Stephen's Blog

Trust Matters

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Mrs. Field’s Launches Attack Ad Campaign Against Girl Scout Cookies

We’ll come back to the Girl Scouts in a moment.

For now, I want to talk about Uber.  I love Uber.  Really, I do.  I use them often and I’ve only ever had amazingly good experiences.  I’ve told all my friends and family about them:  a veritable volunteer Brand Ambassador.

Which is why I find the recent news about Uber so disturbing. 

Initially, the news to which I refer here was that out of Paris.  Look, I get it.  No one likes to see their market so swiftly and severely disrupted.  But those taxi drivers-cum-thugs who threw rocks at Uber drivers and their passengers were just absurd.  I raised my voice in defense of Uber in many a conversation when that news hit the Twitterverse.

But then I found myself disturbed by a different tale of thuggish-ness.  Only this time, it was Uber that was the perpetrator. 

Not the news regarding the overly aggressive tactics that Uber recently deployed vis-a-vis Gett — a rival black car service provider in NYC.  That was also a tad on the thuggish-side, yes.  But New York is a tough town, and the toughest guy usually wins.

No, the thuggish behavior that’s caused me to reexamine my enthusiasm for Uber was their churlish campaign against the ride-sharing service, Lyft.  Perhaps you’ve seen the ads on Facebook? 

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I love Lyft.  Really, I do.  I use them often and I’ve only ever had amazingly good experiences.  But those experiences are very different from the ones I look forward to when I choose to ride with Uber. 

Both Uber and Lyft offer an outstanding on-demand transportation service.  Both can boast efficiency and, more importantly still to many of their riders, convenience at a fair price.  But Lyft offers something that Uber does not:  a sense of community.

And that matters to me.  And, I suspect, to other passengers of both services. 

It’s a bit like shopping at Whole Foods and at the local Farmer’s Market. 

I shop regularly at Whole Foods.  It’s expensive, yes.  But I love them for the quality products they offer, for the outstanding customer service I know I can expect, for the incredible selection of items. 

And I also love going to the local Farmer’s Market.  Even though I’ll occasionally pay more for products that are no better than those which I’d find on the shelf at Whole Foods.  (And sometimes less good.)  Even though the “service” can be spotty.  And despite the fact that the range of items on offer is vastly smaller than what I’d find along the aisles at Whole Foods.

I go to the Farmer’s Market for the experience of being there.  I like the element of community that prevails:  real farmers offering food items, that they themselves have produced, directly to those who’ll serve them up at their dinner tables later in the day.  I enjoy the thrill of discovery:  you never know what surprising treat may be on offer at one stall or another.  That makes the experience consistently fresh, and fun.  And I enjoy strolling about with Others Like Me who are at the Market for the same reasons.

Does the Farmer’s Market compete with Whole Foods?

Sure.  At one level it most certainly does.  And I suppose that the folks at Whole Foods need to give some thought to that.  But how silly would it be for Whole Foods to run a snarky ad campaign directly aimed at those local farmers whose company I’ve come to enjoy?  Not only would those ads reflect poor character, they’d reflect poor understanding of the market.

Which is why the headline about Mrs. Fields caught your eye. 

Now, to be very clear, I made that up.  I’m sure that the good folks at Mrs. Fields enjoy their Girl Scout cookies as much as you and I do.  But imagine if Mrs. Fields did run an attack ad against those neighborhood darlings with their pig-tails and their Peanut Butter Tagalongs and Thin Mints.  It would spark some degree of outrage, wouldn’t it…?

Do the Girl Scouts compete with Mrs. Fields?  Sure, at some level.  But I suspect Mrs. Fields sees the Girl Scouts and their cookies for what they are:  a local community experience that is filled with meaning for people which runs far beyond the products on offer. 

I buy Girl Scout cookies because my daughter is selling them.  I buy them from my neighbor’s kid.  And from my daughter’s BFF Hailey, from the next zip code over.  I buy Girl Scout cookies because I belong to a community in which they’re sold as part of a community-building exercise.  And that community matters to me.  (Plus, the cookies are pretty good.)

This is the point that Uber is missing.  Lyft riders use Lyft for the experience of being part of a community of common character, as well as to get across town.  And by making snide comments about the community ritual that is the Lyft fist-bump, Uber doesn’t just take a side-swipe at Lyft.  They take a shot at me, and the community I enjoy being a part of.

And that’s just a remarkably dumb way to try and capture market-share.

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Why should Congress care about sharing?

peersorg:

UPDATE: Looks like 10 Downing Street held its own workshop session last week as well - Aurore of TaskHub shares notes from a meeting to “help the UK Government understand the evolving needs of the Sharing Economy Sector and examine what obstacles the government can help remove.” Read the piece here

The U.S. has passed an important milestone in the sharing economy. As The Atlantic puts it, “Congress Just Started Paying Attention to the Sharing Economy.”  

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On Wednesday, the Committee on Small Business held a hearing on “The Power of Connection: Peer-to-Peer Businesses.” Peers ambassador Arun Sundararajan, Alan Mond of 1000 Tools (a Peers partner), Beth Stevens of Sidecar (also a Peers partner), and George Mason University professor Philip Auerswald testified at the hearing, answering questions about

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Building a High-Trust Culture, #3: Empower Everyone

This piece makes a great point:  organizational cultures that are based on compliance-driven processes and procedures cultivate a noxious atmosphere of distrust and presumed un-trustworthiness. 

