Trust Matters

Trust Lessons from Independence Day in Small Town USA, 2009

cgreen@trustedadvisor.com (Charles H. Green) — Mon, 06 Jul 2009 07:00:00 -0400

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Real Meaning of L'Affaire Madoff

cgreen@trustedadvisor.com (Charles H. Green) — Fri, 03 Jul 2009 07:00:00 -0400

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

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

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

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

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

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

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

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

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

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

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

How Not to Fix the Barrel

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

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

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

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

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

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

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

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

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

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

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

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

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

cgreen@trustedadvisor.com (Charles H. Green) — Wed, 01 Jul 2009 07:00:00 -0400

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

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

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

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

Putting Trust into a Workable Context

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

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

Building a Trustworthy Business

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

I suggest they can be boiled down to four.

The Four Trust Principles

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

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

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

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

Executing on the Trust Principles

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

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

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

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

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

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

Trust and Pornography: The Supreme Court's Lesson for Business

cgreen@trustedadvisor.com (Charles H. Green) — Mon, 29 Jun 2009 07:00:00 -0400

In 1964, US Supreme Court Justice Potter Stewart famously opined in an obscenity case that it was exceeding difficult to define obscenity, “but I know it when I see it.”

It wasn’t a casual comment, but a carefully reasoned statement, which did and still does make a lot of sense. Certain things—like obscenity—vary considerably across time, locale, and situation. And another such thing is trust.

Trust Doesn't Mean Much Without Context

I can’t think of another concept which carries with it such a wide range of meanings. In context, we nearly always understand the concept being referred to—but the reference varies situationally. Just consider:

- I trust my dog with my life—but not with my ham sandwich.
- I trust a stranger to sell me a book on Amazon—but that doesn't mean I'll introduce my daughter to him.

But business these days doesn’t like subjectivity. The business community has come to insist on things like best practices, diagnostics, rankings and ratings, and—above all—behavioral indicators that can be metricized. Because we all want to know how we’re doing, where we’re going, who’s doing best at it, and just how you know if you’re doing it right. You can't manage it, after all, if you can't measure it.

The business community has gotten hooked on the corporate equivalent of self-help manuals. You know what’s next. Ten Easy Steps to being a Highly Trustworthy Company. Sign up for your Corporate Trust Ratings. Become a Certified High Trust Company. You get the picture.

Who Are the Most Trusted Companies? It Depends

Beneath this rush is almost always the notion that One Size Fits All when it comes to trustworthiness at the corporate level. Trustworthiness is a "thing." Someone has the key to it, and others don't. For the philosophers out there, the operant belief is that there are Platonic Forms for things like Trustworthiness, Engagement, and Leadership.

But in these matters, Potter Stewart was more right than Plato. The bigger truth is--it depends. It's not that the emperor has no clothes--it's that he has more than one wardrobe.

Who is more trustworthy: Apple Computer or Amazon? Fidelity Investments or American Express? Singapore Air or Dell Computer? These are not sensible questions, I suggest, taken out of context.

It depends--on whether you’re talking to customers or to employees. On whether you’re talking about reliability or other-orientation. About transparency or collaboration. About last year or about this year. About a major transaction or about a corner-store impulse purchase. About your car or about your oncologist.

One attribute commonly associated with trust is transparency—but that’s not Trust Virtue One if you’re the CIA. Teamwork may be a trust virtue for the US Army—but not for a law firm of litigators.

At a personal level, you can make some generalizations about trustworthiness: I’ve done so myself in my Trust Quotient self-assessment survey. But even there, I caution against reading the raw results without the context.

At a corporate level, trying to define the most ‘trusted company’ with a one-size-fits-all set of metrics is a fool’s errand. That doesn’t mean it isn’t a useful, valid, and meaningful exercise. It just has to be done situationally, in context.

Like obscenity, we regular plain old human beings have no trouble recognizing trust when we see it. We don't need a scalable model to understand it. Attempts to force-fit trust into behavioral indicators that can be rank-ordered, weighted and incentivized are akin to the US movie ratings system. The ratings tells you more about the rater than the thing being rated.

The Supreme Court already figured this one out and wisely gave up the force-fit approach. At higher levels, such as trust, life overflows the petty boundaries we try to impose on it in the vain belief we can “manage” it. Like a giant wave, we’re far better off surfing it than trying to control it.

Trustworthiness? Or the Appearance of Trustworthiness?

cgreen@trustedadvisor.com (Charles H. Green) — Thu, 25 Jun 2009 06:00:00 -0400

I received an email from my friend (and ex-colleague) Martin, who retired to the Caribbean more than ten years ago. He makes a point I agree with in language more accessible to him than to me (British, that is). Since he’s brilliant (by which of course I mean he agrees with me), I thought I’d let readers hear another voice.

Charlie, we've emailed a number of times about words like trust (which you pretty much own), trusting (i.e. when a buyer is trusting of the seller), trustworthy (i.e. what a buyer hopes the seller is). As I read the commentary on Obama's plan to improve the regulation of the financial services sector I am getting somewhat depressed. Not, I hasten to add, because I do not think Obama's heart is in the right place.

My concern is that his regulatory approach doesn't mandate nor does it seek to combat untrustworthiness. Too often this 'Nation of Laws' falls back to the common defense that 'nothing I did was illegal' even if it broke all sorts of ethical boundaries with the nadir being reached with the apocryphal words 'it depends on what the meaning of is, is'.

I am reminded (and this was more years ago than I care to remember) of my initial exposure to the English Legal System in the 17th and 18th centuries where, because of the rigidity of the 'common law' (i.e. I didn't do anything illegal), a Court of Chancery grew up where by the Chancellor could grant some type of relief 'in equity' which was essentially "a manifestation of the ideas of justice entertained by individual chancellors."

While one could argue that the plaintiffs attorney business is a sort of surrogate for relief against the 'nothing I did was illegal' defense, I wonder if the US needs something similar to the Court of Chancery where there is some body where a person aggrieved by financial creativity could ask the question, "OK, I know what they did to me was technically legal, but was it 'right'?"

I fear that unless the Obama approach to regulation adopts this sort of philosophy I feel sure that the brilliant students coming our of Law Schools and Business Schools will continue to act in an untrustworthy manner by finding ways of disadvantaging the unsuspecting and trusting buyer.

I know many of your clients are in the financial services industry. Is their aim to BE trustworthy or to appear to be trustworthy?

Best,
Martin

Martin, I could not agree with you more.

As a (lawyer) friend of mine points out, there is no concept of “truth” in the law as it exists in the US today - there is only evidence. For the MBAs’ part, they (OK, we) replaced relationships with outsourced business processes, and management with metrics, effectively removing any sense of “ethics” by depersonalizing the behavior of human beings. (Maybe it began when we started calling people 'human capital.' Note which is the adjective).

The combination has been devastating, as you point out. Look at any corporate org chart where you see “ethics,” and the next two words are “and compliance” - as if they were the same thing. As you point out, they are--or ought to be--very different concepts.

And while I too think Obama’s heart is in the right place, this effort was all too predictable. He is doing precisely what America’s “best and brightest” are taught to do as “best practices,” namely create mechanical solutions to issues of human behavior. Alter the incentives, redesign the institutions, create more Chinese walls, and--especially--more procedures to comply with.

Commonsense suggests that if you treat ethical violations with procedural solutions, you negate the very conscience that made us call it unethical in the first place. Do that long enough, and the word "ethical" will become listed as "archaic" in the dictionary.

If you prefer the language of academics and empirical proof to commonsense, try this from Roderick Kramer of Stanford:

Gatekeeping measures may actually have contributed to declines in public trust in business. These studies have found that “innocent employees” who are subjected to additional compulsory oversight measures often “become less committed to internal standards of honesty and integrity in the workplace.”

To flip Ronald Reagan’s words, the act of constantly verifying destroys trust. Excessive compliance measures ruin ethics. Big Brother is death on the human conscience. The trouble with regulatory answers to misconduct is that they foster more cynicism, more degradation of the real issue into mere gotcha contests. They trivialize issues that are, or should be, ethical at heart. As you said.

Martin, I honestly believe that the best answer to the decline in trustworthiness lies not primarily in shifting incentives, or in classical regulation. It lies in mass shaming of the untrustworthy by the consuming public.

The act of mass shaming galvanizes the public’s conscience. Whether or not any particular Madoff then “gets it” or not is beside the point: a community itself needs to articulate, for itself, that there are standards that lie well above and beyond the common law of “I did nothing wrong.” The best Chancery court may be the blunt instrument of public opinion.

Your concluding question should be read by every financial services senior exec, and passed out in the form of a quiz to the general employee base of his or her firm, in the following form:

“Your CXO has said that the aim of your company is not just to appear trustworthy, but to be trustworthy. Do you believe he means it?”

Now that’s a scary question.

Why Trust is Asymmetrical, and What that Means for Trust Strategies

cgreen@trustedadvisor.com (Charles H. Green) — Wed, 24 Jun 2009 06:00:00 -0400

Much of the talk about trust is just that – talk about “trust.” We forget that trust is a word for a relationship between two parties, each doing different things. Further, it’s an unequal relationship.

What we call “trust” results from one person (or entity) trusting another. One party trusts; the other is trusted. The result is what is properly called trust.

Unlike other relationship words (like ‘love’) the quality of trust is asymmetrical. To trust is very much not the same thing as to be trusted. Just ask a traveler in a new foreign country. Or a Madoff client.

The asymmetry is all about risk—the one taking the risk in a trust relationship is the trustor, the one doing the trusting—not the one being trusted.

When we describe degrees of trusting, we use precisely that word: ‘He is very trusting.’ While an adjective, 'trusting' derives from a verb—it tends to describe a behavior, the act of trusting.

When we describe degrees of being trusted, we use a different word: ‘She is trustworthy.’ 'Trustworthy' is also an adjective, but it tends to describe character, an attribute one possesses.

If we’re going to be precise in talking about trust in a useful way—whether it’s personal trust, business trust, or social trust—we need to clear about the risk-asymmetry between the two parties to trust. Absent that simple clarity—who’s doing the trusting, who’s being trusted, and in what realm—there’s not much that can be usefully said.

Here are some examples.

Trusting Strategies.

Trusting someone is very useful—if your trust is justified. Things happen faster, better, with higher quality and lower cost. Life is richer. Of course, if your trust isn’t justified, you get burned. Reasonable risk assessment, then, is a valuable skill in trusting.

But trusting cannot obliterate risk, and risk management alone has its limits. To trust only those we have vetted as trustworthy is to make a mockery of trust. Ronald Reagan’s statement “trust but verify” was cynically manipulative. If you can verify, you don’t need trust--you just need an auditor.

Trustworthiness Strategies.

Being trusted by others is at least equally useful, and of course the combination is best of all. How can one become more trusted—by customers, employees, friends? There are two basic strategies: the first is to trust the other party, the second is to become more trustworthy.

Oddly, the most powerful strategy for driving increased trustworthiness in others may be the act of trusting them in the first place. Marlon Brando’s Godfather character knew this: so do successful networkers. Like homeopathic medicines, a little trust given can innoculate against large doses of untrustworthy behavior by others. This is due to the deeply embedded human propensity to reciprocate--good for good, bad for bad.

Being trustworthy toward others drives their propensity to trust you—and it’s a less risky strategy than trusting them, since most risk is borne by the trusting party. The effect of trustworthiness on trusting doesn’t rely on reciprocity—it is a unilateral action by the trustee that alters the risk perceived by the trustor.

Remember the asymmetry of trust is all about risk: it comes in many forms, such as asymmetry of information, or of power. Many trust issues present as issues of the asymmetry of power: think asset managers trusting rating services, or consumers trusting credit card issuers. It's what's behind jokes like, "I'm from the IRS and I'm here to help you."

There are several ways to manage risk so that the asymmetry is acceptable to both parties. One is simply transparency: the exchange of information.

At a personal level, the decision to reveal information that would put you at a “disadvantage” in a competitive situation is an act of trust. If your client is 58, you are 32, and your client asks your age, do you say, “I’m in my mid-30s?” Or do you say, “I’m 32.” The latter is an act of trusting; it usually makes you seem more trustworthy, and of course it carries some risk.

At a business level, when companies fight greater transparency (presumably to prevent competitive advantage), they are simultaneously destroying the inclination of their stakeholders to trust them, because to withhold information for self-oriented reasons is intrinsically untrustworthy. Too many industries and companies simply do not get this, hence they invite far stronger regulation than need be the case.

I have elsewhere written about the Four Trust Principles: they apply to people and to organizations, and are largely about enhanced trustworthiness.
Personal and business approaches to trustworthiness overlap in the arena of leadership. The general who personally leads his cavalry troops into battle shows that he will take risks on their behalf; the troops' powerful response is to trust him in return. Trusting given yields trust returned.

