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Seller’s Remorse in the Marketing Business

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Courtesy of Advertising Age,  a peek into a catfight; a domestic squabble; a business story right out of a Hollywood fanzine.  Famous buyer vs. aggrieved seller.

The Famous One here is Zappo’s, beloved by the online set and poster child du jour for customer service.  The aggrieved party (picture them throwing a pair of stiletto high heels at Zappo’s head) is marketing agency Ignited.

With what crime does Ignited accuse Zappo’s?  Disrespect, it would seem. The disrespect of a seller by a buyer. 

The horror.

When Buyers Disrespect Sellers

Seems that Zappo’s sent out an online RFP to some 100 or so of their closest-friend ad agencies, asking for first-round pitches.

Of course, Ignited didn’t make the first cut. Ah, but they had a trick up their sleeve.  Using Google Analytics allowed them to see how much time the reviewer—Zappo’s—had actually spent reviewing Ignited’s proposal.

Zappo’s had reviewed only 20% of the pages, about 15 seconds per page, before relegating Ignited’s work to the digital circular file.  Whereupon Ignited went public with its “gotcha,” announcing the horrible 15-second truth to the world.

Unfair! said Ignited. They didn’t even look at our brilliant methodology, insights, testimonials.  How dare they! And then–as if it were the clincher in an argument–Ignited’s Wolfsohn says, “they never clicked on the page that outlined our approach to measurement. Which may explain why they didn’t know we’d be monitoring how much time they spent looking at our proposal."  Gracious me.

What’s wrong here?  Where to begin…

The Customer Owes You Nothing

If you click on someone’s personal ad in an online dating service–what do they owe you in return?  Bupkus.  Zip.  Nada.  The same is true of a seller whose sole connection to the buyer is an online response to a 100-company RFP.

(Why Zappo’s would run a 100-company RFP is another question.  Maybe to screen out those who respond to mass RFPs?  Or those who can’t manage to get ‘round them?  Hey, maybe Zappo’s is clueless (though I wouldn’t put big money on that hypothesis)).

But that’s irrelevant to Ignited.  Or should have been. 

I know what I’d do with 100 first-round sections on qualifications, methodologies, and testimonials.  I’d ignore them completely until I’d seen if they had anything interesting, original, provocative, value-adding to say about me–the customer/client. 

If they do have something to say about me, then I’d go back and check the testimonials to see if I knew anyone.  I might or might not look at the qualifications or methodologies at all.

And if there was nothing in it about me in this first-pass attempt to impress me, the customer?  Then it’d take me, oh, I don’t know, maybe 15 seconds to conclude this act was not going on to Hollywood. Simon may get there faster than Paula, but they both end up at the same conclusion.  And purchasing people can make Simon look indecisive.

And from all that I have seen, my response is the rule, not the exception, on this one. 

Buyers Buy from Trust

One of the biggest fallacies sellers make is that buyers buy based on their own stated rational criteria.  The truth is, a dose of trust overwhelms rational data like methodologies—(which are, frankly, more similar than sellers like to think).

What sells best is a sense that the seller cares about the buyer—cares enough to actually distinguish this buyer from another, to take a risk and make a client-specific suggestion, to focus on the client rather than on oneself–to say something that is of value and that makes the buyer feel heard, seen, recognized, understood.  A sample of your wares, please, customized to me.

Earth to Ignited, a little multiple choice: every client’s favorite subject is:

a.    Ignited
b.    themselves

Think carefully now…

You can recognize sellers who don’t get this.  They confuse sample selling with theft of intellectual property.  Says Ignited’s Wolfsohn: “When I go to my mechanic, he won’t do work on spec. We’re a very rare industry that is willing to give stuff away for free, and it escalates to a point where it’s self-defeating to the industry that we’re all in." 

Maybe that’s true–if you’re a mechanic. (Though I’d love to hear from insulted mechanics who disagree with Wolfsohn).  It’s not true, however, in services businesses like marketing. You’re selling air, for heaven’s sake; give a little away to let them feel you.

Zappo’s response, incidentally—to publicly engage in a dialogue about the event—strikes me as incredibly gracious. 

Yet I suspect it’ll be a long time before Ignited does marketing work for Zappo’s.   

 

July Carnival of Trust is Up!

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The July Carnival of Trust is now up for your reading (and viewing, and listening) pleasure.

The Carnival is hosted this month by Adrian Dayton, who somehow lives the schizophrenic life of a lawyer who is social-media savvy.