Many companies institute heavy-handed compliance rules and bulk up on highly-paid compliance staff because they are required to do so by law.  While they may prefer not to commit substantial resources to such functions, it’s mandatory that they do so. 

Often, this is the repercussion of some past transgression — on the part of the company itself, or because an entire industry has been tainted by a series of bad acts that have robbed it of society’s faith. 

For instance, a number of the nation’s largest mortgage servicers were found to have engaged in deceitful and illegal practices in their handling of delinquent home loans in the early days of the financial crisis.  In many cases, firms like Citigroup and Bank of America failed to provide timely or adequate notifications to borrowers during the loan-modification or foreclosure process. 

A 2012 national settlement over these botched foreclosure practices led the courts to appoint an independent monitor at these firms, to keep an eye on future foreclosure policies, practices, and personnel.

These and the many other ill-doings brought to light in the wake of the financial crisis led President Obama, in June 2009, to propose a “sweeping overhaul of the United States’ financial regulatory system, a transformation on a scale not seen since the reforms that followed the Great Depression.” 

The subsequent Dodd-Frank Wall Street Reform and Consumer Protection Act has now burdened the entire financial services sector with an array of regulatory requirements which have, in turn, made it necessary for banks and other players in our financial system to devote enormous resources to compliance functions.  The fact that few of these system are, or are likely ever to be, terribly effective is lost on policy-makers.

Why are these regulatory initiatives and the systems they mandate almost useless?

That question returns us to the topic of trust, and to the empowered work-place discussed in the article posted here.

Anyone who has every watched a Whodunnit knows that the cops always close in on the suspect who had the Means, Motive, and Opportunity to do the dirty deed. There’s a helpful analogy in this.

For so long as we have a professional management class, we accept that there will be some who will have the Means to self-deal.  In economics, this is known as the “principle-agent” problem.  Management (agents) are meant to work in the interests of shareholders / owners (principals). 

But often management works in its own interests at the expense of owners.  We use incentive schemes to try and keep interests aligned.  Indeed, the whole field of corporate governance aims at correcting the many troubles that arise out of the agent-principal problem, with mixed effectiveness.  But, essentially, we accept this state of affairs as a cost of doing business.

If some in positions of power and privilege will have the Means to breach trust and to self-deal, what can we know of their Motives?  What of the motives of more junior management?  Or of the guy in sales over in China, tempted to offer a bribe so as to win the contract that assures he hits his quota?  What of the administrative staffer in charge of the petty cash till?

By and large, we throw our hands up in the face of the enormity implied by the task of learning and monitoring the motives of all the employees that might commit some bad act that may impact materially upon a business.  It’s too amorphous a task, too hard to measure against any standard and reliable metrics. 

So, since some will always have the Means to commit fraud or to otherwise self-deal, and as we can’t possibly address the Motives of the thousands of employees who may be spread across the globe, we instead focus efforts on limiting the Opportunity for such bad acts.

We settle for trying to hire right, often after conducting flimsy background checks.  We hire internal and external auditors, a bloated legal department, compliance staff, risk management personnel, including some who attend specifically to regulatory and reputational risks, we subject staff to check-the-box ethics and compliance training programs, and we install whistle-blower hotlines so employees can rat one another out.

And none if it works.  At least not well, or consistently. 

Collectively, businesses are spending billions of dollars a year trying to curtail Opportunities for their employees to act in bad faith.  And yet the headlines continue to feature a seemingly endless series of stories about corporate malfeasance of all flavors.

And the reason is because we’re focusing our attention and budgets on the wrong thing.  Yes, some will always have the Means to self-deal.  And for those so inclined, no system can design away all Opportunity for such — not without so stifling a business that it is no longer viable as an entity.

The answer lies in addressing the Motives of our people.  And that returns us to a focus on culture and, more specifically, to building a culture of trust.

More on that in later blog posts.

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2014 Edelman Trust Barometer - Edelman

What’s even more significant than the widening gap between people’s trust in government vs. their trust in business is to note that trust in business is itself pretty low.  Unless you consider technology businesses.

Why is that?

My own belief is that many, if not most, tech businesses need to be much closer to their users than traditional businesses think they need to be.  The “touch-points” that make up the user experience among tech businesses are both more regular and more immediate. 

As such, there is a greater sense of “intimacy” which both allows for, and demands, that a relationship of trust be established, maintained, built upon, and extended. 

Technology businesses that succeed in this grow.  Those that don’t die. Trust is, thus, an existential issue for most tech businesses, and they know it. 

For other businesses, trust concerns are typically relegated to marketing departments where they’re treated as merely “brand issues,” or legal and compliance departments, where they are viewed as “reputational risk” considerations.  Trust is ancillary, rather than being viewed as a necessary core competency.

This is great news for tech entrepreneurs, as it opens up countless opportunities for disruption in almost every business sector. 

Entrenched incumbents who have garnered little trust among their customer base will be repeatedly displaced by nimble tech innovators who focus on building immediate relationships of trust among a community of users.

Just ask the traditional taxi cab drivers in San Francisco.  Or Paris.