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Trusted Transactions, or Trusted Relationships?

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Justice Potter Stewart once remarked, with respect to pornography, that it was virtually impossible to define it, but, “I know it when I see it.”

Ditto for trust. It’s both a verb and a noun. Its objects are implied and contextual, as in “I trust my dog with my life – but not with my ham sandwich.”

Increasingly, we need to make explicit another dual-meaning of trust. We trust relationships, and we trust transactions.  I trust John – to have my best interests at heart. I trust eBay – to create trustworthy transactions with strangers. It does not follow that I trust an eBay customer to go out on a date with my daughter.

Much of the public dialogue today confuses these two distinctions. Is it Congress that people don’t trust? Or is it members of Congress who themselves are considered untrustworthy? To the average voter, it’s a distinction without a difference. I suspect the inability to tease them apart is itself a source of anger. But if we fail to separate them, we doom ourselves not only to nasty public discourse, but to failed solutions.

Lessons from the 2007 Financial Crisis

Back in 1970, the US mortgage industry was still adequately described by the perennial Frank Capra Christmas movie “It’s a Wonderful Life,” with Jimmy Stewart as George Bailey, president of the Bedford Falls Savings & Loan. Bailey (for he and the company were inseparable) made loans to people he knew personally.

The bank’s depositors were Bailey’s friends and neighbors. The depositors were also the borrowers; likewise, the employees. The loans stayed on the S&L’s books, presumably to term. Those who took out mortgages had no intention of doing anything other than paying them off, with burn-the-mortgage parties at the end.  No moral hazard here.

This was relationship trust. The strength lay in personal ties, cemented over time. A man’s word was his bond, and anyway you knew where he lived. His reputation was everything, at least until it wasn’t. Relationship trust served business and society well.

But relationship trust was about the only kind we had, and it had its limits.

Transactional trust in George Bailey’s world was shallow and fragile indeed. The S&L was at risk of being forced out of business by a single competitor, the evil Mr. Potter. It was at risk of the low-tech deposit processes of Uncle Billy. Most importantly, it was at risk of a bank run. It was a good thing George Bailey worked the relationship trust game well, for he had precious little else to depend on.

Trusted Transactions in the Mortgage Business 

Fast forward to 1995, Dwight Crane, Robert C. Merton and others published The Global Financial System: a Functional Perspective. A masterpiece of what sociologists knew as “functionalism,” this book laid out the case for transactional trust, viewing the mortgage business as one part of a complex and, ideally, integrated financial system.

In the chapter on mortgages, they ran down the characteristics of a system you could trust. It would have markets – markets for deposits, markets for mortgages, markets for loan originations. The book listed the costs of not having a systemically integrated system: risk of meltdowns, differential pricing within very narrow geographic regions, low liquidity, gross inefficiencies.

In short, George Bailey’s relationship-driven-trust was considered too risky, too costly, too uncreative and too unresponsive. Above all, it was too expensive. Consumers – the would-be purchasers of mortgages – were subjected to higher prices than necessary, driving up the cost of home ownership, and therefore driving down the economic livelihood of those seeking the American dream.

You simply could not trust such a system, the good professors opined.  “It’s a Wonderful Life” was now half a century old. George Bailey was quaint. (No one noticed that only one year before the 1995 book, contributor Robert C. Merton had become a Board Member of the soon-to-be-notorious little hedge fund called Long-Term Capital Management L.P.)

In business, Progress was synonymous with all these terms: systemic, low-cost, efficient, market-based, liquidity. No one was about to cast doubt on the important and positive nature of all these terms.  The academics and wunderkind of Wall Street were creating institutions you could trust.

The new trust was almost entirely cast in terms of systems and transactions. Transactions replaced relationships. Where markets couldn’t handle the job, models could. Of course, from today’s vantage point, this looks as naïve as the academics’ view of George Bailey a few decades ago.

In a few short decades, the “trust” pendulum swung from a man’s word to the solidity of a system. We went from high personal trust to high systemic trust – each extreme without the moderating influence of the other.

We Need Rich Trust

The transactional revolution in mortgage banking indeed delivered on most of its systemic promises. Markets were established, costs were lowered, liquidity was raised. But it all, as we know, ended very badly.

The confusion over trust went way beyond semantic. Alan Greenspan himself in 2008 famously said:

“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms.”

In other words, Greenspan thought that transactional trust would have the same sort of reputational bias that relationship trust had. He was, sadly for all of us, mistaken.

Transactional trust absent relationship trust had its own internal seeds of destruction. The absence of long-term relationships was crystallized in the Wall Street acronym IBGYBG – I’ll be gone, you’ll be gone, let’s do the deal. Just as personal trust doesn’t scale easily, so transactional trust doesn’t easily foster ethical behavior.

George Bailey wasn’t wrong, he just had no system. The professors weren’t wrong, they just assumed relationships. The truth is: we can’t afford just one form of trust or another, we need a rich mixture of both.

Well Beyond Mortgages

The mortgage industry is but one example. The electorate, reflecting it all, ends up exerting single-issue us-vs-them pressure on its own.

The polls are basically right: we do have a crisis of trust. But what crisis? It is not just a failure of morality. We cannot fix it solely by getting back to ‘family values,’ or seeking out leaders of impeccable morality. Those are, in fact, necessary conditions, but they’re not sufficient.

On the other hand, those who insist that the system is sound, it just needs tweaking, are dead wrong as well. This is not a matter of incentives needing adjustment. This is not a matter solely of transparency in markets. Those too are necessary conditions – but not sufficient.

We live in an interconnected world: transactional trust is critical for us to do live a life built on global commerce without it.

