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Everything I Needed to Know About Sales I Learned From my Father

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I grew up in New Jersey, The Garden State. At least that’s what it said on our license plates. My dad was a salesman, selling fertilizer and other products to mom and pop farmers in the 60’s and early 70’s. I went with him on sales calls, spending the day riding around the state with him, and watching him work.

He wasn’t like the other salesmen. He didn’t like pushing people. In fact he truly cared about them. Here was a typical sales visit to a farmer:

Farmer (either spouse): “Morris – come on in.” They liked Dad (still do).

Dad: (After sitting with the first cup of coffee, which he didn’t like but drank anyway because he didn’t want to hurt anyone’s feelings). “How’s your family?”

Farmer: “The kids don’t want to do anything…[complain, complain, brag brag for 10-20 minutes].

Dad: “How’s Rosie” [Names the farmer’s wife if she’s not there, otherwise asks her directly].

Farmer: “The best” [complain, complain, brag, brag for 10-20 minutes]

Dad: “How’s things going on the farm?

Farmer: [Complain only for 20-30 minutes].

Dad: “Do you need anything?”

Farmer: “I need…” [places an order].

The farmers knew why Dad came – he never had to say. Often they told him that they liked buying from him, not because his product was better, but because he took the time to listen to them. They trusted him. He kept his word. When there was a problem, and there always was, he dealt with it.

Yep. I learned a lot about selling watching my Dad with farmers. He was caring, a listener, credible, reliable, and he rarely talked about himself unless asked. Totally trustworthy. Still is.

 

Trust Reader Volume 2

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Greetings.

This is the second in a series of ebooks I’m releasing called The Trust Reader. Each issue will feature a full-length article on trust-related issues, plus synopses and links to two other articles.

The Trust Reader will be published roughly every few months. Articles introduced here will be available thereafter on the trustedadvisor.com website, but you’ll see them here first.

Get the Trust Reader volume 2 here

In this issue, the featured article addresses a key question: Does Trust Really Take Time? Here’s why it’s key.

Purportedly, one of the great economic advantages of trust is the time it saves in the conduct of business. I make that claim, as does Steven H.R. Covey, Jr. Yet, the phrase "trust takes time" is routinely asserted by most businesspeople—including those who agree that trust takes time.

Well, does it or doesn’t it? The lead article answers that question, and is contained in its entirety in this issue.

The other two articles are:

Discounting, Price, Value and Psychology — a look at how buyers really think about money in buying. Worried about price cutting? Read this one.

Client Focus vs. Client Focus Lite — are you really client-focused? Or just faking it. Take a hard look in the mirror before you answer, and read this one.

Both these articles are abstracted in this issue, with links provided. All three articles will now join the permanent collection of trust-related articles on Trustedadvisor.com.

The Trust Reader series joins the Trust Matters Primer series—an occasional selection of the best from from the blog Trust Matters.Download the first edition of the Trust Reader here

Trusted Advisor Associates ebook Series on Trust

You can also find previous issues of the Trust Reader here, as well as copies of The Trust Matters Primer here:

Trust Reader Volume 1

Trust Matters Primer Volume 1

Trust Matters Primer Volume 2

Trust Matters Primer Volume 3

If you would like to receive email updates for the Trust Reader and Trust Matters Primer, please subscribe here.

You can find previous articles published by Charles H. Green at http://trustedadvisor.com/cgreen.articles/

As always, if you prefer not to receive our series, simply email me or click the unsubscribe link below to let us know.

The Trust Reader Volume 2

/0 Comments/in /by

Greetings.

This is the second in a series of ebooks I’m releasing called The Trust Reader. Each issue will feature a full-length article on trust-related issues, plus synopses and links to two other articles.

The Trust Reader will be published roughly every few months. Articles introduced here will be available thereafter on the trustedadvisor.com website, but you’ll see them here first.

Get the Trust Reader volume 2 here

In this issue, the featured article addresses a key question: Does Trust Really Take Time? Here’s why it’s key.

Purportedly, one of the great economic advantages of trust is the time it saves in the conduct of business. I make that claim, as does Steven H.R. Covey, Jr. Yet, the phrase "trust takes time" is routinely asserted by most businesspeople—including those who agree that trust takes time.

