304: Return on Trust
Good morning dear friends
/strategy
Eric Ries’ recently published Incorruptible: Why Good Companies Go Bad… And How Great Companies Stay Great reads less like a research-driven ‘how to be world-class’ in the spirit of Jim Collins’ Good to Great and more like a manifesto. To be sure, Ries weaves in powerful case studies – Costco, Cloudflare, Devoted Health, Patagonia and others – but he also emphatically argues for an expanded definition of the role of companies and consequently what profit is. In Ries’ definition “Profit is the maximisation of human flourishing”.
He says, “Maximization is important because it preserves what was valuable in the conventional understanding of profit. The strongest organizations are those that are good stewards of the resources under their control. Efficiency still matters.” And “Why human flourishing? It’s the only phrase honest enough to capture the true scale of what we’re after. Happiness is subjective and easily confused with dopamine hits. Sustainability might connote a miserable, bare existence. Well-being is too easily misinterpreted as mere physical health. Human dignity isn’t really something that can be maximised, only protected.
“Flourishing – real human flourishing – means people growing into their potential, physically, emotionally, spiritually”.
I will return to Incorruptible, hopefully before the end of the year. For today, I wanted to share this provocation. In a chapter entitled Harder is Easier, he asks, “Why don’t we just give people what they want?”
He notes that employees at high-trust organisations report 74% less stress and 50% higher productivity; that 79% of people who highly trust their employers feel more motivated to work; that a World Economic Forum study shows trusted companies beat the market by 5% in times of growth and 11% in times of crisis; that 71% of consumers will stop buying from us when we break their trust, while those who trust us are twice as likely to try new products and stay loyal even when new competitors emerge, meaning that companies with high levels of customer trust deliver two to five times the returns to shareholders over a ten-year period; and, finally, that high-trust business relationships require up to 40% less contractual complexity and monitoring costs.
It’s a great litmus test for any business strategy, any tactic, any proposed path – does this build or damage trust?
[Here are a few more letters on trust.]
//self
The late Andre Dubus’s Broken Vessels is an astonishing meditation on life.
In an essay entitled Into the Silence he reflects on how at parties where young people gathered, the mothers would gather in part of the room speaking about their babies.
“The mothers were not talking abstractly about infancy and early childhood. They were telling stories about their children, so that a listener could see and hear and perhaps even smell and touch the child who was not in the room, not even in the house, but at the mother’s home, usually in the care of a teenage girl. The mothers were also talking about their motherhood, and to convey those deep emotions and physical and spiritual changes in their lives, they chose what we have always chosen with our friends: they told stories with concrete language, with words that appeal to our senses. We talk abstractly with people whose love or affection or respect we don’t want, so we keep them at bay, we do not tell them any of the stories that are part of the collection of stories that is our earthly lives.”
In my work with clients I constantly ask, “Please give me an example. Make that more concrete for me. I understand that as a concept, I understand the abstraction but let’s get a little more granular”.
Trust is built in the details. Trust is built not as an idea but in action.
///soul
On Tuesday evening, I had dinner with a friend. We’ve known each other for twelve years now, hadn’t seen each other in six. We ate in a restaurant that is now thirty-one years old. A favourite of mine, one I hadn’t been to, incredibly, in fifteen years. Our conversation flowed without break for four hours. It was a blessing.
At a point in the evening Isaac and Khumo Shongwe came into the restaurant to collect takeaways. Isaac is the reason I have this friend, and many others.
In 2014, I was lucky enough to be nominated for the African Leadership Initiative’s (ALI) Media Fellowship. Isaac founded ALI in the early 2000s. It now has several hundred South African fellows. He interviewed me: a conversation in equal parts intimidating and inspiring, it explored my childhood in Nigel, my schooling in Springs and my journey through the world. He extended trust and invited me into the fellowship.
Over the next two years, I was exposed to a wider array of thinkers than I had ever encountered. The fellowship is structured around reading and dialogue. It – the reading, the moderators who held the conversations, my fellow fellows – changed my sense of self, my sense of what the world could be and how I could be an agent in making it so. It transformed me.
Much of my coaching practice was seeded there. At the heart of my client work is the question “What can we do with our positions of privilege to improve our world?” This letter grows from those years – both the habit of disciplined enquiry and the impulse to share that which we have been given. Several of the most important relationships in my life are a consequence of ALI.
The following evening, ten leaders had trusted me to convene them in conversation about Dan Wang’s book Breakneck. Four of the people in the room, I know because of Isaac’s act of faith – that if he convened people, they would find each other. A fifth is a fellow I had the privilege of successfully nominating a few years ago. The conversation was rich and hopeful. Because of trust.
ALI has been carried forward by many – executive directors, gracious conversation moderators, dedicated staff, funders and, of course, fellows.
The starting point was, and remains, trust underpinned by a conviction that the most consequential and enduring form of profit is human flourishing.
Best wishes
Karl
PS: You can subscribe to this letter here, and find out more about my coaching practice here.