Does Your Company Have a Culture of Trust?

This post originally appeared on the Harvard Business Review blog.

Walking around Munich on a recent trip, I was impressed by the throngs of bicyclists whizzing by (move over, Amsterdam!). But what struck me even more was what the cyclists did when they dismounted. They left their bikes unlocked. In Boston — a relatively safe city — I’ve become paranoid about bike theft, carrying around two locks in addition to my “saddle leash” to keep the seat away from the prying hands of criminals. But along the streets of Munich, even at night, I walked by literally hundreds of bikes that either weren’t locked at all, or were only locked to themselves (i.e., they weren’t secured to a bike rack or a parking meter). Anyone could grab them, pop them in the back of a truck (admittedly, a lot more Germans seemed to drive Smartcars than pickups) and spirit them away to a warehouse where the lock could be easily sawed off. But, apparently, no one did.

And that reminded me of the correlation between trust and economic growth. Munich, a city of 1.35 million, is almost ludicrously tranquil and prosperous. It’s a financial hub ranked by Monocle magazine as the world’s #1 most livable city , and it ranks seventh in a similar survey by Mercer. Perhaps the barely-locked bicycles are a clue to its success?

Nobel Prize-winning economist Kenneth Arrow wrote in 1972, “Virtually every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time. It can be plausibly argued that much of the economic backwardness in the world can be explained by the lack of mutual confidence.” (A gazillion other economists agree with the premise.)

It makes sense, of course — you aren’t going to loan someone money, or conduct big deals, if you’re not confident you’ll be paid back. (Or at least that the law will stand up for you if you’re wronged — see Max Chafkin’s recent take on doing business in Argentina in Inc. Magazine). Conversely, if there are some guarantees in place, you’re more likely to take on the risk necessary to back a new venture (that would be the basis of Silicon Valley), try out a new product, or make a trade. (The potential dark side to guard against is that studies have also shown the “culture of trust” is much stronger in ethnically homogenous countries — i.e., people trust folks who are like them, not that that’s a shocker for anyone who’s thrown business to fellow Rotarians or alumni from your alma mater).

But overall, creating a culture where people feel secure in dealing with others is a long-term recipe for success — whether in geopolitics or your own company. The key is building a shared expectation that deadlines and agreements will be kept, and having a central authority (at the city level, it’s government or law enforcement; in companies, it’s the boss) that backs those guarantees. What does your company do to foster — or hinder — a culture of trust? And how does that impact your bottom line?

How to Become More Powerful

Get ready: the art of acquiring and retaining power has been demystified. Jeffrey Pfeffer’s Power: Why Some People Have It–And Others Don’t (based on a class he teaches at Stanford’s business school) is one of the best business books in recent years. No padding here–Pfeffer offers insightful and informative strategies you can deploy immediately. Here are some of the best:

 

Jeffrey Pfeffer's Power: Why Some People Have It - And Others Don't is a knockout business book.

 

 