Explored carefully, this simple framework tells us how to better navigate the worlds of romance, business, friendship, business regulation and socio-governmental institutions.

Increasing trust starts with asking: who does the trusting, and who is to be trusted? Where's the risk, and how can we manage the asymmetry?

The Trust Week in Review

cgreen@trustedadvisor.com (Charles H. Green) — Fri, 19 Jun 2009 06:00:00 -0400

Introducing The Week in Trust: a weekly look at the world through trust-related eyes.

Part news-roundup, part mind-stretching and whimsical, part commentary that didn’t have enough zip to make it into the blog, but which needs saying.

Big Story Department.

Regulation has got to be the story this week. Regulation, at least to my schizophrenic view of things, represents the failure of capitalism to regulate itself. I believe that business is a higher calling, and that it ought to be capable of long-term self-interested thinking. But you couldn’t prove that by recent history.

According to the Wall Street Journal, Wednesday’s announcement represented “the most sweeping reorganization of financial-market supervision since the 1930s.”

Bruce Carton’s most excellent Securities Docket explains in not-that-complicated language why the WSJ is not being hyperbolic. Credit cards, exotic derivatives, small banks, private equity, hedge funds, insurance—not to mention more energy behind enforcement. It’s all coming down the pike.

And it’s not just the finance sector. Let’s not forget (hey it was way back at the beginning of the week) that the US Food and Drug Administration (FDA to those who can read alphabet soup) will be regulating tobacco. That was a long time in the making, and a milestone of sorts.

Why such a sudden glut of regulation? On some level sure, it’s the Democrats. But Democrats can’t just regulate for the heck of it, and not all of them want to anyway.

I contend it is, as I stated above, a failure of self-regulation. Whether it’s mortgage brokers or CFPs or regional airlines or credit card companies, what precedes regulation is a mountain of self-justifying rhetoric, aimed at short-term benefit of market players against consumers: ironically, thus harming the industry long term.

But enough about regulation, it’s Friday. Let’s raise our sights.

Who Knew Department.

What do you do if you're a government with an endemic social dishonesty problem? If you're Indonesia, you open up 7500 'honesty cafes,'or food stores where the responsibility of paying the right amount is left to the customer. I don't know of any larger-scale attempt at testing the old saw that 'the fastest way to make a man trust you is to trust him.' Early returns are it's working great in schools; in government offices, not quite so much.

Hey, it’s the principle behind vaccines—expose them to a little bit of trusting, and they’re inoculated against being untrustworthy. Nothing new to readers of this blog. But way more fun.

Do guns kill people, or – does lack of trust kill them? One of those academic studies that makes you scratch your head a bit; you know there’s some truth there even if it’s cleverly hidden behind the English language.

Trust Angles Department.

It’s one thing when a bucketshop broker or a used car dealer gets accused of being untrustworthy—right or wrong, that’s the price of being stigmatized as low-trust. Ho hum.

But what if you’re known for high trust and you get accused? Ouch. Big Ouch. For example, the Canadian Conference Board. Ouch, I say.

What’s it mean to trust your babysitter? Find out.

You may think trust is down, down, down. After all, that’s the drumbeat du jour. But how many of you are happily using cloud computing? What an act of trust that is. And sometimes, maybe it lets you down. But--have you stopped using it? And what does that say about your level of trust.

Your Opinion Department.

PGA pro Vijay Singh is still wearing his sponsor’s golf hat. His sponsor, interestingly, is mini-Madoff Stanford Financial. Hate it when that happens.

Is he being loyal? Or stupid? You be the judge.

Please give me some feedback: should The Trust Week in Review be a regular Friday feature of TrustMatters? Enquiring minds (ours) want to know.

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

shirsch@trustedadvisor.com (Stewart Hirsch) — Thu, 18 Jun 2009 06:00:00 -0400

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

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

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

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

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

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

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

Dad: “How’s things going on the farm?

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

Dad: “Do you need anything?”

Farmer: “I need…” [places an order].

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

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

Trust Reader Volume 2

cgreen@trustedadvisor.com (Charles H. Green) — Wed, 17 Jun 2009 07:00:00 -0400

Greetings.

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

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

Get the Trust Reader volume 2 here

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

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

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

The other two articles are:

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

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

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

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

Trusted Advisor Associates eBook Series on Trust

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

Trust Reader Volume 1

Trust Matters Primer Volume 1

Trust Matters Primer Volume 2

Trust Matters Primer Volume 3

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Why Trust Improves Your Bottom Line

cgreen@trustedadvisor.com (Charles H. Green) — Mon, 15 Jun 2009 06:00:00 -0400

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

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

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

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

Let’s break it down into the economic benefits of

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

How Trusting Adds to the Bottom Line

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

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

Specifics?

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

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

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

That all adds up to real money.

How Being Trustworthy Adds to the Bottom Line

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

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

Specifics?

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

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

That all adds up to real money too.

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

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

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

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

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

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

Who's Minding the Store in Corporate America?

cgreen@trustedadvisor.com (Charles H. Green) — Fri, 12 Jun 2009 06:00:00 -0400

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

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

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

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

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

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

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

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

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

Where is Accountability in Business?

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

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

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

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

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

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

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

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

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

Where’s the shame?

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

cgreen@trustedadvisor.com (Charles H. Green) — Thu, 11 Jun 2009 06:00:00 -0400

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

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

Take it away, Walt.

Bob and his Two Simple Questions

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

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

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

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

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

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

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

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

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

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

“So, how’s business?”

“So, how are YOU doing?”

---------

What Walt said.

Carnival of Trust for June is Up

cgreen@trustedadvisor.com (Charles H. Green) — Wed, 10 Jun 2009 08:06:32 -0400

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

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

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

The trust crisis facing the PM and Parliament in the UK
The state of trust in sales as a profession
Trust in the medical profession
Trust-based scams
Ten practical steps for improving business relationship trust.

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

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

The Banality of Bad Behavior in the Financial Planning Business

cgreen@trustedadvisor.com (Charles H. Green) — Tue, 09 Jun 2009 06:00:00 -0400

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

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

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

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

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

Or were they?

What Passes for Good Behavior in the Financial Planning Business

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

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

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

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

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

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

What Good Behavior in Financial Planning Should Look Like

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

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

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

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

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

Can Ethical Behavior Be Increased in Financial Planning?

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

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

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

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

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

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

Ethics vs. Jack Welch at the West Point of Capitalism

cgreen@trustedadvisor.com (Charles H. Green) — Mon, 08 Jun 2009 06:00:00 -0400

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

MBA Students For Ethics and Social Responsibility?

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

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

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

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

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

Ethical Progress at Harvard Business School?

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

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

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

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

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

Jack Welch, Old School: Interconnected World, New School

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

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

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

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

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

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

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

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

Managing Trust Metrics

cgreen@trustedadvisor.com (Charles H. Green) — Fri, 05 Jun 2009 07:00:00 -0400

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

The question they should ask themselves is: why?

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

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

Trust Trends: Precisely Measuring—What?

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

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

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

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

How’m I Doing? Measuring Trust Improvement is Tricky

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

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

Measuring Trust to Drive Motivation Can Backfire

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

The Best Trust Measurement Encourages Diagnosis

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

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

Want to measure trust?

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

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

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

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

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

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

The Power of I'm Sorry: the Four R's of a Trustworthy Apology

mslatin@trustedadvisor.com (Mark Slatin) — Thu, 04 Jun 2009 07:00:00 -0400

Do you remember the last time you felt like you deserved an apology but didn’t get one? Maybe…

The waiter forgot about your table
They shipped you the wrong product
Your significant other embarrassed you in a group setting

Fill in your own blank. What impact did that have on your level of trust?

As sure as death and taxes, we will mess up. How we respond, regardless of fault, can have a monumental effect on our relationships, yet apologizing is rarely discussed in business development circles.

I recall an audience member asking a sales trainer, “What do we do when we make a mistake”? The trainer responded, “Be careful about apologizing. If you admit to the mistake, you could have legal liabilities”. While technically correct, that advice somehow didn’t feel right to me.

Shifts in thinking on this topic appear hopeful. Even state governments, hospitals and insurance companies have abandoned legal posturing in favor of an apology approach. “I’m sorry” legislation has been approved in 29 states and is gaining momentum. To reduce the risk of litigation, New Jersey recently started the Sorry Works! Coalition.

Gaffes, slip-ups, and blunders present a fork in the road to relationship depth. The proper apology, even in the most egregious circumstances, has the ability to strengthen relationships. Even seemingly insignificant faux pas like arriving late for a meeting, mispronouncing someone’s name, or failing to include someone, present a moment of truth to building trust.

We’re a “fix it” society. Somehow, we convince ourselves that if we just correct the problem - without an apology - we’re back to our original balance in the trust bank account. That’s a myth.

So how do we build a worthy apology?

Experts like Aaron Lazare and Nick Smith, in their book On Apology, point to four essential parts of the apology, and we can remember them as the 4 R’s: Recognition, Responsibility, Remorse, and Reparation.

1. Recognize - First, the offender must show they recognize their misbehavior by restating the offense as objectively and specifically as possible. Repeating what happened and why will show that the offender understands not only where and how they went wrong, but why the offended is hurt. Be direct, i.e., "I apologize for whatever I did to hurt you" won't cut it!

2. Responsibility - Second, the offender must accept responsibility for the action that caused offense. No excuses here! He can't blame the beer or the bad mood. The apology is all about THEM and how they feel. It doesn't matter if the actions were intentional or not, the end result is the same.

3. Remorse - Third, the apology must show, sincerely, remorse for the misbehavior. Sincerity can't be faked: we know it when we hear it. We’ve all heard non-apology apologies. Include a statement of apology along with a promise not to repeat the behavior. Remember Don Imus (see Imussed Up: Anatomy of a Failed Apology)?

4. Reparation -The fourth essential component may be the trickiest: reparation. The offender has to give something back, atone in some way for his offense. This is easily said, but hard to do. How, indeed, do we mend a broken heart?

“The apology represents a common frailty --we are all human, we all make mistakes, perhaps even hurt someone, intentionally or not, then face the dilemma of where to go from there?” states Susan Morrison Hebble. “For starters, the offender needs to listen, openly and earnestly. They need to hear what the person has to say; let them talk; let them suggest what might be done to restore harmony to the relationship”.

As Martha Beck writes, "The knowledge that one is heard and valued has incredible healing power; it can mend even seemingly irreparable wounds."

Here’s a hard truth: we must first admit that our own pride poses the biggest obstacle to apologizing. I would propose, then, that the apology requires us to shift our focus from ourselves--our own discomfort, our own embarrassment, our own sense of guilt--to the person or people we've offended--his hurt, his sense of betrayal. It requires us to act selflessly rather than selfishly.

It is a daunting task, one that forces us to look at ourselves, at our own flaws, and then look beyond them to the person we've hurt. But anyone who has offered up a real, solid, true apology will attest that in doing so they released themselves from the very pain, discomfort, and shame they'd been avoiding all along!

The 4 R’s aren’t rocket science, yet like most risk – reward propositions, they take practice.

Who do you need to apologize to?

Can Trust Be Taught?

cgreen@trustedadvisor.com (Charles H. Green) — Wed, 03 Jun 2009 06:00:00 -0400

Let’s not mince words. The answer, pretty much, is yes.

The exception is what the academics call social trust—a generalized inclination to think well or ill of the intentions of strangers in the aggregate. That kind of trust ends up being inherited from your Scandinavian grandparents (or not, from your Italian grandparents).

The rest, let’s break it down. First, enough talk about “trust.” Trust takes two to tango. One to trust, another to be trusted. They are not the same thing.

So let’s start by asking which we want to teach: to trust, or to be trustworthy?

Trusting someone is, paradoxically, often the fastest way to make that other person trustworthy—thereby creating a relationship of trust. People tend to live up, or down, to others’ expectations. So if you can muster the ability to trust another, you’re both likely to reap big returns quickly from the resultant trust.

However: trusting can also be a high risk proposition. The vast majority of business people, on hearing “trust,” will say “that’s too risky.” In other words, they hear “trust” as meaning “trusting,” and they turn off.

On the other hand, there is being trustworthy. If you consistently behave in a trustworthy manner, others will come to trust you, and voila, you have that trusting relationship. Being trustworthy tends to take longer than trusting, but the results are just as good. And, it’s very low risk.

Let me say that again: becoming trustworthy is a low risk, high payoff proposition. This is not a hard concept for people to get, if explained right.

What does it mean to be trustworthy? The trust equation explains it: it’s a combination of credibility, reliability, intimacy, and a low level of self-orientation. You can take a self-assessment test of your own TQ, or Trust Quotient, based on the trust equation.

So the question is: can people be taught to become more credible? More reliable? More capable of emotional connectedness? More other-oriented and less self-oriented?

