The Trust Edge: A book review by Bob Morris

The Trust Edge: How Top Leaders Gain Faster Results, Deeper Relationships, and a Stronger Bottom Line 
David Horsager
Free Press (2012)

“As soon as you trust yourself, you will know how to live.” Johann Wolfgang von Goethe

Presumably all C-level executives agree with David Horsager about the importance of trust within a workplace culture (a) between and among those who labor there and (b) between the given organizations and everyone else who is directly involved with it, notably customers.  Years ago, Warren Buffett observed, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”

Although all C-level executives may affirm the importance of trust, many (too many) of them spend less than 20 years earning it and less than five minutes ruining it. Lack of trust and respect for a supervisor is probably the reason most often cited by highly-valued employees who leave. It is certainly among the major factors that explain why positive and productive employee engagement in the U.S. workplace is, on average, less than 30%. Much of the material in Horsager’s book can help to increase that percentage.

Now consider this: Many of the companies that are annually ranked on lists of those that are “Best to Work for” and “Most Highly Admired” are also ranked on the lists of those that are most profitable and have the greatest cap value in their respective industries. That is no coincidence. Horsager focuses on a number of such companies that include Amazon, Apple, Harley-Davidson, IBM, IKEA, Southwest Airlines, and Charles Schwab. Their people trust their supervisors, they trust their colleagues, and they trust those for whom they are responsible. Both trust and distrust are contagious. Much of the material in Horsager’s book can help those who lead an organization to establish or strengthen a culture of trust.

These are among the dozens of passages that caught my eye:

o       The High Cost of Suspicion (Pages 21-23)
o       Barriers to Trust to Overcome (34-39)
o       The Oracle of Omaha (55)
o       [Why] Conflict is Inevitable! (63-64)
o       Tips for Effective Listening (80-81)
o       Accountability: How? (116-118)
o       Being a Mentor (139)
o       Commitment, Harley-Davidson Style (151-155)
o       Finding Common Ground: Questions Build Connect (172-174)
o       Six Ways to Motivate Contributors (189)
o       Consistency Builds Habits [Good or Bad] (229-230)
o       Extend Trust to Gain Efficiency and Effectiveness (241-242)
o       Fifteen Tips for Rebuilding an Organization’s Trust (262-263)
o       The Making of a Trusted Online Presence (299-301)
o       An Environment of Trust (310-314)

I commend Horsager on his skillful use of reader-friendly devices that include a pair of sections that conclude the first 15 chapters, “The Trust Edge” and “Ask Yourself…,”  sections that review the chapter’s key points and then pose questions that the reader is encouraged to pose…and then answer. At the conclusion of the 16th and final chapter, he suggests “Five Ways to Sharpen Your Trust Edge.” These sections can facilitate, indeed expedite frequent review of the material later.

The “pillars of trust” on which Horsager focuses are Clarity, Compassion, Character, Competency, Commitment, Connection, Contribution, and Consistency. Obviously, there are countless other words that could also serve as names but perhaps no other set of eight whose names begin with the same letter. The names are far less importance than are developing and then sustaining those strengths. Almost all of the material in this book can help individuals to achieve two separate but interdependent strategic objectives: to establish or strengthen their own pillars of trust (however named) and then help others to do so, also.

David Horsager agrees with Peter Drucker: If you don’t have a customer, you don’t have a business. He would then suggest that, if people don’t trust you or what you offer, you don’t have a customer.

How and Why Market Anomalies and Incongruities Can Reveal 10 Clues to Business Opportunity

Illustration by Stefanie Augustine

Here is an excerpt from another outstanding article that appears in strategy+business magazine, published by Booz & Company. In it, Donald Sull shares his insights concerning how and why market anomalies and incongruities may point the way to the next breakthrough strategy, thence to a wealth of business opportunities. To check out a wealth of free online resources and obtain more information about this magazine, please click here.

Here are the first four “clues.” To read the complete article, please click here.

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During their heyday in the late 19th and early 20th centuries, transatlantic cruise lines such as the Hamburg America Line and the White Star Line transported tens of millions of passengers between Europe and the United States. By the 1960s, however, their business was being threatened by the rise of a disruptive new enterprise, namely, nonstop transatlantic flights. As it happened, the cruise ship lines had one potential strategy with which to save their business: vacation cruises. Starting in the 1930s, some of these lines had sailed to the Caribbean during the winter, thus using their boats when rough seas made the Atlantic impassable. And in 1964, when a new port was opened in Miami, Fla., the pleasure cruise business began to boom.

But the great cruise lines missed this breakthrough opportunity. They saw their profitability fall while dozens of startups, including Royal Caribbean and Carnival, retrofitted existing ships to offer pleasure cruises and built an entirely new travel and leisure category that continues to grow today.

Managers and entrepreneurs walk past lucrative opportunities all the time, and later kick themselves when someone else exploits the strategy they overlooked. Why does this happen? It’s often because of the natural human tendency known to psychologists as confirmation bias: People tend to notice data that confirms their existing attitudes and beliefs, and ignore or discredit information that challenges them.

Although it is difficult to overcome confirmation bias, it is not impossible. Managers can increase their skill at spotting hidden opportunities by learning to pay attention to the subtle clues all around them. These are often contradictions, incongruities, and anomalies that don’t jibe with most of the prevailing assumptions about what should happen. Here is my own “top 10” field guide to clues for hidden breakthrough opportunities, observed in a wide variety of industries, countries, and markets. If you find yourself noticing one or more of them, a major opportunity for growth could be lurking behind it.

