In late May 2009, when the New York Times caught wind of and wrote about it, roughly 20% of the class of 2009 of Harvard Business School had signed the MBA Oath. On June 8^th, when I wrote about it, the numbers had jumped significantly. 

By June 11, when BusinessWeek wrote about it, over half the class had signed. Today, in November, 65% of the HBS graduating class has signed.

Perhaps more importantly, the Oath has become something of a movement. It has a permanent home, at http://mbaoath.org/ . It is a 501(c)3 organization, and has an Executive Director, Peter Escher (signer number 5 of 1704, as of today). It has spread well beyond Harvard Business School, and in fact the mission is to develop chapters globally.

I sat down (virtually) with Peter Escher to chat. Excerpts follow:

PE: It’s an embodiment of our belief that things have changed over the past few decades, and that business has responsibilities to do things right, and obligations to society. Mechanically, it’s a preamble about the role of business, and eight specific tenets. A key part of the statement is “my purpose is to serve the greater good.” A sample tenet is “I will act with utmost integrity and pursue my work in an ethical manner.”

CHG: It has really taken off; were you surprised?

PE: Candidly, yes. It turned out we were part of a very big wave. It’s humbling, as well as exciting.

CHG: What drove you to do it?

PE: The spring was a time of reflection—the role of an MBA was very much on our mind, what with Harvard MBAs in leadership positions at so many Wall Street institutions, and the indictment of business leadership in general. Rakesh and Nitin pointed us to some early versions of the Oath that had been developed, along with the World Economic Forum. We took it from there, aiming just to get 100 signers. Of course it went well beyond that.

CHG: On the face of it, the Oath sounds unobjectionable. But you have gotten objections, yes?

PE: Oh yes. The top ones are:

1.    I don’t need an oath to be ethical; in fact, this implies I’m not.

2.    I won’t sign because there’s no enforcement mechanism.

3.    It’s all just Harvard spin.

CHG: And how do you answer those?

PE: To the oath/ethics connection, we note that law and medicine have very similar oaths. We are trying to get business to emulate those models.

To the enforcement issue, the oath won’t prevent bad actors from acting badly; but it can give aid and comfort to those who want to do the right thing by saying it publicly, along with others.

To the Harvard spin, we want to make this very much not about Harvard, but about business and MBAs in general. As to spin in general, well that’s a sad indicator of how big a hole we’ve dug ourselves as MBAs and businesspeople.

CHG: What activities are you undertaking to move forward?

PE: We have oath signers from over 250 MBA school programs at this point, and have active participation (attend our conference calls and the like) from over 25 campuses. We'd like this active participation to grow to even more schools. We want to expand our Board membership to other schools.

We held a Fall Summit, with representatives from 9 business schools, and from the Aspen Institute and the United Nations Global Compact. 

CHG: What are your ambitions?

PE: We’d like to get 10,000 MBA signers by next year at this time. Since the top-55 US-based MBA programs (according to US News & World) generate roughly 12,000 graduates annually, it implies that we need to focus on US and non-US programs, and alumni as well.

CHG: How do you wish the MBA Oath will be used?

PE: As a touchstone, a guideline for discussion, and a tool for education.  It is a way for like-minded people to identify each other. We’re not out to codify rules or procedures for every situation. We want to productively guide discussions, and to enable signers to have guidelines in mind before they go into challenging situations. 

CHG: Trust seems clearly implied in some of the Oath; is that how you see it?

PE: One thing we’re aware of is that transaction costs in the economy are increasing massively. Trust is the scale answer to cutting down on transaction costs. If you didn’t have trust, business wouldn’t happen at all. And if we had more trust, it’d work a lot better.

CHG: You’ve got the bully pulpit; anything more you want to say?

PE: Just read what we’re about; agree or not, please have a point of view. Our website is www.mbaoath.org

CHG: Peter, thanks very much for your time, and best wishes to you and MBAOath.

The other day I got a call from the local Ford dealership—I had bought my car from them several years ago. They wanted to know if I’d be willing to refer several of my friends to them.

“Refer my friends!” I said. “You’ve got to be kidding! Your dealership behaved very badly towards me twice in the last six months—unethically, even—and despite my complaining about it, I have yet to hear anyone there apologize, or even take responsibility for it.

“In fact, I’ve already told a number of my friends to never do business with you. And you call me and ask me to refer business? Do you know what ‘fat chance’ means?”

Ouch, Mr. Ford Dealer.

In the “olden” days, it was lore that a good customer service story might be retold a dozen times, while a bad customer service story would be told a hundred times or more.

Nowadays: make that a hundred thousand times—or more. And within days. The now-classic example: the United Airlines broken guitar video , which garnered 3 million views in seven days. (It’s a pretty catchy song, if you haven’t heard it).

Reputation Marketing 2.0

Industry after industry has historically made an implicit assumption in their marketing: that the supply of new customers is endless, and endlessly renewable. Don Peppers and Martha Rogers took a head-on shot at this fallacy in their under-appreciated 2005 book "Return on Customer," stating that customers are, in fact, the scarcest resource.

In other words, the very common slash and burn marketing tactics that most companies use to churn through leads—massive emailing, lead culling, indifferent customer service reps—are now poisoning the well.

They were right in 2005, and they’re about 100 times more right in 2009.

How many of the 3,000,000 YouTube views made in one week were of people who were potential customers of United? Existing customers of United? Employees of United? It’s a hard number to calculate, but let’s agree on three things:

• it’s big
• it’s bigger than it used to be
• it’s very not good for United.

Is Your Marketing Poisoning Your Well?

Back to Joan and her local Ford dealer. Can you imagine the impact on that dealerships’ local market if Joan had access to local media? Well guess what, she does. And since all media is local in this age of Craigslist and YouTube, Ford itself could and should be concerned about such things.

The biggest impact of all this bad-news-traveling-faster world is that Darwinian selection can act a lot faster. Businesses using anti-customer tactics are subject to being outed on a massive, nearly real-time basis. Customers can make up their own minds, and increasingly trust surveys show that we trust others like us more than we do nearly all other institutions.

Which means users of classic anti-consumer bad marketing tactics are now more likely to have the gun pointed right back at them.

I’m going to give the Ford dealership a break and not name them by name. But rest assured I’ll send them a link to this blog. They dodged a bullet this time; but bullet-dodging is not a good strategy going forward.

My mechanic taught me something the other day about being a Trusted Advisor. He screwed up in a big way. And I ended up trusting him more as a result.

An Old Car and an Intimate Relationship with AAA

I love old cars and I drive a 19-year-old Mazda Miata as my primary vehicle to prove it. This necessitates an intimate relationship with AAA, as well as Gray's Auto in Arlington, VA, where I've taken my cars for years with good results. A few weeks ago my car overheated on the way to an appointment. AAA came to the rescue, depositing me at Gray's where Kevin and crew graciously inserted their unexpected visitor near the top of the list of waiting customers. it took days (and a lot of money) to diagnose and fix the problem. When I arrived at the scheduled time to pick up the car, it wasn't ready--still being test-driven. It didn't pass the test. I sat in the grimy waiting room for nearly three hours until it was (ostensibly) ready to go. Then half a mile into my drive home it overheated again--dead as a doornail in the right-hand lane of a busy DC thoroughfare. It was Saturday; growing dark; raining. I wasn't the happiest of campers.

I called Kevin. He was embarrassed and frustrated, and tried valiantly to find a wrecker (on their dime) to retrieve me faster than AAA could. No luck. "We'll stay open for you," he assured me.

Ninety minutes later my haul and I were back at Gray's, where Kevin and crew waited to take care of me. They handled the situation beautifully. They were responsible and apologetic, not defensive and guilt-ridden. They didn't explain or justify or blame; they simply said, "We'll take care of it." Then Kevin's boss insisted on driving me home, stopping along the way for take-out (on his dime) so I wouldn't have to worry about dinner. And in the end, there was no additional charge for the final repair, even though they'd spent considerable money on parts and labor replacing another failed temperature sensor. We joked when I picked up the car the second time about a mutual desire not to see each other again for at least a couple of months.

Trust Doesn't Just Trump Screw-ups: Screw-ups Can Create Trust

So why do I trust Kevin--and Gray's Auto--more as a result of this experience? Because I've seen their true colors. I know what they stand for. And I am confident that, given another challenging situation, they will rise to the occasion. Could they have fixed the problem the first time? Maybe; I don't really know and I don't actually care. What I'm left with is an experience of being looked after by people who chose to do right by me, which far outweighs the costs (tangible and intangible) of a one-time goof.

Mistakes are an opportunity for us to show the world what we're made of--to make known how we handle ourselves and who we choose to be in a moment of truth. Don't be afraid to screw-up. When you do (and you will because we all do), don't cover it up with excuses or defensiveness or blame or avoidance tactics. Show your clients who you are for them. Do the right thing and they'll learn they can count on you for far more than parts and labor.

On day one, I gave a corporate seminar for about 40 people. On the following day, I was an attendee in a 200-person conference. (It feels great to occasionally be in the stadium seats, instead of down there with the lions).

In the first case, there was a very mild form of the seminar-business occupational hazard known as multi-tasking: desktops open, blackberries, Twitter, Facebook, email. It’s been getting worse for several years. I made my usual clever plea for paying attention, and got reasonably good compliance; though it did deteriorate during the day.

I find that doing workshops lately is a little tougher in some respects; it’s harder to get the audience to interact. They’re not leaving, they’re just slightly checked-out. It’s not just ADD—it’s ADOSO, as in “Attention Deficit—Oh! Shiny Object!” (Thanks @scobleizer)

In an attempt to control that behavior, I’m acutely aware that I’m stumbling these days in the no-man’s land between requesting, ordering, and pleading. When I’m doing keynotes, it’s fine; it’s the workshop scene that feels different.

On day two, I came in deliciously a minute late and sat down where I felt like—not my gig, time to relax and enjoy. It was a social media conference; they had a very large screen for slides, and next to it, a smaller one displaying ongoing real-time twitter notes (check it out at #bdi). Each presenter had about 20-25 minutes, including Q&A.

Pretty much everyone in the audience had their heads down looking at their newest super-lightweight portables, iPhones and Droids. When they looked up, it was often as not to look at the public tweet-screen. (Yes,I tweezed out a few tweets myself).

At first I cringed instinctively out of sympathy for the speakers. Until I noticed that they did not seem noticeably bothered by it at all. In fact, lots of speakers today are using Twitter as part of the real-time interaction. The line for open mics for Q&A was not empty, the questions were great, and the real-time twitter dialogue was on point.

The conference subject matter itself—like a Greek chorus—gave the meta-text of what I was seeing. Social CRM goes beyond seller-to-buyer dialogue to include buyer-to-buyer. The old line about one satisfied customer tells four but one dissatisfied customer tells 12—that’s history. They now tell 500,000, and do so instantly. The web is your new website. Inbound not outbound marketing.

In other words—the heads-down twittering was definitely multi-tasking, but that doesn’t mean there was no dialogue going on. In fact, there was a ton of dialogue.

More content per minute flowed through that room than if everyone had hung on every word a speaker said. One speaker is limited by the human ability to enunciate sounds rapidly, and—it’s only one speaker. We can all read much faster than someone can talk. Asynchronous one-off communication is bound to be less rich than everyone talking at once; it’s just that it’s harder to focus in the latter case.

There are 2 things you can say about all this. First, it’s not wrong, just different. There are deep intensive interactions with other human beings, and there are shallow, broad interactions with other human beings. We’re seeing a shift from the former to the latter--in terms of gross numbers at least.

There's no right or wrong about this. What is important is the ability to go in either direction as the situation demands. And, there is a huge benefit. The involvement of others is exactly how you get collaboration. We are, at a large level, sacrificing some intimacy for the sake of collaboration.

It’s also true that, in a world where intimacy holds a smaller “share of relationship,” the ability to gain that intimacy will command a premium. It’s not gone, just more rare, and more valuable for its rarity.

The second point is simply, this is the future. Disapproval of the downside of social-babble has very little impact on whether it’s going to keep on happening. Our failure to approve of the downside simply keeps us from gaining the benefits of the inevitable upside.

Presenters, get used to it. The only relevant question is: how will you respond?

For starters, don’t stand there in front of the tsunami. But don’t just get out of the way, either. Grab your surfboard.

This is from a letter she sent yesterday to family and friends:

Yup. I am on the train, heading west. Not Kansas City, but Winona, MN via Amtrak. From there, a limo ride will take me to Rochester, Minnesota & the famed Mayo Clinic.

Today has been full of ‘deja vu’ experiences; it was almost exactly 15 years ago (October, 1994) that Husband 1 & I drove from [hometown] to Mayo Clinic, still reeling from the news of a dreadful diagnosis. I was suffering from a sinus infection in addition to a deep sense of despair. The multiple myeloma had invaded 90% of my bone marrow and I was severely anemic. Oooooh, what a difficult time it was -- so many of you remember, especially daughter 1 and daughter 2.

Fast forward to today! Husband 1 is accompanying me again, since Husband 2 has very limited time off from his job. I am feeling good, my body having had 2 months without the effects of chemotherapy.

Life at home has finally settled into a wonderful rhythm. I breezed through thirteen days of radiation treatments focused on a lime-sized growth on my ribs. These lasted less than 5 minutes & the only side effect was perhaps some fatigue. Most days, I car-pooled with the husband of a dear friend who was also receiving radiation. So the process was quite enjoyable (and was moderately effective, though there is still a growth, the size of a fried egg -- sunny side up).

The issue of what to do next was still unresolved. My decision to turn down the clinical trial at State U. was a clear one. However, it brought recognition that I was facing the beginning of the end (Aren’t we all? Every day?)

This decision – to focus on quality rather than quantity, was filled with both sadness & a sense of freedom. Along with making sure that all my affairs were in order (they aren’t – yet), I relished spending time in our woods, either sitting under a favorite tree & listening to the birds heading south, or cutting, hauling, splitting, & stacking wood for our fireplace/stove. We are planning a trip to California over Thanksgiving. I am holding onto the possibility of traveling to both Europe to visit Daughter 2, and a trip to Hawaii with Daughter 1. Have you seen the movie “The Bucket List”? There I was.

Then came a series of events, both big & small, that absolutely FILLED me with energy, enthusiasm, hope, and a sense of direction. To make this story short, I ran across a clinical trial going on at Mayo Clinic that looks very hopeful, requires minimal change in my daily routine, and I believe (fingers crossed) will accept me. This all occurred in about one week, everything falling into place.

Over the past FIFTEEN years, I have come to points such as this, where the end appeared near. And each time, something has shifted. I am here; filled to overflowing with gratitude, surrounded by love, a bit worse for the wear, but thoroughly enjoying the ride.

And better off for living on the edge of life.

You could make a case that the ‘most likely to succeed’ is collaboration.

Why Collaboration Seems An Obvious Winner

For one thing, the economic benefits of collaboration seem somewhat obvious. Philip Evans of BCG has written about the massive cost advantage accruing to Toyota vs. the US auto producers due to their ability to collaborate with their suppliers. Steven M.R. Covey Jr. has written about the stark cost and speed savings available to those who seek it. I’ve written about it at some length too and in fact collaboration is one of the Four Trust Principles in my own work.