Well, does it or doesn’t it? The lead article answers that question, and is contained in its entirety in this issue.

The other two articles are:

Discounting, Price, Value and Psychology — a look at how buyers really think about money in buying. Worried about price cutting? Read this one.

Client Focus vs. Client Focus Lite — are you really client-focused? Or just faking it. Take a hard look in the mirror before you answer, and read this one.

Both these articles are abstracted in this issue, with links provided. All three articles will now join the permanent collection of trust-related articles on Trustedadvisor.com.

The Trust Reader series joins the Trust Matters Primer series—an occasional selection of the best from from the blog Trust Matters.Download the first edition of the Trust Reader here

Trusted Advisor Associates ebook Series on Trust

You can also find previous issues of the Trust Reader here, as well as copies of The Trust Matters Primer here:

Trust Reader Volume 1

Trust Matters Primer Volume 1

Trust Matters Primer Volume 2

Trust Matters Primer Volume 3

If you would like to receive email updates for the Trust Reader and Trust Matters Primer, please subscribe here.

You can find previous articles published by Charles H. Green at http://trustedadvisor.com/cgreen.articles/

As always, if you prefer not to receive our series, simply email me or click the unsubscribe link below to let us know.

 

Why Trust Improves Your Bottom Line

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Let’s just face it head on.  Many of you think all the recent hoo-ra about trust is lefty-liberal, softy, wishful thinking. Nice to have, but not the stuff of serious bottom line impact.   

If only the world could be freed of terrorists and Madoffs and Wall Street’s relentless pressure for quarterly performance, then maybe we could afford some trust; but right now, with this economy?  Gwanwidja, Charlie, it ain’t happening.

Or, the most common variation: Hey Charlie, I’m down with the program, but the problem is my boss.  Or the Executive Committee.  Fix them first, then come talk to me.

Well, this is the blog to forward to your boss and the Executive Committee.  Because whoever doesn’t “get” the raw economic power of trust isn’t acting in the best economic interests of the organization.

Let’s break it down into the economic benefits of

•  trusting
•  being trusted (not the same thing)
•  building an organization along trust principles.

How Trusting Adds to the Bottom Line

If you trust someone, you greatly increase the odds of their behaving reciprocally—that is, they become trustworthy.  Don’t trust me on that, read Robert Cialdini, who posits reciprocity as the number one factor driving influence.

If you trust, and the other party behaves reciprocally, all kinds of time and cost can be cut out—mostly time and cost that was engineered in to protect against untrustworthy people.

Specifics?

Trust your suppliers: with advance order information, with cost information, with pricing, with materials requirements, with new design information.  (Don’t, by contrast, create enemies of them by using purchasing as a blunt instrument). 

Trust your customers: develop price and product quotes together with them, share your advance product information, make a point of listening to them, allow them to spend time with you at your offices, get your people to theirs.  (Don’t, by contrast, create enemies of them by surprising them or trying to squeeze the last nickel out of each contract).

What you gain by trusting:  Less due diligence time and cost, shorter elapsed time-to-market, better design quality, higher sales hit rates, lower sales investment cost, more forgiveness of errors, better pricing, higher customer retention.  (Steven HR Covey Jr.in Speed of Trust focuses heavily on the trusting part of trust).

That all adds up to real money.

How Being Trustworthy Adds to the Bottom Line

Take a look at the Trust Equation; take the Trust Quotient self-assessment test yourself.   Being trustworthy means being credible, reliable, safe to be with, and focused more on others than yourself.

Trusting people may be the fastest route to being trusted, though it’s also higher risk.  Being trustworthy also produces reciprocal trustworthiness—it may take a little longer, but it’s lower risk.

Specifics?

Tell the whole truth, don’t just don’t lie.  Don’t over-perform, or under-perform—just do what you said.  Be prepared to recommend a competitor if it’s the right thing.  Don’t manage your earnings, just be transparent about your accounting policies.  Don’t try to control others.  Comment on feelings—yours and others’. Do your level best to actually care—don’t fake it.  Don’t Always Be Closing.  If you don’t know something, say so.  (There are a raft of specific things to do in response to your Trust Quotient, free).