1.    This product should already exist (but it doesn’t). As the accessories editor for Mademoiselle magazine in the early 1990s, Kate Brosnahan spotted a gap in the handbag market between functional bags that lacked style and extremely expensive but impractical designer bags from Hermès or Gucci. Brosnahan quit her job, and with her partner Andy Spade, founded Kate Spade LLC, which produced fabric handbags combining functionality and fashion. These attracted the attention of celebrities such as Gwyneth Paltrow and Julia Roberts. Many well-known product innovations — including the airplane, the mobile phone, and the tablet computer — began similarly, as products that people felt should already exist.

2.    This customer experience doesn’t have to be time-consuming, arduous, expensive, or annoying (but it is). Consumer irritation is a reliable indicator of a potential opportunity, because people will typically pay to make it go away. Reed Hastings, for example, founded Netflix Inc. after receiving a US$40 late fee for a rented videocassette of Apollo 13 that he had misplaced. Charles Schwab created the largest low-cost brokerage house because he was fed up with paying the commissions of conventional stockbrokers. Scott Cook got the idea for Quicken after watching his wife grow frustrated tracking their finances by hand.

3.    This resource could be worth something (but it is still priced low). Sometimes an asset is underpriced because only a few people recognize its potential. When a low-cost airline such as easyJet or Ryanair announces its intention to fly to a new airport, real estate investors often leap to buy vacation property nearby. They rightfully expect a jump in real estate values. Similarly, the founders of Infosys Technologies Ltd., India’s pioneering provider of outsourced information technology services, were among the first to recognize that Indian engineers, working for very low salaries, could provide great value to multinational clients. The company earned high profits on the spread between what they charged clients and what they paid local engineers.

4.    This discovery must be good for something (but it’s not clear what that is). Researchers sometimes recognize that they have stumbled on a promising resource or technology without knowing the best uses for it right away. The resulting search for a problem to solve can lead to great profitability. One example was the founding of the ArthroCare Corporation, a $355 million producer of medical devices based on a process called coblation, which uses radio frequency energy to dissolve damaged tissue with minimal effect on surrounding parts of the body. Medical scientist Hira Thapliyal, who codiscovered this process, founded a company to offer it for cardiac surgery, but that market turned out to be too small and competitive to support a new venture. Undeterred, he looked for other potential uses, and found one in orthopedics, where there are more than 2 million arthroscopic surgeries per year.

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Incongruities like these can offer a critical clue about where your assumptions no longer match reality. From there, you are more likely to uncover the kinds of opportunities that you might otherwise have missed — and that your competitors still don’t recognize. Start by asking yourself, What are the most unexpected things happening in our business right now? Which competitors are doing better than expected? Which customers are behaving in ways we hadn’t anticipated? Take yourself through the list of top 10 clues. Leaders who consistently notice and explore anomalies increase the odds of spotting emerging opportunities before their rivals.
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To read the complete article, please click here.

Donald Sull is a professor of strategic and international management at the London Business School, where he is also the faculty director for executive education. His books include Why Good Companies Go Bad, Revival of the Fittest, and most recently, The Upside of Turbulence: Seizing Opportunity in an Uncertain World.

Book Review: Walk the Walk

Walk the Walk: The #1 Rule for Real Leaders
Alan Deutschman
Portfolio/The Penguin Group

Deutschman’s objective was to write what turns out to be an especially entertaining and engaging as well as informative analysis of “real” leadership, what Bill George would characterize as “authentic” leadership. He explains that aspiring rulers struggle to preserve their positions, stewards focus on strengthening the status quo while preserving its values and priorities, and “lemmings” repeat the same practices and strategies that previously ruined other organizations whereas “real” leaders establish and instill the one or two values “that will be most important for an organization or a movement or a community.” They “talk the talk” (i.e. affirm the right values) and “walk the walk” (i.e. consistently demonstrate those values in their behavior). The exemplars include Steve Jobs, Herb Kelleher Martin Luther King, Jr., Wendy Kopp, Ray Kroc, Nelson Mandela, Danny Meyer, Fred Smith, and both Thomas Watson Sr. and Jr. Deutschman differentiates real leaders from those whose behavior (invoking another cliché phrase) “talk a good game” but don’t play it. For example, Mark Fields, Al Gore, Frank Lorenzo, Laura Turner Seydel, and Arnold Schwarzenegger.

There is much of substantial value in this book when Deutschman stays out of the pulpit and concentrates on real-world situations that demonstrate the core values of real leadership. For example, there is some fascinating material in Chapter Two when he first discusses Ray Kroc obsession with cleanliness in every McDonald’s location, Fred Smith’s obsession with FedEx’s punctuality, and Charles Schwab’s obsession with impeccable integrity throughout his entire organization. All of them led by example, working side-by-side with their associates, asking no one to do what they had not already done themselves. Deutschman also discusses several military leaders, all of whom also led by example. In modern warfare, it makes no sense for generals to place themselves directly in harm’s way but Norman Schwarzkopf, Richard Cavazos, and William Latham had already demonstrated their courage in brutal combat on numerous occasions in the past. By the time they became general officers, their reputations for both valor and integrity had preceded them. They had earned – and deserved — the respect and trust of those who served under them.

At the conclusion of the final chapter, Deutschman observes: “The final proof of leadership isn’t having new ideas; it’s pursuing an idea obsessively – with every action, in every moment, with everyone watching – for many years or even for several decades. That’s when you’re a real leader.” All real leaders exemplify in everything they do and how they do it the same values they so passionately affirm.