Furthermore, it’s not hard to understand what collaboration looks like. It means cooperating, not fighting. Our mothers taught us that regarding our siblings, and our teachers taught us about playing nicely together in the playground. There’s a sense that ‘we know how to do this.’

So—Why Don’t We Collaborate?

We know why to do it. We know how to do it (or at least we think we do). So why don’t we do it? I learned an axiom about ten years ago from Phil McGee: if you see negativity happening, the odds are good that you’ll find fear at the heart of it. Personal fear.

At this level, I can’t presume to speak for others, so I’ll have to just put out there why I fail to collaborate. And I do fail—constantly. The more calm I get, the more I am capable of noticing just how anti-instinctive it is for me to collaborate.

Let’s say someone calls me to say, “Hi, I see you wrote something about collaboration; maybe we could collaborate on writing more about that, get to know each other, maybe work together in some way?”

My first instant reaction—if I’m honest—is negative. This person is trying to steal my thunder, trying to get something from me. I careen back and forth between dismissing the person and fearing they’ll overpower me. Are they worthy of my time? Worse yet—am I worthy of theirs?

I know the benefits: I’ll learn and grow, and have more chances for good things to happen by behaving collaboratively than not.

And I know how to do it: just say, “Hey that could be really interesting, let’s talk,” and then do so, from a place of curiosity.

I’ve gotten much better at it. I almost always notice those instincts now, right away. Not that long ago, I just lived in them.

Sometimes I get over it and say/do the right thing within 30-60 seconds. Other times it may take up to a day of thinking on it before I end up doing the right thing.

Yet there are still those times I have managed to put things off indefinitely. Or others where the opportunity is now long-gone, and exists only on my should’ve guilt list.

The Logic of Avoiding Collaboration

I don’t really think it’s just me. In the face of astonishingly obvious economic benefits, and a fairly obvious set of “how-to’s,” I think the main reason we don’t collaborate is simple. Simple fear.

There are two simple approaches to lowering fear. One is to mitigate risk. The other is to stop being so fearful. The first one is getting most of the press; we need more of the second.

While in reality it was the U.S. government who took Marie captive, it has pinned the blame on a fictitious powerful Chinese drug lord...

It’s a common enough phrase that we don’t think about it much. But on reflection, it has two implications:

1. the verb “pin”—to narrow down, narrow in on, focus, sharpen, highlight, single out, point to
2. the object “blame”—guilt, condemnation, disapproval, (negative) responsibility, culpability, fault, shame

Basically: to bring down on another a concentrated dose of social pressure as being the primary cause of something really bad.

Pinning the Credit

So I’m in the car the other day (pulled over—don’t tweet and drive), in the midst of a twit-up with Rebecca Woodhead (@rebeccawoodhead). She had quoted Chris Brogan to a client, which had the effect of convincing the client to do what Brogan had suggested.

Which happened to be what Rebecca herself had been telling the client--apparently for some time—to no avail.

Full of good British humor about it, she jested, “I guess I should have thought to pin the credit on Brogan earlier.”

Pin the credit. I love it. Puts it right up there with “fancy a cheeky pint?” in my list of favorite Britticisms.

And higher still in my list of wisdom-bites. Pin the credit:

Basically: to divert to another a concentrated dose of social approval for being the primary cause of something really good.

Pinning the Credit, Reciprocity, and Collaboration

A willingness to pin the credit on another is a deceptively simple way to achieve several goals. First—as Rebecca’s example perfectly shows—it can often get things done faster, breaking a logjam by bringing in a third party or an appeal to authority.

Second, it signals a willingness to subordinate your own ego—something as valuable as it is rare in consultative and sales and support people. The client picks up that signal very clearly.

Third, it signals something to the credited party too. It says you recognize and value them, and that you’re willing to do them a favor. And favors invite reciprocal favors.

Fourth, that whole favor-giving thing requires a time perspective longer than the transaction at hand. By showing you’re willing to play that game, you suggest a plethora of ways to work together going forward. You can collaborate.

Pinning the credit shows you are polite, you can defer gratification, you are not in the game for your own ego, you can be trusted to collaborate because you’re in it for the long haul.

A powerful three words, I’d say.

I had not heard Craig speak before. Readers of this blog will find themselves nodding at many of his comments, and I for one found his thinking on several issues to be insightful and provocative.

Since I am not a professional reporter and did not record his talk nor take detailed notes, let me state that these are my impressions: while I’m trying to make my comments correspond to the reality of what he said, any disconnects are entirely my fault.

Unlike many speakers in the HBSCNY series, Craig allowed his comments to be on the record; he also gave out his email, Facebook and Twitter addresses freely. Not really surprising for someone who describes his primary job as being customer service. As he put it, “I haven’t done customer service for—oh, about an hour now.”

In the same vein, he suggests, “customer service, if done in good faith, is a form of public service.” That takes “doing well by doing good” to a whole ‘nother level. (I see some parallels with Buddhist Capitalism).

Craig Newmark on Leading and Managing: Competition, Metrics, Timeframe

Craig stated in definitive terms a couple of themes that readers of this blog will resonate with—the need for long-term thinking, and the focus more on commerce, and less on competition.

Someone asked about what he focused on: “I’m focused on the next 20 years, with an eye to the next 200. And I’m not kidding.” He isn’t, either. He’s very conscious of changing society, e.g. his recent involvement in veterans' affairs.

In response to the question, “Who among your competitors most causes you to lose sleep?” Craig answered, “I don’t really lose sleep over competition at all. My focus is much more on customer-related issues—spam and scam, service.” My translation: Take care of your customers, and your competition issues will take care of themselves. (It also brings to mind an old Jerry Garcia quote: “The Grateful Dead don’t strive to be the best at what we do, but the only ones who do what we do.”)

On analytics: “We get lots of anecdotal feedback, and rely on intuitive skills. Whenever I’m in New York, I love popping in on realtors. We’re not so big on formal analytics.” I can’t read Craig’s mind, but I suspect he’s also got a healthy suspicion about the dangers of OD’ing on analytics.

Craig Newmark on Trust

Craig uses the designation “curators” to describe the job of editors; that was new to me, and I like it. “The news curators have a particularly big role to play in restoring trust in the media.”

Craigslist puts a lot of effort into combating fraud. One person asked whether it was a losing battle, with fraud increasing. Here’s what Craig said: “You can’t make the world 100% safe, trust doesn’t come without risk. But in my experience [and he has a lot, I might add--CHG] the vast majority of people are trustworthy; maybe 1% of people have bad intentions. Just use commonsense.”

Asked about ways to improve trust going forward, Craig talked about establishing different levels on the scale between anonymity and certifiable identity. For a small transaction, maybe we don’t need to know much. For larger transactions, we need to have higher levels of verified identity.

Fair enough, but I actually found his answer to an earlier question to be even more relevant. “I'm not interested in politics, my focus is governance,” he said. “And we’ve got some great examples of governance right here in the US; they’re called the Constitution and the Bill of Rights. If you focus on asking how to work with those forms of governance, you can frame political issues in a far more productive way.” I'm guessing that Craig sees that focusing on issues of governance at the corporate level is similarly a way to resolve issues of competition, politics and social relevance, not to mention customer service.

My words now, not his: I think what he’s doing is running an organization which is at once purely capitalist and at the same time, always striving for integration into a broader context of social responsibility. Remember: “the dedication to true customer service through a for-profit enterprise is a form of public service.”

Capitalism and social responsibility are not incompatible: Craig Newmark is one of those rare leaders who sees that, done right, they are in fact inextricably linked, and for the benefit of both.

While in reality it was the U.S. government who took Marie captive, it has pinned the blame on a fictitious powerful Chinese drug lord...

It’s a common enough phrase that we don’t think about it much. But on reflection, it has two implications:

1. the verb “pin”—to narrow down, narrow in on, focus, sharpen, highlight, single out, point to
2. the object “blame”—guilt, condemnation, disapproval, (negative) responsibility, culpability, fault, shame

Basically: to bring down on another a concentrated dose of social pressure as being the primary cause of something really bad.

Pinning the Credit.

So I’m in the car the other day (pulled over—don’t tweet and drive), in the midst of a twit-up with Rebecca Woodhead (@rebeccawoodhead). She had quoted Chris Brogan to a client, which had the effect of convincing the client to do what Brogan had suggested.

Which happened to be what Rebecca herself had been telling the client--apparently for some time—to no avail.

Full of good British humor about it, she jested, “I guess I should have thought to pin the credit on Brogan earlier.”

Pin the credit. I love it. Puts it right up there with “fancy a cheeky pint?” in my list of favorite Britticisms.

Basically: to divert to another a concentrated dose of social approval for being the primary cause of something really good.

Pinning the Credit, Reciprocity, and Collaboration

A willingness to pin the credit on another is a deceptively simple way to achieve several goals. First—as Rebecca’s example perfectly shows—it can often get things done faster, breaking a logjam by bringing in a third party or an appeal to authority.

Second, it signals a willingness to subordinate your own ego—something as valuable as it is rare in consultative and sales and support people. The client picks up that signal very clearly.

Third, it signals something to the credited party too. It says you recognize and value them, and that you’re willing to do them a favor. And favors invite reciprocal favors.

Fourth, that whole favor-giving thing requires a time perspective longer than the transaction at hand. By showing you’re willing to play that game, you suggest a plethora of ways to work together going forward. You can collaborate.

Pinning the credit shows you are polite, you can defer gratification, you are not in the game for your own ego, you can be trusted to collaborate because you’re in it for the long haul.

A powerful three words, I’d say.

A dear family friend mentioned to me the other day that her commute was really difficult. Three days a week she travels from Brooklyn to Princeton NJ and back.

“The trip out in the morning is fine,” she says. “I get express transport and I’m psyched up to work. It’s the trip back that’s hard.”

“The trains are not express, and I’m tired. It’s a low point in the day, it’s dark, and while I can always get a seat, I end up just sitting there, unhappy. It’s just a depressing time.”

Blecchh. I get it. But I also remember some wisdom that people have tried to teach me over the years (with some success). It boils down to this:

Reframe that sucker. Don’t think “how can I make a bad situation slightly more bearable?” Instead, think “How can I make my evening commute the absolute center of my day, a source of relaxation, rejuvenation and delight?” (Thanks David Teiger).

Dare to be great. Don’t think “there are all these impediments, I can’t surmount them, people don’t care about me, this takes too much time.” Instead, think “this isn’t a problem, this is an opportunity, and I have every resource at my command until and unless someone says definitively that I don’t.” (Thanks to Bill Gregor, who never thought he’d be in the same blogpost with David Teiger).

Please help my friend Reframe that Sucker and Dare to be Great. Here’s what I’ve got so far. Can you make it five times better, and greater, and more exciting for her?

·         Introduce yourself to the conductor(s). Say “I’ll be a regular here, my name’s Susy, how are you doing?” Find out if they like a candy, or a flower, and bring them one once a week. Always sit in the same seat.

·         Buy a $150 set of great headphones. If you can’t afford them, hit up a relative for the holidays. Use that Netflix account to order all the documentaries by Werner Herzog and watch them in your computer or DVD player. If not Herzog, then all Woody Allen movies. Or—who’d you just love to watch?

·         Take those same headphones and download atmospheric music. Read. Or sleep.

·         Learn Mandarin.

·         Forget the headphones: do seat-based isometrics.

·         Make a friend a day. Single out someone in the car who looks as bored as you were, and go make them happy. How? Ask them!

·         Write a blog about commuting, and how to turn it positive.

On a near daily basis we read about data breaches that expose sensitive information and negatively impact the finances and privacy of companies and individuals alike. Clearly the efforts (as a whole) of those of us in the Information Security Community are lacking and incomplete.

Increasingly I find myself wondering “Have we failed to understand and integrate ‘trust’ into our methodologies for measuring how well an organization secures sensitive data? Or is ‘trust’ too soft and ambiguous a concept for a rigorous, technical, quantitative discipline such as Information Security?”

Leading “trust” thinkers like Green & Covey have successfully illustrated the significant value of trust in business relationships. Logically, their arguments should hold for a business relationship where one or both parties have an obligation to maintain the “security” of critical data on the other’s behalf and need “assurance” of the same.

So what is the relationship between “trust” and “security” and “assurance”? Does true assurance exist where there is no trust (even if the data is secure)? Conversely, can one (mistakenly) trust and perceive a high level of assurance where data is not truly secure? (Sadly, the answer to this rhetorical question is self evident.)

I would argue that our level of trust “magnifies” (negatively or positively) our perception of security, and therefore, the amount of (true or false) assurance that we receive. Therefore, it is critical that we base our level of trust on appropriate measures so that the assurance is indeed directly proportional to the actual level of data security.

• In those responsible for governing and maintaining the security of your data (personal and organizational trust),
• In the regulations and the “Watch Group” responsible for defining and promulgating “reasonable & appropriate” data security regulations/standards (market trust).
• In the third party that performs the necessary due diligence to attest to the company’s compliance with said standard (organizational and market trust),

Currently most organizations use some measure of trust in picking business partners by seeking independent attestation of the security level (assurance). Fundamentally, this is a great approach; however, there are three issues which often denigrate the level of assurance we receive;

• The assurance is largely defined (and constrained) by the standard to which the potential partner is aligned (we may not trust the industry watch group because its intentions are not aligned with ours and their track record is concerning); and,
• The assurance is delivered by a third party who is not sufficiently independent from the organization being assessed and/or the watch group defining the standard.
• There is insufficient standardization of the scope and rigor of the testing that should be performed as a basis for attestation (e.g., there is no standard definition of a "network penetration test").

Unfortunately by focusing “outside” we are missing a vital measure, perhaps the most critical element of trust, the trustworthiness of the individual, team, and senior management with whom we are entrusting our data. One could argue that a high (and warranted) trust in the organization can fully compensate for the three flaws cited above.

So what is the best mechanism to” measure” the trustworthiness of those responsible for securing your data? Can it be done via a tool like the “Trust Quotient”? Can we more directly measure the individuals (or organization’s) intent, capabilities, and results in a repeatable and/or semi-quantifiable manner?

Assuming so, how then do we leverage these measurements in a formal manner so that the assurance we receive is directly proportional to the actual security of our data and the likelihood that the risks associated with a third party processing our data have been mitigated to an acceptable level?

So often the process of discovery starts by yielding more questions than answers…

According to a New York Times article, your average dog “is about as intellectually advanced as a 2- to 2-and-a-half-year-old-child.”  The article goes on to say:

Dr. Coren has come up with an intelligence ranking of 100 breeds, with border collies at No. 1. He says the most intelligent breeds (poodles, retrievers, Labradors and shepherds) can learn as many as 250 words, signs and signals, while the others can learn 165.

But Clive D. L. Wynne, an associate professor of psychology at the University of Florida who specializes in canine cognition…takes issue with efforts to compare human and canine brains.

He argues that it is dogs’ deep sensitivity to the humans around them, their obedience under rigorous training, and their desire to please that can explain most of these capabilities. They may be deft at reading human cues — and teachable — but that doesn’t mean they are thinking like people, he says. A dog’s entire world revolves around its primary owner, and it will respond to that person to get what it wants, usually food, treats or affection.

