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When Being Trustworthy Isn’t Enough to be Trusted

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In sales, you sometimes hear, “They were pursuing an aggressive strategy – aggressively waiting for the phone to ring.” In other words, sometimes you’ve got to take action.

Much the same is true of trust. If you want to be trusted, sometimes it’s not enough just to be trustworthy. Sometimes you’ve got to take action. But how?

Most of my work over the past 15 years has been on trustworthiness. In The Trusted Advisor and my other books, I’ve put a lot of emphasis on the Trust Equation – more properly, the “Trustworthiness Equation.” The implied (and often explicit) message is, “To be trusted, be trustworthy.”

But what about when that’s not enough?  How do you take action?

To understand what action to take, I need to differentiate between trust, trusting, and being trusted.

Trust, Trusting, and Being Trusted

In all the writing and research I see done in the field of trust, rarely do I see this critical but simple distinction being made. It seems quite obvious, when you think about it. One party trusts, the other party is trusted, and the result is trust. Simple.

And yet – most trust talk obscures the differences. See if you can guess which one is being talked about in these examples:

  1.      Trust in banking is down
  2.      Banks rank low on the trust scale
  3.      People don’t automatically trust their bank anymore.

I’d suggest that probably they mean the following:

1. “Trust in banking is down” – is about trust (e.g. the level of trust that exists between banks and their clients is less than it used to be)

2. “Banks rank low on the trust scale” – is about being trusted (e.g. banks are viewed as less trustworthy than football clubs or hospitals)

3. “People don’t automatically trust their bank anymore” – is about trusting (e.g. these days people are less inclined to trust everything, including, for example, their bank).

But since they all sound pretty much alike, unless you can read the mind of the writer, you can’t be sure. And here’s why that’s important.

The Reciprocal Relationship between Trusting and Being Trusted

The creation of trust between two parties depends on a reciprocating exchange. It begins when party A takes a small risk to trust party B – A is the trustor, the one doing the trusting. Party B is the trustee, the one who is trusted. And if party B agrees to the new relationship, the result is a higher level of trust.

Take something as simple as a handshake at a networking event. Party A goes over to party B and says, “Hi Mark, I’m Charlie – I think your work on the boson participles was great, and I just wanted to meet you (extends hand).”

If party B reciprocates (e.g. “Hi Charlie, delighted to meet you, I’ve heard about you as well, how are things? (shakes hand),” then the result is trust.

If party B does not reciprocate (e.g. B looks at A’s hand, does not extend his own, gives a tight-lipped smile and turns away), then trust is not created.

The key to trust creation is reciprocity – the trustor takes a risk, and if the trustee reciprocates, trust is created. If not, trust is not created.

Therefore: the absence of trust can be caused by:

a. too little trustworthiness on the part of the trustee, or

b. too much risk aversion on the part of the trustor.

Now here’s the key: if you want to be trusted, you have two strategies you can pursue.

  1. Increase your level of perceived trustworthiness (think trust equation), or
  2. Kick-start the reciprocity relationship by first playing the role of trustor. 

You’ve heard the second strategy before. Henry Stimson often gets credit for first saying, “The best way to make a man trustworthy is to trust him.” The same is true of making yourself more trusted – demonstrate vulnerability by offering to trust first.  The natural human reciprocal response is to return the gesture – tit for tat, good for good, bad for bad.

How often have we heard: You get out what you put in, the love you take is equal to the love you make, one good turn deserves another, whether you expect good or ill, that’s what you’ll get. They’re simple statements, but not simplistic – they’re profound.

In game theory, the simple “tit for tat” strategy is shown to beat all others. (You’ll love the link – Richard Dawkins in video with circa 1990 computers).

Using Reciprocity – Rightly 

Reciprocity is deeply wired into our psyches. You can trust it. You can use it. You can depend on it working – if, that is, you don’t abuse it.

Want your customers to trust you? Find some ways to trust them.

Want your colleagues to trust you? Find some ways to trust them.

Want your direct reports, and your report-to’s to trust you? Find some ways to trust them.