The answer is yes. Big picture, there are two ways to teach these things. One is to recall Aristotle’s maxim: "We are what we repeatedly do. Excellence, therefore, is not an act, but a habit."

People can be taught truth-telling, reliability, even other-orientation to some extent by showing them the behaviors—particularly the language--of trustworthy people.

But the deeper, more powerful approach to building trustworthy people starts the other way around: by working on thoughts to drive action. As the Burnham Rosen group articulates this point "thought drives actions which result in outcomes."

Many disciplines outside of business know the truth and power of this approach: psychology, acting, public speaking, to name a few. Business doesn’t appreciate it enough. But commonsense does.

Trust can be taught: either by teaching trusting, or trustworthiness. The latter is lower risk, hence the most attractive approach for many in business. And trustworthiness can be taught via a mix of skillsets and mindsets

It makes sense.

Call for Submissions to June Carnival of Trust

cgreen@trustedadvisor.com (Charles H. Green) — Tue, 02 Jun 2009 12:39:54 -0400

Just a reminder: midnight Thursday June 4 is the due date for submissions to the June Carnival of Trust.

In the nearly inconceivable case that you've not heard of the Carnival of Trust, it is a compilation of the Top Ten blogposts of the past month having to do in some way with the subject of trust: trust in relationships, business, politics, or society.

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

This month we're delighted to welcome sales savant Dave Stein. Reporting from the urban wilds of Martha's Vineyard, Dave is a big-picture observer of the field of sales and sales training. Check him out at the cleverly titled Dave Stein's Blog or at his company, ESR Research (think the JD Powers of sales training). Dave and I are one of those connecctions made through social media (Social Media Today, to be precise), and we have come to know and respect each other. I look forward to his being able to share his wisdom with Carnival of Trust readers.

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

Have We Learned from the Financial Crisis?

cgreen@trustedadvisor.com (Charles H. Green) — Mon, 01 Jun 2009 06:00:00 -0400

Most people would agree that something went awry with large parts of the global financial system. Most would also agree with some broad-brush characterizations of just what went wrong. A bit too much greed, self-orientation, short-termism. A bit too little customer focus, ethics, regulation.

Hopefully some of the overheated sectors learned something, or were at least chastened. Then again: don’t hold your breath. Here are some anecdotal samplings from the home lending and the financial advisory segments.

Ethical Improvements in the Home Appraisal Business

In an April story the Center for Public Integrity reports:

In a 2007 study by October Research, a real estate news provider, 90 percent of more than 1,200 appraisers polled reported feeling pressure to change property values, usually from lenders, mortgage brokers or real estate agents.

How much pressure? All too often, if appraisers didn’t come up with numbers that fit what lenders wanted, they found themselves blacklisted. How overtly?

Amerisave, one of the largest online mortgage lenders, has close to 12,000 appraisers on its “ineligible appraiser list,” which was removed from the Atlanta-based company’s website after the Center made inquiries about it.

Actions taken? NY Attorney General Cuomo did some vigorous investigation; one results was a Freddie Mac new “Home Valuation Code of Conduct” to go into effect May 1.

Who opposed it? Why, the National Association of Mortgage Brokers, of course.

The same people who, when JPMorgan Chase’s Jamie Dimon said his failure to terminate the company’s mortgage broker business was the “biggest mistake of his career” responded by saying Dimon’s remarks “clearly reflected his poor understanding of the mortgage industry.”

Uh, NAMB vs. Jamie Dimon? Tthat's one you lose on credibility alone, NAMB.

NAMB’s excuse for its role in the mortgage debacles? Others did it too. So much for ethical learnings.

Ethical Improvements in the Financial Planning Business

There are principled, ethical, customer-focused financial planners; I’ve met many, and know a few well. At the same time, I think few would argue that the sector is a hotbed of high ethical behavior. RegisteredRep.com reports:

According to a recent study by Prince & Associates…15 percent of the wealthy left their financial advisors in 20087 and 70 percent took at least some of their assets out of the advisor’s hands.

Why? False advertising, says Cerulli Associates in the same article: what an advisor says he offers and what he really does aren’t in sync. Bill Bachrach, a respected (by me as well as by the industry) consultant in this space says:

“It’s been way too easy for former stockbrokers to gather assets and dump them somewhere and call themselves wealth managers…If asset management is all you do and you can’t point to some other way you make money, you have nowhere to hide when performance goes south.”

What’s the industry response? Here’s Ken Fisher, a mega-marketer of financial services, responding to two former sets of clients who are suing him for failing in his fiduciary responsibilities:

The lawyers who are representing the clients in both matters are “similarly incompetent." Both cases “will run into a concrete wall. The person who will be sorry in the end is the client, who will wind up spending money on lawyers and getting nothing.” [Fisher said he wanted to teach one lawyer] “a lesson he won’t forget.”

Now there’s a client-focused kind of guy. The kind you'd want out front promoting responsible behavior on behalf of your industry. Customer satisfaction? Let them sue for it, then endear them to you through public insults and threats. Great strategy, Kenny boy.

Then there’s the case of Jeffrey Forrest, fired by his broker dealer, sued by the SEC to keep him from working as an investment advisor. He continues to run an RIA firm in California, and is licensed to sell insurance there. In March, he and Associated Securities, for whom he was a top producer, were found guilty by a FINRA panel.

Associated Securities—surprise surprise—is appealing. Another great customer lesson: never admit you're wrong. Especially when you are. Goebbels had that one down pat.

Last but not least. Finally, after all the Madoff hoopla—some concrete action:

SEC commissioners on May 14 voted 5 to 0 in favor of a proposal that would require the roughly 6,000 federally registered investment advisory firms that deduct their fees from client accounts to undergo surprise audits. The move is part of a wider effort by the regulator to crack down on advisers with direct custody over client holdings.

Exactly. Bernie made off with all the money by skulking in the gray spaces between regulators: for example, he custodied his own investments and no one checked on them.

So, surprise audits? You betcha, right on, about time. The industry should applaud this effort to help improve its reputation. Thank you SEC!

But, wait. The proposal is opposed by the FPA, NAPFA and the IAA.

Why the resistance? Here's a taste:

A surprise audit would likely cost his firm about $3,000 a year, said Ben Baldwin…That fee would likely be passed on to clients, he said.

“There should be an uproar because it's going to hurt a lot of consumers,” Mr. Baldwin said.

Others contend that the proposal would force smaller firms to stop deducting fees from their clients' accounts — a move that would require them to wait for clients to reimburse them for their services.

A National Board member of NAPFA elaborates further:

“When you deduct your fee from the client's account, you have no cash-flow problems.”

And that, I guess, would be why NAPFA opposes the SEC’s proposal. Because it would force advisors to send invoices instead of directly deducting fees. Thus slowing cash flow.

More Madoffs? An occasional small price to pay if it helps protect advisors’ cash flow.

There are simply too many players like the ones quoted in this post who still see regulation as a hateful intrusion on their god-given right to extract cash from customers' wallets unless expressly forbidden by federal law.

And there are simply not enough players who see regulation as the regrettable consequence of the presence of the former group of players. They do business based on the simple idea that you should treat people, and most certainly customers, decently. It can't be easy for you to watch the first group so demean your industry's reputation.

Many from that first group must have read a blogpost of mine from two and a half years ago: How to Get Your Industry Regulated in 6 Easy Lessons. They're executing the six lessons marvelously, and I have no doubt they'll succeed beyond their wildest dreams very soon now.

Ethics and Compliance: What's Trust Got to Do With It?

cgreen@trustedadvisor.com (Charles H. Green) — Thu, 28 May 2009 06:00:00 -0400

I believe words matter. They affect the way we think, therefore the way we perceive, therefore the way we act. Words are not passive things, acted upon by our blind behaviors; they are cultural repositories of memory. Ontogeny recapitulates phylogeny in language as well as in biology.

So it has always bothered me to hear “ethics” and “compliance” in the same phrase.

I’m aware I’m in the minority; it is casual usage to combine the two.

There is the Society of Corporate Compliance and Ethics and their Institute.
Back in 2005, a speech by the SEC talked about the decline in ethics and compliance.
Corpedia Corporation “offers a wide variety of innovative and user-friendly compliance and ethics solutions.”

So, it’s commonly used. Then again, we also live in a world that obsesses over Britney Spears.

Defining "Ethics" and "Compliance"

Let’s try the dictionary. First, ethics:

1. (used with a singular or plural verb) a system of moral principles: the ethics of a culture.
2. the rules of conduct recognized in respect to a particular class of human actions or a particular group, culture, etc.: medical ethics; Christian ethics.

Now, compliance:

1. the act of conforming, acquiescing, or yielding.
2. a tendency to yield readily to others, esp. in a weak and subservient way.

These two words don’t live together easily. In fact, if we try to substitute “Wall Street” for “medical” or “Christian” in the ethics definition, we get what most people would call an oxymoron: Wall Street ethics.

I would argue this is a serious issue. Entire industries—financial and pharmaceutical come to mind—have come to conflate the two words, and we are all the worse for it.

When “ethics” becomes a soul-less matter of ticking the boxes, when we substitute acquiescence for a conscience and subservience for principles, we have lost a great deal. In particular, any meaningful sense of the word “trust.”

How can a financial planner aspire to being a fiduciary through procedures alone? How can a company achieve client focus through quarterly behavioral competencies alone? How can we create trusted regulatory agencies if all they do is enforce processes and paperwork? How can you give multiple choice 'tests' that 'certify' people as being 'ethical?' But that is generally how "compliance" programs are executed.

That way lies Bernie Madoff, and a thousand other example of people who have lost track of simple guidelines like be transparent, tell the truth, serve your clients, and work for the long run.

You Can't Comply Your Way into Ethical, or Trustworthy, Behavior

A focus on compliance alone can never create ethical behavior. Perversely, all it does is incent slightly bent people to become more bent by focusing on exploiting the inevitable gray areas that crop up in any set of behavioral rules. There are plenty of professionals who are 100% compliant with their industries' lax standards, and are, by many customers' judgment, highly untrustworthy, selfish sleazeballs.

Law schools can take some blame here; law is the only profession in which the notion of ‘truth’ is non-existent, replaced by ‘evidence.’

MBAs are hardly blameless; their mindless pursuit of markets, transactions, and micro-measurements have fueled the replacement of “character” with “observable behaviors that achieve sustainable competitive advantage.”

But that’s too easy. We’ve all gone along with it. We’re all infatuated with “science,” neuro-proof, lawsuits and fix-it drugs. Ethics? Get with it, dude.

I know this sounds like an old-fart rant, and in part it is. But there are plenty of businesspeople who behave well, and even prosper because of it. And they’re also to blame for tolerating the shades of gray.

We don’t have a crisis of trust and ethics so much as we have moral sloppiness--a willingness to tolerate mediocrity. Most of us have remarkably similar instincts about what’s right and what isn’t.

What we’ve all got to do is get mad about how far we’ve strayed.

And compliance is not an excuse.

The Trust Audit

cgreen@trustedadvisor.com (Charles H. Green) — Wed, 27 May 2009 08:00:00 -0400

While trust is an issue that never goes away, the last couple years have been seen a collapse in the trust that the public, employees and even companies have for corporations and many other organizations. Many organizations recognize that without trust from their key stakeholders, they can't operate properly.

However, once the leadership recognizes a problem, the next step is often to measure it. And trust is notoriously difficult to measure.

So, here at Trusted Advisor Associates, we've been analyzing, well, how to analyze trust. Today we'd like to talk about what we've come up with and are planning to introduce in the next few weeks: The Trust Audit.

Trustworthiness at the Organizational Level

I've been writing recently about a comprehensive approach to thinking about trust. Think of it as a two by three matrix.

On one axis, we have those who trust and those who are trusted; trusting, and being trustworthy. See for example Trust, Trusting and Trustworthiness.

On the other axis is “where” we find trust: interpersonal, organizational/institutional, and social.

We’ve talked a lot about being trustworthiness interpersonally. For example, if you haven’t done so already, click to find your Trust Quotient™, your TQ™.

But how can we trust a business? What can an organization do to be trusted? To regain trust? And so forth. What’s needed is the organizational equivalent of the TQ quiz: what’s needed is a Trust Audit. And it’s finally just about here.

For some time, Trusted Advisor Associates have been developing a tool aimed at assessing trustworthiness at the organizational level. We're announcing it now, even though it’ll be a few weeks before it's website-deployed and open for business.

Introducing the Trust Audit

The purpose of the Trust Audit is to allow a company to take a systematic, high level look at its trustworthiness. More organizationally savvy than a financial audit; more market-focused than an employee engagement survey; and more culture-focused than a reputation survey.

