Why You must Offer Customers a Guiding Oar in Today's Environment

By Britton Manasco

What does it take to earn the trust of key decision-makers and influencers in today’s turbulent economy?
 
It’s no longer simply about product features or service capabilities. When your customers are making a significant commitment and putting precious dollars (even their own business) at risk, they expect more than ever before. They want a helping hand and a guiding oar. They aren’t just investing in your solutions; they are investing in a promise of superior returns and best practice. They are investing in your company as a leading advisor and authority who is ready, willing and able to help them navigate a challenging period in economic history.

That is why buyers will increasingly gravitate towards thought leaders.
 
Cisco Systems, the $40 billion maker of networking systems and solutions, represents a great example of this point. The company managed to eclipse competitors such as Juniper Networks and Alcatel-Lucent by thinking of itself not just as a technology company but a “leadership consultancy.” John Chambers, the firm’s CEO, contends that the insights Cisco has gained by networking its own business can now be shared with its clients to help them drive growth. “We’re really talking about business process change,” he says. “And since we have done it for ourselves, we can show others how.”
 
Over more than a decade, Cisco has actively promoted its ideas about how to leverage networks for business success. It has underwritten ground-breaking research. It has published extensively. And its executives, particularly Chambers, have been visible proponents of network-driven business. Such efforts help to set Cisco apart from other players in the networking sector while opening up new markets – such as telepresence and web conferencing – for the company to penetrate. The company’s thought leadership positions it as a respected authority as opposed to simply another vendor.
 
So what does it take to become the authority in a marketplace and earn the trust of one’s prospects? As the experience of respected players such as Cisco, SalesForce.com, McKinsey and FedEx suggest, there are several steps once must take to become a thought leader. Among them:
 
1.  Identify issue(s) that you wish to own and content that helps customers. 

You can’t be an authority on everything. It’s critical to determine the issues that matter – or will matter – to the customers you intend to engage. SalesForce.com recognized the growing expense of software implementation and integration as a growing source of dissatisfaction. Note that the issue was framed from the point of view of the buyer’s problem as opposed to the seller’s product features. The company’s CEO, Marc Benioff, became the voice of a buyer backlash and promoter of a new approach that turned a painful capital expense into an operational one that is comparatively easier to justify and implement.

2.  Invest in the development of solid, research-driven insights and perspectives. 

The key here is to actively engage in the research necessary to stay on top of market trends, customer concerns and new business opportunities. Consistently cited as the most prestigious and influential consulting firm in the world, McKinsey & Co. recognized the wider potential of investing in thought leadership back in the 1970s and 1980s. It would produce top research on management topics and then, present it as scholarly articles in the Harvard Business Review or thought-provoking editorials in the Wall Street Journal. Other research and insights – such as those produced by the McKinsey Global Institute – are presented to clients and prospects in its own influential publication, the McKinsey Quarterly.

3.  Develop a distinct, high-level position/message that resonates and is authentic.

Companies must move beyond what they sell to focus on the results they deliver and their thought leadership is a powerful way of conveying this perspective. Cisco offers another interesting example here. The company recognizes that “networking technology” is a little cold and mechanistic on its own. With this in mind, it has coined the umbrella term “human network effect” for its marketing and customer outreach efforts. The concept not only humanizes the company, but reflects the fact that the real winners are people and that its success stories have a distinctly human face.  
 
4.  Leverage your insights in multiple channels. 

FedEx's thought leadership marketing program, known as “Access,” reaches C-suite decision-makers through multiple channels including executive events, web site initiatives and direct mail. The company also publishes a custom magazine, Access Review, to reach its targeted customers. The program is designed to show FedEx's leadership role in the global economy. Grounding its point of view in solid research, FedEx commissioned the independent, nonprofit research firm SRI International to study and measure the movement of goods and information around the world. Each year, the company releases a new report ranking 75 nations based on nearly two-dozen indicators of access to information and physical goods.

As the premium for customer trust continues to rise in the coming years, companies will increasingly embrace thought leadership as a means of earning and strengthening it. Buyers now expect their suppliers and solution providers to illuminate the path forward and guide them through demanding decisions. By meeting this profound need, thought leaders take the steps necessary to become market leaders.

Britton Manasco is a contributing "trustmeister" to the Reputation Garage and founder of Manasco Marketing Partners, a firm that specialized in thought leadership strategy and execution.  He also produces the blog, Illuminating the Future: How Thought Leaders Become Market Leaders. 