What you gain by being trustworthy: Higher sales closing rates; shorter sales time, more repeat business.  Higher employee retention.  Customer loyalty.  Fewer lawsuits.  More honesty from others.  Fewer competitive bids, more likelihood of your advice being taken.  Higher confidence in your quarterly earnings statements.  Higher customer sat ratings. 

That all adds up to real money too.
 

How Building a Trust-Fostering Company Adds to the Bottom Line

I have suggested  four Trust Principles: these work at the individual as well as the organizational level. The principles are:

1.    Other-focus for the sake of the other
2.    Collaboration
3.    Relationship, not transaction, focus
4.    Transparency

These are not new concepts. If your company conducts all its affairs with these principles in mind, then you live in an organization that creates trusting and trustworthy people, processes and relationships.  And makes a ton of money.

Unless you have brute monopoly pricing power, and don’t care about your reputation or your legacy in the world, then trusting and being trusted at the personal and institutional level is about the best profit guarantee you can get.

It may sound like a Buddhist mantra or a Beatle song, but it’s also an economic model.  Trust pays—as long as you treat profit as a byproduct, not the goal itself.  

Who’s Minding the Store in Corporate America?

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Sometimes you get one of those, waddya call ‘em, iconic moments.  Bush standing at the Twin Towers with the megaphone.  (Bush standing next to “heckuva job” Brownie).

We got a classic on the evening news today.  The Chief Executive Officer.  Of the Bank.  Of America.  Saying with a straight face the most amazingly truthful truth in front of Congress: namely that he didn’t run his own bank—his securities lawyers did.

First, the facts, as reported by the Wall Street Journal:

[lawmakers] pressed Mr. Lewis on why Bank of America did not inform its shareholders of its growing concerns with the losses at Merrill Lynch if the issue was serious enough for Mr. Lewis to fly to Washington and speak with federal officials about abandoning the deal by invoking the "material adverse change" clause.

"If there is an event that you consider so significant that it may allow you to invoke the [MAC] do you not think that same event is of interest of shareholders and requires you in your fiduciary duty to disclose it?" Rep. Peter Welch (D., Vt.), said.

"I leave that decision to our securities lawyers and our outside counsel … I’m not a securities lawyer," Mr. Lewis said.

As one Congressman pointed out, the deal was approved by shareholders in December and cost the US taxpayer $20B the next month.  But, as Mr. Lewis implied, his lawyers advised him what to do, and of course, like a good little CEO, he took his lawyers’ advice.  Don’t tell.  After all, you might get in trouble for leading.

Who’s minding the store in corporate America?  CEOs or lawyers?  Or–is it even worse than that?   

This is a veritable Where’s Waldo book of things wrong: I’ll just focus on one.

Where is Accountability in Business?

Nowhere near Mr. Lewis, that’s clear.  But as we said, he is iconic.  An avoider of truly Madoffian proportions does not achieve that status alone; he stands on the shoulders of previous avoiders and a system of avoidance.

It starts with a “mistakes were made” kind of attitude. (See Charles Baxter’s classic 1994 essay here). 

Lack of accountability gets reinforced by a subtle shift from “ethics” to “compliance,” as brilliantly described by Harry Markopolis, the Madoff whistleblower: “The SEC’s main focus is to mindlessly check to see if registered firms’ paperwork is in order and complies with the law as written.”

But it’s business programs too.  The lack of accountability ironically traces back to a great intellectual achievement—the multi-industry success of business process re-engineering.  In industry after industry, business processes have been broken up into pieces and stitched back together by contracts linking outsourcers to purchasing departments.  All done by lawyers.  And all lacking a sense of commercial commitment or relationship between buyer and seller.  (And taught proudly in business schools as "best practices" and "benchmarking").

I’m fond of quoting Phil McGee’s dictum: all management problems boil down to two: a tendency to blame, and an inability to confront. 

An inability to confront the truth, facts, accountability, responsibility, obligation, fiduciary duty.  All these are terms that are far too visceral and human to be captured adequately in the cold rational phrases of the law.  Which is why the best jurists always know the “rule of law” should leave a lot unsaid.

I am painfully aware that our only MBA president will almost certainly appear more inept at management than the lawyers who preceded and followed him.   But I’d argue that Clinton and Obama each know what Bush—and his contemporary, Mr. Lewis at B of A—did not.  That the law should have limits.  "Leading by the law" is nearly oxymoronic; perhaps it even takes a lawyer to fully appreciate how foolish it is. 