Trusting + Trusted = Trust

Trust it. It’ll work for you too.

Destroying Trust with Just a Verb

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The Associated Press decided to drop the term “illegal immigrant” from its reporting. Their point: the term ‘illegal’ should be applied to actions, but not to persons. It’s the immigration equivalent of, “hate the game, not the player.”

Of course, that’s red meat to a lion for some. Senator John McCain said, “You can call it whatever you want to, but it’s illegal. There’s a big difference…I’ll continue to call it illegal.” And so the battle is joined. Where one side sees respect, another sees absurd political correctness.

This is a worthless, useless, and totally unnecessary argument. It is also typical of a great many pretend arguments – full of energy and fury, truly signifying nothing.

And who’s the culprit? A verb. To be precise, the verb “to be.” I’m not kidding.

The Tyranny of the Verb “To Be”

In Spanish (and other Romance languages, I think), the English “to be” actually has three forms: estar, tener, and ser. Estar refers to a temporary condition: he is tired, she is in Europe, I’m sick. Tener refers to “having” a passing state – I have hunger, you have thirst, he has luck. Ser, the third form of “to be,” has to do with permanence: he is a man, you are virtuous, she is from the US.

In English, all those forms translate into one word, to be: I am, you are, he is.

Why is that a problem? Consider these interactions:

“The new Bond movie is great.” “No it isn’t, it stinks.”

“He is always negative.” “No, he’s just realistic.”

“You’re not serious.” “I am totally serious!”

“He’s an illegal.” “How can you be so judgmental?”

Because we have only one verb in English to cover so many situations, we end up bludgeoning each other. Since we can’t distinguish our several meanings, we assume others mean the same thing we do.  And when it turns out they meant something else, we chalk it up to obtuseness and  bad will on their part.

Which explains why I always have good intentions – but you! You’re always working some angle.

The American Burden

We’re not about to add two new verbs to American English (I can’t speak for the British or the Strines). But it’s not like we’re handcuffed. All we need is a little clarity of thinking.

1. Distinguish between actions and actors. The AP had this one right. You can still morally condemn people if you want – just don’t be sloppy about your definitions of morality.

2. Distinguish between your preferences and the other’s characteristics. I am not annoying – you are annoyed.

3. Avoid using personal pronouns with “to be” except for “I” and “it.” We have a right to say “I am __.”  We don’t have the same right to say “you are __” or “he is __.”  Only a rocking chair is oblivious to the difference.

I am fairly confident it’ll work for you. Unless you’re seriously pigheaded, that is.

Leadership Development: the Trust Perspective

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Leadership and Development, Trusted Advisor, Trust-Based LeadershipI rarely write blogposts promoting the services we offer. But since we have something new to offer – this is one of those times.

Are you involved with issues of leadership in your organization? Then you may be interested in our newest service offering, Trust-based Leadership.

And if learning and developments is not your thing, please pass it on to the appropriate person.

Trust-based Leadership joins our two other flagship programs – Being Trusted Advisors and Trust-based Selling. Here’s how it came about.

The Case for Trust-based Leadership

In 2011’s The Trusted Advisor Fieldbook: A Comprehensive Toolkit for Leading With Trust, Andrea Howe and I articulated the central role of trust in leadership. That may sound like a no-brainer, but it’s not all that obvious. Historically, the idea of “leadership” has been all about vertical relationships – leaders and followers, the high-potential few, charisma. Not so much anymore.

Now, critical business relationships have moved to the horizontal dimension: partners, joint ventures, alignment, startups, remote teams. In such environments, leaders have no direct control – they can’t give orders, they often can’t even offer incentives. What they can do, and must do, is influence people to move in the same general direction. And the number one driver of influence is – trust.

(For a longer discussion of this issue, see The New Leadership is Horizontal, Not Vertical).

Trust-based Leadership – the Program 

We’ve had this program in development since early summer 2012, and it’s finally ready. A one-day program, it’s almost entirely experiential. It is aimed at supervisory to mid-level  groups in all kinds of businesses and organizations. It comes with diagnostics and sustainment plans. See more details here.