Recession Landmines Do Not Discriminate: Proceed With Extreme Caution

by Stephanie Fierman

A recession landmine is like a real landmine. It’s going to kill or maim whomever steps on it. The guilty, the innocent… it doesn’t matter. A landmine does not discriminate. You just explode.

And so it was with a recent Pepsi ad for G2 (low-calorie Gatorade).

When you watch the ad, you can see what Pepsi was trying to do almost immediately, then BLAM: it spins around like Linda Blair’s head and everyone’s covered in slime. This means Pepsi now have something in common with AIG, but more on later.

The shots move back and forth between NBA player Kevin Garnett and a normal, suburban-looking guy - also named Kevin – who loves to swim. The voiceover also switches back and forth between the two men, and herein lies the problem. In trying to write a Nike-reminiscent “athletic striving” ad, the supposedly inspiring statements appear to mock and insult people who have lost their jobs or are otherwise suffering due to the economic crisis. See for yourself (if you cannot already see the ad on your screen, click HERE).

When I first heard about this controversy, I’ll admit it: I really, really wanted to support Pepsi. Pepsi's a great brand. But this spot has issues.

The lines are being called "arrogant and insensitive" and a "cruel" "slap in the face":

Garnett: “I’ve never been handed a pink slip…” “I’ve never had to tell me wife ‘We can’t pay the mortgage.’” (Kevin “The Big Ticket” Garnett has a $24.75 million contract with the NBA)

Normal Kevin: “I’ve never had to fill the holes in my sneakers with cardboard.”

Garnett: “I’ve never used the backstroke as a ‘coping mechanism.’”

And with these statements, my professional persona disappeared and I became a person who can’t pay for food, who doesn’t have health insurance, who has to drop out of school. The sneaker comment struck this trustmeister as particularly startling. Normal Kevin moves us swiftly down the road, past unemployment, with homelessness straight ahead.

How did Pepsi end up in this place? The financial services companies got into trouble for how they handled their (financial services) business. They made endemic mistakes, in their own backyards. This energy drink runs right into a buzz saw for no reason at all.

And so let us come back to how Pepsi now shares something with AIG. Both companies failed to grasp how people are feeling today… how “business as usual” no longer applies. 1.3 million children in the United States are homeless at some time every year - and that was before the recession started. One could assume that some of these children must use cardboard to fill the holes in their shoes.

If you think this is overly dramatic, we would respectfully suggest that you could step on the same landmine that Pepsi and the banks did, either while you’re on the job or chatting at a cocktail party. This is a sea of vast, vast pain.

Personally, I am counseling clients today to look hard at the need to advertise right now. If you are running ads, make sure they are seen and tested with a much broader swath of consumers and experts - people who may not be in your target audience. Put the ads through the mill. Have linguists and child advocates and food bank directors mull every word, every image.

Is all this fair? Fairness is not at play; raw nerve endings are. We are all in the business to sell, of course, but at what cost at this very moment? The news and current events are swinging wildly from one day to the next: are you comfortable deciding what messaging won't spark an undesirable (albeit inadvertent) reaction? Think long-term. If you’re not 100% secure in next week’s flight, cancel it. Because getting this wrong could negatively affect your brand’s reputation for years, if not a lifetime.

#1 In Our Series for Keeping Customers In Tough Times (Nicolette Wuring)

TIP 1: In Today’s Low-trust World Your Promises Are Much Less Likely to Be Believed.  Focus Instead on Improving Your Ability to Deliver Meaningful Interactions With Customers that Build Trust.

A cable company in Europe launched a re-branding soon after a roll-up of acquisitions by a group of venture capitalists. 

The investors demanded that the re-branding take place almost immediately.  This was not only premature and meaningless to employees and customers, it proved harmful.  Premature because on the inside this organization was far from one company.  Harmful because important organizational, operational and cultural objectives necessary to sustain the rebranding hadn’t been met. Worse still, mistrust and insecurity could be found throughout the organization in abundance. Employees were insecure about retaining their jobs after the roll-up. They were uncertain about how to represent the new entity.  And for many loyalties remained rooted in the company they used to work for. Customer-facing policies and procedures were not in place yet.  Systems had not been integrated.

Disregarding all this, the investors demanded that management forge ahead with a re-branding. The effort introduced a vision for a completely new DNA for the culture.  It painted a picture for the outside world of a company that sets itself apart by truly listening to its customers and one that enters into a personal dialogue with you.  The brand image was warm, engaged, truly caring, attentive and accessible. A company that makes complicated things simple. Boring things more fun. Dishonest things honest.