At the same time, there is no social structure or business process that can work without humans. There is no lock that can’t be picked, no code that can’t be broken. There is no inhuman system that can’t be perverted by humans.

Did anyone say Facebook? Uber? Airbnb? Zuckerberg and Sandberg today are as enamored of the potential for better algorithms to solve trust problems as Crane and Merton were about the potential of markets to unilaterally fix trust back in their day.

Trusted transactions? Or trusted relationships? Yes. We need ‘em both. Always have, always will.

The Reverse Elevator Speech: Disaster and Recovery

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Trust requires that someone take a risk. Perversely, that means the avoidance of risk is tantamount to preventing trust.

One of the hardest things to do is to recognize this need in the face of mundane, everyday interactions, where it always seems that taking a risk is inappropriate.

So rather than give a mundane business example, let me do this one by metaphor.

A British account executive years ago told me the following story:

“I was going to see a potential client for what could have been an important piece of business for us. Unfortunately for me, I missed the scheduled plane by minutes, and thus was delayed by an hour. I called, and they agreed to reschedule the meeting to accommodate me.

“When I arrived, a bit flustered, the team of a half-dozen clients execs had gathered downstairs, and we all then went to the lift to go upstairs to the designated conference room.

“Unfortunately the lift was made for about four people. We all crammed into the lift, and it slowly began to climb. At that point someone – how shall I put this – well, as we English say – passed gas. The lift continued its crawling pace upward. No one, of course, said a word, nor even altered their expression. There was dead silence.

“As the doors finally opened, we all rushed to get out – all at once. And all 7 of us thereby tumbled onto each other on the floor. We all picked ourselves up, even more embarrassed, and again without saying a word to each other, made our way into the conference room.

“As I set up at the head of the room, I could feel the weight of this triple discomfort: I was late, the tumbling all over each other – and of course the ‘gas’ incident in the middle. It was all contrived to create a mutual sense of misery.

“What to do? I stood in the front of the room and said, ‘Gentlemen, little did I know this morning what a fine level of intimate relationship we should all achieve in so little time here this afternoon. I am honored indeed.”

“Well, everyone fell all over each other laughing; I had somehow managed to prick the balloon of the unspoken that hung over us like a cloud, and the rest of the day went marvelously. And oh yes, we got the sale.”

What this gentleman had done, in our nomenclature, was to Name It and Claim It; that is, to speak aloud the one thing that no one could figure out how to talk about. He did it with humor – an excellent tool – and was rewarded for the relief he caused by an appreciative relationship, and even a sale.

So What?

Charming, you think, but quite beside the point. What’s it got to do with me?

Well, as it happens, I had another conversation just last week (with, as it happens, another Englishman). He was a business development manager, tasked with what felt like an impossible burden.

“The senior partner insists on bidding a job in a sector in which we frankly have no experience. Certainly far less than anyone else. And he wants me to pretend it just doesn’t matter, or to dazzle them with bluster, or in some way to just blow through it. It’s simply not going to work, and we’ll look the fool.”

Well, yes they’ll look foolish if that’s how they go about it. They don’t recognize the relevance of the reverse elevator speech.

The solution is for the senior partner to say something like this:

“You may be wondering why a firm with so little experience in this sector is even here pitching you at all today. Certainly I wondered it! But I assure you we don’t make a habit of tilting at windmills.

“There is an angle here that I fear conventional wisdom might not point out. We’ve seen it a few times before, and it can make the difference between a run-of-the-mill project and a truly game-changing solution.

“I simply could not let the situation rest un-addressed. And that is why I am here in front of you today. Now, what we see going on here is…”

You may have picked up that there’s a ‘catch’ here.  The catch is that you actually have to have something consequential to say. If you have nothing consequential to say, then you shouldn’t be there in the first place, and you deserve what’s about to happen to you.

But if you do have something to say, the surest way to strangle it before it sees the light of day is to deny the elephant in the elevator – the lack of relevant sector experience, in this case.

Hope, they say, is not a strategy. Hoping somebody won’t notice the obvious is a strategy-killer. In such cases, not to take a risk is the biggest risk of all.

Get credit for stating the obvious, for telling the truth, and for relieving the tension that everyone feels. Put it out there. That way everyone is leaning forward on their seats, waiting to hear the idea that just might be so good as to overcome the banality of traditionalism.

Take the risk. Call out the wind in the elevator. Like a vaccination, it amounts to taking a little risk to mitigate the much larger risk staring you in the face. And you’d be surprised at how often it works.

Tackling Trust in the Tech Sector

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(I’m attending #CODECON this week). Trust in digital technology is a nascent hot issue. The headlines are a target-rich environment for emerging trust issues: from GDPR to autonomous vehicles to fake news to ad tech to AI to cyber-hacking. Tech leadership is scrambling to stay out in front of the EEC, the Justice Department, and – most of all – public opinion.

Trust is not yet the crippling threat that we see in financials or pharmaceuticals; brands are still strong, the sector is relatively regulation-free, and money is being minted. But the clouds are on the horizon.  According to Edelman PR, “Trust in technology is showing precipitous decline.”  Smart leaders know not to ignore the canaries in the mine.

The usual solutions are – to be kind – all over the map. They include governance, “best practices,” re-skilling, communications efforts, transparency initiatives, compliance programs, and mission statements.

If you feel these “solutions” are all vaguely unsatisfying – you’re right. What they all lack is a fundamental understanding of the basics of corporate trust, as applied to tech.

At the root of it all: people trust people more than organizations.

Trust – the Basics

Consider three basic, commonsensical tenets of trust:

  • Trust is a dynamic relationship between trustor and trustee;
  • Trust is created when a trustor takes a risk, to which the trustee responds (or doesn’t), creating higher levels of trust (or not);
  • The strongest trust is between persons; trust in organizations by contrast is pale, or ‘thin.’

