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The Hole in the Soul of Business

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The Hole in the Soul of Business

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(the title of this post is a direct 'tribute' to a column of the same name by one of my favorite management writers, Gary Hamel) For the past 12 years, Edelman has conducted a very in-depth study of the level of trust consumers have for government, media and corporations and has found, unsurprisingly, that there has been a steady decline in public trust. This doesn't come as a big surprise to most readers who feel continuously manipulated and lied to by government, media and corporations in the interest of their own gains.

But trust works both ways and I'm less interested in convincing customers and citizens to trust and more interested in convincing government, media and corporations to trust their customers and citizens.

I've observed and been part of a growing DIY culture - one that is demonstrating that individuals can and will come together to achieve results that are inspirational and often reflecting a more democratic outcome than any of the top-down efforts.

Take, for instance, the amazing efforts of #OccupySandy, a grassroots, people powered movement of engaged and concerned citizens looking to help Hurricane Sandy victims and get affected areas back to normal (or better) in the wake of the storm. Government did an okay job coming in in the immediate aftermath, sending in troops, supplies and boosting the cleanup and some corporations have donated a good number of proceeds to the clean up (mostly going to the Red Cross and other large NGOs). But the #OccupySandy volunteers can go deeper and further and not have to encounter much for red tape. They can see a crisis, figure out the most efficient and best way to fix it and just do it. Are mistakes made in the process? Probably. But the benefits of these agile, scrappy "organizations" outweigh the losses.

I've been a fan, advocate of and participant in grassroots change for a long time and continue to believe that encouraging participation is a good thing. Generations of people were encouraged to be passive and dependent, but the web came along and changed that paradigm. Instead of Read-Only, it gave us writing privileges. We gained a voice. It allowed us to connect with others who wanted to contribute. Those who grew up with the web expect interaction and their default is participation. Those of us in the 'sandwich' generation (half our lives were pre-browser) and older are still trying to figure out what that means.

I was raised in a culture that promoted a paternal outlook on the world. People needed protection: from invasion, from the communists, from brand confusion, from the bad guys and, mostly, from one another. The default was security, not transparency. Sites like Wikipedia were frightening before they were invaluable. But as the web has evolved, it's as if the curtain is being pulled back on the Wizard of Oz and we are realizing more and more that we don't have to wait for permission or someone else to save us. We have the tools and power at our fingertips.

But power is a funny thing. Once you have it, you don't want to give it up, especially if you have it based on some default or otherwise extrinsic means. Real power and leadership is when people trust and respect you and choose to follow you. When I think of real power and leadership, I imagine those that really affected change like Gandhi, Martin Luther King Jr., Simone de Beauvoir and more recently Steve Jobs (and yes, Steve was reportedly hard on people, but he led with such inspiration). These leaders didn't feel threatened by others. If they were criticized or challenged, they would engage in the challenge and open themselves up to improvements. But most power is fleeting and extrinsic. It's gained from having money or given a position in which one can exercise their power. I've watched lots of people luck out on a bit of success only to let it go to their heads. These are the same people who feel the most insecure about their power.

Most corporations fit this bill. It's such a dog-eat-dog world. Customer loyalty is fleeting. And you can have a hit one day and be forgotten the next. Smart companies who will succeed will remain more agile and flexible like the #OccupySandy example. What works today may not work tomorrow, so how does one know how to stay a step ahead? By being open and flexible and empowering every employee in your organization to bring their innovation to the forefront. And how do you ensure that this innovation is focused and not haphazard? Strong culture and leadership. The more your employees understand and are invested in your brand, the better their ideas will be.

But the hole in the soul of business is that it can't trust. It can't trust partners, employees, customers or even themselves most of the time. Even when doing the same thing over and over stops achieving results, leaders would rather turn to outside consultants that don't know their business for the answers rather than asking their own employees who have hundreds of ideas on how to evolve. Every corporation and every government has an #OccupySandy of their own just waiting to be the incubator of potential awesome, but they either ignore or alienate their biggest assets.

I'm guessing that Edelman's Trust Barometer has a direct correlation to the trust that government, media and corporations have for their customers and citizens. You trust us and we'll reward you by trusting you back. I know it sounds more than utopic on my part, but I still believe in the awesomely powerful potential of collaboration between people, government, media and corporations - with an emphasis on people - to solve problems (and make profits) more effectively.