“I take the view that dogs have their own unique way of thinking,” Dr. Wynne said. “It’s a happy accident that doggie thinking and human thinking overlap enough that we can have these relationships with dogs, but we shouldn’t kid ourselves that dogs are viewing the world the way we do.”

What is Intelligence, Anyway?

Apparently the conclusion we are meant to draw is that dogs look pretty smart, but it’s really just behavioral training—good old stimulus and response stuff, hooking them in by bribes to get their food, treats and affection. (If I read it wrong, please correct me).

Most of us dog-owners, I suspect, find this treatment unpersuasive. But don’t believe us. Consider the far more striking information from earlier in the same article. Consider Jet:

Jet is both a seizure alert dog and a psychiatric service dog whose owner has epilepsy, severe anxiety, depression, various phobias and hypoglycemia. Jet has been trained to anticipate seizures, panic attacks and plunging blood sugar and will alert his owner to these things by staring intently at her until she does something about the problem. He will drop a toy in her lap to snap her out of a dissociative state. If she has a seizure, he will position himself so that his body is under her head to cushion a fall.

Jet is not unique. Other dogs are trained to deal with suicidal tendencies, turning on lights for trauma victims, reminding owners to take medication, and so forth.

The Fallacy of Reducing Motives to Behavioral Indicators

I don’t know about you, but I don’t find it useful to describe Jet’s behavior solely in terms of fulfilling a desire for affection, much less food. It’s precisely the same discomfort I get when I hear economists describe unselfish behavior among humans.

In an attempt to preserve an elegant theoretical model about how self-serving behaviors lie at the heart of all human action, I have heard economists ascribe unselfish behavior to longer term self-aggrandizement, or to advancing the species’ interests by occasionally sacrificing the good of an individual.

But sometimes devotion to others, unselfishness, an inclination to collaborate, is best described as simply what it appears to be.

As ee cummings put it, sometimes a cigar is just a cigar.

I trust my dog with my life—but not with my ham sandwich. Which suggests it’s highly doubtful that my dog would save my life in order to get a deferred-gratification ham sandwich. Something else is going on.

So is Jet smart? If you measure by human vocabulary, as smart as a 2 year old. Personally I’m not blown away by two-year olds’ intelligence, except in comparison to 1-year olds. That’s not what I mean when I say wow, my dog is really smart.

What I mean when I call a dog smart is that empathy thing, the ability to not hold a grudge, to reach out and touch someone.

To elevate the word “smart” (as in vocabulary breadth) to a higher level than “smart” (as in save a life and mend a heart) is to waste a good word.

Jordan Furlong, of Law21, is this month's host of the Carnival of Trust.  He brings a most interesting perspective to it.

Most obviously, Jordan's a lawyer.  Second, he has that bemused  Canadian perspective about things south of the border.  Finally, two of his interests shine through: innovation and collaboration.

These traits show in his choices, and in his thoughtful commentary linking his choices. 

Jordan has written about trust before.  Perhaps that's why he moves easily among the various blogposts he has chosen to highlight in this month's carnival.

Pop on over to the Carnival at Jordan's site, and here's a taste of what you'll get:

- How recent thinking on the economics of law firms has affected client trust levels;

- The effect on trust of both in-court tactics and extra-court marketing;

- The ties linking referrals, trust, innovation and collaboration;

- The relationship between trust and risk;

- How contracts and trust are in some ways opposed.

Add to that a delightful vignette, and a dozen extra-credit mentions.

Good stuff, food for the heart and the brain alike.  Jordan has done fine work here for all thougthful people interested in the subject.

Many thanks, Jordan, for a most excellent Carnival. I invite all readers to go benefit from his hosting.

You can also look at past Carnivals, and enter your own blogposts or those of others for future carnivals by going to the Carnival of Trust homepage.

Remember this question when we were kids: If a tree falls in the forest and there is no one around to hear it, does it make a sound? 

I remember the days when simply reaching a certain age, one was seen as old. I think Web 2.0 changed that.  My theory is that in the world of social media, people aren’t judged by simply by chronological age, but rather by adaptability to and use of, technology. It may be true that the older one gets the less likely a person is to use new tools. But age does not prohibit one from jumping in. Chris and Julien capture this concept in Trust Agents, by describing a person who is seen as connected as “One of Us."  Age doesn’t seem to a factor by itself anymore. If my theory is right, then by using Web 2.0 channels of communication we can connect and be connected, without regard to age. And that opens new doors in business for everyone.

THE VIRTUAL ROOM IS REAL

It’s more than just about adapting to technology.  It’s also about being part of a community – one that creates trust.  I’ve watched my son play a virtual game on line and build relationships with a community of avatars representing people.  Trust is created based on how long people are there, and how people talk with, trade with and treat each other, even when they never can meet in the real world.   

 That’s not to say real world connecting isn’t important. I teach a workshop called How to Work a Room and Still Feel Good About Yourself™  This workshop is about the typical ways to network in person – conferences, luncheons and charity dinners, even in line waiting to board a plane, and addresses how to build relationships – NOT sell – in that environment.  It is still relevant to network this way in business. 

Many will now have to operate in both the real and Web 2.0 worlds. Of course we still exist if we’re not blogging and tweeting. While the Web 2.0 world doesn’t discriminate based on age or any factor other than whether we enter the room and appropriately create relationships, only we can decide if we need to be there. But if we’re not in the room – whether virtual or physical, we’ll never even know what we’re missing. This is a benefit of social media, and why we can’t ignore it, whether we’re 20 or 65.

Today's Part II of the video is all Q&A: questions from the audience, and answers from David Maister, Julien Smith, Chris Brogan, and yours truly.

There is 75 minutes of video here, so to help you navigate, here is a rough map of the questions asked and the time marker at which they are asked, plus a sample quote:

   1:11    -How do you put a number on the value of engagement and trust?  (David: if measurement drove trust, we could lose weight by standing on the bathroom scale)

11:00    -What role does the fear of failure play in shutting down trust? (Charlie: in trust, risk mitigation doesn't just cut risk--it increases trust)

16:30    -What was the best response you've seen to a screwup?  (Chris: Coke hit a home run; Branson hits lots of singles, so they can risk losing a few)

21:00    -Doesn't price beat trust at some level? (Julien: intimacy is a great differentiator)

27:00    -Isn't customer intimacy just one strategy, and you can only pick one?  (Charlie: these days you can't pick only one; trust is actually the way you get to scale for low-cost strategies, not just intimacy.  Chris Brogan: Vanilla Ice said: stop, collaborate, and listen.  David: if people trust you, you don't have to do all that icky marketing stuff).

35:00    -What kind of metrics work with non-profits? (David: if companies were serious about metrics, they'd post their customer satisfaction ratings) 

41:00    -How do I transfer powerful online trust to an MBA-managed traditional business?  (Chris: Let revenue do the talking.   Julien: I'd urge a healthy level of scepticism about the social media Kool Aid. It's an experiment; try it.) 

53:00    -How does a leader teach matters of virtue, in a corporation?  (Charlie: the doctrine of competition is essentially anti-ethical. If all you do is compete with others, you have no one left to be ethical toward. "Buddhist capitalism" works better.)

56:00    -How do you balance privacy versus transparency?  (Chris: there are times for both).

58:00    -Can this kind of cool event actually happen outside of Twitter?  (Julien: the horizon effect, everyone gets closer to everyone else--it's inevitable).

62:00    -What's the generational impact of all this?  (David: We've talked about clients, but trust between generations is a very big issue within organizations, and we're doing pathetically)

65:00    -Is there a danger of giving priority to squeaky wheel twitterers?  (Chris: In some ways, that's odd.  We don't really want to wait in line like sheep; twitter empowers).

69:00    -How can I use social media to create authenticity?  (Discussion: it varies with target audiences--reaching 5 people through social media is tough)

72:30    -Why do companies pay 4x to get new customers what they'd save in retention?  (Charlie: Stupidity in this area does abound).

73:30    -Charlie describes how Chris and Julien role-modeled all this behavior in setting up this event.

Enjoy.

You can see the video here.

Put on by myself, David Maister, Chris Brogan and Julien Smith, and moderated expertly by Robin Carey (CEO of SocialMediaToday), it was a breakfast, panel discussion and Q&A session with 300 of our closest friends.

OK, maybe "Trust Summit" is a little grandiose, but I think the 300 didn't mind much. And after all, Chris and Julien did write the very hot Trust Agents. And David and I (and Rob Galford) did write The Trusted Advisor, which has proven to have legs.

And we all, very much, talked about the same thing. Trust is vital in a new economy, just as it was and is an old economy. In fact, if anything, new social media are making trust even more central to successful business.

Robin asked at one point how many people there were on Twitter; about 99% raised their hands (excepting David, I think). More tellingly, when she asked how many signed up through the Twitter channel, the answer was remarkably similar.

Big thanks to Marvin Bzuro for making the video available to us. Thank him yourself, at marvin "at" b2bvid.com.

Today, we're posting Part I of the video: it consists of opening remarks by Robin Carey, and by we four panelists. It runs to about 25 minutes. Tomorrow we'll post the (lively!) Q&A session.

To see Part I of the video, click here.

The Twittersphere was hugely active before the session. And after. And during, for that matter. You can see the entire twit-fest on Twitter with a hashtag search: look for #trustsummit. And while you're there, check out @chrisbrogan, @julien, and @charleshgreen

If you don't want to do that, several twitterers did yeoman's work summarizing for the sake of the rest of us. At the risk of ticking off all the others, I'll single out @amandarykoff as the most re-tweeted summary. You can find it here. But honorable mentions also go to Fred Abramson, Andrew Marshall, PRBrew.com, and Articu-Blog.

And if that doesn't satiate your appetite, then go watch the video again. And come back tomorrow for the Q&A.

It provides for significant consumer-friendly reforms, due to take effect in February 2010.

These regulations are going to cost bank card issuers some significant chunks of change, as they’ll no longer be able to do things like apply your payments to the lowest-interest part of your debt, charge rates like 29.99% and hit you with large fees for slight transgressions. 

That is, when the law takes effect.

A Funny Thing Happened on the Way to the CARD Act Effective Date

Something happened between May and now--something that has caused many bank card issuers to raise their rates, accelerate their payment terms, and increase fees for those who can’t comply.

Now, why would that be happening?

The obvious deduction is that the banks just couldn’t resist getting in a last feast on their already burdened consumers by jacking up rates until they are forced to behave in a way society, through its duly elected government, has dictated they must.

Oh, what to do?  Bend to the will of the people?

Nah.  How about one last feeding at the trough, while it’s still legal.

That’s how Christopher Dodd, chairman of the Senate Banking Committee, sees it, and he’s not alone. Last week, the committee passed legislation to move up the CARD implementation to December 1.   And yesterday, he proposed freezing rates in the interim.

Sometimes, the obvious conclusion is the right conclusion. But that doesn’t stop some banks, and their industry spokespeople, from trying to argue the opposite.

Says Scott Talbott, SVP for Government Affairs at the Financial Services Roundtable:

…the bill was based on the faulty premise that credit card interest rates were going up because of legislation.
Instead, he said, interest rates were rising because of risks posed by the unsteady economy and by card holders themselves, who are defaulting on their payments or paying late more often.

In other words, we’re raising your rates because interest rates are going up in this recession, and because you greedy customers are abusing us poor folks at CitiBank and BankAmerica by withholding your money from us.

(Just to be clear: these actions are being taken by the banks who issue the cards, not by the MasterCard and Visa folks who create and brand them).

This is not a function of US culture only--it seems to be endemic in the business.  Over in the UK, where they’re presently considering US-like regulation, we get a similar argument from the banks:

One senior credit card executive pointed to the United States, where the supply of credit is already shrinking and its cost rising as a result of similar reforms, which are to come into force in February 2010.

In other words, if you restrict our profits, we’ll yell and pout and gouge you and generally behave badly; consider yourself warned, you're responsible for our bad behavior.   

Responsible Business Behavior? Or Merely Not Illegal?

Most people can intuitively understand the difference between ethical and legal, and between unethical and illegal. Most of us want to live in a society where laws are ultimately derived from a sense of ethics—not the other way around. Just because something is not illegal hardly implies it is ethical.

But it seems increasingly that business is becoming deaf and blind to this simple distinction. Consider the Congressional testimony by several health care executives this past summer.

When asked whether they would voluntarily forego rescission (cancelling policies in effect) except in cases of intentional fraud, the executives one after another said they would not. Why?

Because, they said, what they were doing wasn’t illegal.

You have to ask the question, are these people stupid? Or venal?

In favor of the argument for stupidity, one can point to a modern penchant to substitute process for judgment. How else to explain a school principal suspending a 6-year old child for eating with a cub scout knife’s spoon? Or mechanical SEC procedures that Madoff and his whistle-blower Markopolis both called stultifying? 

While I think stupidity is the more usual culprit, in this case I vote for venal.  How arrogant do you have to be to insist that raising rates is the fault of economically challenged customers?   To tell your PR people to stand down?  And to argue that not being a crook entitles you to a seat at the table of responsible businesspeople?

I was privileged to share a platform this Monday morning with an entirely different kind of leader. I wish the heads of credit card operations in some of our major banks would take a look at this CEO, Aaron Feuerstein, in a 60 Minutes video.  And to hear him on Monday describe in the simplest terms why good corporate citizenship must be rooted in a sense of personal values. 

Not being illegal is nowhere near close enough.

Dharmesh Shah

At the risk of over-simplification, it says stop trying to push out your message; instead, make it easy for others to find you. To find you: in order to buy from you, tweet you, link to you, find out about you, advertise for you, recommend you.

In their clever phrasing of it: stop doing outbound marketing, start doing inbound marketing.

So the story of how I bought their book is perfectly appropriate.

Last Friday morning, I shared a stage with Chris Brogan, Julien Smith and David Maister. Later that day, I got Chris’s daily blogpost, called Inbound Marketing Is For You.

Turns out it’s an unabashed advertisement for the book, leading off with all the reasons Chris is conflicted and hence the buyer is warned (unless, as he puts it, you want to learn some great stuff).

Well, what’s a body to do? I had just spoken with the guy, I believe he’s high integrity, and here he is pitching someone else’s book, with nothing in it for himself. I have to buy it.

So I click on the link, which goes to Amazon. I pick the Kindle edition (thanks Brian and Dharmesh) and select download to my iPod Kindle reader (which is so good I didn’t bother to buy the new Kindle, by the way).

Three minutes after reading Brogan’s blogpost, I’m reading Chapter 1 of Inbound Marketing, and I realize that I’m now living proof of precisely what they are writing about.

Did publisher Wiley advertise it? I don’t know; if they did, they wasted their money, at least on me (though Brogan did publicize them). But Wiley got a sale, the authors got their royalty payment, and Amazon got its ounce of flesh.

For me the customer, I got a book I was confident I wanted, I felt good about the purchase because I trusted the recommender, and I got it fast and easy. Really easy.

Second best of all, the book has already had an impact on me—I’m seriously thinking about how to use it in my business. The authors should be proud.

Best of all, Brogan, Shah and Halligan all get free shout-outs from me; and not only did they not pay me to do it, I paid them!