Here are a few counter-intuitive corollaries of those basic principles:

  1. Working directly on the perception of corporate trust – through PR, advertising, reputation management – is pushing on a string. Corporate messaging urging you to trust the corporation is impersonal, viewed skeptically, and weak by nature;
  2. Risk mitigation doesn’t help trust, it destroys it. All trust begins by a trustor taking a risk; no risk, no trust.
  3. The best way to create a trusted organization is to create a Trust-based Organization: one in which all persons are trusting and trusted by all those they encounter, in all their interactions.

The failure of corporations to articulate coherent approaches to trust can be traced to their failure to fully appreciate that trust is primarily personal, that it requires risk, and that it is driven by employees interacting with others based on core trust values.

A positive (or negative) personal interaction with a Lyft driver does more to create (or destroy) trust than a revised TOS agreement, ad, or app feature. Ditto for an Airbnb host, a Google technical service rep, or a Salesforce account exec.  Corporate trust is created by the aggregation of personal interactions at the platform/customer interface.

Trust Basics Applied to Tech

The tech industry, like most, has a few peculiar wrinkles. For one, tech inherently deals with inanimate, impersonal ‘things,” whether that be iPhones or algorithms. It’s an uphill battle to personalize trust.

Another signature trust challenge for tech is scaling. This typically means data capture, digitization, and algorithms-cum-procedures. Trust can also scale – but through values, not algorithms. Corporate trust ultimately rests on personal trust, which rests on personally-demonstrated values:

  • Southwest Airlines’ reputation emerged unscathed from recent disasters that would have sunk United, because its demonstrated emphasis on deeply personal interactions inoculated it against the impersonal “big company” image;
  • Facebook has a great trust advantage in that its core subject is personal relationships. But it gained a reputation as being “creepier” than Google because, once hacked by fake ‘friends’, our sense of personal betrayal is far greater than for a flawed algorithm about buying preferences.

Transparency in tech is big – but often misunderstood. Transparency per se is not key – it’s how open you are about what you’re being transparent about. Ten pages of “disclosed” Terms of Service is like the small print at the end of your bank statement – more a cause for suspicion than a gesture of openness. Tech customers – like all people – will accept a wide range of behaviors as long as they feel you’re being intentionally open about them.

What is To Be Done?

The answer is simple, albeit not easy. Create a Trust-based Organization.

As noted above, that means an organization in which the cultural DNA is rooted in individual relationships, in which people know how to be trusting and trustworthy in all their personal interactions, and in which the organization supports such traits through some specific shared values.

  • Trusting. The key skill of trusting is intelligent risk-taking. This is less about risk-aversion, and more about knowing how to be personally vulnerable and emotionally connected. The skills of empathy, listening and transparency are, to paint with a broad brush, not widely practiced in tech – but they are as key to trust as anywhere else.
  • Trustworthiness. The Trust Equation lists the four factors of personal trustworthiness: (Credibility + Reliability + Intimacy) / Self-orientation. Tech people love the equation-based formulation, but tend to focus overwhelmingly on the two ‘rational’ components of Credibility and Reliability. Yet our research shows that, in fact, the single most powerful factor driving personal trustworthiness is Intimacy. Again, not a core strength in most of tech.
  • Values. The Four Trust Principles – Collaboration, Relationships over transactions, Transparency, and Other-focus – offer a values-based beginning point for cultural transformation. There are many things an organization can do to become trust-based, but chief among them are conscious role-modeling on the part of leadership: in particular, role-modeling of the virtues of trusting and being trustworthy.

(It’s worth noting that the traditional tools of change management – metrics, KSFs, incentives – are not only not very helpful in trust, but can even be counter-productive: we don’t trust others if we think they’re incentivized to appear trustworthy just to gain personal advancement).

In sum, people don’t trust YourCo. They trust the people in YourCo, and they do so based on how those people interact with them and with all others.

If you’re serious about improving trust in your company, don’t lead with your communications department – lead with your leaders. Personally.

 

Acquiring Soft Skills: You Gotta Practice the Scales

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I’ve led a fair number of trust-building workshops over the years. I’ve even written a book or three on the subject of trust. One thing hasn’t changed much: I still hear the same question, no matter who I’m speaking to, no matter what country I’m in.

“Do we really have to practice the soft stuff?”

It’s inevitably followed up with some variations of “I get it, but this isn’t going to help me close the big deal I have on deck,” or “Yes, but it’s different here,” or the classic, “This is so basic, why are we wasting our time?”

Let me answer that.

—

You’ve heard this one.

The New York tourist asks the cab Lyft driver, “How do I get to Carnegie Hall?”

“Practice, practice, practice,” comes the answer.

The joke is well known – but sometimes we forget how broadly it applies.

Students of classical and jazz piano and guitar often don’t like doing the scales; but most have to do them nonetheless. I remember learning to play all seven modes (Dorian, Phrygian, Lydian, etc.) starting from all four fingers from the same starting fret; then moving up a fret and starting over again.

My guitar teacher told me that the next step was to do the same cycle for minor, major seventh, dominant seventh, diminished and augmented scales. “This is the point,” he somberly told me, “at which all the jazz greats picked up heroin.”

Suppose a music student tells the music teacher, “Scales are boring; I get the concept, that’s all I need. Doing scales just cramps my style and inhibits my improvisational skills.” What does the teacher say?

They typically smile and say, “Yes, the scales are boring – but you’ve gotta do them anyway. Do you know how to get to Carnegie Hall?” Etc. etc.