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Red Zone/Green Zone

Baghdad (International) Green ZoneBaghdad (International) Green Zone by James Gordon

Does this sound familiar?

Jane works for a company that is fairly successful. The product it produces is beer and has moved from being a local favorite to a regional favorite to a favorite in pubs across the entire U.S. Jane's role is customer service and she takes calls from, mostly, happy customers every day, thanking her for producing a really great beer with a great taste and a solid heartfelt brand. One Monday morning, the companies executives round up all of the employees for a big meeting and tell them that, because of the great success thusfar, the board has decided to go more nationally aggressive with the company. The company is getting a boost in funding and will be hiring a whole bunch of new people to handle the expansion. Jane is excited. More customers equals more great phonecalls for her.

As they expand, things start to change...but not in the directions Jane thought they would. The biggest addition seems to be to the sales team - a group of beverage sales specialists. In order to help Jane out, they hire two other people, quite junior as part of her customer service staff. The sales team sticks to their own, which baffles Jane a little. The smaller company always hung out as a team, so they would know exactly what was happening in each department, from executive to sales to customer service to science to even the staff that were brewing.

The pressure is on to sell and produce more beer and there are rumors that the strict quality process they had before isn't being adhered to. Jane and her new team are receiving more negative phonecalls than usual, and, because of the national focus of the new sales, the customer service lines are constantly busy, giving Jane no time to monitor or train the new people. One day she is pulled into the office of the VP Marketing who tells her there have been complaints about customer service. She works unpaid overtime to put together scripts and quality control documents for her staff. She puts in a request for a CRM system so that she can keep track of the calls, but is told that customer service is a 'loss leader', so the request isn't approved. Meanwhile, the sales department is furnished with a foosball table, and they are all given expense accounts to wine and dine their customers.

Jane is frustrated, and, as things get worse and worse, she starts to hate the job that she once loved. She feels powerless to help the customers who are calling her daily unhappy - she doesn't know what is going on, and when she does (as far as the quality rumors go), she can't say anything. Then the decision comes to 'tighten the belts' of the company as sales are waning. Who do they cut first? Jane's team. She is left with one staff member. Even the quality of Jane's customer service plummets as she can't handle the volume of calls...and when she does, she is powerless to help the customers. She is called into the office of the VP Marketing again. This time the news is really bad. They've decided to outsource their customer service and, other than handling the transition, Jane is no longer needed. The poor performance of her department just doesn't warrant keeping it local.

This is a classic story that I've heard from many companies over the years, but other than a different idea of what is important (what you measure, matters), I just thought it was the way most businesses handled themselves.

It wasn't until I read Naomi Klein's latest work on Disaster Capitalism that it occurred to me that what happens in this country with the social system is tightly connected to what happens to the parts of a business like customer service, that are seen as 'extraneous'.

In her writing, she discusses the growth of Green Zones - the 'free market' influx of private companies coming in to solve public services for a profitable venture - while the Red Zones - the public services that remain in place to serve those who cannot afford to pay for the Green Zones that are underfunded and forgotten until they are enough of a problem to wipe out altogether (housing projects, for example) - are used as an example to demonize the public system and further grow Green Zones.

This happens in business like the above examples. The Green Zones are the profit centers of the company and the Red Zones are the cost centers of the company - the cost centers, of course, support the growth of the profit centers (providing customer service, marketing, support staff, quality control, etc), but on the books are seen as pure loss leaders. So, when a company needs to cut back costs...those centers are hit, not the 'profit' centers like sales. After enough cutbacks, the performance of the cost centers suffers, which gives enough validation to outsource or get rid of them altogether. Because the sales team is showing numbers (even though those numbers would not exist if it weren't for the corporate Red Zones supporting them), they are shown as an example of what works in the company.

Now, I don't know if Klein would want me to twist her metaphor to support my thesis, but I do believe it is the core of what is failing with business today. The Yin and Yang of it need to be kept in place and both cost and profit centers rely on one other to exist and flourish. Jane's story above ends in her getting a new job that she can love again and her old company struggling to stay afloat, not understanding why things went so badly after the expansion...maybe even returning to their roots years later and re-gaining their customer's trust.

In the public sphere, we must be wary of Green Zones and the creation of Red Zones, but we must also be aware of it in terms of our professional sphere. Is your company creating a Green Zone/Red Zone atmosphere? I urge you to read Klein's work either way and tell me if you see the parallel yourself.

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