And the impossible, possible.

Now what do you suppose a group of confused, fearful and uncertain employees of this company felt when this re-branding hit the above- and below-the-line communication channels?  How do you suppose their customers felt when confronted with completely disengaged and confused employees who were struggling with legacy operational issues that made it impossible to deliver on the brand promise?  What do you suppose was the media coverage on these results, or the comments posted by customers and employees in online social environments?

The results were very bad indeed.  The company lost employees and customers, prospects turned to alternatives, and every Euro invested in the brand campaign was largely wasted.  Had this disaster taken place in the current environment, where companies can ill-afford mistakes, things would have been even worse.

Learning: Job #1 as a starting point in keeping customers is to deliver on promises.  Lead with trusted actions and only then back them up with brand imagery and communications.  The people you interact with as a company, especially your employees and customers, make or break many a brand’s reputation. Never make promises or create expectations they cannot live up to!

Nicolette Wuring is an internationally acclaimed and awarded Customer Advocacy thought leader, speaker, author and boardroom advisor to Fortune 500 companies. She is the founder of Customer M@nagement Services, www.customeradvocacy.biz, a strategic consulting firm dedicated to helping business conceive of increasing their economic value by creating emotional connections and trust with their employees and customers.

Financial Firms Must Break From The Pack To (Re-)Establish Trust

by Stephanie Fierman

Here at the Garage, we believe that a more measured approach to bank and investment advertising is probably a positive development.

After all, hadn’t all the ads begun to look the same? Could every company and every investment have possibly offered the best return, and the most Morningstar stars, and the biggest retirement homes in paradise? Unlikely. Outside of just a few stalwarts, such as Vanguard with its slow-and-steady point of view and Bogle-esque approach, many of the siren calls in the newspaper, on television and online had all taken on a surreal and undifferentiated patina. That’s not effective.

Now it appears that all the bulls have stampeded in the opposite direction.

Consider the list of firms advertising in one issue of The Wall Street Journal this past week, along with text pulled verbatim from their ads:

MORGAN STANLEY: “To find the smart investments today, you need to be world wise.”

MERRILL LYNCH (aka Bank of America): “Seeing clearly. Acting confidently.” “With personal insight into your goals and an understanding of the market…” “…Find a smart place for your money.”

CME GROUP: “Rise Above the Risk.” “For more than a century CME Group has provided competitive, transparent and safe markets.” “…protect customers and ensure financial integrity by guaranteeing the performance of every transaction on our exchange.”

TD AMERITRADE: “There’s never been a better time for a second opinion.”

FIDELITY: “Guaranteed income you can live with.”

GLENMEDE: “There’s no substitute for safety and stability.”

PNC: “…It’s also a way of doing business that has strength and stability at its very core.”

Safe, smart, transparent and guaranteed: these are the adjectives to which financial firms are now rushing as they adjust to our new economic circumstances. The problem is – well, it’s the same problem as before, isn’t it? If your messages are entirely undifferentiated from those of your competitors, they essentially melt into one and stakeholders become unable to distinguish one from the other.

If the Garage held a focus group tonight, and scrambled the names of the above firms and the quoted text, we would challenge any budding Trustmeister to re-match the elements correctly.

And killing an ad’s effectiveness may, in fact, be the most benign result. Worse? Just as when every firm claimed great returns – which turned out to be untrue and, in some cases, backed by unscrupulous actions – everyone now shouting about safety looks equally as unlikely and untrustworthy.

All of these brands are more and are capable of doing more: the “more” being the hard work needed to determine exactly what it is about the brand that is unique and distinguishable from the competition.*

Without doing this work, going out with a “safety” message isn’t safe at all.

* Many of the above firms may not technically be competitors, but that’s an insider’s view. To the public and the U.S. Congress, too much of the same becomes one shapeless – and dubious – perception.

A version this post was first published on http://www.stephaniefiermanmarketingdaily.com/.

Customer Service: Your lifeline in the Crisis (Nicolette Wuring)

Editors Note: 

General Electric’s Jeff Immelt recently noted that the global economy is not simply undergoing an economic downturn, but an emotional, social and economic reset.  