The Trust Audit is not:
a. a longitudinal survey purporting to track trust over time
b. a public database
c. a best practices database

It is none of those things because we believe trust is situational, for organizations as well as for individuals. We are interested not in academic research per se, but in teeing up meaningful issues in a meaningful way for our clients.

What is the Trust Audit? The Trust Audit is private; results are known only to the company contracting for it. The Trust Audit is aimed at leadership teams, top management teams and Boards who are interested in taking a serious, objective look at how trustworthy they are seen to be, and at what they can do to improve.

The end result “deliverable” of the Trust Audit is a survey-based discussion around a Heat Map—a map of where the organization’s biggest trust threats and trust opportunities lie.

Conceptually, The Trust Audit™ is built from the four Trust Principles (client focus, transparency, medium-to-long term focus, and collaboration), and from a modification of Weisbord’s model of organizations – external relationships, leadership, structure, rewards, processes. Think a 4x5 matrix (come on you, you knew we’re ex-consultants, you knew what to expect).

Mechanically, the Trust Audit starts with an online survey—20 questions, just like the TQ, one for each cell in the matrix. Respondents will come from external (customers, suppliers) and from internal (employees, leaders). There is no set number of respondents.

From the survey, the Heat Map is generated, and richer discussions (we have up to five areas to explore in each of the 20 cells) are held around the opportunities indicated.

If you’re interested in learning more, stay tuned to this station, and/or contact Sandy Styer at sstyer@trustedadvisor.com

Collection Agents: Trusted Advisors, or Creepy Hustlers?

cgreen@trustedadvisor.com (Charles H. Green) — Fri, 22 May 2009 06:56:34 -0400

Good salespeople, psychologists and counselors know one basic truth: people are influenced by (and buy from, and take advice from) those who listen empathetically to them before selling, advising, etc. (This beats approaches like value propositions, for example.)

So what happens when these techniques are used by credit card collection agents seeking repayment from people who are seriously underwater with their credit card? See What Does Your Credit Card Company Know About You?

First, it works. Second, it’s hard to avoid feeling creeped out.

My question: how do we reconcile these two observations? Can you use “good” trust-building techniques for “bad” ends? Does it mean these techniques are manipulative? Or does it mean collection agents are getting a bad rap, and actually raising positive karma in the world?

I mean the question more seriously than you might think. It has implications for how we try to restore trust by regulation in the financial sector.

Therapist, or Credit Collections Agent?

Consider Donna Tiff, a 49-year-old Missouri woman who owned $40,000 on multiple cards. Tiff became adept at countering aggressive collection agents by threatening suicide.

And then Tracey came along. She worked for a company that today is a subsidiary of Bank of America. Tracey had talked to Tiff several times and noticed that there was a mistake on her account — an automatic payment was going to be deducted twice from her checking account. If that happened, Tiff’s other checks would bounce.

“I told her, thank you so much for catching that,” Tiff recalled. “And then we talked for over an hour about my problems and raising kids. She was amazing. She was so similar to me. She gave me her direct number and said that I should call her directly anytime I had any questions or just needed to talk about what was going on.”

Over the next three years, Tiff paid off the entire $28,000 she owed Bank of America and spoke regularly with Tracey, she said. And the $12,000 she owed on other cards? Well, those companies didn’t have a Tracey. They never got fully repaid.

It’s a heartwarming story. Unless you’ve seen how people like Tracey are schooled in the art of bonding. What are the odds that the random customer assistant who dealt with Tiff would have so much in common with her and manage to strike such a close bond? I tried to call Tracey myself, using the information Tiff provided. But I was told she didn’t work there anymore.

I asked Tiff if she ever asked Tracey to write off the late fees and the interest charges.

“Oh, no,” she told me. “She was so kind to me. How could I ask her for something like that?”

I remember when Bill Clinton was first running for president in New Hampshire, and his nickname “slick Willy” was brought up. He reportedly asked a friend, with all the sincerity he could muster, ‘am I really a slick Willy?’

I took that story to mean that someone as smart and as good at empathy as he was ultimately had to wonder about his own motives, and whether he himself could tell the difference.

Or, take Bernie Madoff. He flawlessly imitated nearly every aspect of the trust equation. Does that mean that being credible, reliable, intimate and other-oriented are bad things?

Take the classic Turing test. If you communicate, via a computer keyboard and screen, with two closed boxes—one with a real person inside, and one with a computer—just how do you tell the difference?

And if you can’t, does that mean the computer is human? We want to say of course not—but try explaining just why.

Trusted Behaviors Without Intentions are Empty

In this case, most of us would say the difference has to do with motives. Does Bank of America intend to help raise the psychic health of credit-battered Americans, and get paid in the process? Or is it in the business of extracting wealth from people to whom BofA sold their credit cards in the first place, cynically using Maslow’s hierarchy as a tool to get there?

It isn’t just hypothetically relevant. It goes to how we regulate trust in society. It shows the bankruptcy of ever and ever-greater reliance on purely behavioral and metrics-based approaches to trust. Trust without motives is the computer in the box.

If legislators and regulators cannot figure out a way to put integrity into regulation instead of dealing solely with procedural “compliance,” there will always be a Madoff who figures out how to mimic acceptable behavior. (See Harry Markopolis' congressional testimony for a far more workable approach).

You can’t strip trust down to behaviors alone without squeezing the soul out of it. When it comes to trust, intent is relevant.

Trust Matters Primer vol. 3

cgreen@trustedadvisor.com (Charles H. Green) — Wed, 20 May 2009 06:00:00 -0400

Announcing Volume 3 of the Trust Matters Primer—the "Best Of" series from the trustedadvisors.com blog Trust Matters. You can download it by clicking on the link below:

Trust Matters Primer Volume 3

I’ve written the ebook series to add more dimensions to the dialogue about trust—to draw connections between otherwise disparate blog posts, to highlight some of the dialogue, and to offer it in a form you can share with others.

What do these three articles have to do with each other?

A random act of kindness on the flight from DFW to Boston
A shift in thinking about capitalist theory by a management icon
A Harvard Business School study debunking conventional wisdom about cognitive learning.

Hint: they all have to do with interpersonal relationships and trust.

If the interplay of interpersonal relationships and trust interest you in a business context—or any other sphere, for that matter—I hope you will read and enjoy Trust Matters Primer Volume 3. I look forward to your feedback!

Realms of Trust and Manifestations of Trust

cgreen@trustedadvisor.com (Charles H. Green) — Tue, 19 May 2009 06:00:00 -0400

Most would agree that trust is a hot topic just now. That's about the only thing agreed upon about trust, however. We can't even decide what it means.

I wrote a post last week called Trust, Trusting and Trustworthiness. I suggested that much writing about trust confuses these three manifestations.

Think of that post as Managing Trust Part I -- Trust Manifestations. Think of this as Managing Trust Part II -- Trust Realms.

There are three trust realms in all: interpersonal trust, organizational/institutional trust, and social trust.

The realms of trust are well known to academic trust researchers, not so much to business people. They do make simple common sense, however.

1. Interpersonal trust

Interpersonal trust deals with one-on-one dynamics. Most of my work has focused in this area. It’s the stuff of relationships, selling, advisory businesses, and personal risk-taking.

2. Organizational and institutional trust

This form of trust covers a wide range of issues: the organizational environment conditioning interpersonal trust relationships, the trust of individuals in their organizations and institutions, and the nature of trust relationships between organizations themselves.

Surveys that measure “trust in government” can shift dramatically and quickly, with the election of an Obama, or the humbling of an SEC, for example. In these respects—speed and personalization—organizational trust resembles personal trust. But it also deals with organizational cultures and values—undeniably group phenomena.

3. Social trust

Social trust deals with the generalized beliefs individuals hold about “other people." Think under what conditions you’re likely to lock your car doors. Unlike the other two realms, this trust doesn’t deal with people as individuals; also, it tends to change only glacially, perhaps across generations.

If we array the realms of trust against the manifestations of trust, as shown below, we can begin to have a structured conversation about trust.

Trust Realms and Trust Manifestations
Manifestation/Realm	Trusting	Being trusted	State of Trust
Personal
Organizational
Social

Until then, we are going to have vague, or circular, or meaningless discussions about trust.

When Steven H.R. Covey talks about how trust affects speed and cost, he is largely talking about the manifestion dimension—the presence or absence of a state of trust. But is he talking about the state of personal trust? Or organizational? Or cultural/social?

Gatehouse, a UK communications consultancy, says “business is facing a massive and global crisis of trust right now.” But what are they talking about? Which manifestation? Which realm? Or are we descending into an inevitable and inescapable downward spiral of rampant anarchy?

Do they mean that individuals are less trusting of business? Or that more businesses are untrustworthy? Or that the state of economic uncertainty has rendered the state of trust lower?

Paul Seaman’s review of the Edelman Trust Surveys (Would you trust a trust survey?) does a nice job of taking apart the apparent meaning of trust survey data. A small example: trust in banks is down, trust in government is up: does that mean we want the government to take over banks?

These are not word games. Intelligent policy formulation depends on being able to clearly define problems. For example:

• When is structural regulation preferable to greater enforcement?
• For what trust issues is transparency an appropriate remedy?
• Do we have any institutions that teach the personal manifestation of trusting?
• If you change personal and organizational trustworthiness, do you have to worry about social trust?

We’re entering a period where trust has gone viral; it’s got buzz. We’re about to see more survey data, telling us with greater and greater precision whether doctors are gaining on nurses in trust ratings, who has the most trusted brand name, and whether trust in Romanian economists went up or down in October.

Watch out for conflicts of interest: who's paying for a ranking of trustworthy companies? What problem is being solved? What issues are being addressed?

Get ready for many tales, full of sound and fury, signifying—well, just what? That is the question.

Day Trader Management

cgreen@trustedadvisor.com (Charles H. Green) — Mon, 18 May 2009 06:00:00 -0400

The NYTimes’ Joseph Nocera wrote Saturday about the closing of Neil Barsky’s hedge fund, Alston Capital. Barsky, it seems, is one of the good guys. (The same issue has an article titled “Hedge Fund Manager Accused of Fraud,” just so we keep things in perspective).

One of the reasons Barsky left the hedge fund biz after seven years was:

[he was] “tired of the ways the business had changed. “When I first started in 1998, we used to send out quarterly numbers. Now investors want weekly numbers. Professor Louis Lowenstein” — the iconoclastic and recently deceased Columbia University business law professor — “has a great line in one of his books: ‘You manage what you measure.’ ”

I for one wouldn't call it a ‘great line,’ but the practice has certainly become widespread—and we are generally the worse for it. Let me explain.

If Measurement is Good, How Much More Measurement is Better?

Nocera provides another example of change, in his fascinating book Good Guys and Bad Guys. In the mid-1970s (not that long ago for some of us) investors couldn’t be dragged out of bank savings accounts into new-fangled money market funds. Too risky, doncha know.

Fast forward to 1987, the go-go ga-ga days when everyone was focused on—daily mutual fund prices. Awfully risque.

But it’s not just finance. MBA programs and systems consulting firms have been pushing a hot product for some years now. It’s sold as efficiency, liquidity, process outsourcing--but at its heart is Lowenstein’s ubiquitous link between measurement and management. More measures, more frequent, more detailed: equals better management.

If you can measure it, you can manage it; if you can’t measure it, you can’t manage it; if you can’t manage it, it’s because you can’t measure it; and if you managed it, it’s because you measured it.

Every one of those statements is wrong. But business eats it up. And it’s easy to see why.

I just got an iPhone app that lets me check my QuickBooks account. Now, of course, I crave my receivables data updated instantly, constantly, 24-7. Because I can. And because more is better. Isn’t it?

A consultant friend was about to be hired to help improve engagement survey scores for an executive’s team. He tells me::

“In no time, you heard middle management’s attitude evolve; ‘OK, this group is going to meet its goals; we are not going to be the ones lagging behind on these numbers. We will be able to show measurable improvement in engagement.’ And so they were about to turn ‘engagement’ into another meaningless exercise in meeting the numbers.”

The ubiquity of measurement inexorably leads people to mistake the measures themselves for the things they were intended to measure. It doesn’t have to be this way--but it too-often is.

Even Malcolm Gladwell feeds the measurement frenzy. In his current New Yorker article How David Beats Goliath, he cites Vitek Ranadive. Ranadive has made a career of turning un-integrated batch processes into aggregated real-time processes—faster, more data-rich, integrated. He suggests the problem with national economic policy is that the Fed has to wait weeks for data. Presumably if the Fed worked with real-time data, we’d have better economic decisions. Call it day-trading national interest rate policy.

If Barsky thinks weekly investment numbers for his hedge fund are too short-term, let’s hook him up with Ranadive. Set up the databases right, and we could all be day-trading hedge funds! And of course, there'd be an app for that.

