So, treating unethical practice with new rules delivers business a "double whammy!" Firstly, it adds layers of bureaucracy and cost, and secondly, it creates greater reliance on systems and less reliance on trust. By depending more on the legal system and less on the development of true trustworthiness, business loses a golden opportunity to enhance efficiency and grow value.
But the development of a culture of trust cannot be the function of government. On the contrary, government's role, as in fact in the case of Sarbanes-Oxley, is to protect society from businesses whose cultures are not ones of trust and from individuals who are not trustworthy in their dealings. Business needs to recapture the initiative if it wishes to limit legislative bureaucracy. It needs to become more trustworthy and cultivate cultures of trust. It needs to do so not only because it is more efficient to do so and will avoid over-regulation, but also just because it is right to do so!
So, what are some of the steps that a business can taketo cultivate a culture
that is more trusting, management that is more trustworthy,
and a brand that is more trusted?
Firstly, let us take a look at what causes these low levels of trust in
American business. It is not because American business people do not
believe in the values of honesty and trust. We do, and we try to teach
those values to our children. But there is a covert value system operating
in the background of our society that undermines all the good things we
teach and all the high values that we espouse. That covert value system
is underpinned by the idea that the quantity of the outcome is more important
than the quality of the process. It is more important to win than
to be a fine sportsman. Use steroids in sports; cheat in school; bully in
negotiations; threaten with litigation; act ruthlessly in business--Win
at all cost. Efficiency has a higher value than integrity. This
is not what we say, nor is it what we teach; it is simply the value we model.
And so, we have turned business into a game, a game in which winning is
the only measure of success. Business is a game where the quantity
of the outcome is more important than the quality of the process.
We talk of winning and losing, because in a game there cannot be a win-win
outcome: in a game there must always be a winner and a loser. This
metaphor undermines the credibility of cliché management phrases
like "win-win." We talk of game plans. Even words
such as "competing" emphasize the game metaphor. Metaphors
powerfully influence the way we think and inspire the way we act. But
if business is a game, then who is to say that our employees, and even our
management, are on our team? If our customers are our counterparts,
why would we expect their loyalty? Why would we expect our vendors
to give us a good deal, if they too want to win the game at all costs? And
if we are not breaking a rule (a law), why would we not act unfairly (unethically)
to gain a point? When the pressure is really on and we believe we could
win big time by breaking a law and getting away with it, why would we not
do so?
The first step in building a trusting culture, then, is to change the
metaphor--and with that, the business conversation--from game to
mission and from win to value. And I don't
mean "mission" and "value" in the clichéd sense
of the words. I mean them in the literal sense of the words: a quasi-religious
meaning to the word "mission" and both a moral and an economic
meaning to the term "value."
The word "mission," now an accepted term in business jargon, has
a religious tone to it--something almost spiritual. The zeal and focus
with which successful businesses have pursued their missions is not too
unlike the single-minded passion of the religious zealot. And it is deliberately
that I use both words: zeal and focus. Success requires both unrelenting
focus and driven energy. Too often, business strategists concentrate
on the focus but not the human energy that, together with focus, creates
business velocity. A zealous mission does more than anything else
for both energy and focus.
Human energy is generated from one of two sources: Animal instinct or a
sense of purpose. In the nightmarish images of 9/11, we saw many manifestations
of focused human energy. We saw masses of people running for their
lives. But we also saw heroic people risking their lives, running
up stairwells instead of down them, in a desperate attempt to save another
human life. The energy of fleeing from danger is driven by the animal
instinct of survival. The firefighter running up the flight of stairs
was driven by the purpose to save a human life. There is also a third
manifestation of human energy that we see on TV "reality" shows.
In these situations, too, people do amazing things, not to survive, nor
out of any noble human value, but for the possibility of gain: either financial
or fame. The energy expended in the protection of things we have or
in gaining things we could have but do not is also driven by instinct. The
desire to have more is an animal instinct. The drive of the hero,
on the other hand, is rooted in the desire to be
more. Carefully crafted business missions articulate the purpose
of an organization and why individuals may find something heroic about working
there, beyond the accumulation of wealth for themselves and shareholders.