Is your management team feeling panic about that?  Applying the thinking developed by the trustmeisters here in the Reputation Garage can help.  If Mr. Immelt is right, and we think he is, your management team will need to radically change its playbook.  And not only have the rules changed, there is not yet a lot of clarity around what the new game board looks like. 

Below our newest “trustmeister,” Amsterdam-based Nicolette Wuring, offers thoughts as this relates to her specialty: customer advocacy, operations and service.  In a follow-up piece, Nicolette will offer tips for keeping customers in this rough and tumble environment.

------------------

As your management team works its plans to manage the current downturn, it’s worth remembering that we are all at once suffering a financial market crisis, a world economic crisis, a management crisis, an ethics/values crisis, and a crisis of changing consumer purchase and lifestyle priorities. 

First and foremost this crisis is about trust, and trust is earned and lost by people. Over many years businesses became so short-term profit-focused that the managers, employees and even customers became just variables in the profit equation, traded off as assets or liabilities, not as the human beings they are. “Customer right sizing” is but one of hundreds of examples of this.  In too many cases the “right” was for profits, not the customer.  And the customer knew this and promptly withdrew credits on deposit from the company’s earned trust bank.

Or consider the CSR paradigm “People – Planet – Profit” that is widely promulgated here in Europe. Most corporations have not only been short performance on the planet-side, but also on the people-side. This has accelerated the profit collapse. 

The BIG question for industries and companies is how to become profitable again? The answer for 2009 is that you must get much better at finding ways to keep your customers by earning their trust. Relationships develop between people, not between “corporations” and “customers.” That’s where the customer facing people in organizations enter into the equation.

A good starting point is to answer the following questions:

1)     Do we have a strong level of “earned” trust among our customers? 

2)     Can we quantify it?

3)     Do we have strong managerial and operational competency to build trust through our customer-facing operations? 

4)     Have we set the right goals to drive trust, and are the right metrics in place to track progress?

Customer Service, Customer Care, Customer Operations, you know, all those people who manage the trust you build in your business cannot be treated as dehumanized robots, as ‘human doings’, managed at a task level for their quantitative results. One of management’s top priorites right now is to boost their role as the window to ‘the corporation’, representing the organization.  The bottom line?  You must find ways to help your organization to better interact with customers as human beings.  That is how you will earn trust and improve your relationships. 

Nicolette Wuring is an internationally acclaimed and awarded Customer Advocacy thought leader, speaker, author and boardroom advisor to Fortune 500 companies. She is the founder of Customer M@nagement Services, www.customeradvocacy.biz, a strategic consulting firm dedicated to helping business conceive of increasing their economic value by creating emotional connections and trust with their employees and customers.

Her latest book Customer Advocacy: When You Care People Notice is available on Amazon.

In Toys We Trust (By Jarvis Cromwell)

When my brother sent me an Amazon link to Playmobil’s Security Check Point toy I was sure this was either a joke or a phishing scheme. 

Nope.  It’s real.  Buy it here.  Cost of the toy: $62.  Customer reviews: priceless.

Welcome to planet earth circa 2009.  If we had to pick a symbol for the low-trust headwinds blowing a destructive chill around the globe, this might be it.

Needless to say some Amazon customers are having fun with this one, as in this example:

I was a little disappointed when I first bought this item, because the functionality is limited. My 5 year-old son pointed out that the passenger's shoes cannot be removed. Then, we placed a deadly fingernail file underneath the passenger's scarf, and neither the detector doorway nor the security wand picked it up. My son said "that's the worst security ever!". But it turned out to be okay, because when the passenger got on the Playmobil B757 and tried to hijack it, she was mobbed by a couple of other heroic passengers, who only sustained minor injuries in the scuffle, which were treated at the Playmobil Hospital.

Or this one:

Do they make a Playmobil GSE Mortgage Set, complete with little plastic Freddie Mac and Fannie Mae CEO's, ...and maybe little plastic Congressmen that get really rich, really fast when they are in charge of overseeing little Fannie and Freddie CEO's? ...Oh, ...and maybe an armada of little plastic attorneys to protect the little plastic Congressmen and little plastic Freddie and Fannie CEO's.

Other customers are disturbed:

“It's disturbing because the toy teaches children that fear and paranoia is normal. That it's right and correct for society to distrust its citizens the minute they buy an airline ticket…. It erodes trust between citizens, replacing it with trust in a government entity (HSA)--a government that of late has done quite a bit to suggest that it in no way deserves that trust.”

