noticed the plethora of one-word nonfiction book titles lately?

The following titles are taken from the top 60 best sellers on Amazon’s list of business books. That means nearly 1/4 of the top books have one word titles. Yes, they have subtitles, but other than that, I’m being a purist, and didn’t even count titles with ‘the.’ (Like ‘The Secret,’ which has no business being on a business list anyway).

Blink, Think
Stick, Switch
Tribes, Outliers
Nudge, Sway
Linchpin, Rework
Drive, Mojo
Freefall, Aftershock

Most naturally fall into categories of opposites. For every one word title, there is an equal and opposite title, seems to be the rule.

I can’t imagine we had this many one-word titles in recent history, and I suspect it means something.

The Curmudgeonly Interpretation: The Decline of Rome, redux

There is an obvious interpretation which appeals to modern Luddites and curmudgeons: "It’s the Twitter that done it!" You can write the rest of that post yourself.

Variations on that theme include, "Anybody who thinks he has 5000 friends doesn’t have any," and "Kids these days don’t even know their times tables."

There is another view, of course, and that is simply that the meanings of words change over time. In Jorge Luis Borges classic short story “Pierre Menard, autor del Quixote,”  , the author Menard resolves to write the greatest novel of all time. Which, as everyone knows, is Don Quixote. So after great labor, Menard triumphantly succeeds in writing Don Quixote, in its original Spanish.

But of course, the meaning of the words had changed over the centuries, hence it turned out that Menard had not written the greatest novel of all time after all; whereupon he died forlorn of disappointment (as I recall).

An awful lot of wasted energy gets expended on debates over the changing meanings of words like ‘friend.’ Too bad we don’t have the ability to just say ‘friend-like-it-meant-in-1957’ and ‘friend-like-it-meant-when-it-became-a-verb.’

Not Better or Worse, Just Different Books

Let’s just stipulate that there were some good things about the 1957-model Friend that were lost in the transition to the New Model. But the reverse is true too. With 2000 friends, you can find someone up at any hour of the night, for example. That’s non-trivial, as far as I’m concerned.

I just spent 3 hours of a 5-hour flight reading a really good old-style book called Crisis of Character: Building Corporate Reputation in the Age of Skepticism, by Peter Firestein. Not a one-word title. Because, in this case, it’s not a one-word book. (Excellent book, by the way).

Then again, I’m a Malcolm Gladwell fan; I’m not about to join the backlash against him. Blink? Outlier? Yeah, I get it, and I get it quick. Maybe I don’t have to read the whole book to ‘get it,’ but I always do anyway, because I love reading Malcolm.

Yes, I think one-word titles are different, and new, and here to stay.  And I’m sure it is all part of “the twitter,” we all have A.D.D. now, and so on. And some of that’s good, and some of that’s bad.

What it is, it’s just different.

My favorite old Greek philosopher (maybe the only one I remember) Heraclitus said, “you cannot step in the same river twice.” True dat, Heracky!
 

Shaming Bribe Takers with Zero Denomination Currency

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A most curious post showed up on the Worldbank.org site. It tells the story of 5th Pillar, a unique initiative to mobilize citizens to fight corruption in India.

According to Anand, the idea was first conceived by an Indian physics professor at the University of Maryland, who, in his travels around India, realized how widespread bribery was and wanted to do something about it. He came up with the idea of printing zero-denomination notes and handing them out to officials whenever he was asked for kickbacks as a way to show his resistance.

Anand took this idea further: to print them en masse, widely publicize them, and give them out to the Indian people. He thought these notes would be a way to get people to show their disapproval of public service delivery dependent on bribes.

The notes did just that. The first batch of 25,000 notes were met with such demand that 5th Pillar has ended up distributing one million zero-rupee notes to date since it began this initiative. Along the way, the organization has collected many stories from people using them to successfully resist engaging in bribery.

When confronted with a demand for a bribe, the citizen offers up a zero-rupee note. This act turns out to have serious, positive consequences. In one case, “a corrupt official in a district in Tamil Nadu was so frightened on seeing the zero rupee note that he returned all the bribe money he had collected for establishing a new electricity connection back to the no longer compliant citizen.”

The Power of Shame Over Corruption

The article suggests several reasons for the power of the zero-rupee notes. Corrupt officials become frightened of being discovered; they also don’t want to have disciplinary proceedings established.

But the most powerful reason, says the article, is that the fact of the many zero-rupee bills’ existence empowers citizens. They no longer feel alone, and therefore have the courage to stand up against corruption.

What I find interesting are the comments to the blogpost. About a third of them are skeptical, saying it won’t work—this after reading an article about how it does work. Others say it works temporarily, only new laws will work permanently, it’s only a novelty.

Even many who say it does work are prone to focus on the odds of getting caught—suggesting the zero-rupee notes alter the rational risk-taking behavior of the corrupt officials.

I suggest they’re over-thinking it. The power of the zero-rupee note is what the article said it was—the empowering of a disenfranchised group in a very public way.

Call it shaming.

It’s exactly what I wrote about the other day in the confusion over ethics and finance. In a western-driven world which worships rational analytics, ascribing all motives to deductive calculations of self-benefit, we tend to under-rate the impact of the moral disapproval of our peers.

Whether we’re talking about corrupt civil servants in Tamil Nadu, or self-aggrandizing employees in a US company, I think most people are still capable of being ashamed; and that shame comes from a larger group of human beings. In situations where the law seems behind the curve, a deeper sense of community can restore balance.

Shaming is the public expression of a community’s view; we shouldn’t under-estimate its power, for good and for bad.