It is based on material contained in The Trusted Advisor Fieldbook. Trainers have been certified, the program has been piloted (to rave reviews), and it’s available for train-the-trainer for larger organizations, starting now. (Available at first in the US only; but stay tuned).

Email me [email protected] or call me directly at 1-855-TRUST01, ext. 1001 (that’s 1-855-878-7801, ext. 1001) for more information, and I will reply to you personally. I’d like to talk more with you about this exciting new program.

Sales, Surgeons and Profits

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iStock_000002256780XSmallThe NYTimes recently published Salesmen in the Surgical Suite, a look at some questionable sales practices in the US surrounding a robotic surgical technology called the da Vinci Surgical System, a product of Intuitive Surgical Inc. The article cites a case of severe damage to a patient due to inadequate training of surgeons, and a variety of documented practices by Intuitive pushing the limits of proper training and supervision.

My point is not to argue the case for or against the company; that’s being done already in a case filed against them. What I do want to touch on is how we should think about issues like this. In other words – just what kind of a problem do we have here?

Profit vs. Patients?

The ultimate issue, I suggest, is the relationship between a for-profit business and the well-being of the end-user customers. Health care is an extreme case, because of the direct link between the two; but in a sense, this is the same issue we face in a capitalist society for any good or service. Healthcare, and surgery in particular, are extreme cases, thus useful for clarifying issues.

There are three commonly heard points of view:

1. There is an innate conflict between the interests of the profit-seeking business sector and the ultimate good of the patients; this conflict must be regulated by a third party of some sort.

2. There is no innate conflict between business and patients, except insofar as business is regulated by governmental and other third parties, who inevitably just distort the ideal workings of pure markets.

3. There is no innate conflict between business and patients, except insofar as business misreads its own long-term self interest by being addicted to short-term fixes, leading to regulation – a self-inflicted shooting in the foot.

The first two arguments are endlessly hashed over, with much heat and little light, in all the various venues of the day: from Congress to HuffPost to talk radio to coffee shops. (I suspect this debate is largely a US debate, as most other developed economies have tilted toward the first viewpoint, far away from the second). I’m not going to change anyone’s mind about the relative merits of one and two.

But number three is interesting: it suggests that the business-society conflict is unnecessary, and that the solution lies largely within the hands of business itself. All that right vs. left, redneck vs. socialist shouting is nothing more than noise.

Is this a utopian, pollyana-ish view? Or is it very real?

The Best Interests of Business

We can reframe the issue as simply, “Is there or is there not a long-term fit between the interests of business and consumers?” Karl Marx answered in the negative, and claimed that the tension would ultimately result in revolution. I suggest that any right-thinking capitalist must answer in the affirmative – there must be a commonality of interest, else the doctrine of capitalism is of little use or interest.

But if that’s the case in the long run – why then isn’t it in the short run? Why do we see salespeople play with endangering people’s lives in order to get the order in before the end of the quarter? Why do companies fight for less regulation, commit economically foolish acts in order to smooth quarterly earnings, and prefer the net present monetized value of almost anything, rather than the longer-term asset that comes from brand, history and culture?

We live in a very imperfect business world, I suggest. We do not do a good job of assessing economic good, or even of assessing business value. We rely on definitions of value which are narrow, solely financial in nature, and short-term. The tyranny of the discount rate leads us to forego thinking about the next generation – it’s just un-economic to worry about something 40 years out, there’s not enough present value in it to justify it.  The Chinese have a history of looking at hundred-year timeframes; the US struggles to get past quarterly, and three years might as well be a lifetime.

The poverty of our financial calculus can be described several ways. Economists would say we do not take into account externalities, so we delude ourselves about the costs of degrading the environment. Social scientists describe it as resulting in a poverty of the spirit (a tone we hear echoed by those who preach ‘the final days of the empire’).