Management by Measurement Isn’t Just a Financial Disease

If MBMM—management by massive measurement—actually worked, day-traders would outperform Warren Buffett. I think they don't.

The US mortgage industry morphed from a web of relationships (banks, bankers, home-owners) into a global impersonal market of short-term transactions. More liquid? Yes. More efficient? Yes. Lower cost of funds? Yes again.

But today’s meltdown arose precisely because replacing lengthy relationships with multiple transactions, substituting markets for relationships, and metrics for management leaves nothing but short term, impersonal money at the heart of business. The saying on Wall Street became, "I'll be gone, you'll be gone--do the deal." On Main Street, it translates as, "just tell me you're going to meet next month's metrics." It's seductive, and it's addictive. And not good for business.

When hooked up to its kissing cousin incentives, MBMM is a powerful drug. As incentives critic Alfie Kohn says, "Incentives work. They incent people to get more incentives." Like I said, addictive.

There’s nothing inherently wrong with measuring. Or transactions. Or markets. They’re fine things.

But undiluted and without moderating influences, they become not just a bad deal; they can be a prime cause of ruining the whole deal.

How Can I Get Them to Trust Me?

cgreen@trustedadvisor.com (Charles H. Green) — Fri, 15 May 2009 07:39:11 -0400

How can I get them to trust me?

It’s an important question for lots of people: financial planners, TV news anchors, IT help desk people in companies, HR folks who want a seat at the table, pharma company management, and parents and teenagers.

There are three broad approaches to getting others to trust you. They are not mutually exclusive, and are probably not exhaustive—but they come close.

Of course, you can’t control another human being. Trying to do so will paradoxically destroy their trust in you. Which is why all three approaches involve full acceptance of the one whose trust you seek.

Trust Creation Strategy 1: Trust Them.

We are powerfully wired as part of our social instincts to engage in reciprocal exchanges with each other. These acts of reciprocity create networks of cumulative obligation—or of enmity.

If someone behaves well toward me, I “owe” that person parallel behavior. This simple fact underlies the social role of etiquette, as well as things like gifts, Don Corleone's power, or ritualistic forms of greeting like secret handshakes.

We are powerfully motivated to return in kind what we are given. If you want to be trusted—first seek to trust.

Trust Creation Strategy 2: Be Trustworthy.

It sounds trite, but it’s not. It is a strategy of attraction, not promotion. To be trusted, try to be worthy of that trust. All else equal, people trust those who are worthy of trust. And people have finely honed capabilities of discrimination that far exceed our abilities to articulate them.

Which begs the question: what constitutes trustworthiness? Steven M. R. Covey, following consistently in his father’s Seven Habits behavioral pattern, identifies 13 behaviors—phrased as imperative-form verbs like ‘get better,’ or ‘confront reality.’

Much though we may like verbs--they suggest definitive actions we can take--they are misleading. You don't make people trust you, they choose to do so. You attract trust by being who you are, not by acting upon others.

I prefer the Trust Equation: it is couched in the ways people see us—as attributes. Four of them pretty much sum it up: credibility, reliability, intimacy—and whether we are seen as self-oriented, or other-oriented.

This definition of trustworthiness underpins the Trust QuotientTM self assessment test—take it here and find out how trustworthy you are.

Trust Creation Strategy 3: Listen.

The single most powerful trust-creating action we can take is to give to another the fine gift of our own attention. To listen—intently, to the exclusion of all other thoughts, without simultaneous cogitation, and devoid of judgment.

This has nothing to do with the content of what is being heard. It is simply about the act of offering attention. It translates, to the one being listened to, as an act of respect. As such, it triggers the reciprocity reaction: we are willing to listen to those who have listened to us.

All three strategies, to work, must be done cleanly. While we can all become more trustworthy, or better listeners, or better trustors ourselves, we have to keep our motives intact.

If we want others to trust us solely as means to our own ends—they won’t. The concepts of giving freely, and without attachment, are key. The paradox is: if you do these things, you become trusted. But if you set out to do them in order to be trusted, so that you can etc. etc. etc.—you don’t.

Trust, Trusting and Trustworthiness

cgreen@trustedadvisor.com (Charles H. Green) — Thu, 14 May 2009 06:00:00 -0400

The word ‘trust’ gets used in many ways. Consider the simple joke, “I’d trust Bill Clinton with the economy—just not with my daughter. On the other hand, I’d trust George W. Bush with my daughter. The economy, not so much.”

Considering that we tend to use one word to cover so many duties, it’s surprising we ‘get’ the meanings as well as we do.

The Word 'Trust' Gets Used Imprecisely

Let’s break it down.

There are three ways we talk about ‘trust.’

1. There is trust, the verb: to trust. The one who trusts, the act of trusting.

2. There is trustworthiness, a noun. A characteristic or trait of the one who is trusted.

3. There is trust, the noun: a quality of the relationship between people, the level of trust that exists between them.

Here is Steven Covey, a well known writer on trust, using the same word to describe all three situations:

• “Trust is a competency…There is a risk in trusting people, but there is a greater risk in not trusting them.” (Meaning 1, the verb: to trust)

• “Trust is a form of both character and competence….Investors invest in and customers buy from brands they trust.” (Meaning 2, the noun: trustworthiness).

• “Low-trust, low-performance organizations typically exhibit [certain] cultural behaviors” (Meaning 3, the noun: the state of trust).

We usually infer the intended meaning well. Still, it creates confusion about trust itself when we are not clear.

I hear all the time, “Trust is nice to have, but this is a tough environment, and you can’t take that kind of risk around here.” When someone says that, I know they are confusing trust and trustworthiness.

To trust someone is to take a risk. There is no trusting without risking, in fact. (As long as we’re talking Presidents, Ronald Reagan’s “trust but verify” was a bit of political rhetoric: if you have to verify, it ain’t trust.)

Yet to be trustworthy is the opposite of risky. Others strongly trust those who are honest, believable, candid, unselfish, high integrity, direct, and so forth. It’s a lot less risky to be trusted than it is to have people suspicious of you.

The confusion grows when people focus on trusting or being trusted to the exclusion of noticing high-trust environments (where people both trust and are trustworthy).

You Can't Manage Trust if You Can't Define It

To accurately assess, describe, measure and manage trust, we have to get clear on the concepts, the language. Trusting creates trustworthy people, who then attract more trusting from others; pretty soon, you’ve got a whole lot of trust going on.

You can’t build trust if you don’t know which meaning you’re playing with. Try figuring which meaning of trust is intended in this typical quote from the Edelman Trust Survey:

Trust in business around the world is, generally, lower today than it was a year ago, according to the Edelman report. And, generally, CEOs and other leaders aren’t held in especially high esteem.

Does this mean buyers are less willing to trust these days? Or that businessmen are less trustworthy? Or that the state of trust in the world has declined? Is there causality here or not? If so, what drives what?

And therefore what are we to do with such data? Educate people about risk-taking? Step up regulatory enforcement? Or increase engagement between business and customers?

Asking “do you trust XYZ” over time offers the appearance of precision—“it’s up X%, it’s down Y%”—but without any context, it’s hard to say what it all really means.

It’s no surprise that “trust” has such a “soft” image; casual use of words creates the impression that trust itself is soft and fuzzy, hardly the stuff managers should busy themselves with.

The fact is, all three meanings can be defined, measured, taught and managed—but only if we’re clear just which meaning is being measured and managed.

For examples of metrics that deal strictly with trustworthiness, see The Trust Equation – in its online self-assessment form, the Trust Quotient (go on, it's free!).

For an example of how to teach and manage trusting, see this on the risk management tool of Name It and Claim It.

For a good example of the state-of-trust, see a sampling of economists’ and social scientists’ views earlier this year at Trust Trust Trust.

I trust you'll find me trustworthy enough to help increase our mutual trust.

The Great Empathy Famine

ahowe@trustedadvisor.com (Andrea Howe) — Tue, 12 May 2009 06:00:00 -0400

I spent the weekend in California. It started as a mini-vacation—joining a friend’s 50th birthday celebration. It ended with most of the time in my hotel room with the flu.

At first, my demeanor was positive (why compound physical misery with a bad attitude) but steadily declined as I negotiated all the logistical changes required to extend my stay until I could haul my ailing self back across the country.

Of all the service providers with whom I interacted (hotel desk clerks, cleaning ladies, airport rental car attendant), not one acknowledged my matter-of-fact revelation that I was asking for help because I was sick and couldn’t go home.

Why Is Empathy So Hard to Find?

Now, I wasn’t looking for sympathy from these folk (well, maybe a tad). It just would have been nice if, when they learned of my situation, they had given some hint that they had actually heard what I said. "Oh, I’m sorry to hear that,” would have completely sufficed. Or “Oh dear!” Even “Bummer, dude.”

But no. Nothin’. Nada. When I finally emerged from my room, the cleaning lady had an attitude – the Do Not Disturb sign that hung on the door for 48 hours straight had kept her from doing her job.

The Alamo car check-in guy dutifully read – word-for-word – the statement on the back of my agreement justifying the additional $10.99 late return charge. Waiving the $10 might have made me a customer for life. Just saying, “I’m so sorry that my job requires me to tack on this extra fee under the circumstances” might have led me to consider renting from Alamo again.

These are not unhappy or unfriendly people. Hey, it’s California. They get a lot of sun. And it’s not like they were in roles not requiring interpersonal skills -- I’ll give the hotel housekeeper a pass, but the rest were front-line customer service types. And honestly, I wasn’t being a cranky-whiny-pain-in-the-you-know-what sick person – I promise.

I’m not sure what the problem was. Perhaps they weren’t really listening. Or they just didn’t know what to say.

Empathy Isn’t Really All That Difficult

The thing is, empathy isn’t that hard. It comes in many forms: “I’m terribly sorry,” or “I’m sure that wasn’t how you wanted to spend your weekend here!” or even “That sucks!” (sorry, Mom, I know you hate that word).

Just acknowledge -- rather than avoid -- the emotional reality of the human being on the other end of the phone/service counter/board room table.
Are you uncomfortable in this touchy-feely zone? That’s perfectly normal. But it’s also a bad excuse for doing nothing. Awkward empathy beats no empathy any day of the week.

In our Trusted Advisor and Trust-Based Selling programs we spend a lot of time practicing empathy. Put in the terms of the Trust Equation, empathy creates intimacy and intimacy builds trust.

Empathy is imperative in professional services; listening is what drives influence. Just asking good questions is not enough to be a good listener.

Having your client get that you got him -- emotionally as well as cognitively -- is what earns you the Top Listener award, which in turn earns you the right to be heard.

Next time you ask your client how her weekend was, and she mutters “Not quite what I expected,” try putting the meeting agenda aside just long enough to say, “I’m sorry to hear that” or – context-permitting – “Bummer, dude.”

And if your client ever reveals something that leaves you feeling itchy and unsure what to say, say that (“Oh … I’m not sure what to say”). Any attempt will do.

Buying Lessons from a Master Salesman

cgreen@trustedadvisor.com (Charles H. Green) — Mon, 11 May 2009 06:00:00 -0400

I spent some time in South Florida this weekend with Sam, a retired former rep for a national clothing manufacturer—that is, he wholesaled clothing lines to retail stores and chains. His territory was New York. Here’s what he taught me about buying.

How Buyers Say They Buy--from Expertise

A few years ago, he got a terrible pain in his left knee. Three doctors in a row said he needed either a knee replacement or arthroscopic surgery. A fourth doctor said he suspected it was actually a hip problem which caused a pinched nerve, which resulted in knee pain.

“I’m not a hip guy,” said doc four, “but my new young colleague is. I’d like you to have a chat with him. “Fine,” said Sam, “anything to get rid of this debilitating pain so I can get back to tennis and golf.”

“The doctor was young,” Sam said. “That was no problem. But he wouldn’t look me in the eye. He told me it was a hip problem all right, and all those other fancy doctors had it wrong. None of them had even taken an x-ray of my hip, but he did.”

“Problem was, I couldn’t get over him not looking me in the eye. If a buyer or a seller won’t look the other in the eye, I just don’t trust him. Kiss of death and all that. So I says to him, ‘hey, I’m over here—who you talking to?’ He just said he was a distracted kind of guy, nothing to worry about.”

“But that’s exactly what I worry about. So I went back to his boss, Doc 4, and I said no offense at all, I just think I’ll look for someone with a little more experience.”

I asked, “Sam, you told me you didn’t trust the guy; why didn’t you tell his boss?”

“Well,” Sam said, “I don’t want to be ruining some kid’s medical career, so I just made a plausible excuse.”

And there you have it. Sam—a highly experienced and successful salesman, basically says people buy on trust, including him. And yet, when asked by the seller (Doctor #4) why he didn’t buy, he lied—he said it was lack of experience. He didn’t tell the truth--which is that he didn’t trust the young doctor.