It’s galling enough that Mr. Lewis, I suspect, is being disingenuous.  He doesn’t really follow the opinion of his lawyers in managing the company.  He employs them to provide convenient cover.   What’s really galling is that the lie he tells—that he does manage by following their advice—is a lie that has become socially acceptable.  No one calls him on that lie.  Invoking "MBL" (management by lawyers) has become the unassailable high ground of management and leadership. 

We have moved from a “buck stops here” standard of leadership to one based on “I didn’t commit a crime,” a standard now smugly on display by our corporate leaders.  

Where’s the shame?
 

Great All-Time Trust-based Selling Insights, #17

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I’m going to hand over the space today to a guest-blogger: Walt Shill at Accenture.  Walt does a weekly internal blog for ACC, and was kind enough to grant us permission to slavishly “re-tweet” his recent blogpost.

If you’re wondering just how to make sense of Trust-based Selling, or to see the power of low self-orientation in the Trust Quotient, I can’t think of a better story than the one Walt shares here.   (Look for the ZZ Top reference).

Take it away, Walt.

Bob and his Two Simple Questions

Years ago I was assigned to work with Bob – a senior Director. I was a struggling manager. People whispered about Bob and many avoided working with him … You see, he had an unusual style that was reminiscent of Columbo – the brilliant TV homicide detective from the 70s played by Peter Falk.

Bob was never accused of being a sharp dressed man …. He always seemed a bit disorganized and seemingly slow to pick up key points …. Bob was unfailingly polite, but he had a way of asking clients odd questions at awkward times… I must admit, as I started I was a little embarrassed to be with him.

I did most of the grunt work of analysis and preparing decks for Bob, but I also accompanied him to many meetings in the C Suites of half a dozen companies…. And just like Columbo’s (and Steve Jobs’) famous line, “Just one more thing”, Bob somehow managed to always ask some version of two simple questions in every meeting……

How’s business? As a meeting started Bob would casually ask “So… How’s business ?” The client would start with a basic answer, but Bob cleverly teased out evermore detail by mumbling: “uh huh”, “yea”, and innocently asking over and over again – “hmmm, so why is that?”

He never, never, never responded that we could help…. in fact he hardly spoke at all… he was just listening very, very intently… and asking gentle questions with such childlike curiosity that the clients could not resist telling him more.

Sometimes the entire hour would pass with Bob’s wandering questions and we would have to reschedule. …Frequently I had been up all night preparing a document for the meeting –and I would get angry that he was wasting valuable time that I could use to impress the client with my brilliant charts and precise data and blinding insights…..

Weeks or even months later, we would follow up on the key issues. …. And our proposals were always spot on – Bob had an incredible insight to the core issues facing the company…..

I began to realize that Bob’s simple question – “How’s business?” had been creating a massive pipeline for us.

How are YOU doing??  As we were wrapping up a meeting, Bob would innocently ask, “So, how are you doing ?” If the client started talking about the company or business, Bob would gently interrupt them and say, “no, I meant how are YOU personally doing ?” ….followed by his usual “why is that ?” ..his odd style conveyed genuine interest and caring … After just 2 or 3 meetings Bob had started a deep personal relationship because of how much the client had revealed about their aspirations, frustrations and personal lives… all of which were filed somewhere in the recesses of Bob’s complex but powerful brain.

My respect for Bob grew ……and today I marvel at how he faithfully served senior leaders on their most critical issues, grew a very big practice and built his career (and helped mine!) … all by simply asking and then intently listening and genuinely caring about the answers to two simple questions:

“So, how’s business?”

“So, how are YOU doing?”

———

What Walt said. 

 

Carnival of Trust for June is Up

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Carnival of Trust

The Carnival of Trust is up for the month of June, hosted by Dave Stein, and it provides a wealth of perspective on the state of trust at the midpoint of 2009.

For those who don’t know him, Dave Stein  is a consummate student of sales. A former sales consultant, trainer and author, he now runs ES Research Group http://www.davesteinsblog.com/esr/ from the hardship environs of Martha’s Vineyard. Think of ESR as the JD Powers or Consumer Reports of the sales training field.
I have gotten to know Dave over the past year and found him to be ethical, smart, insightful, sober (thinking-wise anyway), and possessed of fine judgment.
Just the person to host the Carnival of Trust.