This poverty of calculus is supported by impoverished thinking. Adam Smith was brilliant; the caricatures of him that came down through Ayn Rand and the Chamber of Commerce retain nothing of his focus on the good of society, much less his work on the moral sentiments. Even business theory is impoverished – NPS and Five Forces just don’t have the sweep that we saw from Peter Drucker or even Sun Tsu.

What I’m suggesting is that business needs to radically re-think itself, across the board, into a long-term partnership with the rest of society. The commercial instinct of mankind ought to be a driver of value and wealth creation for all of society, and not hostage to an ongoing battle between haves and have-nots. Whether we need more or less government, more or less regulation, should not be the issue.  The issue should be how can business and society line up on the same team?

We really should be able to do better.

Hitting a 7-Iron from the Tee Box

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This weekend I joined a dozen school buddies for an annual golf outing. Now, I took up golf late in life, which explains why I’m pretty much the worst player in the group.  At least, that’s what I tell myself.

Nobody minds much, except for me; everybody respects everyone else’s level of play. After all, that’s why handicaps exist. That said, once per outing, I will ask one good player for some advice. This time, I got some great advice from Dave.

“Charlie, your drives are too erratic. When they’re good, they’re as long as anyone’s, but much more often they end up in the woods on either side. Put away your driver club and just hit a 7-iron off the tee. You’ll give up 100 yards in distance, but you’ll always be in the fairway.”

An Insult? Or a Challenge?

As golfers know, on the face of it, that’s a bit of an insult. A 7-iron is made for much shorter shots than the driver.  Telling me to use a 7-iron from the tee is like telling a cyclist to use training wheels, or a poet to go work on rhyming. But I know Dave, and he knows me, and I knew he was just trying to challenge my thinking in a creative way. And thinking is at the heart of the matter.

All sports are about one’s mental state to some degree; but no other sport can touch golf in the attitude-to-performance linkage. How can you miss a two-foot putt? Easy – start worrying about missing it.

For most golfers (me included), the tee shot leads the list of stress-inducing moments. There are a thousand ways to think wrongly about your tee shot – and every one of them can make for a self-fulfilling prophecy. The trick is to leave your thinking behind when you finally approach the tee, and let the habit of your muscle memory take over. Over-thinking is the root of all evil in golf.

Over-thinking: a Metaphor for Life

There was no way I was actually going to hit a 7-iron from the tee – these are my buddies, and I’m not all that ego-free! But I realized Dave had given me a gift. All I had to do was envision the result of a 7-iron from the tee – and duplicate it with the driver.

Mechanically, that meant slowing down, dialing back the swing, not trying to kill the ball. Mentally, that meant feeling relaxed, staying within my comfort zone, not pushing the limits – and especially not fearing all the bad things that could happen .

The result was powerful. I gave up some distance (less than 100 yards, though) but stayed within the fairway much more often. Result, better scores.

The Tee Box of Life

How often do you invite failure – because you’re pushing the limits on a dozen variables, living in fear of missing on one of them? Does it happen in sales calls? Client progress meetings? Presentations? Performance reviews?

Maybe you should try hitting a 7-iron from the tee box. Dial back the rough edges; stay within yourself; be very clear about the core message, the core values, the core parts of the relationship. Find your swing, and learn to trust it. Be clear and simple about what you’re doing. You may not make the occasional spectacular shot; but you’ll miss a whole lot of disastrous shots, and improve your score.

Insecure Egomaniacs

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Stern Woman BWIn April 2007, the New Yorker published an article by John Calapinto called The Interpreter. It describes Dan Everett, a linguistic researcher who lived for many years with a remote Amazonian tribe in Brazil, the Parahã.

The Parahã consider their language to be vastly superior to all others, and show no interest in learning other languages. In fact, as far as they’re concerned, nearly anything that isn’t part of their culture is completely un-interesting – planes, movies, radio. They are entirely self-absorbed, in a very profound and fundamental way.

Meanwhile, back in the “civilized” world, the field of linguistics is dominated by the theory of Noam Chomsky, which I won’t attempt to describe except to say it posits a universal characteristic of human propensity to form language. In other words, it says all languages must have this one thing (recursion) in common.