So, who got screwed here? Who got left holding the bag? No one that I can see. 
 

The current issue of the MIT-Sloan Management Review trumpets the main feature: "Sustainability as Competitive Advantage."

You really don’t have to go any further. The clear implication is in the syntax: do this (little) thing, and you’ll get this (big) thing. Do this (responsibility) thing and you'll get this (profitability) thing.

Turn the hands over this way, you’ll correct your hook. Sell this way, you’ll make more money. Practice sustainability, you’ll beat your competitors.  Use these means, and you'll get those ends.

This means-end confusion isn't just in the headline. One article makes it crystal clear in the opening three sentences:

Many companies are taking the first incremental steps toward sustainability, such as energy conservation and recycling. That’s a good start — but going further can yield significant competitive advantage. The growing movement toward sustainability in business offers companies a powerful lever for creating competitive advantage.

Get the picture?  The ultimate reason to do this 'good' stuff is because it's profitable at the individual company level.   Interesting: it suggests high profitability is the measure of social responsiblity.

MIT Sloan is hardly alone. I’ve taken flak lately for supposedly singling out Harvard. Neither school is unique.

Capitalism-as-competition always implies an end goal--typically shareholder value, or sustainable competitive advantage.  Led by a variety of influences ranging from Milton Friedman to Ayn Rand, the idea of capitalism-as-competition has been transmuted and transmitted by business gurus like Michael Porter, government gurus like Alan Greenspan, and business superstars like Jack Welch.

Note: it hasn’t worked too well. Business has gotten so co-opted by the competitive paradigm that we’ve lost all sense of even the possibility of another view. 

Yet there is another view, and a very obvious one at that. It’s right under our noses. Let’s call it Buddhist Capitalism.

Buddhist Capitalism

I don’t mean this too literally. I am no expert in Buddhist teachings, and not all Buddhist precepts track easily to business.

But one difference between capitalism-as-we’ve-come-to-know it and Buddhism is instructive. One is about vanquishing one’s foes; one is about getting along harmoniously in the world. And we all know which is which.

Business-as-competition is all about linearity: if you do this, you’ll get that. And the more you tighten those links, the more you control them.

Buddhism, on the other hand, embraces paradox. If you let go your attachment to X, you’re more likely to get it. But only if you give it up. The outcome cannot be sought successfully, it can only be received if you stop seeking it.

It isn't all that alien a concept.  The best salespeople know that success comes to those who give selflessly to their customers. From Dale Carnegie to Zig Ziglar, people have known that you succeed best by getting others what they want.

What I mean by Buddhist Capitalism comes down to doing two things: help others, and stop focusing on  your own immediate ends.

Capitalism-as-competition negates the oncept of ethics, since it subordinates even ‘ethical’ ideas like sustainability to the overarching goal of profits and competitive advantage.  A business school can't feasibly teach ethics when, down the hall, the strategy course teaches that your ultimate goal is to win battles against your supply chain, customers, unions and employees.  Who's left to behave ethically towards?

Is Buddhism Profitable? It's the Wrong Question to Ask

Business (some of it) is more and more focusing on things like ethics, social responsibility, and sustainability. And that is a good thing. But it’s doomed as long as we can’t get past the question: “Can I gain sustainable competitive advantage by doing it?”

Believing that the purpose of business is to make profits is like believing the purpose of living is to eat. The purpose of sustainability is sustainability—not the competitive advantage of those who practice it. As long as we limit our definitions of ‘good,’ ‘social benefit,’ and ‘business ethics’ to definitions couched in competitive advantage, we subordinate them.

We need to make profit a byproduct, not a goal. While it is true, very true, that ethical and customer-focused business focusing on the long-term really are more profitable, that is Not. The. Point.

The point is to make business a full partner in society, not a mad dog following an ‘invisible hand’ that responds only to heavily enforced legal mandates. If business wants a seat at the social family table, it needs to act like it’s a member of the family—not an outsider following its own rules.

In an increasingly interconnected world, it’s Buddhist Capitalism, not Competitive Capitalism, that we need more of.  The fact that it's also more profitable is a lovely byproduct.  But not a goal.
 

The woman next to me—healthy, casually but not inexpensively dressed, a bag full of intellectual reading material—I peg as a clear cereal-banana candidate. She does not disappoint.

When they bring her plate, it’s sugar-covered cereal—with two sample-sized boxes of raisins. No banana. Her disappointment is palpable, though not enough to make her rude.

“What happened to the banana?” she plaintively asked. The flight attendant shrugged her shoulders with that tilted-head fake smile, and said, “Sorry, that’s all they send, so that’s all we can give.”

I told her I felt her pain. “It’s not the banana per se,” she mused. “Though I do think they’re far better than raisins on cereal.  It's just that they promised—it said so right on the menu, that I’d get a banana. And I didn’t.  If they’d said raisins, I’d still have chosen the cereal. But they promised bananas. And then didn’t deliver.”

The Trust Equation

Trust doesn’t just happen. It is the result of one party trusting, and the other being trustworthy. You can get better at trusting, and you can get better at being trustworthy. The second is less risky, and generally easier (though in the end you need to do both to increase trust).

So let’s talk trustworthiness: and let’s talk The Trust Equation.

You can break down trustworthiness into four components: Credibility, Reliability, Intimacy, and Self-orientation. I’ve talked elsewhere about the components—how they work, which is the most powerful, frequent, etc.

For this post, let’s just stick with which is easiest.

The Easiest Ways to Improve Your Trust Quotient

Improving credibility can take a long time; gaining credentials, earning degrees, publishing, getting references, learning presentations and speaking.

Lowering your self-orientation is a life’s work—it’s hugely powerful to be able to focus on others in times of stress, but easy? Not that one.

Intimacy can actually be gained quickly: for example, learning to comment on another’s evident feelings at a moment in time. But most people find that feels risky. So, easy? Well, maybe not.

Arguably the easiest trust equation component to improve is reliability. Say what you’re going to do—and then do it. Just do it.

If you print that you’ll serve bananas—then have them to serve. If you might ever have to say yes we have no bananas, then never say it in the first place. Nobody, but nobody, wants to hear your excuses for no bananas. We just want the bananas. You promised.

Low reliability is a form of lying; lying made worse because it’s a lie of action, not just of words.

The great news is, it’s not all that hard to fix. It doesn’t take years to develop a track record. No shrinks required. And it doesn’t require all that much in the way of emotional risk.

Just say what you’ll do, and do what you say. How hard can that be, eh?

Note: You can take your own Trust Quotient, or TQ, by going to the TrustQuotient page.  And, starting Friday, having hit 10,000 takers of the test, we're adding a new feature.  The core trust quotient part of the assessment test will remain free, but we're introducing a new Trust Styles option: there are 6 distinct trust styles, each with differing characteristics, strengths and weaknesses.  We'll charge extra for that option.  Check back with us in a day or two to explore this exciting new option.
 

After all, you wouldn’t hire a financial planner without talking to their references, would you? You wouldn’t hire a new employee without finding out their work history, would you?  You wouldn't let your kid stay overnight with unknown neighbors, would you?  Don't we always equate trust with transparency, openness, getting to know more about others? 

Well, not necessarily. In fact, sometimes—no. Like all trust-related things: it depends. Trust is a bit like Justice Potter Stewart’s definition of obscenity: you may know it when you see it, but it sure is hard to define.

Anonymous Blogger Meets Anonymous Blogger

Take the case of two anonymous law bloggers meeting in Las Vegas—“Ed” of Blawg Review  and “Kael” of Legally UnBound (Not their real names--I mean, what'd you expect?)  Both are distinguished in their fields.

Read “Kael’s” account of their meeting,  and you discover some serious, powerful ways in which anonymity does not decrease trust—it actually increases it. Anonymity can free you to speak truths. Anonymity forces people to confront you as you ‘really’ are, not as your accumulated biography. (Remember, part of Bernie Madoff’s charm was his resume--decidedly public, entirely non-anonymous).

More interesting is the question it raises about just “who” it is that you’re trusting when you trust someone anonymous. Here’s “Kael”:

What do I mean by persona? You see, all I know of Ed is what Ed allows me to see. While I've seen 'him' (the opinions and thought of Blawg Review), I have not seen 'him' (the man that may have been married and raised children). But the only Ed that I want to see is the Ed that he allows me to see. The same is true, from my end.  Thus, our trust and our relationship is based upon the information that each allows the other to see.

Much too often, I believe that our collective, societal opinion of a 'trusting relationship' is FULL DISCLOSURE. I disagree. I think that our curiosities about others and our desires to place judgments upon others is the basis (in part) of the relationships in which we engage. Our trust is therefore contingent upon the amount of disclosure we make to the other entity, instead of simply taking whatever disclosure is given and either finding a basis for commonality, or not.

The terms 'keeping it real' and 'puttin' my heart out there' are all too commonly the basis for our understanding of what it means to 'trust'. We don't have to 'keep it real' to establish trust. We only have to identify the boundaries and the common goals, then allow for the personal disclosures to build the trust. Yes, personal disclosure is the key to trust, not TOTAL disclosure.

Principles Before Personalities

Ed and Kael (I’ll drop the quotes now, we know them well enough at this point) are not cranks. Some of the more successful organizations in the world are the 12-Step programs, originating in Alcoholics Anonymous.

The common view of “anonymous” is that meetings assure anonymity to those who don’t want outsiders to know of their condition. But the 12th Tradition (the organizational correlate of the 12 Steps for individuals) is “Anonymity is the spiritual foundation of all our traditions, ever reminding us to place principles before personality.”

In other words, the (main) purpose of anonymity is not to keep outsiders from knowing members’ names—it is to prevent members from forcing their particular biographies on others, both within and without the organization. You are trusted, in other words, if you remain anonymous, so that others can see that you speak only from your own inner truth, unclouded by your, and their, inevitable prejudices.  That way we minimize the judging that Kael speaks of.

Both Kael and AA speak the same truth: the ‘you’ that matters is not the ‘you’ of your lineage, your family name, your profession, your accent, or your resume. There is another authentic ‘you’ within, and—in a sense—that is the only ‘you’ that can be trusted.

Trust increases as you get to know people. Yes? Or no?

As with all things trust-related, and human-related--it depends.
 

Two weeks ago I wrote an article in Businessweek.com called Wall Street Run Amok: Harvard’s to blame.  In it, I suggested  that business schools including Harvard have over-taught competition, and under-taught collaboration—a concept more appropriate to our connected times.  CNBC saw the article and interviewed me, albeit over-playing the blame-Harvard angle.

Then, last week, Harvard Business School’s Deputy Dean of Academic Affairs Karl Kester logged in to the Businessweek.com article and posted a lengthy rebuttal comment both there and on his own site.  Rather than further this discussion in our separate forums, I'd like to invite Dean Kester to continue the dialogue here, in this blog's open comments section, along with others interested in the topic. Clearly the issue strikes a chord with many. 

Business Schools Have Taught Competitive Success as the Ultimate Goal

Whether you call it sustainable competitive advantage, maximizing shareholder wealth, or simply ‘winning,’ the dominant worldview in business today is that business is all about competition. Ask an MBA to provide an alternate worldview and you’ll get glazed looks.

It was not always thus. Only since the seventies have business schools made the adjective in “competitive strategy” so ubiquitous as to be redundant. Before that, ‘strategy’ had a decidedly more customer-focused tone to it—for example, read Peter Drucker. (I won’t rehash the argument, it’s in the businessweek.com article).

That belief system has become so entrenched that nearly any other aspect of business has become subordinated to “competitive success.” Think of any subject you like--human resources, values-based management, compensation management, employee engagement, customer satisfaction—and you will find that corporations routinely attempt to justify even the most humanitarian programs in terms of their ability to add to the bottom line. Their bottom line, that is--not that of the network, or supply chain, or their partners.

“Good ethics is good business,” they say, as if ethics demanded a currency-based justification. “Happy people lead to higher profits,” “being socially responsible is associated with higher returns on investment,” and so on.

Why must every social virtue be justified solely in terms of its ability to add to the bottom line? Why do we in business not see this  Kool Aid we have been drinking for the self-obsessing small-think it is?

This is precisely the trap into which I believe Dean Kester falls with his comments, and why this conversation needs more airing.

Collaboration as a Tactic--Yesterday's View

Dean Kester says, in his response to me:

"Today, more than ever, business is a competitive endeavor. At the same time, management is a more collaborative endeavor. At Harvard Business School we embrace both of these truths in preparing our students to become successful leaders in business and social enterprise."

This approach--that business is about competition and management is about collaboration--is precisely the default idea in business today. It suggests that  the purpose of trust and collaboration is to help Our Team to beat Their Team; that collaboration is but a tactic in service to competitive strategy; and that collaboration should somehow be subordinated to a superordinate goal--the success of the competitor.

This is vintage Business School (not just Harvard), Jack Welch, and Corporate America ideology. 

It is an idea, I want to suggest, whose time has passed. 

Deputy Dean Kester's above response is a perfect example of the current thinking, and in turn suggests how deeply embedded that way of thinking is. Dean Kester is hardly alone in this viewpoint.  But neither am I alone in noticing that over-dosing on the ideology of competition is starting to cause serious economic harm. Here's where I see the new view heading.

Collaboration as a Strategy--Today's View

Yesterday’s world—the competition-centric worldview—explicitly sees customers and suppliers as competitors, along with direct competitors.

In today’s flat, connected world, our first instinctive look at the world should not be based on the threats posed by our customers, but by the enormous opportunities available to us each if we can operate together.  In a connected, transaction-cost laden world, it is simply more economic to trust than to compete.  (See Philip Evans on a convincing presentation of the US vs. the Japanese auto industry and the power of collaboration).

What’s the alternative, you ask? Simple. Stop thinking about ‘winning,’ with its zero-sum implications and paranoid overtones.  Instead, start thinking about succeeding, something that is best achieved in concert with others, like our customers and suppliers.  We need to think more about commerce, less about competition.  The critical nexus is between sellers and buyers, not sellers and their competitors.

Trust.  Collaboration.  Success.  Cooperation.  Boundarylessness beyond the corporate walls.  Our customers are not our enemies, for heaven's sake--they are our customers!

I am far from the first to make this point: see Is It Time to Retrain B-Schools?  Nor is this my first time: see The Horizontal Imperative from February 2007, and Collaboration is the New Competition from March 2008.

Trust and Collaboration: The New Leaders

We can't any longer let collaboration be the handmaiden of competitive advantage—in the age of networking /globalization / outsourcing it should be a goal in itself. If collaboration in your company isn’t strategic, you’re not doing it right. It is the new Key Success Factor.

The business schools are fully capable of recovering the intellectual high ground in this area. After all, several faculty at Harvard—Heskett, Schlesinger, Sasser—along with Frederick Reichheld at Bain—are responsible for superb, highly customer-focused, original work on customer loyalty.

But the b-schools are not, as yet, institutionally leading the charge nowadays.  For now, leadership is coming from the newly emerging world of blogs and social networking—for example, from people like Chris Brogan and Julien Smith, authors of Trust Agents.  (Other key thought leaders in this area include Robert Scoble, Philip Evans of BCG, Dov Seidman of LRN, and the young-at-heart Tom Peters).