• People avoid asking for help or favors (such as dinner once a year with the CEO) because they think it’s fruitless–yet it’s one of the best ways to reinforce bonds and people are very likely to say yes. Why? Because 1) people like to think of themselves as generous; and 2) “saying yes to a request for assistance reinforces the grantor’s position of power.” Don’t be afraid to ask – it’ll set you apart.
• How to build a power base when you’re still low on the totem pole? “Build a resource base”–i.e., cultivate things other people want, which could be anything from money (if your department controls resources) to jobs, information, or just listening. Notes Pfeffer, in a nod to behavioral psychology, “Helping people out in almost any fashion engages the norm of reciprocity – the powerful, almost universal behavioral principle that favors must be repaid. But people do not precisely calculate how much value they have received from another and therefore what they owe in return. Instead, helping others generates a more generalized obligation to return the favor, and as a consequence, doing even small things can produce a comparatively large payoff.”
• Your ticket to professional success? “Occupy a brokerage position.” In others words, put yourself between groups and fill holes and help transmit information – the additional contacts and knowledge will give you more power. But note that the benefit only accrues to you if you’re in the position yourself – simply knowing someone who’s a broker won’t do you much good.
• Alpha Dog Redux. Harkening back to a previous post of mine on “How to Become an Alpha Dog” and the research of social scientist Amy Cuddy, Pfeffer sounds a similar tone: “…if you have to choose between being seen as likable and fitting in on the one hand or appearing competent albeit abrasive on the other, choose competence. Self-deprecating comments and humor work only if you have already established your competence.”
• Rebranding yourself can be tough, as I write about in my recent Harvard Business Review blog post on “How to Reinvent Your Personal Brand.” Pfeffer advises that if you’re developed a bad rap somewhere, the best move is simply to leave -  it’s just too hard to overcome it. He adds that “…because impressions are formed quickly and are based on many things, such as similarity and ‘chemistry’ over which you have far from perfect control, you should try to put yourself in as many different situations as possible – to play the law of large numbers. If you are a talented individual, over time and in many contexts, that talent will appear to those evaluating you. But in any single instance, the evaluative judgment that forms the basis for your reputation will be much more random.”
• Mild negative traits are not a deal-killer. When someone has a reputation as somewhat difficult (the key is somewhat, not pathologically), that can actually help your power base because people who are “forewarned” and hire you anyway will be more committed to the decision (Pfeffer cites Larry Summers’ well-known truculence).
• Got an enemy? Be generous and you’ll win in the end. Two good options are to “co-opt them” (create a committee, let them lead it, and they’ll be working from the inside, not the outside) or to help them get an even better job…far from where they can bother you.
• How to keep perspective when you’re already in power? The sage words of a Swiss executive: “What you have to do is every now and then expose yourself to a social circle that really doesn’t care about your position.”
• Status is “portable.” How is it that so many high-level business execs successfully run for public office, or so many actors and rappers create fashion lines? And how come Bono is now a prominent humanitarian ambassador? It’s because, as Pfeffer observes, “…people assume that if you are smart enough to succeed in one highly competitive domain, you must be competent in other, even unrelated domains as well. One implication of this phenomenon for you is that the specific organization or domain in which you rise to power may matter less than the fact that you manage to achieve high-level status someplace. The prestige and power that come from achieving a senior position will generalize to some extent to other contexts, providing you with status there as well.”

Dorie’s Book Review: The Upside of Irrationality by Dan Ariely

Dan Ariely, the Duke University professor who gained fame with Predictably Irrational: The Hidden Forces that Shape Our Decisions, has a new-ish book out. This one, The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home, unfortunately falls prey to a major peril of business books: saying in 300 pages what you could have said in 30. I adored Predictably Irrational and its insights on human motivation and behavior…but I’m beginning to wonder if behavioral psychology-inspired business books are played out at this point.

Having read Ariely, Ori and Rom Brafman’s Sway, Jonah Lehrer’s How We Decide, Dan and Chip Heath’s Switch, Influencer by Kerry Patterson and co., and more (and these are generally excellent books), I’m going to gag if I have to hear about the “ultimatum game” one more time (for the uninitiated, this is a favorite of psychologists, in which people generally choose to punish each other for perceived misbehavior/cheapness, rather than taking a pragmatic view and accepting a small amount of free cash). Same goes for the “story of Rokia,” an experiment that explains how people are more sympathetic and motivated when faced with one troubled person, rather than an undifferentiated mass of suffering. Is there anything new to report, guys?

 

As in the "story of Rokia," behavioral psychology shows that individuals are moved by compassion toward individuals - not groups. U.S. Library of Congress photo.

 

 

Overall, Ariely retreads old ground and goes into way too much detail, explaining every trivial nuance of complicated experiments. Here’s my takeaway of what’s relevant for business types:

• Too little of a financial incentive and no one will respond or care; too much of one (make this free throw and you’ll get a million dollars!) and they’ll choke.  So be strategic with rewards and give folks just enough to get them motivated, but not enough for it to induce crushing fear.
• Best way to demotivate employees? Destroy their work or ignore their efforts. Even if it doesn’t end up getting used, paying attention to your employees and their work can enhance feelings of motivation and fulfillment.
• People dramatically overvalue their own creations, while others are more realistic about the merits (or lack thereof).
• Hate a task? Do it all in one fell swoop, to get it over with. Love a task? Keep taking breaks, so you have the pleasure and excitement of returning to it.
• To increase your happiness, spend your money on one-time or short-term “highs” (like travel), rather than fixed expenses (a new couch), because you’ll get used to the couch, but the travel and memory of it will remain novel.
• Want to limit emotional impact? Have someone “go rational” by doing a math problem or somesuch and watch their subsequent empathy decrease.
• We often keep making decisions based on how we’ve acted in the past; basically, we get in a habit. We do so even when those decisions were made under unusual or adverse circumstances that no longer exist, so we have to be mindful of this phenomenon.