Dave has selected a tasty sampler of things trust-related. Just a few:

And that’s just five. Check the full Carnival of Trust to read those items and the other five, and Dave’s commentary on all of them.

Many thanks to Dave Stein for hosting a solid, content-rich and thought-provoking Carnival. Drop on by and treat your brain to a feast.

The Banality of Bad Behavior in the Financial Planning Business

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My eye was caught by a headline in registeredrep.com: “When Bad Firms Happen to Good Advisors.”

Some well-regarded experienced financial planners, the story said, signed on with the most recent mini-Madoff–Sir Allen Stanford and his Stanford Financial Group. Then they got burned.

Interesting story, I thought; even really good, ethical planners got sucked in, it seemed. Here is Bob Hogue, a Houston planner looking to move from Bank of New York:

Stanford offered service providers he knew well: Lockwood Financial’s platform of money managers, with which he had already built his business on, top-notch client and data management technology provided by Odyssey Financial Technologies (a leading European vendor), and a custodial relationship with Pershing, the custodian he was already using. Adding to the appeal, Pershing guaranteed easy transition of client data, no change in account numbers, if Hogue and the three FAs in his Dallas office moved to Stanford. “There weren’t any other firms offering all that,” says Hogue. He and the three other Bank of New York financial advisors joined Stanford’s Dallas office in November, 2007.

There was all the hooplah, too—yacht cruises, fabulous food, beautiful facilities. But Hogue et al weren’t seduced by that.

Or were they?

What Passes for Good Behavior in the Financial Planning Business

Stanford advisors got incentives for selling the CDs, including a 1 percent commission and, depending on the size of the sale, eligibility for a 1 percent trailing fee for each year on the CD’s contract, as well as trips and bonuses and invitations to the annual sales meeting, awarded based on how much money an advisor funneled into Stanford International Bank. [italics mine]

Wait a minute. What do CDs yield– – 3-4%? At those rates, commissions would eat up half the owner’s yield. We cry “usury” at credit card charges in the 20% range–how about 40-50%? And on a CD?

And, if these CDs were in fact yielding higher—7%, 8%–then they were far outside the normal risk range of the usual buyers of CDs.

What kind of a financial planner rakes 50% off the top of a “conservative” product that his customer could buy for nothing at an FDIC-insured bank? Or sells a highly risky product to people looking for conservation of wealth?

According to registeredrep.com, apparently the answer is “good advisors.”

50% fees on CDs? Good? In what dictionary? Let’s get real.

What Good Behavior in Financial Planning Should Look Like

A financial planner friend tells me that when she gets calls from wholesalers pitching products for her to sell, after they describe their new product, their next line is typically “let me tell you how much commission you can make on this.” When she says, ‘never mind that, what’s the yield for the customer?’ the response is usually, ‘uh, hang on a minute, let me look that up.’

That’s the normal pitch. Wholesalers are not stupid. This means: the average financial planner is not in it for you, they’re in it for themselves; that’s why the wholesalers lead with commissions, not benefits to clients.

The same planner tells me she often finds clients who have been put 100% into a variable annuity product, for example, when they have near-term needs for retirement or college expenses. “It makes no sense,” she says. Until you check out how the previous planner made 5%, 6%, 7% commissions up front by selling them this concoction. Then it makes a ton of sense. For the advisor.

Earth to registeredrep.com–bad advisors do this, not “good” advisors! This is the banality of evil. The incessant trickle-down of selfish, anti-customer, opaque behavior eventually makes routine, daily ripoffs get termed “good.”

Madoff and Stanford are anomalies. But the daily, garden-variety, grinding low-ethics, customer-hustling, devious behavior is all too common. See, for example, Michael Zhuang’s comment on a blogpost of just last week.

Can Ethical Behavior Be Increased in Financial Planning?

There are many ethical, customer-focused, honest, trustworthy planners. I know some of them, they do exist. They are as good professionals as in any industry. And there are seedier, greedier industries out there.

But so what? Since when is “he’s worse” an excuse for unethical behavior? Just last month the SEC charged a former President of NAPFA, one of the industry’s two professional associations, with kickbacks.  (Well, at least he wasn’t a Madoff….)