And his Carnival shows it.  He comes up with some doozy negative examples of trust.  I love negative examples, as I think we learn better this way. 

–Read about a classic Twitter tweet that is bound to destroy trust.

–Or–have you ever been badgered?  No, I mean Badgered–as in, by a Badger.  Great YouTube find.

–Or, 20 rules for trust in blogging. 

Want to know more about trust?  Or to get Adrian’s unique social media take on it?  Or merely read a few highly entertaining, insightful selected blogs and comments about trust in the world?  Then click here to view Adrian Dayton’s edition of the Carnival of Trust for July, 2009.

Many many thanks to Adrian for a fine job of hosting; please pop over and give him a look.

 

Arguing Rationally to the Irrational

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More and more research—from behavioral economists and psychologists—is pointing out ways in which our Renaissance-era views of human cognition are a bit off base.  It is one thing to say cogito ergo sum.  It is quite another to claim we cogit very well.

Perhaps the best-known of the new works is Predictably Irrational, by Dan Ariely.   Others include Sway and Nudge, and maybe Blink and Squawk.  And definitely Yes.  (See a pattern in these titles?).

However, the opening story in Ariely’s Predictably Irrational raises an interesting question.  To whom are these books addressed?

Does Convincing People Change Their Actions?

He tells a fascinating story of having suffered from third-degree burns, wondering why the nurses insisted on the all-at-once one method of bandage removal, rather than slow removal of the bandage.

The nurses insisted the all at once theory was the best for the patient.  Ariely concluded, based on research done afterward, that the nurses’ attraction to that theory was in fact based on their own need to curtail the empathetic pain that they felt for the patient.  If the patient’s pain were all that mattered, some version of slow removal turned out to be far better.

So far so good.  Ariely tells the story as an example of how irrational thinking often—and predictably–dominates rational decision-making.  Indeed, as he says, when he talked to the nurses about it:

“In the end, we all agreed that the procedures should be changed.”

Good. Clear thought (cognitive rational therapy?) triumphs, thanks to Ariely’s insightful analysis.  Right?  Well, not so fast.

“My recommendations never changed the bandage removal on a greater scale…”

This is ironic: but it should not be a surprise.  If you’re trying to convince people of the weakness of rational argument, then rational arguments are not likely to do the job.  In a similar vein:

•    You often can’t solve a problem by working at the same level at which it was caused.
•    Most people, if told what to do, are generally inclined not to do it.  (Underscore that for strangers, teenagers, relatives over the age of 14, and men—I think).
•    In the US, the self-help book market is $2 Billion.  That’s about $600 of self-help per person per year.  Clearly either the advice is bad or people don’t take it.  (Hint: put your money on the latter).

Corporate Implications of Non-rational Thinking

This raises interesting questions for the daily conduct of major parts of corporate business.

  • Why do salespeople spin lengthy arguments about value propositions?
  • Why do consultants use powerpoint for numbers and words alone?
  • Why do buyers spend time rationally justifying decisions?
  • Why do change initiatives spend so much effort developing convincing arguments?
  •  

So what’s a corporate change agent to do?  Let me offer a few very broad, inconclusive observations:

1. The likelihood of other people accepting suggestions is greatly improved if:

  •     They are presented in the form of a story
  •     They are presented at a time of crisis for which the suggestions offer a solution
  •     The recipients of the suggestions conceive of them as their own

2. People make decisions with their gut, and rationalize them with their brains.  The rationalization process is important: it dictates procedures, and positions logic as a kind of least-common-denominator quality requirement.  It also serves as an emotionally neutral (albeit manipulable) arbiter, which relieves us all of the emotional/political pressure of deciding based solely on argumentation.

3. We need to take these books seriously.  One b-school industrial economist who focuses on culture change told me, “Frankly, we know perfectly well how to manage organizational change.  It’s called propaganda, or the Big Lie.  Just keep saying the One Big Thing, over and over, and people will fall into line.”  You may not like his observation, but it makes a lot of sense, and there’s data to prove it.

Not that that proves anything…

    

 

The Boston Consulting Group Caused the Recession

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Like all good conspiracy theories, this one may have a few loose links.  But work with me here–it’s a good story.

The 70s: When Strategy Became Competitive Strategy

Back in the 60s, Bruce Henderson, chafing at Arthur D. Little, re-conceived competitive strategy.  He founded the Boston Consulting Group, who in the 70s introduced the world to concepts like the experience curve, the Doom Loop, and the barnyard strategy matrix. 