It is this mission, this sense of purpose, that not only focuses strategy,
but also generates human energy and creativity.
Many missions expressed in quantitative terms unintentionally foster cultures
of greed. They measure corporate success only by Wall Street's quarterly
reaction. These missions breed cultures of having more. When
a mission highlights a company's contribution to the lives of others
(customers and society), not just to their pockets (shareholders), it inspires
in employees a desire of being more through their work. A "having"
culture is a culture of greed. A "being" culture is a culture
of ambition. Shifting a culture from one of greed to one of ambition
is the most important step in establishing a trusting culture.
In a trusting culture, success is built around a healthy respect for
ambition but a distaste for greed. Ambition is the passion to succeed. Greed
is the desire only for the fruits of success. Ambitious people
earn recognition. Greedy people demand reward. Ambition
propels people to make contributions. Greed drives people to
take credit. Ambitious people celebrate the success of others,
too. Greedy people celebrate no successes but their own.
To sustain and build a trusting culture, missions should be both credible
and authentic. Individuals or companies who promise to be all things to
all men lose credibility. Credibility is built and focus is heightened when
a great deal of thought goes in to two choices-- the first external, and
the second internal. The first: what set of customers are we serving,
and what set are we choosing not to serve? The second: what are our
true capabilities, and what are we not capable of doing?
Customer selection is traditionally defined in terms of market segmentation
and geographical demography. This approach to customer analysis reinforces
perceptions of the customer as nothing more than a source of revenue for
the company. Furthermore, today's boundary-less world, its shrunken distances,
and its merged markets make that type of segmentation and targeting almost
irrelevant. To maintain the theme of a mission focused on contribution
rather than gain, we should rather identify our customers by the nature
of their need and the extent to which they value the fulfillment of that
need. The deeper the customer need we identify, the more value he
or she will attach to its fulfillment. Where your customers live
or work is less relevant than what they value. With the almost infinite
choices available to customers, what now matters most to them is the depth
of their needs that you satisfy, the accuracy and focus with which you do
so, and the concern for them you demonstrate, expressed in high convenience
and low cost. Starbucks does not aim to fill the universal need of
thirst to a particular market segment. Rather, it aims to satisfy
the much deeper human and social need to connect and form community around
a coffee experience. Starbucks then sets about making that experience
conveniently accessible to anyone in the world who wants it! Starbucks defines
their customers by human characteristics and values, not segment and location.
For a mission to be authentic, the promise it makes to its customers should
be one that results from optimal utilization of the company's capabilities
and the passions of its leadership. Capability and passion are what
differentiate people and teams and are the true drivers of energy and innovation.
A mission will never ring true to employees if it is not congruent
with the real passions of the leaders. Leaders of organizations dedicated
to hospitality must love serving people. Those dedicated to health
care should feel passionate about health. It becomes a bit more complex
to craft an inspiring mission reflective of deep passion for companies who
manufacture un-trendy, widget-like objects! But even in these cases,
leadership should see beyond the object of manufacture and penetrate to
the deeper human need they aim to satisfy that is aligned with their own
passions. Nokia's migration from rubber and paper to mobile phone
technology is an example of the innovation that this process can liberate.
In the same way, the mission should focus on a contribution that is well
matched to the organization's real capabilities. Capabilities are
not strengths in used in conventional "SWOT" analyses. A
capability answers the question, "Having determined my strengths and
defined my customers and their deep needs, what meaningful contribution
do these strengths allow me to make to my customers?"
When a mission is fully aligned with its core foundations, customer set,
capabilities, and passions, it commands credibility and inspires people
to a higher sense of purpose. It reaffirms their commitment to ambition
for the company, rather than greed for themselves.
Having designed and built a trusting culture, it is frightening how quickly
the same management team who built it can destroy it! In just the
same way as a religious institution with a long tradition can be fatally
damaged by clerics whose values undermine their core mission, the same can
occur in a business. If a business sets itself up as standing for
a purpose higher than financial gain, its leaders, executives, and managers
should live their business lives according to those values. Living
values does not mean abiding by them when they are not being challenged.