What can you do as a consumer? Search hard for the good planners. Don’t let yourself get snow-jobbed. Ask a lot of questions. Do not be intimidated. This is still a caveat emptor business. So caveat.

But–if you run a financial planning firm, you can make a real difference. Dare to be above average. Look at client-focused behavior in other industries. Talk to highly successful firms who are known for straight dealing. You know who they are in your business–emulate them. Read up on trust. Conduct focus groups. Talk to your critics. Steep yourself in the literature on how short-term anti-customer behavior kills long term shareholder wealth. Dare to do good!

Call me naïve, but I still believe that a critical mass of people in the financial planning business know the difference between today’s norm of selfish, short-term anti-client mindset and the longer-term client-focused strategy that is possible, and that in fact creates loyalty and mutual profitability. 

If I’m right about that, then it just takes some concerted courage by a few to speak up and start making a difference. And if you’re still reading, maybe you resemble that remark.

Ethics vs. Jack Welch at the West Point of Capitalism

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You may have heard about the recent so-called MBA Oath undertaken by some students at Harvard Business School.  Do click the link, it’s a short read, but to summarize it even more, it’s an oath to behave in ethically, non-selfishly motivated, socially responsible ways.

MBA Students For Ethics and Social Responsibility?

Here’s the May 30 NYTimes story,  as of which date “nearly 20% of the graduating class” had signed the oath.  When I read that, I resolved to blog about it in a week’s time.  It was clear to me on May 30 what I was going to say:

No biggie.  In my own class (1976) it wouldn’t have surprised me if as many as 10% would have signed such an oath.  That would suggest either a doubling or a 10 percentage point increase every 35 years.  

By that arithmetic it would take either until the year 2061 or the year 2114 for 51% of Harvard MBAs to agree with such controversial statements as “I will act with utmost integrity and pursue my work in an ethical manner."  Oath?  Much ado about nothing.

Well, shame on me, o me of little faith in my descendant classmates, because as of June 3 (according to the Economist’s story), that number was up to 400—roughly half, by my close-enough calculations. 

Now, half is considerably larger than 20%.  In fact, I think it’s more like 50%, though HBS MBAs in my day weren’t all that great at math (‘go hire one from MIT if you need it’ was the not-so-tongue-in-cheek phrase we heard).  And I am quite sure, as I mentally run down my list of classmates, that nowhere near 50% would have signed the oath back in the day.

Ethical Progress at Harvard Business School?

I’ve previously critiqued the ethics course at HBS  and b-schools in general for not getting it right, but this is different—as a whole, this manifesto gets it very right.

I don’t like using superlative buzz words, but the “sea change” metaphor comes to mind.  Or, to mimic Verizon’s FIOS ad, “This is big.”

How big?  Let’s contrast it with Jack Welch. 

Welch was recently trotted out from the dead to reprise his greatest hits at a Bloomberg/Vanity Fair economic forum.  It had a shot at being an intelligent economic dialogue until Jack popped open the coffin lid and shouted “buy or bury the competition!”  thus drawing loud applause from the over-60 crowd in attendance. 

Now, GE’s stock price when Welch left in 2001 was 50; it since dropped as low as 8.  Today it’s 14.  But don’t tell me that’s the fault of his (handpicked) successors; it’s what happens when a formerly great strategy meets seriously new times (and Imelt can’t work Welch’s old opaque GE Capital magic anymore).  That applause at Bloomberg  was the sound of the old guard waxing nostalgic, still hoping to believe in the old verities.  But they’re gone, gone. 

Jack Welch, Old School: Interconnected World, New School

Jack WelchThe old strategy?  Competition, competition.  Your customers and your suppliers are your competitors.  Be boundaryless–right up to  the boundary of your own company, where it becomes bury the enemy. 

The new strategy?  Collaboration, collaboration.  It’s a flat world; joint venture, alliance, outsource, teamwork, network, share.  Your customer is your purpose for being, and your supplier is your life partner.  We’ve finally gotten past Thomas Hobbes–and just in time to deal with global warming and global supply chains.

Which strategy is right for the times?  Look at Detroit; a fervent worshiper of the Competitive Gospel.  According to Welch, Detroit’s downfall was unions, pension laws and health care.