What are your favorite insights from behavioral science? Anything that impacts your business decisions?

Dorie’s Book Review: Get-It-Done Guy’s 9 Steps to Work Less and Do More

In my ongoing quest to invent more time, I recently tackled another productivity book–this one from my friend Stever Robbins, the “Get-It-Done Guy” of podcast fame. His new book is Get-It-Done Guy’s 9 Steps to Work Less and Do More, and here are my favorite tips (in case you’re even more time challenged than I am and need a summary):

Stever Robbins, author of Get-It-Done Guy's 9 Steps to Work Less and Do More

• The best way to be productive is not to do things well that you shouldn’t be doing at all. Construct a “Life Map” to determine your priorities, and stick to them.
• Divide up your time into three kinds of days–focus, admin, and spirit. On “Focus” days, you drill down on an important task–that’s where the progress happens that you feel really good about. But “Admin” days are necessary, too–writing that masterpiece on a Focus day will be cold comfort if they shut down your telephone and electricity. Pay those bills and you’ll be all set. Finally, a “Spirit” day is your recharge time, which gives everything else meaning.
• Too many choices can be stressful (a key insight of behavioral economics). Limit your own choices and increase your happiness. Determine what your Absolute No’s and Absolute Yeses are–and if the new car or new desk or whatever you need meets those criteria, just buy it. No need to waste hours of your life evaluating 30 different options when this one will be just fine.
• Eliminate “tolerations,” which is coach-speak for “minor things that annoy you but don’t seem like a big enough deal to do anything about.” You’ll feel better and less stressed on an ongoing basis if you make the time to knock them out. Over the course of the next 10 days, pick 10 minor things and get them done. In my case, that means replacing my HVAC filter and hanging up a photo that’s been languishing on my desk.

What are your favorite ways to conquer clutter (mental or physical) and become more productive?

Marketing and the Sprained Ankle

A while back, I sprained my left ankle–again. Due in part to simple human error and in part to my predilection for racquet sports that involve jerking around from side to side, this is perhaps the fourth time this fate has befallen me this year. But why only my left ankle? After the first sprain, it got weaker–it “learned” how to get sprained. It became an unfortunate habit.

Sprained left ankle. Photo by Faster Panda Kill Kill.

In 2008, a New York Times magazine had a fascinating article about children who are diagnosed as bipolar. The piece notes:

Simply having seizures — even artificially generated ones — seems to alter the brain in such a way that it develops an organic seizure disorder. Some scientists say that a kindling process may happen with mania, too — that simply experiencing a manic episode could make it more likely that a particular brain will continue to do so. They say this explains why, once a person has had a manic episode, there is a 90 percent chance that he will have another.

In short, your body can get in the habit of having a manic episode or a seizure, just as mine has apparently decided that sprained ankles are the thing to do. If we can develop habits for physical processes that we barely understand, of course we can develop habits for more conscious activities. That same year, the Times had a great social marketing article called “Warning: Habits May Be Good for You.” It featured a British public health specialist trying to get people in Ghana to wash their hands with soap–an easy way to alleviate a variety of communicable diseases that were ravaging the nation. She turned to private sector marketers like Procter & Gamble for assistance in crafting a strategy, and was ultimately successful. The article reveals this little gem:

Academics were also beginning to focus on habit formation. Researchers like Wendy Wood at Duke University and Brian Wansink at Cornell were examining how often smokers quit while vacationing and how much people eat when their plates are deceptively large or small. Those and other studies revealed that as much as 45 percent of what we do every day is habitual — that is, performed almost without thinking in the same location or at the same time each day, usually because of subtle cues.

The challenge for us as marketers? How to create products so valuable and integral to the lives of our customers that they become habits–something so trusted you don’t even have to think about it. (We’re obviously leaving aside the unethical routes to habit formation, like the early 20th century cocaine-in-sodas trick.) How can we make our product and services indispensible?