Together with Michael Porter, they redefined strategy from a vague, military idea, to a disciplined, quantitative analysis based on a Hobbesian view of the business world: a State of Nature as Competition.  Competitors lurked everywhere–including masquerading as your suppliers and your customers.  Henceforth, all talk of "strategy" would implicitly have “competitive” as a leading adjective.

It is hard to describe today the impact this new ideology had on the business community.  Suddenly the world made sense—everything was about competition, and everything was quantitative.  It was about winning, and the winner was the one who ran the numbers best.  Peter Drucker was so 10 minutes ago–now, if you couldn’t measure it, you couldn’t manage it.

The 90s: When Organizations Became Processes

In the early 90s, Michael Hammer  and James Champy wrote Reengineering the Corporation, and the other shoe dropped.   The other shoe was business process re-engineering.  Pre-Hammer, companies were functional organizations.  Post-Hammer, they were bundles of processes. 

Functional organizations were messy things that needed coordinating, leading, managing.  Processes could be broken out, modularized, tinker-toy-rebuilt, outsourced, and re-assembled—and despite Hammer’s later protestations, the idea remained attractively impersonal to its fans. 

The 00s: Metrics, Competition and Process Prepare the TinderBox

BCG, B-schools and other leading business thinkers embarked on a decade of exploring the implications.  The Holy Grail of business had become sustainable competitive advantage, which produced economic value added, which produced maximal shareholder value. 

You got there by achieving global scale in every business process: if you weren’t #1 or #2 in any process, you outsourced it to one who was.

Outsourcing to achieve scale through best practices meant multiplying transactions, reducing time-frames, and replacing messy relationships with tightly written contracts–or, better yet, markets, the truly impersonal solution.  Performance was quantitatively defined, included not only in contracts between companies, but in employee relationships with people (who were renamed “human capital” to fit the new business Esperanto—finance).  No need to inspire or manage through people; just craft a blend of  metrics and incentives, the way Skinner incented those white mice in his boxes.  Poster child: Jack Welch.

An example: the mortgage industry.  The purveyors of the competitive/process/metric paradigm saw mortgage as an industry that was regionally fragmented, structurally clumpy, high cost, stodgy, inefficient, illiquid, and highly subjective.

In 15 years, they transformed it.  The mortgage business became globally integrated, highly specialized (substituting markets for organizations via disintermediation), low-cost, nimble, cutting edge, efficient, liquid, and highly impersonal.  It became a market-driven, process-linked, globally efficient industry.  That’s all true.

It also became bereft of relationships; laden with perverse incentives; managed by serial transactors; stripped of any sense of responsibility; and governed solely by financial metrics.  In a business whose product already was money, the doubling-up emphasis on financial metrics obliterated any memory of other principles or values that might have once existed in the financial sector. 

The new mantra was IBGYBG. I’ll be gone, you’ll be gone; do the deal and let the next sucker clean it up.  The entire Meaning of Business became—to make more money than the other guys.  Period.

You work for your company–in theory, the shareholders.  Your company’s job is to win.  You win by beating others before they beat you.  Customers are walking wallets, sources of the poker chips you use to measure success.  Suppliers are to be played off against each other.  All parties are to be managed in clumps of processes, carrotted-and-sticked to behave in certain ways.  That, simply, is how it was supposed to work.  According to this mantra.

This ideology didn’t just happen.  It was four decades in the making. 

Bruce Henderson didn’t mean to do it—but he set the wheels in motion.  BCG, Hammer, Porter, and CSC-Index made it look enticing.  Economists and quant-wannabes from the HR, exec-comp and leadership world added their hops and spices to the brew.  Goldman Stanley and Morgan Sachs refined it; private equity and financial engineers distilled it; and Merrill Stearns, mortgage brokers and Joe the Plumber  got drunk on it.

Complicated?  Yes.  That’s where conspiracy theories come in; they let you simplify.  So pardon me if I just use the shorthand version: BCG caused the recession.
 

July Carnival of Trust: Call for Submissions

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A reminder: midnight tonight, Thursday July 9, is the due date for submissions to the July Carnival of Trust.

Not heard of the Carnival of Trust?  It’s a compilation of the Best Blogposts of the past month having to do in some way with the subject of trust: trust in relationships, business, politics, society–it’s a broad range.

