Why We Don’t Trust Companies, Part II – the Three M’s

Yesterday I wrote about three fundamental reasons that most companies aren’t trusted: trust is mainly personal, most companies don’t understand trust, and they make bad choices of tools to enhance trust. Let’s call that Level I of  the Corporate Book of Being Trusted. Now let’s look at Level II.

Most companies, even if they do reasonably well at Level 1, are still not very trusted. It’s often due to what we might call the three M’s – mission, motives and mindset. If your goals, beliefs and attitudes are all anti-trust – even if you think you mean well – then no matter what you say, it will bleed through. People can tell. And it’s people that do the trusting.

Mission.

I’m using the term “mission” loosely here, to include terms sometimes defined as distinct – vision, goals, and the like. Basically, what a company says it’s trying to do.

And despite the ringing statements of companies like Coca Cola (“…to inspire moments of optimism and happiness…”) and Enron (you really must read it for yourself), most companies in the past few decades would cop to “achieve sustainable competitive advantage,” (often dressed up as “be the best X in the Y business”).

Sustainable competitive advantage. Never mind whether that’s true, or whether the true underlying motive is to maintain the bureaucracy until the incumbent management has had its way. Let’s assume it is true. What does “sustainable competitive advantage” (hereafter, SCA) imply?

It says above all that business is a contest, and a largely zero-sum contest at that. It’s about winning, and what I win, I win by dint of you losing. And vice versa. As was very well articulated by the strategists from the 70s and 80s, this is a Hobbesian view, in which everyone is a competitor lying in wait to conquer us. And so we must conquer them first.

Much more could be said about this as a mission, but let’s stick with one observation – it is extremely hard to believe in all that and believe at the same time in the power and desirability of trust. People who believe in SCA are hard-pressed to believe that they might make alliances with suppliers, customers and even competitors, that they might benefit by greater transparency, that taking risks can be desirable, and that another goal besides winning might actually exist.

Most corporate people  just can’t wrap their heads around that.  And so they, and their companies, behave in anti-trust ways.

(There is, of course, a great irony here. Companies which actually do a better job of being trusted end up being more profitable and successful. But the power of the ideology is such that most corporations refuse to believe it).

Motives.

It’s almost an axiom in business that the purpose of a company is to make a profit. And even though few people now believe it as dogmatically as Milton Friedman asserted it’s pretty much an important goal, and rightly so. The problem comes from those who have boiled it down, stripped it to the bones, and turned it into Management Mantras Lite.

They have put a lot of emphasis on two beliefs: the primacy of shareholder value, and the short term perspective. As to shareholder value, Cornell Law School Professor Lynn Stout says, “the ideology of shareholder value maximization lacks any solid foundation in corporate law, corporate economics, or the empirical evidence.” So the belief is unnecessary, and unfounded. Yet it continues.

It is also anti-trust, because it subordinates the goals and desires of all other stakeholders.  Who can trust an entity that uses others as means to its own ends – and brags about it!

Short-termism is a long topic in itself. Let’s just note that the passage of time is a requirement for many forms of trust. Game theory shows distinctly different results if a game is played once, vs. many times. Over time, we can establish patterns, mutual obligations, track records and character.

Short-termism hobbles trust considerably; the accompanying belief in transactions rather than relationships is enough to strangle trust.

Mindset.

Some mindsets flow naturally from the missions and motives outlined above; see how many you have heard:

• I’ll be gone, you’ll be gone – do the deal
• Do unto others before they do unto you
• It’s a dog eat dog world.

There is one other mindset I want to identify; I’ll write about it separately in this series. It is risk. In the Hobbesian corporate world we have created, risk is a no-no, a negative, something to be mitigated and hedged. Risks are to be laid off, written into supplier contracts so they’re transferred, and are not to be taken if they might result in legal or financial exposure – hence never admit guilt. Hence “nobody ever got fired for hiring IBM.” And so forth.

Yet trust requires risk. There can be no trust without risk. And a mindset that abhors risk is not a mindset that will easily tolerate trust.

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In short: at Level I, we saw that most companies are impersonal, and don’t understand the workings of trust. At Level II, we see that many mental constructs in today’s corporations are inimical to trust.

Is it any wonder that most companies are not trusted?