How Buyers Really Buy--From Trust

So it always is. Sellers think buyers buy on expertise; they don’t. They buy on trust. And when they ask buyers why they didn’t buy, the buyers claim it was on expertise. And since that’s the answer sellers want to hear, they believe it.

The truth is otherwise. As Jeffrey Gitomer puts it, people buy with the heart, and rationalize it with their brain. We overrate the importance of processes--and underrate the importance of connection.

The irony is that young doc was right. Sam underwent arthroscopic knee surgery with a high-reputation doctor in South Florida, and the result was nothing but more pain.

A year later, Sam visited a hip specialist in NY who diagnosed hip troubles just by watching Sam walk. He got a hip replacement two months later, and shot a 47 on the front nine a few weeks ago--pain free.

The young doc was right. Unfortunately--So What. He treated the patient like a case study, not a human being.

Sam would be the first to tell you: being right is vastly overrated. Earning the right to have people believe you’re right—that’s where the trust comes in.

That’s trust. That's how people buy. That’s good selling.

The Shortest Route to Sales is Not the Direct Route

cgreen@trustedadvisor.com (Charles H. Green) — Fri, 08 May 2009 06:00:00 -0400

I’m told that the old tale of the frog in boiling water is false. Supposedly, a frog placed in a pot of cold water will stay put, even when the water is gradually heated—all the way up to the point that the frog itself boils along with the water.

Even if it isn’t true, it ought to be. Because it’s a wonderful metaphor for the biggest single thing wrong with sales.

The Single Biggest Mistake Made in Selling

Business in general, but particularly sales, has fallen into the trip of “more is more.” More detail is better. Greater frequency is better. More measurement is better. But gradually, like the mythical frog, the system can produce the opposite of what was intended.

The implicit assumption—increasingly explicit in large systems, projects and sales management tools like Salesforce.com—is that if you can break things down into constituent parts, then you can manage the whole just by micro-managing all the parts.

This is not a dumb idea. It’s the concept of division of labor; it’s what makes massive projects possible. There’s a lot to like about it.

But there’s one huge thing wrong with it—the belief that the goal of the process is the sale itself.

Suppose you’re a customer. Suppose the person selling to you is entirely driven by a system, process, and mindset that their goal is to get you to buy. Now, if that is their over-riding goal, then by definition, your goals must take second place if there is ever a conflict.

And oh, yes, there will be conflicts. With sellers managing zillions of bytes, items, events, meetings, decisions, calls, qualifications, they frequently have to decide--shall we do what the customer wants? Or what we want? It's a no-brainer for the system; make the decision that objectively maximizes the chance of us getting the sale.

By this view—the dominant view of selling—you the customer are an object, a poker chip in a competitive game. No matter how good sellers are at interpersonal skills or consultative selling, the inescapable point of this approach is that the customer is a means to the seller's ends.

You may be thinking, ‘well, duh, that’s the nature of selling!” Well, no, it isn’t. It isn’t even the most effective approach to selling. Breaking down the process into innumerable smaller pieces doesn't fool the customer--but, froglike, it allows the seller to believe he is effectively selling.

The Goal of Great Sellers is Not to Get the Sale

The whole problem arises from the beginning assumption that the goal of sales is to sell. The really successful salespeople—whether in professional services or jet engines or new cars—realize the paradox at the heart of sales:

The true goal of sales is to help the customer. The sale is a byproduct of helping the customer—not the goal itself.

The distinction is not trivial; it makes all the difference in the world. If I as a customer learn that you are willing to put my needs ahead of your own, then—paradoxically—I trust you.

And if I trust you, I will buy from you.

That simple logic--you put my needs before yours, I trust you, I buy from you--turns out to yield more powerful sales results than the most elaborate of methodologies all aimed at achieving my needs first.

The best sales systems/processes in the world are based on breaking down the process of getting a sale. But in so doing, they break down the one critical element—trust—that drives the most, and the biggest, and the most profitable sales.

It’s truly a paradox. The best sales come from consciously not trying to get the sale, but in being willing to subordinate your interests to the customer’s.

You get the most by trying not to get the most. The best sales come from not trying to sell.

Buddhism? A Beatle song? Maybe, but also a powerful business model. And every great salesman knows the truth of it.

The problem is, all those pretty good salespeople are slowly boiling--and not noticing.

25 Behaviors that Foster Mistrust

cgreen@trustedadvisor.com (Charles H. Green) — Thu, 07 May 2009 06:00:00 -0400

Please welcome Peter Vajda, a frequent commenter on this blog, and a respected thought leader, coach, writer, and co-founder of SpiritHeart. I'm delighted to yield the floor to him for one of his many fine articles.

"Trust men and they will be true to you; treat them greatly, and they will show themselves great." —
Ralph Waldo Emerson

All of life is relationship - even life at work. And the most critical, foundational building block of a team is trust. Without trust most teams are really disparate collections of individuals called groups. The element that creates or erodes trust is your individual behavior.

Trust can support teams to go the extra mile, work for the greater good of the team and the organization, foster open and honest communication and engender mutual respect and support.

Distrust, on the other hand, often stems from a "me first" mind-set that leads to destructive conflict, egoism, and a "going through the motions" attitude.

Trite and worn it may be, but "There is no 'I' in team" is a fact of life at work. When trust is lacking among team members, they spend inordinate amounts of time and energy resisting others' inappropriate behaviors, reacting to others' disingenuousness, playing politics, resisting meetings, and feeling reluctant to ask for, or to give, support. In a culture characterized by mistrust, relationships suffer. And when relationships suffer, performance, production and profits suffer.

How might you be contributing to mistrust on your team?

Here are 25 behaviors that contribute to creating team mistrust:

1. You fail to keep your promises, agreements and commitments.
2. You serve your self first and others only when it is convenient.
3. You micromanage and resist delegating.
4. You demonstrate an inconsistency between what you say and how you behave.
5. You fail to share critical information with your colleagues.
6. You choose to not tell the truth.
7. You resort to blaming and scapegoating others rather than own your mistakes.
8. You judge, and criticize rather than offer constructive feedback.
9. You betray confidences, gossip and talk about others behind their backs.
10. You choose to not allow others to contribute or make decisions.
11. You downplay others' talents, knowledge and skills.
12. You refuse to support others with their professional development.
13. You resist creating shared values, expectations and intentions in favor of your own agenda; you refuse to compromise and foster win-lose arguments.
14. You refuse to be held accountable by your colleagues.
15. You resist discussing your personal life, allowing your vulnerability, disclosing your weaknesses and admitting your relationship challenges.
16. You rationalize sarcasm, put-down humor and off-putting remarks as "good for the group".
17. You fail to admit you need support and don’t ask colleagues for help.
18. You take others' suggestions and critiques as personal attacks.
19. You fail to speak up in team meetings and avoid contributing constructively.
20. You refuse to consider the idea of constructive conflict and avoid conflict at all costs.
21. You consistently hijack team meetings and move them off topic.
22. You refuse to follow through on decisions agreed upon at team meetings.
23. You secretly engage in back-door negotiations with other team members to create your own alliances.
24. You refuse to give others the benefit of the doubt and prefer to judge them without asking them to explain their position or actions.
25. You refuse to apologize for mistakes, misunderstandings and inappropriate behavior and dig your heels in to defend yourself and protect your reputation.

By contrast, when you authentically show up in integrity, and allow your vulnerability to show, others see you as genuine, warts and all. As such, your teammates will begin to trust you and gravitate towards you as you have created a personal container of safety in which others feel they can relate to you in an equally genuine fashion.

Communication and true teamwork are functions of trust, not technique. When trust is high, communication is easy and effortless. Communicating and relating are instantaneous. But, when trust is low, communicating and relating take effort, and are exhausting, and time and energy consuming.

Are you guilty of contributing to mistrust?

[To read Peter's self-diagnostic questions--to find out if you are doing any of these things--see the rest of the article]

"The chief lesson I have learned in a long life is that the only way to make a man trustworthy is to trust him; and the surest way to make him untrustworthy is to distrust him and show your distrust."
--Henry L. Stimson

Trust at O'Hare Airport

cgreen@trustedadvisor.com (Charles H. Green) — Tue, 05 May 2009 21:03:09 -0400

I flew Friday night from DC to Kansas City, by way of O’Hare. That’s redundant, everything is by way of O’Hare.

We left from Gate B8. I got to my seat, put my MacBook Air in the seatpocket ahead of me, and settled in. After a few minutes, the pilot announced the equipment had a problem, and would we all please deplane to board another aircraft at Gate B7.

We grumbled but got up to go. As it happened, I was last out of the plane. I talked with another passenger for 20 minutes until we boarded the new plane. I reached into my briefcase to put my computer in the seatpocket and—heart-drop. I had left it in the other plane at B8.

Why You Can't Trust Strangers

I ran out the door, back to B8. The gate agent said the cleaning crew had not been in the plane, and it was empty, but he couldn’t allow me in—he would go look for me. He did, and after a bit too long, returned—empty-handed.

I ran back to the plane at 7B, whereupon the pilot—same pilot, same crew—came back with me and went in himself. No computer.

We had to leave for KC . I filed a baggage report when I got there. I was cautiously optimistic. I was 98% confident I had left it in the plane, and 100% sure the only other possibility was the gate area. I gave it 50% odds I’d see it again.

By end of Saturday, I dropped the odds to 25%. I emailed O’Hare baggage too. By Sunday evening, I made plans to replace the computer. Monday afternoon, 10 minutes before walking into the computer store, I got a phone call.

It was from Francisco Q., of West Shakespeare Street, Chicago. He asked for me by name, and told me he had found a computer. He said he was an employee not of United, but of an O’Hare catering service.

He hadn’t found it in the plane or the gate area. It was in an O’Hare parking lot, in a plastic bag. He said a friend bought a charger (the battery was depleted), and knew how to find my name from the Mac Address Book function.

Francisco wanted to know how I wanted him to send it to me. I said “fast,” and he agreed to do so. I was beside myself with relief, and offered him several hundred dollars as a reward. He said little about that. I planned to send a check by FedEx to him the next day.

The next day he called to ask, apologetically, if I could send the money before he sent the computer, as it was going to cost him a lot to ship, and he was out the cost of the power cord too. He asked if he could pick up the money at Western Union--the same day.

Once Burned--Do You Give Up Trusting Strangers?

I can hear what you’re thinking. But I could hear his voice, and I had no trouble believing him. I sent him the reward, plus reimbursement for the power cord, and gave him my FedEx account number. (Do you know how much poor people pay in fees to use Western Union? No wonder they stay poor).

You can draw your own conclusions about United Airlines ground employees (myself, I still don't know)--and about Francisco Q. In fact, you probably already have.

So tomorrow morning, when FedEx arrives, we’ll know whether or not I was right to trust Francisco. If I was wrong, I’m not out of pocket just a computer, but a few hundred dollars as well, and will publicly feel stupid.

If I was right, I’ll have my computer a bit faster, and feel better about the human race. And so will Francisco. And I think you will too.

I’ll let you know.

Meanwhile—place your bets in the comments section below. I'm giving heavy odds on Francisco.

Introducing the May Carnival of Trust

cgreen@trustedadvisor.com (Charles H. Green) — Mon, 04 May 2009 16:26:02 -0400

I never cease to be impressed at the quality of writing and insights that the guest hosts bring to the Carnival of Trust. And Victoria Pynchon has forged brilliant new ground this month.

Ms. Pynchon is a lawyer, who also writes Settle It Now, a negotiations blog. This is powerful background for someone writing about trust.

Victoria leads off with a powerful videoclip (a first for the Carnival of Trust) from David Mamet's GlenGarry Glen Ross--Al Pacino at his blustering best.

The Top Ten trust selections she chooses are brilliantly linked to her own trenchant comments on current events.

Commercial corruption; trust in politics; medical ethics; social media. These are among the topics she covers. And it's one of the more entertaining and educational trips you'll go on.

High quality selection; witty and incisive commentary. That's what the Carnival of Trust is all about.

Many thanks and congratulations to Victoria Pynchon. Now do yourself a big favor and click on over to Settle It Now, to read the May Carnival of Trust.

When You Can't Trust Your Leadership

cgreen@trustedadvisor.com (Charles H. Green) — Mon, 04 May 2009 06:00:00 -0400

In my corporate seminars, I often hear the following:

Love the trust stuff, Charlie, but I can’t take that risk in this organization. Leadership talks a good game, but I don’t always believe them. People have been burned for taking risks around here.

Before I can risk trusting them—how can I assess the risk? How do I know I can trust them?

First, I’ve seen several cases where leadership was genuinely asking people to do right—best long-term, transparent, customer-focused—and the employees were cynical. It wasn’t a leadership problem, but a followership problem.

But never mind: let’s assume your leaders really are not all that trustworthy. What is to be done?