The host-ship of the Carnival is rotated each month. The host plays a critical role not only in selecting the blogposts for inclusion, but in adding some value of their own by commenting or adding context. Kind of like a really concise, insightful movie review.

This month we’re delighted to welcome Adrian Dayton, lawyer-blogger extraordinaire, from Amherst, NY.  In his blog Marketing Strategy and the Law he touches on issues broader than the average law blog, particularly touching on new social media. 

Coming off his recent stint as host of Blawgreview, I  welcome the chance to bring Adrian’s perspective to Carnival of Trust readers.

You can submit your post for inclusion here. Good luck!

Trust as Risk Mitigation Strategy

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Forget how you usually think of the word ‘trust.’ Think instead of ‘risk mitigation.’

“Risk mitigation” means reducing risk to an acceptable level. You’re familiar with it if you work in insurance, investment banking, natural resources, infrastructure, contracting, outsourcing, or deal internationally.

It usually comes packaged as high doses of things hard and practical: legal, financial, statistical. Here’s a typical example, this one from IASTA, a supply and spend management firm, lists seven strategies for risk mitigation. Seven ways, that is, to reduce the riskiness of your supply chain.

No surprise, it includes things like dual-sourcing, price hedging, performance-based contracts, and capacity assurance. Basically, ways to make sure your supplier does what you want them to do.

Risk Mitigation is Usually Based on Control

They are all based on the assumption that unless you control your supplier or the conditions surrounding the deal, you are at risk. And the solutions all involve controlling that risk: mainly controlling that supplier.

What’s surprising about that list—shocking, if you think about it–is the absence of trust. (I’m not picking on IASTA; it’s a good list for what it is—a list of controlling strategies). It generally beats the heck out of all the other seven.

What if you could trust your supplier? What if your supplier behaved toward you in a trustworthy manner? In general, your risk mitigation efforts will then cost a lot less, and will be more successful.

Agreement by legal negotiation, and enforcement by legal, process and accounting argumentation is costly. It causes bad blood. It reduces the felt moral obligation of each party to live up to an agreement. It causes delay. And it sure is expensive.

Risk Mitigation by Trust is Cheaper, and Creates Value

By contrast, trust creation costs less than lawyers and accountants. It can often be created more quickly. And it can be far more dependable.

More importantly: if a trustor-trustee relationship is developed, it doesn’t just cut risk mitigation costs, it positively creates whole new levels of value possibilities. Things you’d never do with an arms-length supplier suddenly become possible.

This is not crazy stuff. The truth is, it happens every day: we just don’t think of it as trust. Trust as risk mitigation happens whenever a customer and a supplier keep an informal rolling ‘tab’ of who owes whom. It happens when a client and a professional honor the spirit, rather than the letter, of an agreement. Warren Buffet did it on a grand scale when he bought McLane Distribution.

Simply put, trust is as hard-nosed a business strategy as any involving the usual suspects. There is no trust without risk: trust truly is at the heart of risk mitigation.

And it’s not that hard to do.

Trust-based Risk Mitigation Requires a Change in Belief

The main thing it requires is a belief in the massively predictable human phenomenon that people do as they are done unto. If one party behaves in a trustworthy manner, the other comes to trust. And if one party behaves in a trusting manner, the other party becomes trustworthy.

The predictability of that behavior is way better than any stock market algorithm. Yet it is astonishing how many businesses have been seduced into inherently untrusting relationships. At great cost to themselves, their supply chain, their customers, and even their shareholders.

It is far more profitable to depend on the rules of trust in human behavior, than to always rely on the rule of ‘do unto others before they do unto you.’ (Which, after all, produces an equally predictable negative counter-reaction). 

The amazing thing is that so many businesses, which claim they are focused on financial returns, continually miss this huge opportunity.  I think it’s because they are also bad at personal risk mitigation: the people who run those ‘hard-nosed’ businesses are personally fearful of constructively confronting other human beings, and of speaking the truth about themselves and others. 

People vastly overrate the risk of doing the wrong thing, while they underrate the risk of not doing the right thing.  In business, as in life.  Fear, to many, seems like the sensible attitude.  In reality, trust pays far higher returns.  In life, as in business.

Trust in the Online Dating World

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The realm of romance is a source of intriguing metaphors for trust. Do people really want reliability in a romantic partner? Or is a little unpredictability a good thing? Other than the obvious, what’s the difference between romantic relationships and business relationships?