Unfortunately there is a lot to be disturbed about as a parent in today’s world.  Not just the prospect of terrorism and the loss of childhood innocence, but also trust in the safety of the toys themselves.  More than 20 million toys manufactured in China were recalled for lead paint and other hazards in 2007 — 138 recalls in all.  2008 was better, but there were still over 70 recalls.  We note that Playmobil toys, manufactured in Europe, haven’t had any problems.

A quote from the New York Times in 2007 sums it up:

“Nobody wants to be a paranoid parent,” said Ms. Gumbinner, 39, of Brooklyn Heights, who works as a creative director for a Los Angeles advertising agency and is a co-founder of the site coolmompicks.com. “I mean, where do you draw the line between cautionary and crazy?”

Will Sponsors Throw A Life Line To Michael Phelps?

by Stephanie Fierman

Well. Well, well, well. What can one say about the picture of Michael Phelps smoking marijuana from a bong?
Yes that’s right kids, your gold-medal idol is smoking grass. Weed. Ganja. He’s inhaled. And it looks like he’s done it before, too.

Having moms ourselves, The Garage shudders to think what Phelps’ mother may have said in reaction to the news. And if your Phelps’ reps at Octagon, you've started bailing water. Fast.

Phelps has issued a statement and apology using the “I’m young and dumb” approach and, as Fox Sports is already reporting, this event is likely to fade in the memory of the public. The question is whether sponsors will be willing to help mend his reputation as quickly.

Kid-focused McDonald’s and Kellogg’s Frosted Flakes, for example, have both counted on Phelps to project a wholesome, healthy All-American image. Maybe Phelps could just alter his pitch for McDonald’s a little bit: “Duuuude! After I smoke, I get, like, the wicked munchies. A Big Mac totally hits the spot.” Yikes.

Chances are good that Phelps’ fortunes will survive long-term if this side of him never sees daylight again. But if there's more to come – if this episode turns out to be only Strike 2 following his arrest for drunk driving in 2004 – his sponsorship potential may not recover for decades, if ever.

A version of this post was originally posted at www.stephaniefierman.com.

Changing Media Trustscape Part 4

By Jarvis Cromwell

We've written before that the model for being a trusted source of news is changing as radically as the media business itself -- a result of the epochal shifts taking place in the industry, largely driven by technology.  Here are links to Part 1, Part 2, and Part 3 of that series.

But before reading all that, check out this video from 1981 showing those first early steps into the world of online news.  Wow. How far away those days are from a media landscape where the Twitterscape gets the scoop long before the AP or CNN.

Tone Deafness In Financial Advertising

by Stephanie Fierman

If we here at the Garage haven’t said it aloud just yet, it should be a given that financial services advertising is an arena fraught with peril these days. Do you advertise at all? And, if so, what message do you communicate that won't end up sounding like a punch line? Consider for a moment that Lehman Brothers won a Best Advertising Campaign of the Year in 2007 and Bear Stearns’ tagline was “Risk Managed. Value Added.”

You can’t make this stuff up.

Here’s a Bear Stearns stress ball for sale on eBay that carries the line “Little Things. Big Impacts.” (Ha ha ha! Thank youuuu! Please remember to pay your waitresses!)

Unfortunately, Bessemer Trust appears to be playing the dark comedy angle this week.

Henry Phipps founded Bessemer over 100 years ago to manage his family’s proceeds from the sale of Carnegie Steel. Today, the firm’s website states that Bessemer manages in excess of $50B in assets for over 1,900 families, and that its “history of serving wealthy families affords us an understanding of the issues that matter to you.”

It would be safe to assume that some of those “issues” might include the scary guy in the room these days, Economic Meltdown, and his accompanying stooges, Uncertainty, Irresponsibility, Misrepresentation and Anxiety. A financial firm that chooses to advertise in this climate must reflect that it understands these realities.

So imagine my surprise when I saw Bessemer’s ad in The Wall Street Journal: a half-page ad with huge type, saying “We invest your money right along with ours. Needless to say, you benefit from some very careful thinking.”
My reaction: “They’re joking. Bessemer is an honorable and discreet company. Why would they get down in the mud with other companies that followed this same practice and lost their investors billions of dollars?” Investing your own funds is no guarantee of anything – it’s not a guarantee of wealth, intelligence, integrity or the “alignment of interest” touted in Bessemer’s ad. Lots of categories currently in the hot seat invest their own funds: venture capital firms, investment banks, mortgage companies… Enron invested its own funds alongside clients, for Pete's sake!