In fact, this is no different from any other trust situation. If both parties sniff around each other, waiting to see who’ll take the first risk, operating from fear and a scarcity mentality—that organization will stay mired in mistrust.

Trust, like tango, takes two. One to trust, another to be trusted. And the roles can flip. It’s often true that “the best way to make a man trustworthy is to trust him.”

That suggests: if your boss isn’t trustworthy—trust him. Don’t look for a risk management mitigation metric—dive in and trust him. Embrace the paradox.

This actually works--more often than you might think. Because most human beings, including most businesspeople, respond favorably to being trusted. They reciprocate. The more genuine the gesture, the more reciprocation.

This feels risky. But despite what Ronald Reagan implied, (trust but verify), there is no trust without risk. The risk taken is what drives the risk reciprocated. Fake-trusting, hedging your bets, installing your safety nets, just inflames the situation.

If you still can’t stomach trusting your untrustworthy boss, then think of it this way. If you avoid your boss--avoid constructively confronting untrustworthy behavior--then you are tacitly accepting it. If you do nothing to mitigate it, you inflame it. Because mistrust is also like tango in taking two: a non-trustworthy person, and someone who avoids confronting him.

If you tolerate untrustworthy behavior, you harm your organization. Which means you are acting against the best interests of your organization. Which means you are as culpable as your boss.

I think this is largely right. Leaders are not solely responsible for trustworthy behavior. Followers have an equal obligation. Their job is to demand trustworthiness, and call it out when it's not delivered.

A great many leaders would be appalled to find out how feared they really are. They simply do not have an idea of the effect they are having, and do not intend the results that are resulting. If told the truth, many of them them would gladly change.

So, who will tell them the simple truth--"Here's what people are saying. About you. And I don't believe you intend this. Let's talk. "

Try it. You just might be surprised.

Rationalization - At the Heart of Ethical Challenges

dgebler@skoutgroup.com (David Gebler) — Fri, 01 May 2009 05:33:34 -0400

Guest Blog: By David Gebler, President, Skout Group, LLC

By and large, corporate leaders who get into ethics trouble are otherwise honest people. They believe in the Golden Rule; they think that they would always do the right thing.

So what happens to them? What makes them cross the line? Why do some people fall prey to temptation and others don’t? The answers lie in how well a leader prepares his motivational defenses.

Rationalization Lights the Path to Unethical Behavior

The ladder to success requires a great deal of ambition. Leaders have to be assertive, if not often aggressive, in meeting tough objectives and demanding the most of their people. How well do leaders balance a desire to do the right thing with the drive to win and be successful? When those values and goals conflict, which can happen many times a day, how do they reconcile them?

But “balance” is not the right word to use, because this really is not a fair fight. Sitting in ambition’s corner is the power of rationalization. Rationalization is what allows us to devise self-satisfying, but incorrect reasons for our behavior.

We all of course rationalize our actions all the time. We even rationalize our illegal actions, such as driving over the speed limit. But the greater the ambition, the stronger is the power to find reasons to justify actions that we know are not the right ones.

Managers face many options in making decisions on how to meet a wide variety of goals. Taking the most cautious and risk averse path is not what they are paid to do. They are expected to weigh the balance of risk and reward, but most often the bias is clearly towards the reward.

It often starts quite innocently. “If I have to wait until Form X is signed off on, we’ll miss the customer’s deadline.” Or, “I would never have stolen those documents from our competitor--but if they are in my inbox, am I expected to not open them?”

Someone once said “inside your head is a very dangerous neighborhood.” Left alone, we spin our own web of rationalizations, of ends justifying means. And as we have seen, the more powerful the ambition, the more shocking is the rationalization, all the way up to the New York Governor’s hotel suite. That’s human nature, and that’s not going to change.

Defenses Against Rationalization

What we can do, however, is to bolster our defenses. In many instances managers make these risk-reward calculations alone. How many times have we convinced ourselves to do something--and then changed our minds at even the thought of asking a loved one or trusted confidante their opinion.

Yet managers too often view seeking counsel as a sign of weakness or indecisiveness. They will often raise the dilemma only with subordinates who may be hesitant or unable to question the boss’s judgment. Rationalization is very easy if you don’t get outside views from people you trust.

Intuitive leaders understand the need to seek the opinion of others before making close-call decisions. And forward thinking companies have set up processes that channel managers to verbalize both sides of the issue before making decisions that could have ethical consequences.

Human nature isn’t going to change. But if acknowledge it, we can do a better job at managing it.

Note from Charlie: I'm re-posting this one because it only got one hour in the limelight yesterday before being superseded by the eBook on sales. David Gebler is a powerful thinker and consultant on this subject, and I want to give TrustMatters readers more time to absorb his simple but profound message.

Selling Through A Slump

cgreen@trustedadvisor.com (Charles H. Green) — Thu, 30 Apr 2009 07:00:00 -0400

Over the past few weeks, I have worked with the good people at TheCustomerCollective to co-produce an eBook on selling in rough economic times.

Eleven top sales bloggers, from distinct veritical industry groups, with Top Ten lists from each: if you can't find a few great ideas in this compendium, you're either hopeless or should be master-teaching the class.

Enjoy. It's solid material, at a price hard to beat (free). Let me know what you think.

-Charlie

Selling Through A Slump: An Industry-by-Industry Playbook

A Guide by Salespeople for Salespeople on How to Sell Your Way to Recovery

Download this Free eBook

Selling in a recession is tough. And simply doing more of the same is not the way to survive, much less thrive, in a recession. There are important dos and don’ts in times like these. This eBook is your industry-specific roadmap out of the economic slump.

Selling through a Slump: An Industry-by-Industry Playbook brings together sales strategies and best practices from 11 top sales experts from 11 distinct vertical market sectors, ranging from retail to health care to telecom—because one size doesn’t always fit all. The practical tips and experience-based wisdom here aren’t just limited to any single industry, though. Regardless of your market sector, you’re bound to find value in this arsenal of great sales ideas.

Get access to exclusive tips on how to sell in a recessionary market, from renowned sales experts like Jill Konrath, Charles Green, and Dave Stein. We know you’ve got questions—we wrote this eBook to give you answers.

Click here for valuable sales strategies from experts in every industry:

Charles Green, Founder and CEO, Trusted Advisor Associates Selling for Accountants and Consultants	Skip Anderson, Founder, Selling to Consumers Sales Training Selling for Retailers	Mike Kujawski, Founder, Centre of Excellence for Public Sector Marketing Selling to Public Sector Clients
Mike Wise, VP, Insurance Technologies, IdeaStar Incorporated Selling for Insurance Agents	Matt Homann, Founder, LexThink LLC Selling for Lawyers	Anneke Seley, Founder and CEO, PhoneWorks LLC Selling in Health Care
John Caddell, Caddell Insight Group Selling in Telecommunications Markets	Dave Stein, Founder and CEO, ES Research Group, Inc Selling Technology	Jill Konrath, Author, Selling to Big Companies Selling in Services
Anne Miller, Founder, Chiron Associates Selling Media	Dave Brock, President and CEO, Partners in EXCELLENCE Selling to Manufacturers

Click Here to Download

(A simple registration is required)

Brought to you by The Customer Collective and Oracle CRM.
Welcome to the conversation.

Consulting and the Art of Self-deprecation

ahowe@trustedadvisor.com (Andrea Howe) — Tue, 28 Apr 2009 06:00:00 -0400

According to Wikipedia, comedians use self-deprecating humor “to avoid seeming arrogant or pompous and to help the audience identify with them.” Sounds like a good strategy for anyone looking to build trust and rapport with another human being. Sounds like an especially good strategy for anyone in the consulting profession.

Ask any client who has worked with consultants over the years – they’ll have at least a few horror stories to tell about the Big Important Expert they hired. That creates messes we are all left to clean up.

Self-deprecation is an art that should be routinely practiced by anyone who claims the title “consultant.”

Here’s some material for your toolkit (original author unknown):

Top Ten Things You’ll Never Hear from a Consultant

1. You’re right; we’re billing way too much for this

2. Bet you I can go a week without saying “synergy” or “value-added”

3. How about paying us based on the success of the project?

4. This whole strategy is based on a Harvard business case I read

5. Actually, the only difference is that we charge more than they do

6. I don’t know enough to speak intelligently about that

7. Implementation? I only care about writing long reports

8. I can’t take the credit. It was Ed in your marketing department

9. The problem is, you have too much work for too few people

10. Everything looks okay to me

Share this with your clients. They’ll enjoy laughing at your expense. And they’ll appreciate your ability to laugh at yourself!

Marketing Science is Great in Theory...

cgreen@trustedadvisor.com (Charles H. Green) — Mon, 27 Apr 2009 06:00:00 -0400

Lately I’ve been struck several times by the huge gap between what we might call management science, and the reality of what really happens in the world of management.

Corporate training people plan multi-stage programs for the maximal developmental impact; the programs more often than not get cut off in mid-program.
CEOs pronounce intentions; the tea leaves are read, rightly or wrongly, and the reactions are very often deep cynicism or blind faith—not much in the rational middle area.

This runs deeper than just events overtaking plans. This pattern of the irrelevance of theory in the real world of practice is rooted far more deeply—in the human psyche.

Consider the latest on Barnard Madoff and Susan Boyle.

Madoff Less Sociopath, More Common Crook?

Fortune Magazine tells How Bernie Did It. Many things are astonishing about Madoff. One I figured out ahead of the crowd—the fact that his “investments” were pure vaporware.

But I mistook the scale of his crime for the scale of his mental bentness. I was hardly alone in thinking him a sociopath. Now, I think, he’s just more of a common crook.

In a recorded phone call Madoff made to Fairfield Greenwich’s representatives just before an SEC visit, Madoff began with these words: “Obviously, first of all, this conversation never took place…okay?”

These are Tony Soprano lines—not mentally ill or deluded, just garden variety sleazy crook talk. This fosters distrust based not on mental stability, but on the much more familiar grounds of low integrity.

Madoff went on to remind Fairfield of their cover story, that Madoff only executed strategies formulated by Fairfield. He then essentially told Fairfield he would send Fairfield’s revised strategy on to them, contradicting himself in an almost Kafkaesque way.

Madoff successfully threatened Fairfield with taking away their golden goose--and Fairfield groveled and apologized for daring to let their customers withdraw funds! Finally, it appears Fairfield left their own money in too.

And so--Fairfield claims they were bamboozled along with all the rest. And they appear to mean it.

How is it that can you be complicit with a crook, take massive ill-gotten gains, grovel to a blackmailer, then get ripped off--and then feel righteously indignant about it?

This is the same mindset that says ‘no convict is guilty,’ at least according to the inmates. Which begs the question: What's the difference between Fairfield Greenwhich and the Craigslist Killer's fiance'? (answer--the fiance is less into denial).

The best logic of the best court system can’t lay a finger on the self-judgment of those being judged. Our ability to rationalize overwhelms our capacity to be rational.

Susan Boyle: Irrational Reactions

The NYTimes today has the last (please) word on the Susan Boyle phenomenon, and it is again about how “rational thought” is an oxymoron. Let’s look at what we all thought. We thought:

-she’s a frump; no, wait, she’s an angel
-Simon Cowell judged a book by its cover; me, I just changed my mind based on new data
-people use stereotypes all the time, except for me of course

Susan Boyle proves people are prejudiced. But people won’t change. “Proof” is pitifully weak when up against assumptions.

In business, I often think of Indiana Jones’ encounter with the intricately practiced Arabian master of the sword, threatening to bring years of skill and practice to bear on Indiana in the form of whirling cold steel. Jones responds with a disgusted eye-roll—and a point blank shot from his .45.

Theory is the sword—so often outclassed by the blunt force of emotion, a far more powerful driver of human behavior.

Management theories that don’t take human reality into account are so much whistling in the wind.

Pain is Inevitable - Suffering is Optional

cgreen@trustedadvisor.com (Charles H. Green) — Fri, 24 Apr 2009 06:00:00 -0400

There comes that moment. The plane taxis out to the runway, and it’s “no more cellphones or electronic devices, anything with an on-off switch.”

No more blackberry; Kindle; iPhone-Kindle-enabled reader. No more NYTimes online, google headlines, online magazines. And of course I don’t bring a paper, or magazine, because, you know, I like to think I’m a wired kind of guy, and that just wouldn’t do.

So it arrives. The moment I’ve been dreading. The moment when all there is to read is the online flight magazine. Great bars in Cuernavaca. Plastic blondes hyping expensive matchmaking services. Recipes for comfort food.

Then suddenly, everything changes. Continental’s April issue, in “Sky High,” features Dr. Luanne Freer, an emergency medicine specialist physician, who has been donating time to the Sherpa population in Nepal.