And, today’s subject—how about truth-telling in the dating world? Do you want someone who tells it like it is? Or do you want them to pull their punches once in a while?

Truth in dating: is it a good thing?

Cut to the NY Times His 50 First Dates (or in her case, 3).

Looking For a Woman He Could Trust to Tell the Truth

Poor Ron James. He joined JDate the month he was divorced, and spent the next year and a half looking for Ms. Wonderful.  Along the way, he found the relationship of Online Dating and The Truth to be problematic. To begin with, a lot of people on JDate—explicitly aimed at Jewish singles, partly as a counter to intermarriage—weren’t Jewish at all. And of course, that was just the beginning.

Over that year and a half, he said, there were women he met who lied about their age, posted photos that were 10 years old, misrepresented their jobs and pretended to be more successful than they were. “A lot of the photos didn’t look like them,” he said. “I learned to watch out for sunglasses.”

Then he met Sheryl.

At Starbucks, Mr. James was struck by Ms. Daija’s looks. Her JDate photo was taken swimming, with no makeup.
“You look exactly like your picture,” he said.
“Is that a good or bad thing?” she asked.
“That’s a very good thing,” Mr. James said. The hour flew.

Cue the violins. They married this past January.

Is Trust in Romance a Good Thing?

I was once told by a Match.com date that I was the only 5’11” man she’d met who actually turned out to be 5’11”.  That was also a good thing.  But I met many women who lied about their age, and justified it because–"otherwise, they’d screen me out."  (Which I had kinda thought was the point of having screens.  And yes, I know, we men are pigs, etc.  And yes, we lie too.)

Is the truth generally a good thing? Do we want trust in romance? Or not?

As usual, the answer is, it depends. And the real question is—on what?

Think about these trust statements:

  • I trust that my partner will be faithful—and if not, I don’t want to know about it
  • I want my partner to tell me the truth–unless it’s hurtful
  • I want to depend on my partner—but not so much as to be boring
  • I want my partner to care about me—but not to be dependent on me.

Romantic relationships are one area where we demand both truth-telling of the most intimate nature—but also the ability to hold our tongue, keep a bit of a secret, to once in a while play the Jack Nicholson role (channeling “you can’t handle the truth!”).  In the trust quotient, it’s the low self-orientation factor.

That’s what Ron James seems to have concluded:

“Every day when I leave for work, she says, ‘Drive safely,’ ” Mr. James said. “It warms my heart.”
“Does it really?” Ms. Daija asked.
“That anyone cares,” Mr. James said.

It’s generally not a good thing to subordinate the truth to other values. But caring? Well, that may be the exception that proves the rule.
 

Trust Lessons from Independence Day in Small Town USA, 2009

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In Ludington, Michigan, on July 3 at 9:30PM, it was still light outdoors (Ludington is at the far western end of the Eastern Standard Time Zone).  So it was easy to see the ten blocks of Ludington Avenue, ending at Lake Michigan, where the next day’s parade would be held. 

Two things stood out.  One was that the street had been planted with edgings of red, white and blue petunias, especially for the fourth.

The other was that virtually the length of the parade route, at 9:30PM, was already blanketed (literally, with blankets) and personal lawn chairs (some of them rather expensive) by way of reserving those particular spots for the 1PM parade beginning on the 4th.  

No one had any doubt that every one of those chairs would be there the next day.  No locks, police patrols or citizen brigades needed, thank you very much.

Nor would that be surprising to Ludington’s citizens.  By a (very) unscientific poll, well over 50% of Ludington households don’t lock their house doors at night.  Of course, Ludington is only 20% the size of the Big City of Muskegon, 50 miles away.  But I suspect it’s not all that different in Muskegon. 

The July 4th parade in small towns in America’s Midwest is a distinctive event.  Having been to parades in my youth in towns like Seward, Nebraska and Pompey, New York, I can personally relate, despite having been citified for a few decades since.

The Fourth happens at a glorious time in the calendar, when summer is just hitting full stride.  It is unabashedly patriotic, small-d-democratic, self-congratulatory, and wildly upbeat.  Half the town marches in the parade (fire trucks, beauty queens, conservation groups, HVAC companies, mayors, school bands, veterans and—in Ludington’s case—the Scotville Clown Band, since 1903), and the other half applauds enthusiastically.  All generations are represented, all consuming copious quantities of ice cream and pop (‘soda’ to you ‘coasters). OK maybe a few beers too.  And it’s curious that the celebration of independence is such a community, collaborative affair.