But what about soft skills training? Suppose a corporate training student tells the trainer, “This role-play stuff is boring. I get it, OK? It’s simple. I don’t need to do repetitive drills – it just makes me sound phony.”

What does the trainer say? What does the trainer’s boss say? What do the training department’s clients say?

We Do Muscle Memory Exercises in Music: Why Not in Soft Skills Training?

It’s my experience that, sadly, corporate soft-skills trainers’ responses are not the same as those of music teachers. Faced with resistance, the trainers are more likely to say, “Well, OK, if you say so.”

In fairness to the trainers, it’s not usually their fault. And I don’t think it’s the fault of the client organizations either. I think the blame  lies mainly with L&D organization leadership itself – for not pushing back hard enough, even for partly buying into the clients’ rationalizations that somehow you can cognitively understand your way into learning soft skills behaviors.

The truth is, there is no substitute for realistic “muscle memory” activity when it comes to learning soft skills. You simply can’t “think your way into” skills like active listening, much less empathetic listening. You can’t just memorize a set of canned “answers” to a buyer’s “objections.” You can’t just write sentences ahead of time and think you will be able to give acceptable feedback. (Go re-watch the movie Up in the Air for an amusing example of cognitive vs. muscle-memory learning).

The equivalent of scales in soft-skills training comes in several forms – role-plays, video replays, case discussions. For my money, nothing beats a “fish-bowl” role-play; two volunteers role-play a case in front of a room. When something happens – and it always does – everyone sees it, and knows it. There is no escaping the real-ness of what just transpired.

If trainers know this is true, why then don’t they insist on it just as strongly as music teachers do? Music teachers have one advantage: they are typically older than their pupils, hence in a natural position of authority; whereas trainers are often junior to, and subordinate to, the line people in their sessions.

One trainer told me of being politely informed by an AmLaw 20 law firm that there would be no role-plays in the upcoming session. “Just discuss the technique,” the partner client said, “our people are smart enough to pick it up quickly – no need to waste time on faux drama.” Right.

The Real Reason for Resisting Soft Skills Drills

As is often the case with negative behavior, fear is at the root. No one, me included, enjoys doing role-plays. I also don’t like the taste of some medicine, but if I’m sick, I know to over-rule my taste buds.

In other words, participants just don’t want to do it. Of course, they don’t say that. They say it’s boring, they don’t need it, comprehension is enough, and so on. But it’s still the L&D folks who must not let them get away with it.

I find that each of the major staff functions has a generic effectiveness issue. For IT staff, it’s speaking in jargon and over-promising. For legal staff, it’s an inability to balance risk-minimization with general management perspective.

For HR staff – in my experience – the weakness is a desire to be accepted at the Big Table. Combined with the fact that HR people have no secret vocabulary – they speak plain language – this means that clients will predictably abuse them.

And so when the students resist doing what the L&D people know perfectly well they should do – the teachers don’t push back.

This is of course my pet theory, though it is based on my experience. What’s yours?

If your students ask you how you get to corporate Carnegie Hall, tell ‘em, “Role play, dammit!”

Stop Measuring ROI on Soft Skills Training

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Many, perhaps most, of our clients tend to ask us about how they can measure the returns from Trusted Advisor workshops. However, I suspect their reasons are a little opaque. More often than not, these buyers are already persuaded of the benefits. The potential clients who are truly skeptical are rarely the ones who actually call–nor are they likely to be persuaded, even by a hard-nosed ROI calculation. 

So – why are they asking?

Let’s tackle a garden variety corporate orthodoxy: the one that says your company shouldn’t do training without a measurable return on your training investment.

Variations on the theme: if you can’t measure it, you can’t manage it; all training must be defined in terms of behavioral objectives; each objective must link to behavioral milestones, each quantifiable and financially ratable.

Let me speak plainly: Subjecting soft-skills training to pure skills-mastery financial analytics is intellectually dishonest, wrong-headed, useless at best and counter-productive at worst.

There, I said it.

Now let me explain – and offer an alternative.

There are are sprinklings of truth in the rush to measure soft-skills ROI – but they are surrounding a germ of falsehood at the heart of the matter.

The ROI-behavioral view of training is fine for pure cognitive or pure behavioral skills. If your focus is on teaching Mandarin to oil company execs, mastering the report generation functions of CRM systems, or teaching XML programming, you can stop reading this now.

But if you’re talking about communications skills, trust, customer relationships, listening, negotiation, speaking, giving and receiving feedback, consultative thinking, influencing, persuasion, team-building and collaboration, then read on.  There are at least four problems with measuring “return” on these kinds of programs.

First problem: definitions. We evaluate golf coaching by lowered golf scores—neat, clean, unarguable. But try defining “good communication.” Or trust. Or negotiation. You might as well define the taste of water, or the quality of love. To accept behavioral indicators (“she smiles, she touches me”) is to miss an essence.

Second: causality. All causality is unprovable, though we know when to accept it anyway. “I had 3 lessons with a golf coach, and cut my score by 8 strokes. It was the coaching—you can quote me!”

But what if I take one course in trust, and another in listening. Suppose my sales go up next year by 50%. Which course did it? Or did my company’s 70% growth have something to do with it? Or my happy new marriage? Too many variables.

Third: the Hawthorne effect. (Or, the Heisenberg Principle in physics). Sometimes the act of measuring alters the measurement of the thing being measured. If I know I’m being graded on listening, I’ll do whatever it is I think that you think makes me look like I’m listening. Which destroys real listening.

If you hype net-promoter scores, many will game the scoring – thus reducing the genuineness that underlay the original idea.

Fourth: the perversion of individual measurement. Most soft skills deal with our relationships to others. The drive to individually behavioralize, then metricize, has the effect of killing relationships by focusing on the individual – an ironic outcome for relationship-targeting training.

