Wednesday, October 1, 2014

In the Midst of the Crisis: A Renaissance of Trust

In Stephen M.R. Covey's book, SMART TRUST he described there the situations and events that made this world seemingly run out of trust. Trust currency has almost reach extinction when all the crisis met, from scandals of corruption, lying, betrayal, warfare, rebellion, etc. These made humanity doubt almost every person he deals with. But this part of his book he called "Renaissance of Trust" of the 'outliers' who chose to trust rather than doubt.

He wrote:

The good news, and the Great Paradox about which we're writing in this book, is the fact that in such a low-trust world, there are "outliers" - people, leaders, companies, industries, and even countries that, like Muhammad Yunus, are helping to create a literal renaissance of trust - and that they are enjoying and spreading the benefits of prosperity, energy, and joy throughout the world. We call this a renaissance because it's not some new fad or technique; it is a game-changing rebirth or rediscovery of a timeless principle that has brought rich dividends to people consistently throughout time, similar to the way in which the Renaissance, beginning in fourteenth-century Europe, elevated all of society and humankind.

Consider the Maghribi traders of the tenth-century Middle East. In the midst of the chaotic, social and political climate in Baghdad at the time, a number of traders emigrated to the Maghrib, an area on the African continent between the Atlas Mountains on the south and the Mediterranean Sea on the north. Motivated by the rich business opportunities throughout the Mediterranean region - and not wanting to see those opportunities imperiled by the political chaos - they set up a system of trade, that could exist independently of government intervention. That system was based on trust. In Jump Point, Tom Hayes observed:
The incentives for participation in the trading were great and the inducements to remain in the trading alliance abundantly clear. Remarkably, the system, even across many miles and cultures, operated basically on a handshake [which itself was an expression of trust that showed that the hand held no dagger]. Given the cost and time of going to court over business disputes - not to mention the often corrupt and uneven disposition of justice from the Fatimidi judges - the Maghribi created their own stateless form of justice that worked very well. The key to ensuring performance and compliance: cheats and deadbeats were immediately humiliated and ostracized. In today's parlance, they were voted off the island. The fear of public reprisal and shunning proved to be an extraordinary self-enforcing mechanism.

By exercising trust and using social sanctions rather than legal recourse, the Maghribi traders were able to participate successfully in Mediterranean trade for several centuries.

Even in the midst of today's crisis of trust, we have modern Maghribi traders, many, in fact, who give evidence to the reality that trust is simply a better - a more prosperous, more energetic, more joyful - way to live and to lead. One example is Azim Premji, chairman of Wipro, one of the largest IT services companies in India. To give you an idea of the trust-building values on which Premji operates, one morning he sent a communication to all the managers at Wipro that he was flying down to take up much of their time, but he felt the matter was important and he needed to speak with them directly. In the meeting, he explained that a general manager would be leaving the company because he had inflated a travel bill. The manager had made a significant contribution to the organization and the amount of the indiscretion was not large, but it was a question of principle. Premji said he had come down to personally explain the situation because he didn't want any rumors surrounding the man's departure and he also wanted to make it clear that any attempts to belittle this individual would be met with a similar swift and appropriate response.

In another instance, some critical consignments for Wipro were being held for clearance at the Mumbai port at the same time a government budget presentation was being made. Many people believed that the presentation might result in an increase in the duty rates Wipro would have to pay, so the customs officials thought they would take advantage of the situation by offering to clear the consignments quickly in exchange for a small consideration. Due to the irregularity of the transaction, the issue had to go all the way up to the chairman. Premji said, "Go and plead with the customs officials unfailingly every day to speed up clearance of our imported consignments purely in the normal course. Do not part with a single rupee. If your efforts do not succeed, do not lose heart. If at the end we have to pay a much higher duty, never mind. We will pay. But make diligent efforts to clear our consignments only in the normal course."

Premji 's trustworthy behavior has created trust. As a result, he has been recognized by Time magazine as one of the hundred most influential people in the world and by the Financial Times as one of twenty-five people worldwide who are "dramatically reshaping the way people live, work or think [and] have done most to bring about significant and lasting social, political or cultural charges."

Nobody can enjoy the fruits of success if you have to argue with your own conscience.... People may listen to what you say but they will believe what you do. Values are a matter of trust. They must be reflected in each one of your actions. (Azim Premji - Chairman, Wipro)
Another modern Maghribi trader is Tony Hsieh (pronounced "Shay"), the CEO of Zappos, who began his career just out of college in 1996 by creating company with his roommate called LinkExchange. Two years later, the two sold the company to Microsoft for $265 million. Why did they sell? According Hseih, it was because the company culture had gone downhill. "When it was just five or ten of us," he said, "we were all really excited, working around the clock, sleeping under our desks, had no idea what day of the week it was." But by the time the company roster reached a hundred, Hsieh "dreaded getting out of bed in the morning and was hitting that snooze button over and over again."

That's why, when Hseih became an adviser and investor and eventually the CEO Zappos, his top priority was creating a company culture that would incorporate not only prosperity but also energy and joy. In the process, he took the company from almost no sales to more than $1 billion in sales annually and put Zappos on Fortune's list of 100 Best Companies to Work For. And the way he did that in the midst of what's been called the worst economic climate in decades was to trust his employees and his customers.