These new leaders are not just talking about social media and networks--they're living them and driving them in real businesses.  And they are vastly more collaborative than competitive.

Let's keep this dialogue going.  Thanks to Dean Kester for stating his case.  Now let's talk about where we go from here.

On that note, if you’re interested in continuing the conversation about trust and collaboration with Chris Brogan and Julien Smith, as well as myself and David Maister (co-author, with Rob Galford) of The Trusted Advisor, come join all four of us at the Trust Summit to be held in New York this Friday morning (auspiciously, at the Harvard Club) at 7:30AM.

I'd love, in particular, for Dean Kester to join us, and in the interests of furthering the conversation the already nominal ticket charge is waived for him.

Click here for more information about the event and about Brogan, Smith, Maister and myself.

Click here to buy tickets for the Trust Summit event.

And bring your best collaboration skills—it’s not a tactic, it's the whole point.
 

Consider this example from Will Silverman, an MD in Studley's Capital Transactions Group (Studley is in the commercial real estate business).  You don’t have to be a corporate real estate client to sense the value of the information and perspective that Will provides.

I have excerpted only about half of what Will writes; you’ll have to contact him if you want the rest. You can reach him at wsilverman@studley.com

I have just returned from this year’s ExpoReal conference in Munich. As I’m wont to do, I’ve written a letter detailing what I learned and experienced at the conference. If you’re not familiar with ExpoReal, it is one of the largest real estate conferences in Europe with representatives of 1600 firms from 34 countries in attendance. The dominant categories are German open and closed end funds, as well as German banks. This year I visited with my colleague Tony Smaniotto of Studley’s Chicago office and we met with over 20 investors and lenders whose aggregated US investments and allocations number in the tens of billions. The themes which emerged in those meetings are detailed below.

Tenor of the conference
As has typically been the case at industry conferences in 2009, attendance was down by 15%. There seemed to be substantially less English spoken in the halls and fewer Americans in attendance than in prior years. American attendance suffered from a famous Keynesian conundrum as the average firm seemed to believe that the average firm was not sending Americans, therefore it did not send its own.

Disjointed message
Last year I wrote that in the wake of the financial crisis the European firms were taking a longer view and were less spooked than Americans were last October. This year I would say the tables were turned, American investors now feel more confident that they understand the era they’re entering. For example, in prior years I returned from the conference and reviewed my notes only to realize that I only needed to take notes during one meeting, because every investor and bank had virtually identical criteria and concerns. Not so this year. This year some investors were eager to enter the New York market, others preferred Washington D.C. Some funds wanted to pursue JV/preferred equity structures, others only want absolute ownership. Some banks were reluctant to sell their notes on troubled deals, others suggested that sales are likely. Some funds are flooded with investment capital, others are fighting off redemptions that could take them under. In short, there was no consistent message, and hence, the themes below were discernable amid the noise, but not universally expressed.

The Der Spiegel effect:
Der Speigel is one of the most influential and widely read publications in Germany with weekly circulation of over one million. For a sense of its influence and tone, imagine that Time, Newsweek and US News & World Report were all one magazine, but they were as well written as the Atlantic Monthly. Therefore, when Der Spiegel published an article (both the article and a photo featured in it are attached to this email) about the impact of the financial crisis on the quality of life in New York, it sent shockwaves through upper-middle class Germany (which is the class that generally invests in the large open and closed end funds that have invested billions in the US). The author of the article is about as bullish on New York as Michael Moore is on capitalism. One of main profiles in the article begins “Cathy used to be a banker. Today she is homeless and living in Tomkins Square. She thinks about the heroin and the stench.” You get the idea. Several investors told us that thanks largely to this article, there is significant headline risk for German funds to invest in New York as people fear the return of the Taxi Driver era. This article has even broader significance though.

If you’re among the hundreds who have seen the market update that Woody and I have been presenting, then you may already know where I’m headed. One of the arguments we’ve been making is that a key difference between today’s recession and those of the 1970s and 1990s is that during both of those recessions the economic contraction was compounded by New York’s deteriorating quality of life. A distinction, so far, in this recession is that quality of life and therefore New York’s relative position vis-à-vis other cities, has not slipped the way it did in the 70s and 90s. In the prior recessions companies actually contemplated leaving New York, this time they are merely occupying less space.
This distinction accounts for the “higher bottom” that we’ve experienced thus far in terms of employment and residential pricing. The underpinning of quality of life is safety; crime went down 80% from 1990 to 2008. Such a dramatic decrease has created a peculiar headline risk as a 30% jump in crime would bring New York back to very safe 2003 levels, but would likely be reported as the return of the 1970s. If the rest of the world perceives New York as unsafe, then we’ll have trouble attracting young human capital, keeping jobs here, and attracting investor capital. This Der Spiegel article is the first tangible evidence we’ve seen of this risk. We’re alerting REBNY and the Mayor’s office and we strongly encourage everyone in the industry with press influence to exert it against articles that perpetuate this false and dangerous concern.

New entrant preferences
Thankfully, not everyone was dissuaded….

Fundamentals matter more than capital market
When you strip away everything else in real estate valuation you are basically left with two components, the income and the number by which it’s multiplied…

Lessons from London
London has been a more active sales market than New York in 2009...

The “after you” market
We’ve long described investor preference as the “race for silver” as investors all say they are interested in buying today, but would prefer to watch someone else go first. Therefore the response to Deka’s purchase ….

Still early for many institutions
Several mentioned that they don’t believe their moment will come for some time... They have, astutely in my view, realized that…

Conclusion
Last year it was Americans who seemed disjointed and Europeans who appeared to have a better handle on matters..last October I wrote “Europeans have a tendency…

Will Silverman
Corporate Managing Director
Capital Transactions Group, Studley 

Thanks Will for a great object example.  It's easy to see why people trust you.
 

Scenario 1.

On Monday of Week 2, Mr. X came to visit. “Nice store you’ve got here,” he said to Mike. “Be a shame if something happened to it.”

“Why would anything happen to it?” enquired Mike, part disbelieving and part enraged.

“You just never know,” said Mr. X, slapping his walking stick repeatedly into his palm. “Things can happen. You got no control over ‘em. But we can help.”

“How?” asked Mike, dreading the answer.

“Think of it as insurance. A little extra off the top line, nothing happens to the bottom line. Safest neighborhood around, if you know how to get along.”

“Why me?” asked Mike. “I haven’t got the money, I can’t afford it.”

“Cost of doing business,” shrugged Mr. X. “You raise your prices, you cut your costs—you figure it out.”

“But it’s not fair!” shouted Mike. “Why can’t you cut me a break?”

“Not fair--that’s a good one!  Listen, if I cut you a break, everyone wants one. If it was up to me, I’d do it, I like you. But Mr. Big—he wouldn’t like that.”

“Maybe I could talk to Mr. Big,” said Mike.

“Oh I don’t think that’d be a good idea,”  Mr. X said drily.   “All right, I think we’re done here, Mikey. I’ll come by on Monday for your first payment.”

Scenario 2.  After six years of work, Mitchell finally formed his own subcontracting business, taking the plunge with a big deal from his former employer, BigCo.

As he read through the fine print of the contract, Mitchell noticed several clauses that surprised him. He called BigCo’s in-house counsel, Mr. Z.

“Mr. Z, this is Mitchell. I’m going through this contract, and it says I have to buy millions of dollars of insurance coverage, with BigCo as beneficiary, to cover things like lawsuits filed by anyone anywhere in the world for things like bodily injury, automobile crashes, etc. Look, I’m just an actuary—I’m hardly ever going to set foot there, much less cause all kinds of harm. These things will never happen.”

“Well, the most unlikely things have a funny way of happening, Mitch,” said Mr. Z.  "It’s a big world, you can’t be too careful.  We're just managing risk.  Think of it as insurance.  Which of course it is.  It's really for your benefit, you wouldn't want to be liable for these catastrophes, now would you?”

“But why me,” asked Mitchell. “I can’t afford this kind of extra insurance. And you want me to buy insurance on people I sub to as well? Does this ever end?”

“Oh don’t worry about that, Mitch—you just pass it on to your subs in your agreement. That’s what we did, when our customer demanded we do it. It’s how it works.”

“Is that where it starts, with your customer? Couldn’t we talk to them?”

“Oh I don’t think that’s going to happen, Mitch. Just work out the cost and pay it.”

“But it’s not fair, Mr. Z.”

“Mitchell, Mitchell, you know better than that,” said Mr. Z.

So here’s my question about the two scenarios:

What’s the difference between them?

My lawyer friends (I hope I still have a few) will say, “That’s insulting! Come on, one of them’s legal, and one’s criminal—how can you confuse them?”

But my economist friends (some of them anyway) will say, “Ha!  It’s a trick question. There is no difference, they’re exactly the same.”

“Both of them involve non-value-adding transaction costs. There is some amount of risk transfer between parties—swapping around, really--but to the system, there is no gain.

“In fact, at the system level, there is a net cost; and the distribution of that cost is disproportionately downstream, to Mike and to Mitch.

To put this in context: our economy used to grow by achieving scale through transaction costs—legal agreements, accounting, contracts, commission plans.

Today, we are so inter-linked and fragmented, and so paranoid about trusting, that the transaction costs have begun to overtake the value accruing from scale.

We have become a culture not of shopkeepers, but of tiny outsourcing transactors, fearfully insuring ourselves against our fellows-in-commerce at every step. 

As my friend Bill says, "What is a credit default swap except a statement that you don't trust your customer?"

This is not the way to build a healthy economy.
 

One person, however, made a simple point. “It’s only as good as the people you empower,” she said. “If you empower stupid people, you deserve what you get.”

Fair enough. A similar cold-water dash in the face comes from Sam Bloomfield. The issue this time is the equally ‘soft’ and ‘good’ value of empathy.

What could be wrong with empathy, you ask? Well, not that there’s anything wrong with it, but there’s a danger of forgetting the ‘and also’ aspects. The correlate to the ‘stupid people’ problem with respect to empathy, Sam suggests, is the presence or absence of action taken:

A recent Harvard Business Review piece [Why Small Companies Are Better at Customer Service] addressed how large companies can learn about productive customer service from small companies. The article’s author related his personal experiences about ‘good’ and ‘bad’ customer service. The author concluded from those experiences that smaller companies have a lot to teach larger ones because the people in smaller companies can “empathize” with the customer and therefore deliver better service. And large companies need to learn to empathize more.

In fact, while empathy helps, it simply is not enough. The cited examples also showed, although not observed explicitly by the author, that smaller companies were able to resolve the problem – produce a satisfactory result for the customer. In the small company examples, the employee did not just empathize, s/he also satisfied our author. Those results I would suggest are the key to effective customer service and experience.

So empathy is fine – up to a point. When a customer service representative does not help you resolve your problem empathy alone loses its currency.

Also, large organizations trying to appear more empathetic often devolve into a ’script’ or canned responses like “I am so sorry” or “I apologize”. We simply don’t trust that they mean it, until we see what they can do for us. You can’t institutionalize caring, trust or empathy because those traits, if they are genuine, are not just words but sincere feelings. I would suggest that this customer in the article was ultimately really satisfied because of the actions taken.

Empathy, Sam's suggesting, may or may not be a necessary condition, but it is surely not a sufficient condition.

He's certainly right about one thing. On some level it’s obvious, and not surprising; there aren’t that many pro-empathy people who really think empathy alone is sufficient.

But that’s not the bigger problem Sam’s pointing out. That problem, I think, is businesspeople who don’t understand empathy, and who think that a little slathering of empathetic trappings can keep the customer complaints down.

As Sam puts it:

Large companies are usually effective at creating processes that standardize activities for large numbers of interactions with repeating patterns. But they often fail at creating a standard process for establishing a trusting and sincere relationship with their customers, the very foundation upon which rests all successful call center interactions. In short, one cannot create a process to elicit a sincere human emotion.

I don’t know about you, but it bugs me when a customer service rep leads with “Oh I do apologize for that, Mr. Green.” 99 times out of 100, the rep of course had nothing to do with the problem. It’s fine to say, “ouch, that’s certainly not right, and we’re sorry you had this problem—what can I do to help?” But don't apologize!

Good apologies require some standing of responsibility. I don’t want an innocent bystander to apologize for hitting my car, I want the apology from the texting-cellphone-jabbering idiot that hit me!

There’s empathy, and there’s empathy.  The harm done is not using too much empathy—it’s using it badly, sloppily, and without clean intent.
 

I recently attended my step-grandfather, George’s, funeral in Connecticut. His business partner, Phil, spoke at the memorial service and what he said really sort of blew me away and I wanted to share with you...

Of course Phil shared many lovely memories of George.  One thing struck me in a profound way; Phil talked about the trust that George developed with his clients.

George had founded a CPA firm in 1962. The firm grew to be quite successful. As I sat and listened to Phil share stories about the firm’s success, he matter of factly boasted about the firm’s technical proficiency.

But then, to my surprise, Phil talked with incredible heartfelt-ness (sp?) about what the firm really does: listens to their customers. He talked about the fact that they prepare tax returns and financial statements, etc... but that what they really do is listen to their clients. I cannot recreate what he said – though it struck me as so humane as to counter the pervasive “accountant” stereotypes.

Anyway, here is what I really wanted to share:

• George died at 84 years old

• He founded the firm when he was 37 years old

• At his wake on Monday night an elderly woman introduced herself to my family and indicated she was George’s FIRST client! She is still a client of the firm to this day and whenever she goes into the firm she takes lunch for the partner with whom she meets!

• At George’s funeral there were literally generations of customers...there were people there to honor George who had been his client(s) for 47 years – nearly a half century!!! In one instance there was a family with 3 generation’s of clients. That is cool.

• His clients were acknowledged during the service along with friends and family (and many, many clients were there).

Thanks Sara. 

There are thousands of tips and tricks out there to gain repeat business, increase 'loyalty,' tweak your customer acquisition rates.  But they are all aimed at improvement in the aggregate, and usually over a short time frame.

They forget a few simple facts. 

The greatest client loyalty is personal--not institutional.  It happens one person at a time--not one segment or geography or business unit at a time.  It lasts: not quarters, but decades. 

Real loyalty isn't bought, tricked, or tweaked.  It doesn't trend up or down monthly. 

Yes, it shows up on your income statement. But where it really shows up is at your funeral.

Congratulations, George.

Most businesses been operating under stressful circumstances for at least the last 12 months. For most organizations, profits were down (or non-existent), resulting in considerable price/service pressure from clients/buyers/customers.

So it's not surprising that, as we end this difficult calendar/fiscal year, many are still painfully looking in the rear view mirror as we consider how to address the new year.

But, in doing so, we may well miss a turn --- an opportunity to take advantage of the "green shoots" by thinking differently about our organizations and about how to get the most out of our people.

The Market Has Driven Focus Away from Teams

In the midst of all of the recent economic pressure, there has been a common return to focus on individual performance and a movement away from collaboration and collegiality.

Perhaps some of this shift is valid, because a tough market penalizes lingering mediocrity, but the pendulum has swung to the business equivalent of baseball's VORP (value over replacement player).

But successful organizations are rarely built by teams of super-heroes. Most extraordinary unit performance is a function of ordinary beings banding together to strengthen each other's weaknesses and to collectively make whole greater than the sum of the individual parts.