Suppose a course teaches focusing more on the customer, listening, helping others achieve their goals, helping teammates grow – worthy objectives, found in many programs.

The usual reason to define those results financially is to evaluate them financially. Thus someone – somewhere between the CEO and the person getting trained – is responsible for deciding to do more, or less, relationship-building programs – by using short-term individual measurements, often with short-term incentives.

Hence the perversity: training people to focus on relationships, by measuring and rewarding them individually.

“The more unselfish you are, the more money we’ll give you for being unselfish.
“The more you get rated as providing ‘excellent customer service,’ the more we’ll pay you” (which leads to pathetic begging by CSRs)
“The more you focus on others, the more we’ll pay you.
“Quick, get over here, I want to genuinely listen to you so I can raise my quarterly bonus and get promoted.”

Raise this perversity to the level of an industry over decades, and you can understand why pharmaceutical and brokerage companies have accrued such low ratings on trust.

So what’s the answer? Simple. And you don’t even have to give up your addiction to metrics.

Just measure subjective rankings.

Ask people these simple questions, over time:

1. Would you do that training again?
2. Would you recommend others attend?
3. Would you include it in your budget?
4. How do you rate that training compared to these other five programs?

You can run regressions, chi-squares and segmentations on that data to your heart’s content – as long as it’s measuring subjective data in ranking terms. Just stop trying to monetize interpersonal relationships by measuring ROI on soft skills training.

And for those of you still interested in seeing some data – I recommend our Trust360 multi-rater assessment tool. It’s not going to measure your ROI from a soft-skill training, but when you run a program as a before and after, you’ll be able to see and track key, measurable changes and improvements as a result of a soft-skill program. We recommend running a Trust360 in advance of a program and then again, for the same group, about 6 months later. Our clients who have done so have seen measurable results that still focus on the changes in soft skills, how the program and the Trust360 provided key insight to allow participants to really get to the root of the trust-building in relationships.

Give it a go – talk to us about it. What’s the downside?

 

Sample Selling Without Giving Away the Whole Store

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Sample selling isn’t just for ice cream and perfume. I have argued that it works for intangible services, mainly because the seller has expertise beyond the buyer’s range, and sample selling makes it appear less threatening.

But not everyone buys that. Consider a phone conversation I had not too long ago. It went like this:

“I know you recommend sample selling for intangible services, Charlie,” the caller said, “but I have to tell you, I think that’s naïve.”

“I followed your advice,” he continued, “I gave them a great idea; but I didn’t get the deal. Worse, they stole my idea; now they’re making it a practice area. You can’t trust everyone; you can’t give away the store.”

The Three Myths of Giving Away Too Much

My caller is not alone in his fear of being taken. And as the saying goes, just because you’re paranoid doesn’t mean they’re not out to get you.

Yet he is the architect of his own misery. He has fallen prey to three mistaken beliefs. And while you can’t think your way out of all tough situations, this is one where you can.

Myth 1: Ideas, Like Shoreline, are Limited. I’ve heard it said there are really only seven jokes—all others are variations. I have no doubt that’s true: but there is no end to standup comedians telling no end of those variations. Limited categories don’t preclude infinite instances.

Myth 2: Ideas are the Scarce Resource. As a consultant, I originally bought into the idea that corporate strategies were invaluable; if discovered by competitors, they could bring the company down.

This turned out to be a conceit. In truth, you could give an entire industry public access to each other’s written strategies, and due to a combination of hubris, incompetence and the inertia of culture, very little would change as a result.

As the NRA might put it, “ideas don’t change businesses—people do.”

Myth 3: They’re Out to Take My Stuff. Yeah, some are. And they are the people who believe that ideas are limited and that access to ideas alone is valuable. See myths 1 and 2 above.

Those who are out to take your stuff are co-conspirators in a joint exercise of self-delusion. They’re like thieves bent on stealing counterfeit cash. Go find some fresh air to breathe.

 

Sample Selling without Giving Away the Store

Let me acknowledge that there are certain businesses where idea theft is quite real. Chemical formulae in the pharmaceutical industry, novels in the publishing industry, code in the software business—I’m not talking about these cases. They are covered by patent, trademark and copyright laws. There are still lawsuits, but by and large the rules and case law are very well developed.

I’m talking about marketing, change management, business strategy, process change methodologies, sales processes, communications, systems implementation—the world of complex, intangible services. Like jokes, there may be a limited number of categories—but there is an unlimited number of applications.

How do you avoid falling prey to the myths? How do you not give away the store? Here are three tips to remember.

Sample Selling Tip 1: Present Ideas Collaboratively. The context in which you present an idea is critical. Don’t waltz in and dump an idea on your client’s desk; first they’ll reject it, then they’ll tweak it, then come to believe it’s theirs—leaving you to stew in your own juices. (That’s best case; most likely, they’ll ignore it.)

Instead, go back three steps and engage your client in a general conversation; let the idea emerge in context, between the two of you. Don’t be obsessed with ‘ownership’ of the idea unless you already have a patent.

You might say something like:

“Susan, I was thinking about the XYZ problem we discussed Monday. Does that situation ever arise in other divisions? I’m wondering if it’s really a process problem, or a people problem; can we bounce this around for a while?”

If you’re really smart—and evolved; see Tip 3 below—you’ll let your client discover the idea.

Sample Selling Tip 2: The Real Sample is Problem Definition. The idea of ‘sample selling’ is a bit of a misnomer. The real sample you’re giving the client is not a sample answer, but a sampling of how it feels to work with you.

You do this by continually asking—with the client—“what problem are we trying to solve?” You might say something like:

“Joe, we’ve come up with some great ideas in the business process arena. As we’ve talked, some related issues have arisen in the talent side of the business. Could we schedule some time to work those issues together?”