The ad's small type does actually call out some positive characteristics and benefits of working with Bessemer “as the credit crisis loomed.” Unfortunately, I am fairly certain that no one who saw this ad ever read that far.

Does Bessemer have an executive tuned in to the reputation and trust zeitgeist today? If not, it needs one; if so, we would suggest a bit of retuning. Contact us here at the Garage: we’ll be gentle.

A version of this post was originally published at www.stephaniefiermanmarketingdaily.com.

The Transitivity of Trust (Or Why I Don't Trust Roland Burris)

Paul Allen

I was thinking to myself the other day that I would not trust Roland Burris as far as I could throw him (which btw is a very strange expression when you think about it – right up there with “the proof is in the pudding”).  Now, it is important to note that, up until recently, I had never heard of Roland Burris. And I am probably not alone as far as that goes. And it is likely that my initial take on Burris is not well informed.

 But nonetheless, I do not trust Roland Burris.

Unless you have been living on the same island as the cast of LOST, you know that Roland Burris is the Illinois Attorney General just seated in the US senate filling the post vacated by Barack Obama. Of course the big story around Burris’s appointment is his appointer – Rod Blagojevich (a.k.a. “Blago the Impeached”).  Burris was the net result of Blagojevich’s “pay for preference” scandal in which he sought to personally profit through the appointment of Obama’s senate successor.  “Blago” persisted in his legal right to make this appointment while being pursued for violating the Constitution of the United States in his attempt to make some personal coin off this appointment. Not a good guy at all. And remarkably stubborn in his “wrongness.” Not to mention his poor taste in hairstyles.

The good news is that Blagojevich is being impeached. And will face Federal charges. The bad news is that I still don’t trust Roland Burris. But I think I know why.

It is the “Transitivity of Trust” theory. Which I just made up. But it is based on some fairly sound mathematical principals, much of which we all learned in middle school or perhaps high school.

Do you remember the transitive property? It goes something like this:

In mathematics, a binary relation R over a set X is transitive if whenever an element a is related to an element b, and b is in turn related to an element c, then a is also related to c.

Transitivity is a key property of both partial order relations and equivalence relations.

Or more simply:

Whenever A = B and B = C, then also A = C. 

So in this case, let’s say that I am “A”, and “Blago the Impeached” is “B”. I think I’ve already made the case (as has the entire media community) that Blagojevich is not a trustworthy guy. This is evidenced by his being the first governor to ever be impeached in the state if Illinois. 

So A (me) does not trust B (“Blago”) at all. Who would?

Now, let’s say newly appointed senator Burris is “C”, It seems to me that Roland Burris must feel pretty good about Blagojevich and his decision to nominate him to the senate. After all, despite the controversy around Blagojevich’s rights, wrongs and general bad behavior Burris seems to have no problem accepting the nomination. Burris, in effect, trusts and supports Blagojevich. So to me that means “B=C”. In another words, Blagojevich and Burris appear to be cut from the same cloth – perhaps some kind of self-absorbing fabric.

So, if I (A) don’t trust Blagojevich (B). And (B) trusts Burris (C) (and vice versa). Then according to the “Transitivity of Trust” I (A) do not trust Burris (C). And that’s that.

It’s probably worth noting that Burris’ nomination came with the condition that it was for one term only. So even the government of the United States of America does not fully trust Roland Burris. Because of Rod Blagojevich. This transitivity thing is no joke. 

The big lesson for me in this is how much a perception of trust can be influenced by the company one keeps. Trust (or lack thereof) is a very transferable notion. It can be rubbed on or off by those you choose to associate with.  As a person, or institution becomes serious in it’s mission to become truly trustworthy (which means addressing image, culture, behaviors, values and transactions), the “Transitivity of Trust” becomes a very relevant phenomenon.

Aspiring Trustmeisters (folks who are committed to helping themselves and their organizations establish an trust-based operating approach) must put this phenomenon into real practice. Choose your colleagues and associates carefully. Assess their real and perceived trustworthiness. And don’t work with anyone who uses Rod Blagojevich as a reference.

Copyright 2009 by the Reputation Garage and Allen & Gerritsen

Quotes That Tell the Story of Our Times

Jarvis Cromwell

Here entirely in quotes is the story of the lowest trust age in a century.  (I've paraphrased in a couple of minor instances, but you get the idea.)