The Zappos culture literally epitomizes trust. In his book, Delivering Happiness, Hsieh says, "We don't have scripts [for their customer service call reps] because we trust our employees to use their best judgment when dealing with each and every customer." Unlike at most call centers, call times are not tracked, and reps are encouraged to take whatever time is needed to make a customer happy. Hseih says, "Empower and trust your customer service reps. Trust that they want to provide great service... because they actually do. Escalations to a supervisor should be rare."

Zappos also trust its customers, giving them the opportunity to order any shoes they want, try them on, and return what they don't want - with free shipping both ways and a 365-day return policy. In addition, the company consistently behaves in ways that inspire trust. In May 2010, for example, a pricing error resulted in all items available through a Zappos sister site, being offered for a six-hour period at a maximum price $49.95. Because some of the items carried on that site normally sold for thousands of dollars, the six-hour sale resulted in an enormous loss to Zappos. Nevertheless, Zappos honored the advertised price.

While we're sure this was a great deal for customers, it was inadvertent, and we took a big loss (over $1.6 million - ouch) selling so many items so far under cost. However, it was our mistake. We will be honoring all purchases that took place on during our mess up. We apologize to anyone that was confused/or frustrated during our [sic] little hiccup and thank you all for being such great customers. We hope you continue to Shop, Save. Smile. at
What's most impressive about Hsieh and Zappos is the results they've achieved in the midst of an economic downturn. And those are not just financial results, though they are clearly impressive. To Hsieh, the most important results Zappos has created have to do with energy and joy. In fact, delivering happiness to Zappo's people, customers, and partners is really what defines the company. The company's vision and purpose statement is clear and distinct: "Zappos is about delivering happiness to the world."

An enormous pleasure in life is to be rightly trusted. (Charlie Munger, Vice Chairman, Berkshire Hathaway
Wipro and Zappos are only two of literally thousands of teams and organizations that are creating the ripple effect of this modern renaissance of trust that is gaining momentum around the world.

Denmark-based LEGO trusts customers with tools to "do their own thing" in creating, designing, and assembling their own kits of LEGO bricks. LEGO's view is that the consumer owns the LEGO brand as much as the company does.

Amazon creates customer trust by providing an online shopping experience second to none, including serving as a broker or middleman to a variety of resellers - even undercutting its own pricing sometimes in order to provide every possible choice to consumers. Amazon founder Jeff Bezos says, "If you do build a great experience, customers tell each other about that. Word of mouth is very powerful."

Geisinger Health System increases trust with its patients by providing "surgery with a warranty" - a flat rate for heart bypass surgery that includes preoperative, postoperative, and follow-up care for ninety days, resulting in significantly improved outcomes on nearly every measure.

Max Hamburgerrestauranger [Hamburger Restaurants] of Sweden publishes its total carbon emissions for all items on the menu, allowing customers to consider the impact on the environment in making their choices. Operating with this kind of transparency, as well as providing the best-tasting sandwiches satisfaction ratings in its industry nine years in a row.

In addition to creating with customers, thousands of teams and organizations are also working to create high-trust cultures. The India-based Tata Group has created such a culture for its 400,000 employees through its "Leadership with trust" maxim, which plays out in the company's purpose ("To improve the quality of life of the communities it serves."), its Code of Conduct, and its philanthropy.

In 2003 IBM inspired employee trust by engaging all 319,000 employees worldwide in a three-day intranet "values-jam" to re-create the values they felt should govern the company. One of the three values they selected was "trust and personal responsibility in all relationships." Today they model that trust by openly embracing telecommuting and flexible work arrangements as a better approach for the majority of its workforce, resulting in enhanced productivity and loyalty.

General Mills create employee trust through its commitment to sustainability, including its relentless CSR initiatives and its commitment to "nourishing lives." As a result of this trust, GM CEO Ken Powell is perhaps the most popular boss in America, with a 100 percent approval rating from his own people in 2010. 

The Dalton Company, a building services firm in Canada, creates employee trust with its "alternative approach to building," which starts by enhancing trust with its own people, moves out to its trade partners, and ultimately becomes a force in restoring trust within the construction industry as a whole.

Virginia Mason Medical Center in Seattle inspires employee trust through its "Physician's Compact," an agreement that transforms the often tenuous, adversarial relationship between hospitals and physicians into a high-trust relationship built on clear expectations and mutual accountability. the result is a high-trust culture that ultimately ripples out into the communities Virginia Mason serves.

Government and societies are also taking part in this renaissance of trust. As part of a campaign to tackle endemic corruption, the attorney general's office of Indonesia led in setting up "honesty cafe's" that put the responsibility on people to pay for their meals by putting the money into plastic cash boxes on their own. According to a New York Times article, "By shifting the responsibility of paying correctly to the patrons themselves, the cafes are meant to force people to think constantly to the patrons themselves, the cafes are meant to force people to think constantly about whether they are being honest and, presumably, make them feel guilty if they are not." As of this writing, the cafes are considered a success, with more than seven thousand in operation in twenty-three provinces. In Transparency International's inaugural Corruption Perceptions Index in 1995, Indonesia was ranked dead last out of all the nations surveyed. By 2010 that ranking had moved up to 110th out of 178 nations, and the honesty cafes were recognized as having contributed to the popularity of Susilo Yudhoyono, the nation's first popularly elected president, who championed the program as part of his massive anticorruption campaign.

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