Then repeat Tip 1 above.

Sample Selling Tip 3: Rebalance Humility and Confidence. You need humility. Not humility about your ability—humility about your uniqueness. You are not Einstein (unless you are); you aren’t the only one with ideas. And frankly, your ideas are probably not unique either.

You need confidence. Not confidence in your ideas—confidence in your ability to spot an infinite number of problem areas in your client, and confidence in your ability to generate more ideas to address each problem. It starts simply with seeing opportunities for improvement.

Above all, you are the one with the client relationship; in that, you are unique. So—go define problems, and generate ideas collaboratively.

You’ll get credit—but more importantly, you’ll get repeat business.

Yes Trust is Down – But Trust in What?

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New headlines daily grace the front pages (or screens) of our news outlets that make us question just how far our trust in (fill in the blank) has fallen. Whether it’s politicians or social empires like Facebook, it seems that as individuals we are now in a constant state of “well who shouldn’t I trust now?”

In many ways it’s very true, but it begs an even more important question – if trust is so far down today, what does that really mean?

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You can’t throw a brick into the Googlenets these days without hitting some survey that bemoans the current low state of trust in society. And while there’s a lot of truth to those surveys, there’s also a lot of uncritical thinking and sloppy theorizing.

There are also some powerful ways in which trust has actually increased in recent times, and even more in which trust has stayed broadly the same.

Some Basic Trust Definitions

Much writing on trust neglects to make two simple distinctions. The first is that between trusting and being trusted; both are required for trust, and they are quite distinct. Trust requires a trustor and a trustee – they are different, and asymmetrical. One requires taking a risk, the other requires, broadly speaking, a moral virtuousness. “Trust,” properly speaking, is neither one of those things: it is the result of an interaction between the two of them.

The second distinction is between personal and institutional trust. Personal trust is by far the stronger of the two. You may trust Google to find a babysitter to interview, but you don’t trust Google itself to babysit your infant. And you’re a lot more likely to put your life on the line for your children than for your Coke/Apple/favorite brand. (A notable exception is national patriotism).

Most of the surveys that decry the decline in trust are talking about institutional trust. And it’s true: our “trust” in many, perhaps most, of our political institutions has declined. Ditto for most professions, the police, banks, retail stores, and established religion.

And yet…

If Trust is So Far Down, How Come—

  • you entered your credit card number online last week – at least once – from your mobile;
  • some of you use auto-complete on your mobile to fill in forms, perhaps even including your credit card number;
  • you share so much private information on Facebook (even after all the recent news);
  • you use Lyft, Airbnb, or another sharing economy app;
  • you paid your property taxes online;
  • you may have paid for Amazon to deliver via FedEx a camera that shows your front door.

These are all small examples of how the world has become far more linked. Many of us wouldn’t have considered doing these things ten years ago. These are small counter-examples of increased institutional trust. And, they are examples of trusting, the propensity to trust; at the same time, they suggest that we assign some pretty high levels of trustworthiness to other actors.

At the same time, there are many examples of both personal and institutional trust that have remained largely the same, without much fanfare. For example, you probably still:

  • Ask your neighbor to hold your mail for a few days
  • Fly on planes
  • Don’t look right or left when the light turns green (though you should)
  • Drink the coffee / eat the food at nearly every restaurant in the world without thinking
  • Ask a stranger at the beach to watch your stuff for a minute while you go to the bathroom.

In fact, an enormous amount of daily life consists of little examples of trust: mostly social and personal, but also institutional. Don’t let the headlines make you forget it.

Where Trust Really Is Down

That said, trust really is down in a few areas, and it’s important to be clear about just where.

First, there are indeed some ways in which people are less inclined to trust institutions than we used to be. But even here, read with a grain of salt. When people say they don’t trust Target (for example), they often mean something like “I don’t trust Target’s IT systems to ensure that my credit card doesn’t get compromised.”

Note this is an issue that didn’t even exist a decade ago. Also, it’s an issue affecting pretty much any large organization involved in financing. Also, and most important, check how many people stopped shopping at Target because of concerns about credit cards.

Saying “trust is down” without specifying “trust to do what?” is akin to a non sequitur. You might as well say “love is down” without grounding the statement in divorce rates, dating sites or something else concrete.

The most important way in which trust really is down is in what Eric Uslaner calls generalized trust. As measured by the General Social Survey for 50-some years, it basically asks, “By and large, do you think people mean well, or can’t you be too careful?” In other words, it is a generalized propensity to trust strangers.

On this measure, there is indeed a very gradual, but nonetheless real, decline over the years. High levels of propensity to trust have been linked to education and optimism. Low levels of propensity to trust have been linked to pessimism and low exposure to out-groups.  It is a true, important, and sad, statement that trust in this sense has indeed declined in the US, and in most western world countries.

And that is indeed something to be concerned about, far more than whether “trust” in the financial industry is down x points on a survey last quarter.

Question Obsession: The Consultant’s Nemesis

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Do you go into sales meetings – even meetings with your existing clients – with a slew of prepared questions? Do you constantly find yourself asking question after question in a meeting?

You may be thinking, “Duh, of course. Aren’t we supposed to? How else are you going to demonstrate value added, explore hypotheses, prove your expertise?”

But let’s explore this apparent no-brainer. The fact is, Question Obsession can actually be detrimental. Lets explore why and how.

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Consultants and salespeople (especially consultative sellers and sellers of consulting) have learned one mantra, and we love repeating it. It is the mantra that says, “Listen first; talk later.” In other words, it’s all about the question. Ask a great question, the logic goes, and all else will fall into place.