The cost-cutting and recession-based inward thinking which we’ve all had to endure for the past year drives us to self-absorbed, protectionist, fear-based behavior.  And just as solo behavior doesn’t drive great success, neither can you save or cost-cut your way to prosperity.

Sling-shotting Your Way Into Recovery

We have no insight into the timing of the recovery. But one thing is clear. The firms that will benefit the most, when recovery does come, will be those that have managed to think their way out of the rear-view mirror mentality. In particular, those who have managed to re-discover collaboration.

Collaboration is something that can help ‘slingshot’ us out of recessionary thinking.  Team behavior can accomplish extraordinary things with ordinary people.  Collaboration fuels innovation, and feeds souls.  All that drives financial bottom lines too.

Leaders need to manage the tension between surviving in the short term and leading towards the medium term. Leaders need to help pull/push people out of the scary place we’ve been in, focused—of necessity, to be sure—on survival.

Collaboration responds to the need to motivate people, refocus their efforts, and ignite their spirit. And you don’t have to wait for the recovery to get there. In fact, getting there probably, in its own small way, helps kick start the recovery.

Doing Collaboration from Trust Principles

Collaboration is, in fact, one of the Four Trust Principles  (the others being client focus, relationships over transactions, and transparency).
There’s no single simple tool to being collaborative, and each organization will vary in its approach. But a serious effort at being more collaborative will probably include some of the following:

• Goal setting—done collaboratively
• Spending time together
• Getting to know each other
• Speaking directly to each other
• Speaking about more things to each other
• Developing common language
• Skewing incentives and rewards toward groups
• Honest and transparent leadership
• Clear, repetitive articulation of the philosophy of collaboration by leadership

Development is back on the table. If it’s not yet on your table, ask yourself when you think the recovery is going to happen—and how far in advance of it you need to starting consciously thinking about shifting perspectives.

Discuss it collaboratively with your team.

I was particularly struck by the way they told Robert Scoble's story (a success story, but not usually painted as a trust story).  They call Scoble one of the first trust agents ever on the World Wide Web. 

Though hindsight is 20-20, many people watching Scoble’s moves at the time would have labeled him at best irreverent, irresponsible, and committed to career suicide … at worst a complete idiot. But looking at him through the lens of what it takes to become trustworthy, I’m siding with Brogan and Smith—what he did was brilliant.

The Scoble Story

In 2004, Scoble, then a Microsoft employee, took to blogging about serious issues Microsoft and its end users were experiencing. He even candidly sung the praises of Firefox, Microsoft’s Internet Explorer competitor.

Not only did Scoble not get fired, he got readers. And Microsoft got business. Brogan and Smith report, “People began eating up everything he said. If his very next blog post had praised Notepad as ‘the best app ever,’ his readers probably would have said, ‘You’re so right!’”

Scoble attributes part of this phenomenon to something he learned when he helped run retail stores in the 1980’s. If he told a customer that a competitor had a better selection, they often came back and asked to do business with him anyway, “’cause I like you better.”  (Maybe he got it from the Macy's Santa Claus in Miracle on 34th Street, who recommended competitor Gimbel's on occasion).

What’s Golf Got to Do with It?

One of the reasons trust is so hard to get a grip on is that it’s rife with paradox. For example, the thing we’re most afraid to say or do is precisely what will build the most trust. Or, in Scoble’s case, the best way to generate sales is to have the courage to be brutally honest about your product’s weaknesses and your competitor’s strengths.

Here’s the link to golf (pardon the pun): I am not a golfer. To me, the only logical way to get that tiny little ball to travel hundreds of yards off the first tee towards that tiny little cup is to hit it as hard as possible. If you’re a golfer, you just shook your head in dismay because you know what my strategy will yield: a nice left hook into a thick forest of trees.

Scoble came to be seen as someone who could be trusted because he knew that building trust is like a golf swing: hype your product and you hook the ball; be honest and land it square on the green.

Golf Aside, Motives Matter

Leaving the golf metaphor behind for a moment, it’s important to remember that motives really do matter. Buyers have a sixth sense for manipulation. Had Scoble been talking trash about his products with the intention of closing deals, his strategy would have backfired. Which leads us to another paradox: the more you try to build trust with the intention of closing deals, the less deals you close.

Take a look at your business model. How might the lessons of golf—and Scoble—improve your game?

• What: Trust Summit: Chris Brogan, Julien Smith, David Maister, Charles H. Green (that last one's me).
• Where: Harvard Club, New York City
• When: 7:30 - 9:30AM
• Format: Breakfast, Brief Panel Discussion, then Q&A from Audience
• Cost: $25 in advance, $30 at the door. Limit 300 attendees.
• Sign up: Sign up here

Chris and Julien are co-authors of the current best-selling book Trust Agents. David is my co-author, along with Rob Galford, of The Trusted Advisor.

I first met Chris and Julien as they were writing their book. I found them very engaging, and masters of new social media.

But what has really impressed me is their ability to apply new media technology in service to greater trust in business. They are walking role models in that regard – they walk the talk.

It was Chris’s idea to have this meeting, and I enthusiastically supported it.

We’re looking forward to a great breakfast with spirited dialogue between the four of us, but most importantly between us and you, 300 of our closest friends.

CNBC and BusinessWeek.com: Teeing it Up

As long as we’re on the subject of marketing, let me offer you a couple of links,

First, my BusinessWeek.com article of earlier this week, titled Wall Street Run Amok: Why Harvard's to Blame.

That intrigued the good folks at CNBC, who put me on October 7 with the header "Is Harvard to Blame?" Host Melissa Francis played up the Harvard angle with mock outrage, but it's all in fun—and a pretty good (albeit fast) take on how we create business environments that nurture trust.

Both—I think—are good entrees to teeing up the broader issue of trust we’ll be discussing in New York.

Hope you can make it.

BusinessWeek.com Article

First, Businessweek.com chose to print an article of mine titled Wall Street's Run Amok: Harvard's to Blame.  In it, I argue that the usual explanations for business malfeasance--greed, poor regulation, badly designed incentives--miss a much more fundamental cause.

For several decades now, our business schools have been teaching competition rather than collaboration, and contracted-out processes rather than partnership-based relationships.  With such beliefs at the heart of business, it's not surprising that we find a dearth of things like trust, ethics, and generally getting along.

In fact, if you design a system based largely on self-aggrandizement (think sustainable competitive advantage, maximum shareholder value) as ends, it's not just unsurprising--it's downright predictable.  There's no such thing as ethics if there is only self-involvement.

These belief systems worked well in the 1980s. Today, in a world where six degrees of separation is a vast overstatement, we can no longer afford ideas that encourage competing with our suppliers, customers, employees and partners.  We need a new belief system.

I'm not teeing off on Harvard Business School per se.  It's just that, well, it's the Harvard of Business Schools.  And it had more than its share of the designing of the competitive/contractual/process ideology.  If it can be as successful at teaching the new beliefs as it was at the old, it will continue to fulfill the powerful and positive role it used to.

Watch Me on CNBC Today

The good folks at CNBC apparently read BusinessWeek.com.  They were chatting about the article, and invited me in for today, Wednesday the 7th, on the Street Signs show (Erin and the boys).  The plan is for a slot at about 2:20PM.  Plans, of course, change, but plan to tune in.  And, as they say on the Bravo Channel, watch what happens.  [Later: here is the link to the video--have a look-see, it was fun!]

RainToday Article and Webinar

Also this week, RainToday publishes my article How Poor Cross Selling is Ruining Your Business in today's issue.  Another very practical example of how the ability to manage trust--in particular, your trustworthiness--is a key driver of effective performance. 

Finally, I'm doing a webinar this week with the good folks at St. Meyer & Hubbard.  You can sign up here, and though the session is aimed at building trust in retail and commercial banking, it's got a lot to say about other industries as well.

It seems that one Randy Schumann may have an account in arrears at the local Gas Mart.  And the retailer in question has resorted to a time-honored tradition to enforce some social justice.

Ouch.

Let me suggest, in all seriousness, that we need more Tiger-Town justice, and less Sarbanes-Oxley types of solutions. 

Shame--for lack of a better word--can be good social policy.

Positive Uses of Shame in Creating Public Trustworthiness

The Tiger Town in Montana is hardly alone. 

* Think about the “perp walk,” used by cops and prosecutors quite consciously.  As Wikipedia puts it, “Perp walks are often done to politicians or businesspeople accused of white-collar crimes (whose reputations may be susceptible to damage by public spectacle).”

* The use of the giant inflatable rat as a shaming device is a long-time tool of unions.  But it goes further; the rat is protected legally (I’m not kidding, see here) as a form of free speech.

* Let’s not forget about the (used to be, anyway) power of investigative journalism.  The notion of muck-raking in the US http://en.wikipedia.org/wiki/Muckraker ; the power that the Washington Post put behind Watergate, or the New York Times behind the publication of the Pentagon Papers.

* Local TV news shows delight in consumer protection episodes that go by names like the Wall of Shame, our version of the Puritans’ placing people in the stocks in the middle of town. Cops know it's more effective to post photos of Johns than of prostitutes (so do town governments, which is why that doesn't often happen). 

Shame Works by Enforcing Social Standards

It may seem obvious, but let’s take a moment to see why shame works.

Most people intuitively agree with Justice Brandeis that “sunlight is the best disinfectant.”  Transparency is a valuable social vehicle for increasing trustworthiness in our institutions.  Disclosure is a bedrock of legislative regulation—in pharmaceuticals, financial services, and environmental policy.  The idea is that organizations will not put out to the public things that they would prefer not be seen by the public. 

The most powerful thing about shame is that it works by enforcing social standards.  If the behavior that is exposed runs strongly counter to public instinct, then the power of shame is large.

If you are ashamed by something, it means you fear the judgment of the public.  To be ashamed, on a very personal level, means to feel the rejection of our peers.  It is a powerful effect, and serious medicine when administered at scale.

Shame Should be Part of the Response to Financial Scandals

The popular press is all over Washington to do something to prevent further abuses in the financial sector.  The pressure is building, because so far very little has been done.

Part of the problem is that “what should be done” has come to rhyme with massive, heavy-handed governmental regulation.  Worse yet, most of that regulation has to do a combination of prohibition (Glass-Steagall)  and massive efforts at compliance and disclosure.

The problem with disclosure alone is it rapidly degenerates into mountains of fine-print, while accomplishing nothing in terms of felt social obligation on the part of those writing it.

The problem with structural change alone (think Sarbanes-Oxley) is that it’s expensive, and the opportunity costs are even higher than the outlays.  Just think of the massive price we pay every day in airports because we haven’t figured out a socially acceptable way to keep terrorists from planes other than forcing granny in Dubuque to dump her over-sized tube of toothpaste when she boards a plane.

I’m far from alone in this.  Read the devastating critique by famed Madoff whistle-blower Harry Markopolis.  He suggests that what we do not need is the routinized, predictable box-checking approach to compliance.  Instead, we need randomized, aggressive sampling, followed by publicity. 

Exactly. Unexpected audits, followed by the application of shame.  Bring on the judgment of the people who own the society, who are the ultimate source of the approval of whatever goes on in our society. 

Enough with laws and regs; up with enforcement and shame.

And Randy—about that account.  The Rat is next.

Scot Herrick, author of the delightful blog Cube Rules, is this month's host of the Carnival of Trust. 

For those who don't know, the Carnival of Trust is a monthly collection of the most interesting and noteworthy posts from the Kingdom of Blogs over the past month.  Each month, the Carnival is hosted by an experienced blogger--not myself.  The definition and selection of "interesting and noteworthy" is left to the host; each host infuses the selection and commentary with their own point of view.  The result is a great chunk of reading for you.

This month Scot has collected some terrific blogposts that answer the following questions:

- Would you rather fix your customer's problem, or be right?  Think carefully now...

- Can you break promises with your employees, or not?  And if so, how many?

- What's a great acronym for remembering the components of RESPECT?

- How can you get your parents to trust you?

- Would you rather hire a relative, be hired by one, or recommend one?

- How can you market yourself as being trustworthy?  (It's not a trick question).

 You don't get this much concentrated good stuff anywhere else.  Treat yourself to a choice bit of edutainment; you'll love the way it tastes, honest!

Many thanks to Scot Herrick for hosting this month.  If you liked this month's Carnival of Trust, you might enjoy looking at past Carnivals as well.  And if you'd like to see your blogpost up there in the lights, please do contribute your blogpost (or someone else's you'd like to nominate) at this site. 

Again, enjoy the October Carnival of Trust.

Stewart's Story.

About 6 years ago, I was doing a lot of networking, and met someone who needed a temporary CFO in the Boston area. One of my long-time clients and a networker in the 500+ class on Linked-In, Dallas-based attorney Peter Vogel introduced me to Steve Crane, an avid networker and then a partner at a national firm that provided just that service.

Although I never spoke with Steve directly, through Peter, he introduced me to a Boston-based partner.

I called the Boston partner, and connected him to the potential client. The story could have ended there, but it did not. The Boston partner invited me to meet others in the group in the Boston area. When we met, I shared my view that people in business should treat each other with trust, caring and respect.  One of the partners, Doug, said to me: “You sound just like my B-school classmate, Charlie. You ought to talk with him.” He offered an introduction.  I accepted.

Turns out Charlie was Charles H. Green, now CEO of Trusted Advisor Associates LLC, and co-author of the then recently published The Trusted Advisor. We talked, and did indeed sound alike. That was the start of our valuable and continuing relationship. It’s been great for each of us. All this from doing a favor for someone in Boston seeking a temporary CFO!

Charlie’s Story.

Many years ago, I went to Harvard Business School. I didn’t have long business experience, so initially felt a little outside the group. But I did quickly form bonds with a couple of really great people, including Rob Galford and Doug Warren, both of whom were in "Section H" with me.  Blessed with extroverts’ gift of gab, I found both Rob and Doug refreshing to hang around with, and a great antidote to my own shyness.

We all graduated.  I had a 20-year career in management consulting, then left to found my own business. I co-authored The Trusted Advisor with David Maister and with the aforementioned Rob Galford.

Doug and I saw each other only at reunions, until about 6 years ago when I got a call from Doug. “I want you to meet someone,” said Doug. “His name is Stewart Hirsch, and I think you two might get along.” I talked with Stewart and we did get along. In fact, I hired Stewart to be my business coach. That led to my tapping Stewart's skills to help serve TAA clients - and now he's heading our coaching practice

From Both.

A few weeks ago, Peter mentioned Steve (remember Peter and Steve?) in a conversation with Stewart. Stewart realized that he’d never even talked with Steve, much less thanked him. Stewart then called Steve and shared with him his role in Stewart’s story and his appreciation of for the introduction. Now, they are considering networking opportunities for each other, and starting a new set of links.

Tragically, Doug died several years ago, another too-young victim of cancer. Charlie attended Doug’s memorial service, and another service a few years later at a reunion.  Doug’s wife and children still feel connected to 75-odd members of Section H. Those are wonderful tributes to the power of our shared experiences.

But it has recently occurred to Charlie that, for him, there could be no better memory of Doug than to daily appreciate the living reminder of his introduction of Stewart to Charlie.