You can get all fancy with trust—and I do, the rest of the year—but it bears noting that there is one simple, in your face, no-BS version of trust in towns like this. 

You can leave your car and house doors unlocked.  ‘Nuff said.

You just don’t do that in South Orange, New Jersey; which is a small town, by the way.  Nor do you do it in most cities I know of.  Fuggedaboutit. 

For those (including me) who live in lock-the-door areas, it has a faint whiff of the naïve about it.  But not to those who live in no-lock towns.  It’s real.  I know, because I remember what it was like, and I got reminded of it again this 4th.

To be fair, there are some social reasons for this.  No-lock towns usually rank very low in diversity, which means everyone feels like they understand everyone else, and they pretty much do — people most easily trust those whom they most resemble.  In small towns, the degrees of separation are very small.  And I suspect (though without data) that the population is fairly stable.  This all makes it pretty easy to trust, to preach trustworthiness, and to enforce both.

I personally resent Governor Palin and others attempting to politically hijack small town values for their own divisive purposes.  I equally resent big city people who look down on small town folk as unsophisticated; they are sadly misinformed. 

But all that’s talk for another time.  On the Fourth of July, in a small midwestern town in the US of A, the glory of what it is like to live in a trusting, interconnected community is on full display.

And along with the sunburn and too many hot dogs, it makes you feel real good.   
 
 

The Real Meaning of L’Affaire Madoff

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It is tempting to dwell on the horror of Bernard Madoff. (Thanks to Robert Scheer for teeing up this issue).  How could he have done it?  What kind of a man does that?  Is 150 years in prison enough?  And so on.

Tempting—but largely wrong. If we lay all the blame at the feet of one aberrant individual, then we avoid taking a hard look at broader issues of institutional trust. 

Remember: Madoff was once the Chairman of NASDAQ and served on SEC advisory committees—he was the ultimate insider.  So it’s relevant to ask: if Madoff was such Evil Incarnate, what does that say about the sea he swam in?

Is Madoff a Bad Apple?  Or From a Rotten Barrel?

Recently the former CEO of the National Association of Personal Financial Planners was sued by the SEC for participating in a kickback scheme.   The current president missed a great opportunity to condemn or announce new initiatives; instead, she sadly bemoaned the negative impression this might cause of the character of others in the profession. 

The bad apple argument begs the question: just who elected the Bad Apples head of the barrel?

One single piece of data convinced me that Madoff was not evil incarnate, but a cheap two-bit hustler who hit it big.  It was his taped conversation with Fairfield Greenwich feeder fund starting with, ‘First, this conversation never happened, OK?”

What industry elects a man like that to positions of high influence? 

Some say financial excesses were caused by misaligned incentives.  But an industry doesn’t become trustworthy by un-tweaking incentives.  Remember Chris Rock’s statement of marital fidelity: “A man is as faithful as his options.”  There’s truth to that, but let’s not confuse it with ethics or trust.

The whole point of being trustworthy is that you have just enough moral backbone to resist temptation.  We expect dogs to eat the roast if left on the counter; fixing the Madoff issue by aligning incentives is the equivalent of moving the roast to the back of the counter.  It may save the roast this time, but the dog gets the message—we are now playing a game of “who gets the meat,” no longer a game of “don’t eat the meat.” 

Which is precisely the problem with too much of the financial sector—the proposed options too often suborn more untrustworthy behavior by focusing only on consequences.    

How Not to Fix the Barrel

The real drivers of trust have got to be the personal beliefs about one’s relationship to others.  Are you in it for them, or are you only in it for yourself?  Are you an individual existing in a state of nature with no obligations beyond self-aggrandizement?  Or do you feel some connection and obligation to others, to society?

If you believe others exist mainly for you to make money from them, then you will find ways to exploit them, within (or slightly outside of) the law.  You will devise short-term transactional behaviors to lower the risk of exposure to others, and to help you do unto others before they do unto you.  You will seek to hide, and to prevaricate. 

You will, in short, violate the (four) basic principles of trustworthiness.

But if you believe you and your business and your industry exist to serve customers, and that you too will benefit in the longer run by doing so, then you’ll behave differently.  You’ll understand the word ‘fiduciary’ is critical to trust. You’ll understand the connection between being trusted and being financially rewarded.  You’ll have nothing to hide because you’ll have no reason to hide.  You’ll welcome long-term relationships, because that’s what it’s all about.