She spent three and a half months in a Sherpa village at 14,000 feet, providing health care for both villagers and trekkers. She says she developed a deep connection with the Sherpa people. ‘Some of them didn’t even own a pair of shoes, yet they were much happier than my neighbors in the US who have three cars in their garages.’

This is not news. It surprised me, though—perhaps because it was in such an unexpected context. I heard it as if for the first time. And of course it's true.

We are the architects of our own happiness--and of our own misery. We all agree on it. Yet we don’t seem to do anything about it. Statistics prove it—the wealthier we get, the more happy we do not get.

There are cases where medication helps, though in aggregate we’re probably over-prescribed. And for all those of us who don’t need chemical adjustment to color between the lines—what’s our excuse? Basically, we have none. We must do it. Ourselves.

Prescriptions for Happiness

Me, I find it helpful to collect catch-phrases, one-liners, mnemonic devices. Here’s a small collection. There will not be a test at the end.

•   Pain is inevitable--suffering is optional
•   One foot stuck in yesterday and one in tomorrow means you’re probably peeing on today
•   Don’t rent space in your head to others
•   Cultivate an attitude of gratitude
•   There is a God—and you’re not it
•   Accept what you can’t change, change what you can; and learn the difference
•   No one can mentally hurt you without your permission
•   Don’t measure your insides by other people’s outsides
•   You can’t control anyone; but you totally control how you react to everyone
•   Happiness is an inside job
•   Resentment is like taking poison and waiting for the other person to die
•   Find someone you hate; then say a prayer for them
•   Most interpersonal problems come from a tendency to blame, and an inability to confront (thanks Phil)
•   When in doubt, go find some adult supervision
•   Cultivate an attitude of gratitude

None of these require a pair of shoes.

When Service Companies Shouldn't Talk about Products

cgreen@trustedadvisor.com (Charles H. Green) — Thu, 23 Apr 2009 06:00:00 -0400

I like Continental Airlines. If you have to fly in the US, they’re best of breed. I go out of my way to fly them, and I fly a lot.

Which means I get many chances to hear Larry Kellner, Continental’s CEO and Chairman, do his recorded schtick on the drop-down TV screen at flight’s outset. I still miss Gordon Bethune (what a shame about the silliness that drove him away), but it seems like Kellner’s doing a good job.

Except for one thing. In his spiel, he talks about Continental’s fine “products and services.” And that just rubs me the wrong way.

I do get it, of course. If I were consulting to Kellner, I’d use those words too—in my conversations with him, that is. The abstraction that “P&S” provides is valuable for seeing patterns. Such abstractions are a consultant’s bread and butter, and I dished out a lot of that over my consulting career. I do get it.

But I’m not consulting to Kellner. And while I am a million-miler, a platinum frequent-flyer for years, a President’s Club member since the days of Eastern and the shuttle, as far as I’m concerned, my main identity is--I’m a passenger on their planes.

I’m not a “frequent-flyer” first—I’m a flyer. I’m not a “customer,” much less a “consumer”—I’m a passenger. I’m not buying services (and I’m sure as hell not buying a “product,” despite what I might say with my consulting hat on). When I’m a flyer, I’m buying a plane flight. And while I’m certainly buying an “experience,” I don’t want you to call it that—I want you to call it a flight.

I trust my life to the insane belief that tons of metal can hang in the sky. And when Newton’s law of gravity asserts itself, as it inevitably must, I want to believe in Sully, that guy who can float me down onto the Hudson River just like he was landing on a pillow. (And hey Larry--Sully works for that fershlugginer airline affectionately known as Useless Air—heir of predecessors Agony Airlines and SloHawk. So Larry, I know you guys at my airline, Continental, must have dozens like him--even better!)

I don’t want a high net worth credit product, I want my Platinum Card. I don’t want the best value in the mid-size performance vehicle segment—I want my Ultimate Driving Machine, 5-series please. I don’t want to see the sausage made—I want my Jimmy Dean telling me how great it is, and sounding like Jimmy Dean when he says so.

Larry, I’m sure that when you and Gordon used to kick it back at the crib, you both talked about “product.” But I don’t recall Gordon using the p-word in public. If you’re going to seduce someone, you don’t do it by reading aloud to them from the book “How to Seduce Someone.”

If you’re going to sell me a “product,” just don’t call it that. Talk dirty to me, Larry; tell me about flying, the glory of sitting alone in the front of the bus at 30,000 feet, and about how I’m so, so special. Use your marketing MBA on me--just don’t tell me you’re doing it.

Unless, of course, you want to hire me as a consultant.

In which case, here’s some free consulting. When the Friendly Skies get wired, treat cell-phone talking just like you treat smoking. Smoking is not a "product" you choose not to offer. Ditto cell phone calls.

Call them both a sin against the glory of flying, and tell us you're having none of it. That's marketing I can believe in.

Is it Stupid to Be Trusting?

cgreen@trustedadvisor.com (Charles H. Green) — Tue, 21 Apr 2009 06:00:00 -0400

The ever-catchy Seth Godin highlights an ad for the new super-exclusive Visa Black Card. So rare it’s made of carbon. So elite that it’s limited to just you, and 2,999,999 of your closest friends. It screams exclusivity right through the mass media it’s advertised in.

Nicholas Kristof reported last month on how reliably un-expert experts are. Philip Tetlock, he reports, studied 82,000 predictions by 284 experts over two decades. The results:

“It made virtually no difference whether participants had doctorates, whether they were economists, political scientists, journalists or historians, whether they had policy experience or access to classified information, or whether they had logged many or few years of experience,” Mr. Tetlock wrote.

Indeed, the only consistent predictor was fame — and it was an inverse relationship. The more famous experts did worse than unknown ones.

Dr. Robert Cialdini, the reigning expert in the field of influence, has identified six basic drivers of influence in human beings. The first is reciprocity—a mutual sense of obligation triggered by the actions or words of one.

The second and fourth are scarcity (the Black Visa Card) and authority (Jim Cramer). It is demonstrably stupid to believe that the Black Card is exclusive, and that Cramer is a better stockpicker than the next guy. Demonstrably. But we believe both anyway. (Well, not you and me, of course. But everyone else does. The fools.)

In sales, any number of experts will tell you that people buy from people they like, or trust; that people buy with their heart, and rationalize it with their brains.

If you’re not buying any of this, review exhibit A, Bernard Madoff. He masterfully combined all the triggers into one slick package. An expert, likeable, you could get in on the deal if you were special (you and your 3 million closest friends), and so forth.

A lot of people I talk to about trust throw up their hands at all this and say, “Anyone who trusts is a fool and a sucker.” I prefer to call it human. Trusting is not going away anytime soon; it’s too deeply imbued in our genes and is, net net, too valuable.

We can, of course, get smarter. But the most likely result of getting “smarter” is to stupidly avoid sensible risk-taking by following the "smart" advice of someone else.

“Smart” is a vastly over-rated virtue in the human species. I’ll bet my Black Card on it.

Success - and Measuring Success

cgreen@trustedadvisor.com (Charles H. Green) — Thu, 16 Apr 2009 10:00:00 -0400

How do you measure how much a loved one loves you?

Maybe by the flowers they send. Or the attention they pay to you. Or the look in their eyes when they talk to you, or their curiosity about what you’re doing lately.

You could, in fact, measure each one of those things. Some are easy, like flowers. Others, like curiosity, need decomposing into second-level indicators - how many questions they ask you, the operative pronoun in those questions. The point is, you could do it.

But would you?

Would you ever mistake the measure itself—roses, say—for the love they purport to measure? Of course not. It seems silly to equate the two; the poor sucker who does so is sadly self-deluded and likely unlucky in love.

Roses may be the measure of love--but are not love itself.

Now switch to business. How do you measure success in business? How about by the profits you make? After all, if you create great products that meet real needs in the marketplace and add real value in a customer-delighting manner—well, you’ll get rewarded for it, in the form of profits.

Profits are to business what roses are to love--measures.

So, would you ever mistake the measure—profits—for the success they purport to measure? Do profits really equal success?

Unlike love-and-roses, all too often our answer is 'yes.' Yes, we say, the whole point of business is to make profits. Success consists of making money. It seems silly, we say, to differentiate between the two--the poor sucker who does so is sadly self-deluded and likely to get fleeced by sharper competitors.

In amore, we know the difference between love itself and pale trailing indicators of its recent presence. But in business, we confuse the yardstick with length itself; we’ve lost the ability to distinguish maps from reality.

When did profit move from being a measure of success, to being iconized as success itself?

Thinking that the point of business is to make money is like thinking the point of living is to eat. Profit is a byproduct of doing great business—an indicator. Not a goal.

If all you focus on is roses, you'll at least have flowers at the end of the day; but you’ll fail at love. In business, if all you focus on is profits, you won't even get that. Because, simply, we don’t trust people who are only in it for the money.

Incenting Good Behavior? Or Insulting Customers?

cgreen@trustedadvisor.com (Charles H. Green) — Thu, 16 Apr 2009 06:00:00 -0400

I got my hair cut today by Diane. Who is great, by the way.

We talked about how good hair stylists are often great trusted advisors. Their patients confide in them in ways that lawyers, accountants and consultants can only envy.

And they do it through executing trusted advisor basics. Listening. Being concerned about the client—soliciting preferences, and only then offering suggestions. Letting the client do most of the talking. Practicing discretion. And yes, doing a great job on the hair.

But this isn’t about Diane; it’s about what happened to Diane.

She went to an orthodontist. A new one, a dentist with whom she’d had no prior experience, and therefore about whom she had a mild wait-and-see attitude.

She got a late start, traffic was busy, weather was bad, and she took a wrong turn. She called to say she’d be a little late. In the end, she got there about 8 minutes after her scheduled appointment.

The dentist was young, and had a modern-looking office, including a computerized check-in station, toward which the receptionist motioned her. She input her information and hit enter.

The computer screen confirmed her information, and then—in large letters, having matched her scheduled appointment time against the computer’s internal clock—said:

You’re Late!

Diane’s reaction was one of quiet shock. “I really couldn’t believe they did that,” she said. “I mean, I guess I don’t mind myself; I know they need to run a business, and I was late and that’s my responsibility. But I’m an adult. Suppose a kid came in and their mom let them log in, and they got that in their face. It wouldn't be their fault they were late. To put that embarrassment and shame on a kid, that’s just not right.”

Diane is a generous person. I’d have been a bit more peeved.

Is there a case for the dentist? Sure. Perhaps it was meant as a mild reminder to patients that they share some responsibility for keeping the scheduled patient flow going during the day. It wouldn’t surprise me if there’s a trend of patients being late, and this guy is doing his best in a humorous way to help shift behavior.

But I’m not buying it. To me, it comes off as a heavy-handed move by some customer-phobic techno-dweeb in love with what he imagines to be others’ view of him.

I doubt Diane’s going back. I wouldn’t. Would you?

Can Advertising Avoid Being Cynical?

cgreen@trustedadvisor.com (Charles H. Green) — Wed, 15 Apr 2009 07:59:25 -0400

I saw a TV ad the other night that intrigued me.

It showed a mother who had clearly been called to the police station about her son, who apparently had been hauled in for street racing in the family car. The kid was clearly remorseful and ashamed, not wanting to talk about what had happened. She was emotionally there for him, but also firmly asking him to tell her exactly what had happened.

The tag line was something like, “Responsibility. Liberty Mutual.”

Not your everyday ad.

Now, I like to think I’m as cynical as the next guy, but I have to say, my first reaction was not cynicism. Instead, I thought, ‘Well that was gutsy. I wonder if they can back it up?’

Turns out the ad is part of a broader campaign highlighting the notion of individual responsibility , which in turn is the 2009 version of the company’s broader campaign several-year campaign about responsibility, begun back in 2006 and run by Hill Holiday. It comes complete with website, www.responsibilityproject.com, which has had several million visitors since opening in 2008.

Without having looked deeply into it, I have to say I like this. It’s a relevant issue. It’s an issue they’ve done a nice job of framing, without overtly anchoring it to a particular political point of view. And while they do say they’re about responsibility, it still has the flavor of sponsoring a dialogue, rather than of wrapping themselves in the flag.

Business being business, some idiot had to muck it up a few years ago by buying google adwords related to an advertising exec’s suicide.

And, my viewpoint is not shared by at least one critic, Jack Shafer at Slate, who calls it pandering on the scale of Chevron’s quasi-environmentalist ads.

I’m glad Shafer is upholding the virtues of suspicion while I take a day off from it. Still, at least Liberty Mutual doesn’t address me as “America” and claim “that’s why we at [PickYourBigCo] is doing something about [PickYourBigIssue].

I give them credit. A dialogue about the concept of responsibility at the individual and social level? As long as they stand back and let the dialogue roll, I think they deserve the credit they get by associating their name with it.