Well, surprise, surprise. The Parahã language, according to Everett, appears to be a counter-example. All attempts at demonstrating recursion fail. Chomsky would appear to be wrong.

But the Chomsky-ites are undeterred. Something must be wrong – wrong with the data, wrong with the researchers, wrong with the methodology. Because something can’t be wrong with the theory.

And so the linguistic theorists are just like the Parahã they study: convinced of the utter un-interesting-ness of the world around them – and blissfully ignorant of the irony.

Self-Centricity

Linguistics is hardly the only example of this self-centricity. We are literally born with it; our world starts off as hardly larger than our mother’s arms. Our view of astronomy was earth-centric until very recently in terms of human development.

To this day, maps of the world tend to be centered around, surprise surprise, the country they’re sold in. China was called the Middle Kingdom. Mutual funds in the US tend to be heavily weighted toward US stocks, while those in the UK are UK-weighted – yet each describes itself as global in view.

So, we think we’re the center of the universe. Let’s call that arrogance.

But arrogance has a helpmate, who often shows up at the same time and place.

Insecurity

We all like to be liked. The need for affiliation runs deep in our species, and not just for propagation. As far back as archaeology can inform us, we have tried to present ourselves to others in the best favorable light. Women wear makeup, men strut. So it goes.

In modern society, this reaches abstract levels. Some develop neurotic obsessions about the likelihood of their newborn offspring getting into Harvard, and nearly all of us are prey to teen-age angst – they like me, they like me not, my life is over.

Truth be told, very few of us ever achieve complete escape velocity from this insecurity. We still channel our inner teen-ager with depressing regularity. The urge to measure our insides by the metric of others’ outsides is powerful.

Insecure Egomaniacs

When self-centricity meets insecurity, we get Insecure Egomaniacs. In my experience, it’s not that some people are IE’s and some not – it’s that we all are IE’s, more or less, at different times. The struggle is to be less of an IE, more often, in more situations.

When we are in our IE phase, we reciprocate like alternating current between worrying that no one notices us, and that everyone is looking at us. We think ‘dance like no one’s watching,’ but we aspire to dance so well that everyone watches. We want to be at the center of the crowd, but we sit in the back row, on the side.

It’s as hard to trust an IE as it is for an IE to trust. Both arrogance and insecurity are a form of alienation, cutting us off from another, and from others. In our IE modes, we see risk everywhere, and can’t bear the thought of intimacy or vulnerability – it would either deflate our arrogance, or frighten our insecurity.  And so we rotate, iterate, prevaricate.

We are not doomed by our IE predilections, not by any means. But that’s another story.

 

Using Valuable Content to Build Trust Through the Sales Process

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Valuable ContentPlease welcome guest-blogger Sonja Jefferson to Trust Matters today. She’s founder of Valuable Content consulting firm, and author of the Valuable Content Marketing book. I have high regard for what she does, and think you’ll enjoy this.

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I’d like to make a distinction. ‘Content’ is the words on the page you are reading. It’s the copy on your website, the blog you posted last night, the videos, images and tweets that you share. When we’re talking about content we just mean words, knowledge and information.

What lifts a piece of content above all the noise is the value it has to the person reading it. The term we use is ‘valuable content’. Valuable content is supercharged content – words, knowledge and information shaped for your particular audience. It is content with a bigger purpose, useful information created for a niche; quality collateral that really hits the mark.

Valuable content is meaningful content and it will help you build trust at every step of the buying process. Here is how I’ve seen it make a difference to consultants and professional advisors along the long road to a sale.

Valuable Content For Every Step of the Sale

Growing awareness: Online or off, the right content will help you be found. Search engines reward valuable content. Just like your prospects, the Google algorithm is getting better and better at recognizing and blocking spam. But if you regularly share useful, relevant content in your blog articles and social media updates you’ll build your reputation and network, and rank as a helpful expert in your niche.

“I was struggling with an issue, and didn’t feel I had the whole picture. I searched on the web and found a really useful article by X. Funnily enough someone in my network had mentioned them favorably recently too.”