If a butterfly flaps its wings in Hong Kong, will there be a monsoon in Hawaii? We don’t know. What we do know is that when you help people, opportunities can appear, and when we seize those opportunities, doors open.

In the meantime, please accept it as a nice play on words for an introduction.

All Things Digital Seem to Aspire to Analog

Have you noticed, with all the talk about digital this and that, that the actual goal of most digitization seems to be a reversion to analog?
Think about it. What is HDTV about except an attempt to recreate analog? Aren’t video games trying to seem more and more ‘realistic,’ i.e. analog-like?

What are digital sound and movie recordings trying to do?  To achieve higher and higher fidelity to a life-like, very analog, experience.

Cisco Systems  is making great use of a nearly-analog version of videoconferencing.

In the science fiction realm, the ‘coolest’ stuff - I always though- were holographs and transponders. One is a near-perfect image, the other a way of obliterating time and space barriers to sweet home analog.

And don’t forget everyone’s favorite digital creation- robots.   Not industrial robots, of course, but analog robots like R2D2 and 3CPO - robots hopelessly stuck with things like British accents and adolescent attitudes.

Even digital movies are generally about very analog creatures - cartoon versions of ogres and mules, for example.   How much more analog can you get?

Digital just wants to be analog.

Why the Analog World Appeals to Digi-Philes

The basic appeal of digital breaks down to three factors: freedom of space, freedom of time, and freedom of editing. Digital lets you mess with stuff, unbounded by annoying limitations like time zones, protein, and long distances.

But home sweet analog, analog on the range, analog is where the heart is. It’s messy, sloppy, unpredictable, only approximately causal, but gosh it feels awfully real. Sometimes reality bites, but other times it’s all mom and puppies and roller coasters and exultation.  Even pain is drenched in feeling.

The desire to be digital—OK stay with me, I’m reaching on this one- comes from our desire to control.  And the desire to stay analog comes from our desire for complexity and richness of experience.

The adolescent dream, of course, is to tie the two together.  (I call it adolescent not in a derogatory way, but in the sense of a powerful desire to integrate things into one.)  Logically, you can either make digital look analog—or make analog look digital.

Analog, Digital and Business

Business is loaded with examples of trying to turn analog reality into digital form - and it is, indeed, very much about control. Back in the day, the word used for internal accounting systems literally was “control.”

Control was accomplished by the systematic collection, manipulation and analysis of data. When Robert McNamara started at Ford Motors in finance, he said they used to evaluate outstanding receivables by weighing the pile of invoices. That was analog control. He of course moved it to digital.

The digital desire for control hasn’t changed that much. We now have process control meters or processes just about everywhere, and more analytic firepower at our fingertips than we know what to do with. Literally.

We now have digital mantras: “if you can’t measure it, you can’t manage it.”  The ideology of digital has decided to co-opt the field of management. I wonder what Peter Drucker would think of that (it's his 100th birthday this year)?

Fortunately, digital just wants to be analog. The pursuit of digital brings us great benefits, but at the end of the day, it’s only as good as fake analog.  We will revert to the mean, and the mean is analog.

Jorge Luis Borges wrote a charming short story about the end of such searches.   The only perfect map is a full-size representation of the original.  Which makes the map redundant; and worse, boring.

What analog reality are we striving so diligently to represent digitally? And what price are we paying for the illusion of control?
 

This blog has some pretty talented people reading and commenting in its pages. I'd like to invite all of you to consider submitting one of your own blog postings to the Carnival of Trust.

The deadline for submissions to the next Carnival of Trust is this Thursday night--midnight. The Carnival will then go live in a matter of days--after our esteemed guest host, Scot Herrick, has a chance to go through them and make his selections.

Here's what you do to get your 15 minutes of fame and enrich the world. Pick your trust-related post, and submit it here.

Then sit back and roll in the adulation.

OK, seriously, the Carnival of Trust is a fascinating, monthly compendium of blog postings related to trust in business, trust in selling, trust in society at large. It is kept interesting by the vibrant commentary of our esteemed hosts, and their discriminating selection criteria.  If you don't get selected, it's no dis. But if you do get selected, it's a tribute.

So bring out your best stuff, and share it with the world. After all, how's the world going to get better if you hide those great insights from the rest of us?

(Read more about the Carnival of Trust here).

Let’s face it; survival mode prompts difficult client decisions that include changing long-time providers--possibly YOU.

Misreading Client Loyalty

According to a study by three Harvard professors (The Value Profit Chain, Heskett, Sasser, and Schlesinger):

• 73% of our clients are Mercenaries; “regulars”…but will switch if something better comes along
• 17% are Loyalists, engaging all of your offerings and broadcasting your praises
• Apostles (3% of your portfolio) also referred to as unpaid sales reps, behave much like Loyalists, but also provide constructive criticism so you can better meet their future needs.

Did you catch the scary part? Yup, statistically speaking, nearly three in four of OUR clients are Mercenaries. Indeed, we tend to overestimate client loyalty levels. Recessions don’t help.

Quietly Losing Adhesion

Like a band-aid that’s losing its glue, client losses, except for special cases (e.g. – government bids, mergers, closings, etc.) result from a gradual detachment, a sliding down the curve from apostle to loyalist and then from loyalist to mercenary. The key ingredient in the glue is relationship strength, not institutionally, but at a personal level. The less clients feel attached to us, the easier it is to rip the band-aid completely off.

Create Value

We must create value from the client’s perspective. In turbulent times the status quo isn’t enough.
But how? Its starts with a spirit of GIVING, not quid-pro-quo, but giving with no strings attached. And, as Michael Port (Book Yourself Solid) implores, the value you give must be RELEVANT.

Here is a seven step client nurturing plan designed to cultivate Apostles and improve client retention rates:

1. Be Proactive – Call them before they call you. For example, one of my coaching clients surprised his contact with news of an $83,000 refund check (they scrub every client file seeking losses they can back-apply NOL’s resulting from ERA legislation). That’s apostle behavior!

2. Make introductions – Whether it’s a referral source or a prospective client, your clients love to get introductions, don’t you? Commit to making a minimum of one introduction per day (via email, linked-in, twitter, facebook, etc.)

3. Sampling – Anything free and relevant adds value (see my blog “Free Medium Coffee – No Purchase Necessary”). Send them links to blogs, podcasts, articles, webinars, white papers or books.

4. Compassion – Send them handwritten thank you, congratulations, and condolence cards. Include a Starbucks or Amex gift card for achieving something special. SendOutCards.com automates the process. Remember, “People don’t care how much you know until they know how much you care.”

5. Business Reviews – Set up periodic meetings to review your relationship together. It’s a real opportunity to reach higher level contacts and ensure you’re truly serving them. Tip: make it THEIR meeting.

6. Face-time – Nothing beats live and in-person. Email is ok. Phone is better. In-person is the best.

7. Schedule it – whether you still use a paper calendar or an automated CRM program, decide how frequently you want to touch each client, then schedule your touches.

How would your clients categorize you? Mercenary? Apostle? You sure?

Good news – not only will your nurturing program improve your retention rate, giving makes us feel good and inspires more giving. Think about how you feel when someone gives something of value to you.

Clients don’t leave their Apostles.

‘Wait,’ you say. ‘Which is supposed to be better? And don’t you get one if you get the other? And why are you annoying me with these semantic quibbles anyway?’

Well, I think they may be semantic, but they’re real differences too. And no, if you get one, you don’t necessarily get the other. And yes, one is better than the other.

Let me explain.

Maximizing Success is Better than Winning

In the 2008 Summer Olympics, Jamaican Usain Bolt broke his own world record to win the gold medal in the 100-meter run. He did it while slowing down at the end, to celebrate.

Bolt won, but didn’t maximize his success (intentionally? He later broke the record again). Which suggests winning isn’t everything.  The corporate version of holding back might be sandbagging, managing earnings, putting some cushion in the bank. Not necessarily a bad thing, though it could be.

But earnings smoothing is not nearly as big an issue as refusing to collaborate. The US auto industry, steeped as it was in the au courant teachings of competitive strategy, saw itself as competing with the UAW, with its suppliers, and probably with its dealers.

By contrast, Japanese automakers collaborated with their supply chain. And we all know who won that particular showdown.
It’s hard to prove causality here, though BCG partner Phillip Evans, who has written on collaboration, may be able to make the case. I believe it on principle. It’s simple. The entire lesson of the industrial revolution was that scale matters. He who gets scale wins.

Managing Scale is the New Scale

The thing is, “scale” used to be implicitly defined in regional and national terms. It no longer is. We’re facing a new industrial revolution where ‘scale’ happens globally.  And when you need to outsource things radically and globally, it soon comes down not to who can cut the most deals, but who can manage them.

When you’re dealing with 500 suppliers in a few countries, and your competitors are doing the same, that’s one scenario.  But add a few zeros to the number of supplier/partners you’re working with; make it dozens of countries, not to mention digital and in-transit locations, and the complexity gets quick fast.

The old way of doing things—winning—was based on solitary, siloed, vertically managed, so-called ‘industries’ of a small number of similar organizations. They ‘competed.’ He who won had the biggest market share, lowest costs, and highest profits. And the most success.

The new way of doing things—maximizing success—is based on amorphous (and morphing) agglomerations of supply chains, each similar in some ways and different in others, often competing in one area and collaborating in another. They don’t form neat ‘industries’ anymore. If they waste their time ‘competing’ with everyone, they will lose ground to other agglomerations who are far better at collaborating.

Playing together nicely in the sandbox is the new KSF. Hardball is out; team volleyball and pickup basketball are in. Jack Welch’s old term ‘boundarylessness’ is achieving new meaning—maybe GE thinks it still ends at the corporate boundary of GE, but other firms are applying it beyond the legal ‘firewall.’

Caution: competing is hazardous to your economic health. Even winning probably messed up your chance to achieve still-greater success by collaboration.

Teams always were capable of more than Lone Rangers; now the stakes are even higher.

“In January 2009, every one of the major industries had trust declines…but you see a trust renaissance now [midyear 2009] in a few key industries…we saw increase and stability particularly in auto and in tech….though in France, tech is the number 3…”

This kind of language feeds the perception that ‘trust’ is a unitary phenomenon, capable of being measured precisely, with meaningful small gradations.

Contrast that commercially provided data with a longer-term academic view of trust. Click here for a graph (thanks to the National Council on Citizenship) that shows a nearly uninterrupted steady decline in interpersonal trust for over 25 years. What does a half-year--or a month--mean against that backdrop?

Then throw in, “I trust my dog with my life; but not with my ham sandwich.” 

When it comes to trust, one size definitely does not fit all. It's remarkable that one word covers so many meanings.

‘Trust’ Has Way More Than One Meaning

The truth is, ‘trust’ covers at least four distinguishable meanings—trust in the general human race (social trust), trust in institutions, trust in particular other human beings, and trust in certain processes (e.g. recommendations from previous buyers on eBay).

It is meaningless to say that I ‘trust’ Apple Computer more, or less, than my dog; or my dog more than my girlfriend; or my girlfriend more than Microsoft. It doesn’t even make sense to say I trust Apple more than Microsoft.  It depends.

It depends what I’m trusting them to do, or how to do it. I trust my dog to love me unconditionally more than Microsoft. I trust Microsoft more than my girlfriend to help me with databases, and I trust my girlfriend more than Apple to--well, you get the idea.

Worse yet, ‘trust’ is an end result, an outcome. It isn’t something that people do, it's the state of affairs when they're done doing. It isn’t a behavior. You can measure the outcome—but it won't tell you what to do. 

Trust is An Outcome: There are Two Action Strategies to Get There

Trust is the result of an interaction between a Trustor and a Trustee.  One does the trusting; one is the one who is trusted.

You can increase, or decrease, trust--but not directly.  You must choose one of two strategies.

1. You can choose to be more trusting of others, which increases the odds they'll reciprocate, but at high risk.

2. You can choose to be more trustworthy, which increases your attractiveness in their eyes, though it may take longer.

You can't act on trust itself: but you can act on the actors. 

If ‘trust’ is down, is that because people are less trusting? Or because the one they trust is less trustworthy?

At root, was the problem with Bernie Madoff that we trusted him too much? Or was the problem with Bernie Madoff—Bernie Madoff?

These are non-trivial questions: they have to with corporate and public policy implications of that oh-so-simple-looking data that ‘trust is down.’

Roderick Kramer, publishing in Harvard Business Review,  suggests “Despite deceit, greed, and incompetence on a previously unimaginable scale, people are still trusting too much.”  Too much trust.  Trust is down?  Good; we needed a trust recession.

Kramer's full viewpoint is much more nuanced than that, but that's how he and HBR wrote the headline to his article.  And many people do believe that a trust decline is probably a good thing, that we all probably ought to be even less trusting of a lot of things. That's a strategy of trusting--on the negative side.

Others, like Harry Markopolis,  the Madoff whistleblower, are inclined to blame a combination of Madoff and the regulatory institutions set up to protect us from him. Trust down? Then we need to make the SEC much more effective.  That's a strategy of trustworthiness, via 3rd party enforcement.

Steven Covey Jr. preaches that in an increasingly interconnected world, we need more trusting, not less.  I agree, but in any case, that's a trusting strategy.

So--what to do? If I run a technology business, and I learn that my trust level is way up, except not so much in France, over the last few months—like, what am I supposed to do with that?

What Are We to Do About All This Trust Data?

I have a few answers.

Let's pass on social trust; it moves glacially. Pick your parents well, teach your children, vote, and give generously to charities.  That's about it.

I’m going to focus on business and interpersonal trust.

In that realm, it is probably true that ‘the fastest way to make a man trustworthy is to trust him.’   That's a classic trusting strategy.

But don't hold your breath waiting for that to happen in the litigious, emotionally constipated and largely fear-driven corporate mentality of these these hunker-down recessionary times. Way too many people are way too risk averse.  Trusting, as a trust-creation strategy, appears to them to be just too risky.

The other trust-creation strategy—being trustworthy—has a somewhat longer payback, but with less business risk, and less risk of being executed badly.  For the most part, the trustworthy strategy is the one I recommend to companies.

So here's what you can do.

1. At the individual level:

• Read this paper on the Basics of Trustworthiness: the Core Concepts
• Take the Trust Quotient self-assessment quiz 

2. At the business level:

• Read this on The Four Principles of Organizational Trust: How to Make Your Company More Trustworthy
• And read this on assessing your organization’s trustworthiness.

That’s my answer to ‘so what,’ at least for now.
 

Cheryl wanted to congratulate her long-time client Tom on his recent promotion. So she bought him his favorite whiskey and a gift bag. She put the whiskey in the gift bag herself, and personally delivered it to Tom’s office. Several days later Cheryl received an envelope containing a $20 bill along with a note from Tom’s assistant attached to the cash saying, “We found this in the bag. It must have been a mistake. P.S. Tom says thanks.”

Cheryl was mortified. Being in the construction industry Tom was extremely sensitive to anything that might appear to be inappropriate. Cash in a bag with a bottle of whiskey could qualify. Cheryl had no idea how the $20 bill got into the gift bag, although she suspected that she may have been holding on to the $20 bill as she was packing the gift bag and it dropped in the bag along with the bottle. She called Tom immediately after receiving the note, but he was traveling. She knew she couldn’t address this issue in an email.