“Trust is like the air we breathe. When it’s present, nobody really notices. But when it’s absent, everybody notices.”      -Warren Buffett

"Not so long ago companies assumed the purpose of a business is to make money.  But that has proved as vacuous as saying the purpose of life is to eat…

1. The purpose of a business is to create and keep a customer
   
2. To do that you have to produce and deliver goods and services that people want and value
   
3. To continue to do that a company must produce revenues in excess of costs in quantities and with enough regularity to attract and hold investors
   
4. No enterprise can do this by accident or instinct, it must clarify its purposes, strategies and plans
   
5. There must be a system of rewards, audits and controls to make sure what’s intended gets properly done, and when not, quickly rectified." -Theodore Levitt

“ABN AMRO has set itself one governing objective — maximizing value for shareholders. Setting one objective allows an organization to develop a common language and standards for decision-making and ensures that all energies are focused on reaching the objective."  -ABN AMRO, 2003

"Royal Bank of Scotland on Monday announced it expects to suffer a loss of up to £28bn last year. The RBS loss will be the biggest in British corporate history...Almost all their losses are in subprime mortgages in America and related to the acquisition of ABN Amro... "These are irresponsible risks taken by the bank with people’s money in the UK,” Mr. Brown said, adding that the decision to buy ABN ”was wrong”.         -Excerpted from Two Reports in the Financial Times, Jan 19, 2009

“The roots of mistrust in organizations are 1) the misalignment of measurements and rewards, 2) incompetence, 3) lack of appreciation for a system, 4) untrustworthy information and 5) integrity failure." -John O. Whitney

“The theory of capitalism, going back to Adam Smith over 200 years ago, sees an alignment of interest between consumers and businesses… This theory assumes that consumers are rational in their choices, and to a large extent they are.  -Robert Shiller

“This is the worst showing for Corporate America in 30 years...  It is unprecedented, in fact, to see this many people with an unfavorable opinion of big business.” -Roper ASW, July 23 2002

Trust Recovery Path: The Leadership Challenge (Jarvis Cromwell)

Back in 2007 we quoted renowned free-marketeer Milton Friedman on the pages of this blog as follows:

“There is one and only one social responsibility of business," Friedman wrote back in 1970, and that is to “engage in activities designed to increase profits.”

Friedman’s viewpoint ultimately became the guiding principal of an era: profitable self-interest would be viewed as the only reliable endgame by most businesses. 

And the Friedman playbook worked for a time. The rise of the activist shareholder movement, deregulation, the tearing down of the Berlin Wall, the creation of the Jack Welch rules of management, financial engineering and an expanded investor tool set as applied by the hedge fund industry were all celebrated as triumphs of the free-market. 

Unfortunately, as we all now know things haven't ended so well.  Along the way Friedman's proscription morphed (somewhat hideously) from its original intent of pursuing activities to increase profits to the idea that profits must be pursued at all cost. 

The costs were higher than anyone imagined. We read today that there is increasing consensus that there will be a 15-25% drop in the standard of living around the world  (more in some especially beleaguered regions)  as a result of the current crisis. Wow.  And some corners are now arguing that 2008 was to capitalism what 1989 was to communism. Is this the demise of free market capitalism as we know it?  Or is there a way out of this place?

The optimistic view is that our current sorry state of affairs will herald a new era of free market capitalism that fellow trustmiester Dr. Sri Raghavan has termed "True Metric" capitalism. In other words, we will begin to measure what truly matters for the health of the system.  To achieve that, organizations will need to look towards metrics beyond short-term profit to measure the health of our markets and businesses. 

The pessimistic view is that business leaders won't lead us in this direction.  Over a year ago the futurist Andrew Zolli wrote a piece in Fast Company where he declared that the oblivious capitalist’s days are numbered. In this case Zolli cast his eye to the future and concluded that a host of global forces will force a remake of the playbook for business success.   Business will profit by driving a wider social agenda and “the clinical, value-neutral capitalism of old” will fall by the wayside. 

Let's face it, whichever way you slice it companies have much work to do.  That work includes reducing costs and preparing financially for a long winter. But beyond the very real financial contstaints, this is a time of customer scarcity and increasing fear.  Building  trust must now become a central means through which companies will drive customer sales, loyalty and retention, employee engagement, productivity and, ultimately, long-term shareholder value.  It is an essential metric to the survival of capitalism as we know it.  Warren Buffett compared trust and confidence to the air we breath.  We take it for granted until it's gone.  Hopefully management teams around the world are realizing just how essential it is to our survival.