Generating interest: They’ve found your website, do they find something relevant and useful when they get there? Most websites and marketing communications are nothing more than self-oriented propaganda. We follow the 80/20 rule of thumb: aim for 80% valuable content and no more than 20% promotion. Pack your website full of engaging content, just for them. The key is to focus on the client and their issues: how-to articles and valuable guides are far more engaging than a brochure.

“That article really got me thinking. It made me curious about the people behind it. I checked out their website and found a veritable library of information on the subject – more articles, some interesting slide sets, a great video.”

Proving your expertise and motivating them to buy: Buyers are more likely to want to work with thought leaders and experts in a given field, and your published content helps you earn that title and builds trust in what you can do. When you’re up against a competitor, valuable content gives you an edge. When clients see your passion and expertise shining through, you gain an added level of credibility.

“The quality of their content, as well as their case studies and testimonials, gave me confidence in their ability and set them apart from their competitors.”

To convert all this good will into action is often a matter of good timing. Not everyone will be ready to buy straight away, so motivate them to keep in contact with you – connecting on social media and a simple email newsletter once a month will keep you front of mind.

Making it real and deepening the connection: Turning the spark of interest into a burning desire to meet means engaging prospects on a deeper level. Online tools like the Trusted Advisor Trust Quotient Assessment are a great way of helping potential clients experience the way you could help them; valuable in their own right. Webinars are another way to let potential clients see you in action. Hearing your voice, seeing you answer questions in real time make the benefits of your services come alive. Put the customer and his challenges at the centre of your world, and show them clearly not just how you help someone like them, but how your insights and experience could directly benefit them, for real.

“Every contact with them is valuable to me. I can see they develop good relationships with clients. They are a good fit for my world.”

Help Your Clients Along The Sales Journey

Marketing with content is more than just a lead generation activity. It’s an invaluable tool right through the process from first touch to long-term relationship.  Help your buyers along their sales journey with valuable content. Provide genuinely useful information at each stage of process – from ‘just looking’ to ‘just about to buy, big time’. Use it wisely and people will get to know, like, and trust you, and remember you when the time comes to buy.

[You’re in the right place if you want an example of best practice. Just look around you on the Trusted Advisor website.  You’ll find content here for every step of the sale, from tweets to articles, to e-books, online tools, webinars, his newsletter and of course Charlie’s books.]

 

The New Leadership is Horizontal, Not Vertical

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Horizontal LeadershipSeveral decades ago, when “leadership” became a Big Thing, it was heavily personality-based. It posited Leadership as something done by Leaders, who had learned the art of how to Lead. As a consultant friend of mine, Renee Wingo, put it, “It’s a subject whose proponents can’t figure out whether it’s a noun, a verb, or a gerund.”

Leaders were thought of as those who were followed by others. This dichotomy fed the idea that there are two kinds of people in this world – those who lead, and those who follow. Besides reinforcing the personality-based view of leadership, it raises the classic make or buy question – are Leaders just born, or can their secrets be unlocked and learned by others?

Finally, this distinction between leaders and followers fed a natural assumption that those roles were vertically related within an organization. Think military chain of command. Think bosses and subordinates.  To this day you’ll find many business writers harping on “the difference between leaders and managers,” as if the terms carried some ordained meaning.  In any case, it meant that leaders outranked followers.

Warren Bennis was (and still is) the [leading] guru of leadership. Much of what he has written is about Great Leaders, whether as exemplars, or as subjects in their own right. He held conversations with Leaders, who basked in his attention as much as he did in theirs. The majority of Bennis’s many book titles on the subject center around the noun “leader.”

Leadership development, in this personality-based view of the subject, was something that companies offered to elite groups – those with “high potential,” who had the inner capabilities to become leaders of others. The few, the proud, the Leaders – those were the ones granted the key to the next level.

Away from Personality-based Leadership

That was then; this is now. Things have changed, gradually but firmly. The concept of a hierarchical, vertical relationship between “leaders” and “followers” or “managers” has become less and less descriptive of the world of business. In its place we have networks, webs, relationships, alliances, collaborations, joint ventures, ecosystems, cultures, and communities.