And you’ll never begin a sentence saying, ‘First, this conversation never happened.’

How To Fix the Barrel, and Apples as a byproduct.

I have said before that mass, public shaming is a more effective antidote to low trust than most other solutions being bandied about.

Erecting more airport security measures, more Sarboxes, more Chinese walls, and aligning incentives are all ham-handed, expensive ways to reduce exposure to bad people.  They do nothing to exert social leverage to reduce badness itself.

Social virtues are built by societies.  If we limit our social solutions to imprisonment and walled communities, we’re using our social capital to create criminals.

Principled enforcement—surprise audits and large penalties–is one way society teaches virtues: the IRS uses it very effectively.

Public shaming has a great history too: the muckrakers and activists have achieved great things—think Sinclair Lewis, Gandhi, ML King, the kid in front of the tank in Tiananmen Square, and investigative journalism. All have called on our innate sense of goodness to cause change.

Trustworthiness worthy of the name is an internally felt response to an externally-taught relationship. Don’t cheapen it by just moving the cheese.
 
 
 

Four Principles of Organizational Trust: How to Make Your Company Trustworthy

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Trust, in case you hadn’t noticed, has gotten “hot” lately. But much of it sounds very vague—soft, fluffy, nice-to-have, the buzzword du jour.

I’d like to do my part to make it real.

To me, that means breaking it down and making it sound; tapping into the strategy and mysticism, but also staying grounded in the tactical and the practical.

So let’s review some context; then talk about four specific operating principles a business can hone in on to improve its trustworthiness.

Putting Trust into a Workable Context

I’ve suggested elsewhere that “trust” is too vague a term to work with. To do something practical, we need first to identify the trust realm: are we talking about personal trust, or business/organizational trust, or social/institutional trust?

The next question is about the trust role: are we working on being more trusting? Or more trustworthy? They are not the same thing.  And “trust” is the result of them both interacting.

Building a Trustworthy Business

In the realm “personal” and the role “trustworthy,” we can point to personal beliefs and behaviors as indicated in the Trust Quotient. But in business, trustworthiness is built through a set of daily operating principles. Trustworthiness is built from habitually behaving in accordance with a set of commonly shared beliefs about how to do business.

I suggest they can be boiled down to four.

The Four Trust Principles

1. A focus on the Other (client, customer, internal co-worker, boss, partner, subordinate) for the Other’s sake, not just as a means to one’s own ends.  We often hear “client-focus,” or “customer-centric.” But these are terms all-too-often framed in terms of economic benefit to the person trying to be trusted.

2. A collaborative approach to relationships.  Collaboration here means a willingness to work together, creating both joint goals and joint approaches to getting there.

3. A medium to long term relationship perspective, not a short-term transactional focus. Focus on relationships nurtures transactions; but focus on transactions chokes off relationships. The most profitable relationships for both parties are those where multiple transactions over time are assumed in the approach to each transaction.

4. A habit of being transparent in all one’s dealings.  Transparency has the great virtue of helping recall who said what to whom. It also increases credibility, and lowers self-orientation, by its willingness to keep no secrets.

Executing on the Trust Principles

What are the tools an organization has at its disposal to make itself more trustworthy? Any good change management consultant can rattle off the usual suspects, but for trustworthiness, the emphasis has to shift somewhat.

The usual change mantra includes a heavy dose of behaviors, metrics and incentives. Some of that works here, but only to a point.

For example, Principle 1, focus on the Other, is contradicted by too much extrinsic incentive aimed at leveraging self-interest–it undercuts focus on the Other.  And Principle 3, relationship over transaction, forces metrics and rewards to a far longer timeframe than most change efforts employ. 

Another great shibboleth of change is that it must be led from the CEO’s office. But with trust, it ain’t necessarily so.  Trustworthiness is a great candidate for infectious disease change strategies; guerrilla trust strategies can work at the individual level, and individual players can lead. Behavior in accord with these principles cannot be coerced; the flipside is, it can be unilaterally engaged in.

The most powerful tools to create a trustworthy organization are things like language, recognition, story-telling, simply paying attention to the arenas where the principles apply—and the will to apply them.  Role-modeling helps; some skill-building helps.  But most of all, it is the willingness to notice the pervasive opportunities to work in accordance with this simple set of four principles.

Trustworthiness breeds trusting (the reverse is true too); the combination is what leads to trust. Which, by the way, is quite measurable in its impact on the bottom line.