That is the great lesson of Sales and Consulting 101. And I have no beef with it.  The problem is – if you never graduate from 101, you will end up in quicksand because an obsession with questions alone ultimately leads nowhere.

The Obsession with Questions

There’s good reason for the Sales 101 and Consulting 101 lesson of focusing on questions. Go no further than Neil Rackham’s SPIN Selling, in the case of sales, or Peter Block’s classic Flawless Consulting for consultants. Each one shows with wisdom and data that artfully posed questions generate dialogue and interaction, and that is always superior to pre-emptively beating up the client with the answer.

Of course, we often forget our 101 lesson and go into meetings with answers blazing. But that’s not what this article is about. This article is about the downside of obsessing with questions. It’s what happens when we turn the 101 lesson into a mantra, and we begin to focus on questions alone.

Is questioning an obsession? Try doing a web search on “Top Ten Sales Questions;” you’ll get millions of results.

Now ask yourself whether you recognize these themes:

  • Should I ask open-ended or closed-ended questions?
  • Should I ask about implications or needs?
  • Should I ask about the client’s opinions or offer “challenger” questions?

As one sales website puts it, “Get the answers to these questions, and take action based on those answers, and you’ll get the sale. It’s that simple.”

No, it isn’t.

The sales version of question obsession manifests in lists. The consultant version of question obsession manifests in the Great Keystone Arch Question—what is the central supporting element?

You can recognize this form of obsession because it leads consultants speaking among themselves to say things like, “If we can set the data up right, we can frame the discussion such that when we finally pop the Keystone Arch Question, the whole logjam will be released. They’ll feel the pain, envision the solution, and fall all over themselves in a rush to buy our solution.”

No, they won’t.

That’s because good questions are necessary—but not sufficient. You have to have them, but they won’t get you to the end zone.

If all you do is focus on questions, you’ll end up obsessed with yourself, with your solutions and products, and with how clever you are. That’s called high self-orientation, and it will kill trust and sales both. Question obsession is quicksand for salespeople and consultants alike.

Beyond Question Obsession

The narrow purpose of a question is sometimes to get an answer. But there are broader purposes to most questions, and certainly a broader purpose to the art of questioning itself. One is to create a greater sense of insight for the client. Two others are to improve the client relationship and to give the client a sense of empowerment.

These goals are best accomplished not so much by focusing on the “what” of the question but on the “how.” Some examples:

  • Questions to create insight: Consultants often come up with “insights” that only an MBA could understand or that leave the client feeling helpless. These are not useful insights. We don’t want to leave our clients saying, “Gosh, that’s really smart. How will I remember that?” Rather, we want them to say, “Oh, my gosh, of course! it’s so clear when you put it that way, isn’t it?” Our objective is to create insight, not to demonstrate that we have it.
  • Improve the relationship: The better the relationship—buyer/seller or consultant/client—the better everything else gets. Innovation, profitability, time to market, and insights all improve with relationships. Great questions allow the parties to get closer together, more comfortable sharing the uncomfortable, and more willing to take risks by collaborating. Questions such as, “Let me ask you, if I may, do you personally find that scary?” have nothing to do with “content” insight, but they are critical to advancing the relationship.
  • Create client empowerment: The point of all this questioning is not, ultimately, to understand things. It is to change them. And change will not happen if the client feels the insights are threatening, depressing, or out of his control. The key to action is to help the client see ways in which they can change, take control, own, and improve their situation.

It’s not what you ask; it’s how you ask it. All three of these broader objectives have little to do with the content of, or the answer to, a business question. Instead, all of them focus on the outcome of the question-answer interaction. From this perspective, it is not what you ask that is important, but how you ask it. We need to get past the Q&A outcome, which is just about knowledge, and focus on the outcome of the interaction, which is how we help our clients drive change.

Avoid the quicksand: get past questions for questions’ sake, and focus on real business outcomes.

Competing with Colleagues

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When I wrote The Trusted Advisor with David Maister and Rob Galford, it became reasonably successful within several months. (Amazingly, it still ranks #11,014 – as of this morning – on the list of all books on Amazon. That’s all books, including Harry Potter (#218), Capital (#16,000), etc. I’ll take long-sellers over best-sellers any day of the week).

With its success came a happy problem: how to parcel out the leads between the three of us? Let me be clear, the book wasn’t drowning us in leads; any one of the three of us could have happily fielded all inquiries. And while we wanted to be fair to each other, we were also all of us very clearly in competition with each other.

So the question: how do you compete with colleagues?

Competing with Colleagues

What if one of us got a lead based on the book? Did we have any obligation to pass it along to the other two? If so, how?  Should we establish a quota system, whereby each of us would get every third lead?

Should we let the market dictate things, and let whomever the client had reached out to handle the response? What if the client had written to all three of us?  Should we all respond confidentially, or in some sense share our responses?

The problem was not unique to us, though it seemed so at the time.  You may face a similar problem within your organization – who gets the lead? Who gets to present?

Or, you may come face to face with an  old friend who has changed uniforms and now works for a competitor. In any case, the tension is much the same – the sensation of being a colleague feels intensely in conflict with the sensation of being a competitor.

How do you resolve it?

The Solution

The answer to the problem came to us fairly quickly, on reflection, and I documented it as part of the Four Trust Principles in my later books. The answer lies in true focus on client needs.

In our case: we agreed that we should all respond similarly to all client inquiries, regardless of to whom they were addressed. In all cases, we would say words to the effect of:

The Trusted Advisor was written by the three of us. I suspect that each of us could do an excellent job in response to your query, and each of us would handle the work slightly differently. You would be best served by having discussions with each of us, and making up your mind on that basis.