This is not just a function of web-based aggregations, or faddish vocabulary. It is built into industrial structure, with much greater global sourcing, modular supply chains, and focus on core businesses. Language follows structure, not the other way ’round.

Enter Horizontal Leadership

What that means for leadership is simple but profound: the essential relationships are no longer the vertical relationships contained within corporate silos,  but the horizontal ones that link people across organizational boundaries. The New Leadership isn’t vertical, it’s horizontal.

This forces us to do a better job of defining leadership.  It never was about getting people to follow; it was about getting things done. It still is. Except now you get things done less by lining up the troops, and more by generating movement around a common goal. Horizontal leadership might be defined as “persuading others over whom you have absolutely no direct control to join you in a common cause.”

The “skills” of old and new leadership certainly overlap. You can’t lead horizontally or vertically if people think you’re dull, or an ass-kisser, or hopelessly insecure. But there are differences. The skills of horizontal leadership rhyme with influence, persuasion, and trust. Particularly trust.

Because the biggest difference between vertical and horizontal leadership is reciprocity. To be a vertical leader, you don’t have to be a good follower. But to be a good horizontal leader, you must know how to be trusted – and how to trust. It is not enough to be trustworthy; you must also be a risk-taker, and know how to be vulnerable, two prerequisites of the ability to trust.

Vertical leadership, like command and control, largely goes one way – from top down. But horizontal leadership is best practiced through trust, and trust is bi-lateral; you have to be good at trusting, and at being trusted. “Leader” is not a permanent attribute – it is a mindset/skill-set/role that is played at a given time by a given person, who the next day must play, equally well, the role of follower.

Which means, in today’s world, we each have to behave as leaders, or we simply don’t succeed. This is not New Age pablum-talk; it is a meaningful statement. In a networked, connected world, the skills of playing nicely together in the sandbox – horizontal leadership – cannot be squandered on an elite “high-potential” group; they have to be broadly taught. The concept of leadership development needs democratizing.

The future of leadership is horizontal, not vertical; and the future of horizontal leadership is learning the ways of trust. That means teaching trusting, and being trusted. And it means an approach to teaching leadership that is far more broadly-based than it has been.

The Math of Low Trust

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Trust in business has declined in recent years. One reason why can be demonstrated with a bit of math.

Assume two streams of income, with a net present value calculation for each. (I’ll use a 10% discount rate to simplify). Income stream A has a big payment in year 2 and then pays slightly more per year – but only for 5 years, after which it all ends.

Income stream B is steady and solid, giving less income per year – but lasting 8 years.

NPV Chart

Which income stream do you choose? If you’re a dutiful MBA or financial manager, then in theory you choose B, the one with the higher NPV. In fact, in the real world, stream A is chosen far more often – for two reasons.

Reason 1. What if the example were ended after 7 years, instead of 8 years? In that case, the NPV of Income Stream B would drop to $44.72 – so presumably you’d choose Stream A, which is  unchanged at $46.17.

Timeframe makes a difference. If the average time you spend in a job is less than 8 years, and you are a rational self-maximizing business person, you’ll choose a far shorter timeframe in which to maximize your performance, because that’s what you can control. And these days, it’s more like 2 years than 8.

Reason 2. In the above example, the unspoken assumption is that it is, in fact, a solitary single example. But assume there are thousands of investment opportunities out there, with very similar payoff characteristics. In which case the smart thing would be to take Income Stream A – and then sell it after two years.  Then go find a new Income Stream A in which to invest your profits, and do it all over again. That way you’ll vastly out-perform either strategy, in virtually any time frame.

Or – would you?

Trust and Net Present Value

What’s this got to do with trust? Think back to Walter Mischel’s famed marshmallow study on deferred gratification. We do not trust people who have no self-will, who cannot defer their desire for instant gratification, because they are not in charge of their own desires. But that’s just one marshmallow incident; the rationale doesn’t go beyond Reason 1 above. What happens when one’s choices can be made over and over again?