Living a value means upholding it, even when the cost of doing
so is considerable. The famous Johnson & Johnson Tylenol®
case illustrates this idea. Their story had a happy ending, but at
the time of the recall, there was a strong possibility that the decision
could sink the company. The decision was not made for strategic reasons.
It was made as the costly expression of being serious about the values
that are core to the organization's mission. Southwest Airlines writes letters
to passengers who are abusive to their employees asking them to fly on other
airlines in the future. That is upholding the value of "our employees
are our most valuable assets." Most companies say that their
people are their most valuable assets or that they value their customers,
but when tested, they demonstrate that their truly supreme value is converting
their customers' money as quickly and painlessly as possible into their
own! And guess what? Employees know that. And they accept
it as the reality. What then of managements' values and public statements?
Ask employees! What do they answer? "Who trusts management,
anyway?" Trusted management is the product of an executive team
that has clearly identified the values needed to support their mission,
has evaluated the cost of upholding those values no matter what, and is
committed to living those values at all costs. That means, as Jack
Welch used to say: "We fire managers who don't live our values,
even if they deliver results." Easy to say--so very hard
to do.
A trusted brand is more than a brand that consistently delivers what its
marketing promises. It is a brand that is an integrous manifestation
of its company's values. Just as when an individual's actions do not
reflect his or her values, it causes distrust, so when a company's product
does not reflect its values, the brand loses trust. An innovative
culture will produce innovative products. A culture whose people are
passionate about quality will produce quality products. A company
that values speed will consistently have products out before their competition
and will shorten the chain of delivery. When a business culture is
not designed to support the message of its brand, it is hard, and often
impossible, to successfully and consistently live up to the public's expectations
created by the product's marketing. The value of quality and reliability
was palpable in the old culture of Mercedes-Benz. In the case of BMW,
performance was the clearly visible value underpinning its culture. Is
it surprising, then, that Mercedes, post its merger with a culturally very
different Chrysler, is struggling to retain its formidable name for reliability?
Brand trustworthiness is one of the most serious casualties of mergers
that have not adequately addressed issues relating to aligning culture and
values with mission and product offering.
Dealing as it does with money - other peoples' money - the Financial Services
Industry is more dependent on public trust than any other industry.
By the nature of its activities, it is also subject to the most stringent
regulatory supervision. On the other hand, it lives by the wits of
its intellect, relying heavily on innovative product, service, and solution
ideas. Innovation is the business activity most seriously threatened
by over-regulation. Financial Services, more than any other industry, should
focus considerable attention on the cultures of its firms and organizations,
aligning them with value systems that support their missions. The
problem is that the financial service industry is often populated with personality
types who either do not value the power of the "soft" issues to
impact performance, or are not skilled in attending to those issues. A
further problem lies in the number of mergers and acquisitions that inevitably
occur as the industry evolves. Due diligence for these mergers is
so often focused only on the numbers, utterly ignoring the potential of
clashing cultures to destroy shareholder value. And so the industry
most dependent on building trusting cultures is the least competent in this
area! It is not surprising, then, that the outcome of this failure
to focus on the soft side of the industry has lead to ethical lapses and
the consequent regulation, and possible over-regulation, of the industry.
But that regulation and the bureaucracy it spawns puts innovation, the industry's
lifeblood, at risk. Unless the industry pushes back the tide of over-regulation
with higher standards of internal ethics, cultures that are more trusting,
and management that is more trusted, it risks strangling its innovation
and losing its edge on the stage of global competition. Regulatory
authorities impose trusted systems and procedures on the industry from the
outside in. More than any other industry, however, Financial Services
should focus meaningful resources on building its trustworthiness from the
inside out. It should articulate worthy missions that stretch beyond
the accumulation of wealth, shift its cultures away from greed toward healthy
ambition, articulate and live a value system that supports its mission,
and demonstrate a willingness to pay a high price to uphold those values
at all times. This will enable it to attract and retain people of
high integrity and return the industry to the levels of public trust it
needs in order to thrive. 