We will each be candid with respect to our own strengths and weaknesses, and answer questions to the best of our ability about the others. Each of us will respect your decision, and we are each committed to you making the best decision possible for you.

The best decision for you is what all three of us seek, and each of us will do our best to help you reach it, regardless of your choice.

This solution made everything easier. It kept our relationship collegial. It removed any awkwardness about responding to clients. It removed any awkwardness that clients might experience in choosing whom to talk to.

And, of course, it resulted in the best decision for clients, as each of us have our own particular skills and drawbacks.

So what’s the answer?  Grindingly relentless focus on client service, and the willingness to pursue that logic wherever it leads.

How You Use Your Smarts Is What Attracts Clients

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“It’s not what you know; it’s who you know.”

You’ve probably heard that. But – you’ve also probably heard the exact opposite.

You’ve heard, “You’ve got a limited amount of time to impress them; use it.” But you’ve also heard, “Let the client do most of the talking.”

And you’ve probably heard, “You’ve got to be just a little smarter than your client.” But you’ve probably also heard, “Don’t think you know more about your client’s business than your client does.”

So, what’s the role of smarts? How important is it to be smart? In fact – what does that even mean?

To define terms, I’m not talking here about emotional intelligence, political savvy, or so-called street smarts. I’m talking about what we usually mean by “smart” in business, which generally boils down to three things:

  • Native intelligence, IQ-ish talent
  • Subject matter mastery
  • Industry knowledge

But let’s also be clear: being smart is less about what kind of smart you are and more about how you use your smarts. And usage, in turn, deconstructs into timing, amount, and context.

Kinds of Smart

I’ll use “IQ” as shorthand for some measure of native intelligence, mindful that there’s a lot of debate about its validity. IQ is seen as an innate form of smarts—you’re supposed to be born with it.

People with high IQs tend to think highly of high IQs, but that doesn’t mean everyone else does. In fact, if clients perceive someone as more clever, sharper, quicker, adept than them, it can be perceived as a negative—particularly if you’re selling.

“Watch out for this one,” the client thinks. “He might pull the wool over my eyes and outwit me.”

Subject matter mastery is different. It’s not an innate kind of smart; it’s derived from experience.

“I could be as smart as him,” thinks the client, “if I had chosen to work in that area.”

In fact, it’s that mastery that clients seek. A client hires a lawyer who knows the law precisely because the client doesn’t know it as well. A subject matter expert with a slightly lower (perceived) IQ than the buyer is even better. They are seen as knowledgeable but unthreatening.

Like subject matter mastery, industry smart is derived, not innate. But unlike subject matter mastery, its presence isn’t a plus so much as its absence is a minus. Clients, particularly those in professional and financial businesses, look down on “generalist” subject matter experts and functional specialists. There’s a general feeling that “our people won’t accept advice coming from you unless you have industry smarts” (though the speaker usually refers to ‘our people’ and not to himself).

In general industries, it is believed that management is management and sales is sales, that the know-how is transferable across industries. That isn’t the case in the professions—rightly or wrongly. You won’t win fighting that feeling; it runs deep.

Timing: When to be Smart

The time to show your IQ smarts is before you meet. Show it in your resume, qualifying documents, and your website’s “About Us” section. That’s because IQ smarts are the only kind of smarts that are potentially embarrassing to the client. The client doesn’t want to be over- or under-estimating you in real time; they’d prefer to know what kind of person they’re dealing with up front, in advance of meeting you. That way they feel much more in control, which is a good thing.

Once you’re in a meeting or interacting with the client, never mention IQ smarts again. Don’t bring up your resume, your degrees, your globe-hopping upbringing, or the brilliant circles in which you travel unless, of course, you’re asked a direct question.

You also want to show a little bit of subject matter smarts and industry smarts in advance of a first meeting or interaction—enough to assure the client they won’t be wasting their time and that they might well benefit from meeting you.

In short: be IQ-smart before you meet. And in face-to-face meetings, be subject-matter and industry-smart.

Amount: How Smart Should You Be?

No one likes to feel condescended to. Fortunately, it’s easy to avoid being condescending in subject matter and industry smarts. The main place to worry is in IQ smarts. If you really think your IQ is so much higher than your client’s, remember that your client is likely to resent or fear you if you make a point of it. Go work on your emotional quotient.

For subject matter and industry smarts, there is no natural upper bound. You’re being hired in part for your expertise, and your client will respect high levels of knowledge of your industry without fearing it. Your biggest challenge here is to be gracious in revealing how smart you are.

Context: Being Gracious about Your Smarts

The single most common sales error regarding smarts that professionals make is to think they have to show how smart they are. They somehow believe that a goal of client interaction is to demonstrate how smart they are. This is almost always unfounded, and frequently it accomplishes the very opposite of what’s desired. It makes the client feel you are self-centered and ego-driven and that you’re only out to make the sale.

Instead, the rule should be to use your smarts as necessary in support of the right thing for the client:

  • If it’s useful to mention that a particular recommendation has been followed successfully by three other clients, then say so. But if you say so just to demonstrate your clout, it’s better to leave it unsaid.
  • If it might be useful to the client that you know so-and-so, a big industry player, then mention it. If you do it only to prove your industry smarts, don’t.
  • If a question is asked to which you clearly know the answer, answer it. But if it’s another question that was asked, and you’re piling on to that question to answer another one, unasked, stifle yourself.

Following that simple rule demonstrates that your driving motivation is client service, not the pursuit of the sale and not your search for ego gratification. And if you’re worried about not knowing the answer to an occasional question, remember a client would rather hear an honest “I don’t know” than a transparent struggle to fake your way through an answer.

The smart call is to use your smarts only in service to your client.