That pattern – endlessly taking short-term gratification and jumping off onto a new high-then-low curve – is a very familiar one. It is what characterizes alcoholism, addiction, and it explains why junk food sells. “Just one more drink; one more cigarette; one more Frito. I’ll quit tomorrow, honest.”  But there’s always another drink at hand, and cigarettes and Fritos are ubiquitous.

The connection to business? Easy. Think about the obsession with quarterly earnings. Think about Wall Street’s “IBGYBG” mantra (I’ll be gone, you’ll be gone – do the deal). Think sales quotas, weekly P&Ls, constantly refreshing online metrics for performance. A myriad of new front-end loaded opportunities for instant gratification. Running a business this way perverts strategy in favor of a series of opportunistic NPV calculations.

Business Since 1970 – One Major Trend

Biggest trend of the last 40 years?  An obsession with markets. We have pursued, especially in finance, the grail of frictionless markets, believing that the Invisible Hand will save us by converting our individual selfishness into collective good.

It’s a crock. What markets have also done is encourage NPV calculations everywhere, all the time, and everything is monetized so we can compare them. There’s always another front-end loaded curve to buy into. Buy it and flip it. Invent a new business and IPO it before it goes profitable. IBGYBG. Markets – abetted by modularization and outsourcing and communications – have enabled massive short-termism in business.

The game works until the game doesn’t work. It works if you assume your grandchildren’s world will not suffer by your focus on short-term NPV enhancement. It works if you assume that a culture of instant monetization will beat Chinese strategies from a civilization accustomed to thinking in centuries.  It works if you assume that long-term good is achieved by means of constant short-term optimization.  But it isn’t.

Trust and Short-Termism

There’s  a reason that one the Four Trust Principles is “Focus on the medium-to-long term, not the short term; develop relationships, not transactions.” It’s because trust is born from long-term commitments; the confidence that the other party is after something besides their own instant gratification. Short-termism is perhaps the most perniciously anti-trust business phenomenon of our times. We have been poisoning our corporate cultures through a relentless focus on markets, monetization, analytics and processes.

Those are not the basis of trust. A commitment to long-term principles and relationships is the basis of trust.

When the Client Cuts Your Face Time in Half

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Your progress update meeting with the client is scheduled for an hour, starting at 11AM. You’re hopeful it might extend to a lunch invitation.

11AM comes and goes, and the client is still in a meeting. Word comes from the client’s AA that the meeting has to move to 2PM. At 1:30, it gets kicked to 5:30 – and it’s cut to half an hour, as the client really has to leave no later than 6PM.

What do you do?

This came up in a large workshop the other day; the setting was such that only a 1-minute answer was appropriate.  I gave the 1-minute answer – and I’ll include the longer answer here.

Involve the Client in Problem Resolution 

The quick answer is you start the meeting by saying something like, “Listen, it’s late in the day, and it sounds like yours has been hectic. Ending up in a review session may not be your idea of a good time. Would you rather reschedule?”

And then go with the client’s answer, whatever it is. If the client prefers to push on, then do so. And you’d better be willing to trim your presentation to 30 minutes, rather than trying to double-time it, or passive-aggressively running out of time.

The principle here is to make the client part of the problem resolution.

Involve the Client in Problem Definition

The longer answer is to make the client part of the problem definition – not just problem resolution. Why is it that a previously scheduled meeting slipped so drastically?  That it got cut in half?  That’s a discussion worth having on occasion.

Is it because the client doesn’t particularly care about an update, and it’s really your need for approval that’s driving the meeting? Are you able to specify real decisions that are needed from the client? Is this a box-ticking meeting to fulfill your internal processes? Are you trying to cover your behind? Do you know what the meeting was bumped for, and are you satisfied with the decision? Is this a meeting that neither one of you really wants, resulting in joint procrastination – and if so, what’s that about?

The answers may be perfectly innocuous, or they may uncover a deeper issue – where there’s smoke, there might be fire. The point is not about the answers – it’s about having the vulnerability and courage to re-invite the client to visit the tough questions, to define the issues jointly.