Booshwah; Detroit’s Achilles’ heel was an ideology that, unlike Toyota, pitted them against their own suppliers in an era where supply chain relationships proved the key to lower systemic costs; where one team measured "long term" in 3-year cycles, and the other measured it in generations.

Dealing with GE today is still like dealing with Welch.  They’d rather do reverse online auctions than engage in relationships.  They are shooting their own economics in the foot by declaring,  like old Bolsheviks, "we will bury you" at their fellow commercial travellers.

Me, I’ll bet on the new kids in town, who understand 1+1 >3,  and 1 vs. 1 <2; who say things like: 

>I will safeguard the interests of my shareholders, co-workers, customers and the society in which we operate.
and
>I will manage my enterprise in good faith, guarding against decisions and behavior that advance my own narrow ambitions but harm the enterprise and the societies it serves.

Good for you, HBS class of 2009.  I say you done us proud. 
 

Managing Trust Metrics

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Trust is hot; particularly in the last year.  Measurement has been hot for the past 10 years.  So it shouldn’t be surprising that lots of people are getting excited about measuring trust.

The question they should ask themselves is: why?

One knee jerk management mantra these days is, “You can’t manage it if you can’t measure it,” or “what gets measured gets managed.”  Well, yes—and no.

Early (by which I mean 5 years ago) trust measurements included things like buyer ratings on eBay, and they made sense.  Today, measurement/management mantras get applied in undiscriminating ways.

Trust Trends: Precisely Measuring—What?

Consider the statement: Trust in CEOs is down.  Does it mean that people are less trusting these days? Or that CEOs are less trustworthy?  Or both, and the second interpretation caused the first?

And what do you do about it?  If people are less trusting, then fixing CEOs won’t much help.  If untrustworthy CEOs are the problem, then it will.  But which is it?

My accounting professor, Richard Vancil, when asked the definition of “profit,” replied, “it’s the last line on an income statement.”  Meaning it was a question with no good answer.

I think longitudinal trust attitude questions are much the same: what they measure is the shift in answer to a given question over a period of time.  The question itself isn’t clear, nor does it suggest clear policies.

How’m I Doing?  Measuring Trust Improvement is Tricky

New York’s Mayor Koch was known for asking ‘How’m I doing?’ at every juncture.  I don’t know how it worked for Koch, but it doesn’t work so well for trust.  

You can often measure things like quality (defects per million), or efficiency (output over input) with great precision, and with great frequency.  But try asking your significant other whether (s)he loves you, in myriad ways, every hour.  It won’t take long for the process flow approach to measurement to ruin the love you were so intent on measuring.  Not to mention: just how did you define ‘love’ anyway?  What would you do with the answer?

Measuring Trust to Drive Motivation Can Backfire

A common way to use metrics is to reward certain outcomes.  Applied to trust, this can generate perverse results.  Trust is partly about unselfish attitudes and actions–think about the ethical schizophrenia that results from using monetary incentives to encourage unselfish behavior.

The Best Trust Measurement Encourages Diagnosis

If measuring ‘trust’ alone is like squeezing air; if the act of measuring alters the measurement; and if incentivizing trust metrics can destroy trustworthiness itself; then what are trust metrics good for?

I think they’re good for a great deal—if defined in terms that respect the inherent breadth of meaning of trust, and in ways that allow concrete actions to be taken to improve trustworthiness.

Want to measure trust? 

Start by defining what you’re measuring: the capacity to trust, the quality of trustworthiness, or the presence of both.  (See Trust, Trusting and Trustworthiness). 

Then clarify whether you’re evaluating personal trust, organizational trust, or social trust.  (See Realms and Manifestations of Trust)

Then ask whether respondents will gain practical insights and actions from the measurement to improve their trusting-ability, or their trustworthiness.

At the risk of appearing self-serving, the Trust Quotient is an example.  It measures personal trustworthiness in 20 inter-related ways that provide self-insight to the test-taker, as well as offering practical suggestions for self-improvement. 

The Trust Audit  is another example, this one measuring trustworthiness at the organizational level.   It too uses 20 inter-related measures—not one—that together suggest specific opportunities for improvement. 

Measuring trust is not like other measurements: it’s less like measuring liquid flow or efficiency than it is like measuring love.  It deserves its own metric system.