What do you think?  Are the days numbered for the oblivious capitalist -- or will leadership rise to the challenge and institute a new set of performance measures to bring us back from the brink?  Which companies will get it, which won't?  We would like to know your views.

Copyright 2009 by The Reputation Garage

Fall of GM - A Visual Guide

Jarvis Cromwell

In this chart depicting both the internal and external factors responsible for the Fall of GM, 75% of the management-related factors have trust-related issues.

Unfortunately, this comes as a surprise to nobody other than GM management.

From wallstats.com

Annual Rankings for Most Trusted Companies for Privacy

By Jarvis Cromwell

Privacy, identify theft and data breaches remain trust flash points for organizations. The latest ranking for most-trusted companies for privacy in 2008 from the Ponemon Institute and TRUSTe finds American Express eBay and IBM are the top three most trusted companies.

As the chart below indicates, Google is no longer ranked among the top 20 most trusted companies for privacy, while Apple, Facebook, and Yahoo make the list for the first time.

One of the most important findings from the survey for would-be corporate trustmeisters is the gap developing between the importance privacy holds with consumers and the lack of control they feel over their personal information.

• Seventy-three percent of consumers say the protection of their personal privacy is “important” or “very important,” up from 69 percent in 2006.
  
• Only 45% feel they have control over their personal information, down from 56% percent in 2006.
  

Greater transparency is available to consumers on this issue from organizations like Privacy Rights Clearinghouse, which posts an online chronological database of data breaches that would scare anybody based on the depth and breadth of the list.

Despite the current financial climate, Amex retained the top spot in this year’s list, and Nationwide and Charles Schwab all managed to retain their top 10 rankings as well.

The study asked 6,486 adult-aged US consumers which companies they thought were most trustworthy and which did the best job safeguarding personal information. A total of 706 companies were named by consumers and 211 made the final list of most trusted companies.

A Kids Restaurant Chain Risks It All (Stephanie Fierman)

Wow, Chuck E. Cheese has a problem.

The Wall Street Journal ran a half-page story in Section A yesterday that would cause any parent to run for the hills. While CEC describes itself as a place "where a kid can be a kid" and the cover of its 2007 Annual Report boasts "The Evolution of Fun," it appears that the actual stores have become a magnet for bad behavior and danger. Police all over the U.S. have been dealing with fights, guests carrying weapons and boozed-up brawls.

When a public official describes his local Chuck E. Cheese as "something out of a Quentin Tarantino film," you know you have a serious problem. The picture at right shows the CEC in said politician's Milwaukee neighborhood - with an armed guard out front.

A simple glance at Google tells the Web 2.0 tale. Of 9 front-page search results for "Chuck E. Cheese," 5 are negative. Of 10 front-page results for "McDonalds," 0 are negative.

So where is the crisis management plan and what is the company doing about this problem? While the company's head of marketing describes the fights and problems as "atypical," the risk to a corporation is not always volume-based. Only one child or parent needs to die in one of these melees for CEC to get sued into the ether.

Not only is (a) taking aggressive action and then (b) broadly communicating your plan the "right thing to do," it ultimately protects the bottom line and shareholder value. Take the saddest, most base scenario: if the company gets sued over a child's death, it will be in far better stead with the courts - and the public - if it can show an active, consistent and good-faith effort to address this problem. Such an effort could very well include suffering a short-term revenue hit by closing the most troubled locations in the near 500-location chain. And continuing to serve alcohol in most stores is a recipe for disaster. What percentage of revenue coming from alcohol sales - at children's birthday parties - is worth a legal debacle that effectively cripples the company?

I frequently refer to the Tylenol poisonings in 1982 and J&J's decision to pull all U.S. product off the shelves even after it was determined that the company had no involvement in the tragedy. This may well be the best example in memory of a company taking the long view.

There is a range of choices CEC can take. At the lower end of the range, management needs to take action in its own backyard to resolve these issues. At the higher end, welcome Alderman Zielinski in as a valued advisor. Hold a press conference with him in Milwaukee where he ceremoniously padlocks his neighborhood location while you rightfully announce that no amount of money is worth putting people's lives in danger. Ask Zielinski to help you create a national "Having Fun Can Be Safe" campaign nationwide.

Wherever CEC lands on this spectrum, it had better act quickly. This is a case where a short-term view could be literally deadly for everyone involved.

A version of this post also appears at www.stephaniefierman.com.