When Tom returned to the office the next week, Cheryl and Tom met on the project they were working on. Cheryl thought Tom might have forgotten about the $20, but at the meeting, she mentioned the bottle, the money, and her suspicion of how the $20 got in the bag. She expressed her fear of what it might have looked like. Tom had forgotten about it, but he appreciated her raising it.

Because of their relationship, Cheryl had accumulated a lot of trust in the Trust Bank. Tom did not even think anything was wrong or inappropriate, because he trusted Cheryl. If we looked at his reaction, we would say that he didn’t question her motives or veracity, because he trusted her – trust that was built up long before the incident occurred. In fact, when Tom mentioned the $20 to his wife, she said: “It’s Cheryl – it must have been a mistake.”

So we have a happy ending. This may seem like a dull story. No great conflicts. No cleaning up a horrible mess. Cheryl and Tom had a good laugh - and joked that even if Tom could be bought, a $20 payoff wouldn't cut it. And with that discussion, both deposited more currency in the Trust Bank.

When he first says it, other people believe him, and begin to gush their feelings to him. Of course, his empathy is faux, and so the comedy begins.

Empathy is Cognition Plus Connection

The best way to influence (not manipulate) others is for them to feel that you understand them.

Yet the key word in the preceding sentence is not ‘understand,’ but ‘feel.’

It is one thing to understand someone; it is quite another for them to feel understood.

A seller might perfectly understand a buyer’s needs; often, in fact, even better than the buyer. That doesn’t mean, unfortunately, that the buyer feels understood.

A consultant might perfectly understand what a client is going through, on all levels—including the deeply emotional issues facing the client. But even understanding the emotional issues of the client doesn’t guarantee the client will feel understood.

A common sales truism says, “People don’t care what you know, until they know that you care.”

Just because it’s a truism doesn’t mean it isn’t true.  And it is, profoundly so.  The point of listening is not what you hear--it is the act of helping another feel heard.

Why Saying “I Understand” is Arrogant

On the face of it, the statement “I understand” is the perfect expression of empathy. Unlike Charlie Harper (Charlie Sheen’s character in the sitcom), we usually mean it. We are sincere when we say it, so for me to suggest that ‘I understand’ is arrogant may sound insulting.

But think of it this way. The feeling of being truly understood is, by definition, something that must come from the one who is understood—not from the one doing the understanding. To assert that you understand how someone feels about their situation is to usurp their very role as object of the understanding.

It is not our right as advisors or sellers to tell someone we understand them; it is only they who can inform us that they feel understood. For us to make the claim ourselves is arrogant.

A Better Way to Express Empathy

We can never truly know another. All we can do is to guess at how we might feel in similar circumstances—and assume that they might feel likewise. The source of much tragedy—and comedy—comes from mistaken assumptions that others are exactly like us.

So, what is a better way to express empathy? How do we communicate, across the divide of individuality, a sense of connection with another? Here are a few ideas.

• That must feel…
• I can only imagine how that must be…
• I suppose if I were you I’d feel…
• Is that (difficult, easy, complicated…) for you?
• I think I might have a glimmer of what that means for you…

The particular words don’t matter as much as a combination of sincerity and a respect for the ineffable separateness of the other person.

Ironically, the way to convey connection is to acknowledge the impossibility of fully achieving it.
 

If you’re with me on those three statements, then you probably agree that something is wrong on Wall Street. But just what?

Are warped incentives to blame? A Gordon Gekko-ish culture of greed? A mugging of economic thinking by anti-Keynesian theorists? An over-emphasis on competition? A failure of regulation?

(And let's not go to the 'we need to be less trusting, because there are bad people out there.'  We do not need more suspicion in the world today; we need more trusting, and more trustworthiness of those who would be trusted.)

If we force it, most answers boil down to two: it’s either the greedy financiers’ fault, or the fault of the system to restrain natural greed. Let’s look at some recent examples of both views.

In This Corner: The System’s to Blame

Eric Dash, in the blog Economix,  does a fine job running down several reasons why pay packages got so out of whack with performance. He focuses particularly on moral hazard and timing issues. If you can gain big by risk, but can’t lose, then the game is rigged against the public. And if you take the money and run, then no one can hold you accountable.

But in the end, Dash suggests culture is key—the culture of correctly linking risk to pay--or not--encouraged by those at the top.

It seems curious to cap a structural critique of the industry with a conclusion that is based on a human-nature sort of thing like culture.

Curious, but rather right.

And in This Corner: It’s Ethics That Are At Fault

Over at Investment Business Daily, Gary Stern reports that companies are cutting back significantly on ethics training. “The decision by some firms to cut back on ethics training may haunt them,” reports Stern. “Analysts say creating an ethical culture can help sustain long-term growth, not hamper it.”

Interestingly, Stern also cites a strong culture as the ultimate source of ethical behavior.

But the quotes above illustrate a weakness at the heart of much of the arguments for ethical behavior. They often try very hard to prove that ethical behavior is profitable behavior, hence we can have our cake and eat it too.

Problem is: if the ultimate test of ethical behavior is profitability, then it makes a complete hash of ethics.

I happen to believe that for the most part, behaving ethically is indeed profitable; the longer the timeframe and scope, the easier it is to prove this (sustainability initiatives are a good case in point). But to use bottom-lines to justify ethical behavior is hugely back-asswards.

The Worst of Both Worlds.

What happens when we combine a reliance on structural issues with a casual view of ethics that defines moral behavior in terms of profitability?

A striking example, it seems to me, occurred this summer in healthcare legislation hearings. Representative Stupak of Michigan asked  three health insurance industry leaders whether they would commit to ending the practice of rescission unless there were fraud or misrepresentation.

They fact that the companies refused to so commit is not surprising, or even troubling, to me. There could have been valid business reasons not to knuckle under to such a public hijacking.

But then the leaders opened their mouths to explain why they would not so commit.

“No sir we follow the state laws and regulations,” said one leader.

“No, I would not commit. The intentional standard is not the law of the land,” said another.

Allow me to translate. ‘The reason we won’t stop nailing innocent people to the wall and rescinding life-saving policies for trivial reasons is—because it’s not illegal for us to keep doing it.  And we’ll keep doing it until you stop us by making it illegal.’

What?

I suggest that’s the result of decades of decay in ethics. We have come not only to over-rely on structural solutions, but have produced business ‘leaders’ who blithely abdicate any ethical responsibility in favor of laws passed by state legislatures.

How can business be trusted if it has no ethics beyond a lawyer's opinion?  What kind of ethics is that?

The law should be based on ethics, more than ethics should be based on the law. Law schools, business schools, corporate boards, industry and professional associations should all be ashamed that they have lost track of the difference, and have got it thoroughly backwards.  They need to be held accountable for encouraging this kind of bland monstrosity.

What’s really wrong with Wall Street? Not misaligned incentives, but misaligned views about who owes whom: it’s business that has an obligation to society, not the reverse.  Apparently not everyone got the memo.

Is it due to age? Perhaps; every year I seem to get 365 days older.

Is it due to the complexity of the world? These days, 6 degrees of separation is so five minutes ago. It’s at least down to 4 degrees, closing in on 3.

Is it the ubiquity of mechanized devices to substitute for memory? Could be: kids who learn math on calculators forget how to do addition, and with wireless to-do lists integrating with everything, we have no good reason to exercise our memory muscles—maybe they atrophy?

Maybe. But there’s another explanation.

My doctor put it this way:

The brain circuitry for cognition is fairly complex. Before you can talk about memory, you have to talk about the whole process that precedes it.

If memory is flawed, sure, your memory recall capability can be to blame. But so can your memory storage capability—perhaps it slowly degrades.

Further back in the chain, maybe the storage placement function is to blame—memories are getting stored in the wrong places.

But most likely [says my doctor] it’s that the event was only weakly impressed on us in the first place. The photo was under-exposed. The signal to noise ratio was too low.

In other words, if you’re not paying full attention in the first place, your memory recall is doomed from the outset.

Multi-Tasking is Mugging My Memory

I think he may be right. Multi-tasking may be mugging my memory. I certainly see that happening in others—sitting in classes with blackberries and open laptops. Texting and phoning; reading and watching TV and texting.

A close friend made the same suggestion to me just a few days ago. Since then I’ve been making half-hearted efforts at stopping my multi-tasking addiction, and what I’ve discovered is--I’m pretty hooked.

Interestingly, paying attention is also at the heart of trust. Trust is inherently a relationship: a relationship between one who trusts, and one who is trusted.

At the heart of any relationship is the attention that must be paid, one to another. If attention is high, the relationship is strong. If it’s weak, then so is the relationship.

Why Focus is Central to Trust and to Memory

What is it about paying attention that makes it critical to both memory and to trust? I think it is the same phenomenon. Relationships, like events, only make impressions on us if we are open to them.

If I’m not paying attention to you, you can’t make an impression on me. And of course I won’t trust you. Which means you will not be trusted, and I will miss out on the experience of trusting. Bad stuff all around.

But if I pay attention to you, I will notice things about you, as well as being open to you. I may come to trust you; and you, being noticed by me, may behave in a more trustworthy manner. We allow ourselves to be paid attention to. Good stuff all around.

I think I’ll start small; batch processing email rather than staying constantly on the grid. Cold turkey is kind of frightening.

Who knew that fixing my multi-tasking might help my memory as well as my relationships?

I’ll keep you posted. If I remember.
 

The September Carnival of Trust is up.  John Caddell of Customers Are Talking was kind enough to host it this month, and both the selections themselves, and his commentary, are very much worth reading.  In particular, the Carnival this month touches on the question of what is creates and demonstrates trust—from  elements like transparency and fairness, to simplicity and autonomy. 

So head on over and enjoy the trust feast.

My reaction was a mixture of gratitude (“I think I just got spared a LOT of work”), huffiness (“How could they pass ME over?”), and a dash of embarrassment (“Oh no, I think I just looked like an IDIOT in front of a large group of people”).

In reflecting on what worked and didn’t about my little platform speech (I had three minutes to pitch myself to the group), I realized there are some important lessons about trust-based selling to tease out of my defeat.

What Worked

My dominant strategy was to lead with high Intimacy and low Self-Orientation, and to differentiate myself a bit. How? By telling them first why they might NOT want to elect me. I shared openly that I’m a first-time home buyer and had never before been on a condo board – in fact, I had just made my first condo payment ever. My self-deprecation was effective, I think, in that it got a good laugh and set their expectations about what they could and couldn’t count on me for (couldn’t: Board/home ownership expertise; could: honesty and lightheartedness).

What Didn’t Work

There was one thing I didn’t do that left my constituents understandably less than confident in my abilities. I was too humble. I fell into the trap that (sweeping generalization coming) many women do of being tentative about tooting my own horn.

Sure, I told them a little bit about my professional background (close to 20 years in consulting, the latter half with an emphasis on teaming and relationship skills, which lends itself well to community-building endeavors). But I didn’t let them know that when it comes to starting something up (new community, new board), I’m your woman.

I didn’t tell them that eight years ago I launched a business that now boasts a client roster of global companies that generate millions and billions in revenue each year. I didn’t tell them about the community service program I created that, within six months of its inception, was given a prominent mention in SELF magazine and then acquired by a national non-profit.

(Even as I write this, my brain is screaming: Enough with the tooting horns already!)

Bottom line: I didn’t think about what would be of value to them, link that to what I brought to the table, and say it out loud.

What I’d Do Next Time

Of course, this is all speculation; I might have lost because they didn’t like what I was wearing – who knows. I think it’s safe to say, though, that next time I’d be more effective (and certainly less huffy and embarrassed) by doing the following:

- Take five minutes to prepare. Think about what my fellow condo association members might really want in their first set of officers, and know what the link is to my experience and skills.

- Lead with the same opening – why you don’t want to elect me. It’s honest. Plus it’s a little contrarian, and I like that.

- Toot toot toot away. Confidently, succinctly, matter-of-factly, with an emphasis on the aspects of me that directly address their interests and concerns.

I’d leave them with a more complete picture of me--not one that’s either over- or underexposed.

Seems to me these guidelines apply no matter who we are, what we’re selling, and to whom we’re pitching the sale: prepare and be honest about both your strengths and your weaknesses.

That and choose your clothes carefully.
 

Trust itself has some ‘soft’ and some ‘hard’ components. In the Trust Equation,  we usually think of Credibility and Reliability as the “hard” aspects of trustworthiness. And we think of Intimacy and Self-Orientation as being the “soft” aspects.

But it’s messier than that. For example, a firm handshake and look in the eye go to enhanced credibility, yet they have nothing to do with credentials or expertise.

And then there’s a really big one.   Sometimes, very ‘hard’ actions can dramatically affect the ‘soft’ emotions of our clients, customers, employees.

Take my friend R.

How Weak Business Processes Hurt Trust

He shared with me an email exchange with the customer service folks at American Express. He has an Amex-CostCo card that offers rebates for various categories of expenses.
As he puts it, “I trust Amex to get the rebate classifications right.”

Until, that is, he checked and noted a number of vendors who had not been picked up in the rebate program.  They included such obscure names as Southwest Air, Exxon, Red Lobster, and Marriott.

R. wrote Amex a nasty-gram, and heard back (quickly) with a number of reclassifications. However, Amex also said they didn’t know of Red Lobster or Java City, and would R. please give them more information.

This had the unfortunate effect of upsetting R. more, not just because they didn’t know Red Lobster, but because they didn’t try to look it up. As R. put it, “this made me doubt your past statements.”

Sure enough, he went back and found numerous previous missed classifications. He asked Amex to make these changes and further investigate prior months and years on their own. 

In response to this email, he received an apology and a $50 rebate.

Which, again, didn’t mollify him, but had the effect of getting him even more upset.

And it’s not hard to see why. When you’re talking about money, and when you have as good a reputation for customer service as Amex does, customers come to expect, if not perfection, then something not far off. A series of ‘close enough’ efforts, capped by a weak attempt to buy peace, is ineffective—even brand destroying.

The customer just wants things to work the way they should. You buy a BMW, you expect it to work—and well. You go into McDonald’s, you expect the experience to be predictable, on-time and flawless. You enter into a program with Amex, you expect them to get it right. Not close; right.

The effort to get things right is not rocket science. It is just very solid blocking and tackling; making sure your systems and procedures and processes are as airtight and foolproof as you can get them. It’s the “hard” stuff—there is nothing squishy about nailing down business processes.

But look at the result. R. may or may not have been as ticked off as you would be. But your response, like his, would surely be an emotional one.

What Starts as Bad Execution Gets Interpreted as Bad Intentions

The truth is, we impute emotional intentions to hard actions. We see ‘hard’ behaviors, and we impute ‘soft’ motives—resulting in very intense ‘soft’ feelings.  You don’t just engender ‘hard’ trust by doing ‘hard’ things. You can create ‘soft’ feelings by ‘hard’ actions, just as you can create ‘hard’ results through ‘soft’ actions.

Perhaps ‘hard’ and ‘soft’ aren’t really all that useful. It’s all part of a package. If we are trusted, and if we trust—legitimately—everything gets a lot better. It’s all part of a package.