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Allan Sayle's Comment

Column 3: 05 January 2006.

Credibility, trust and quality

Credibility is essential for successfully running an organization. Trust underpins support. We observe that in everyday life. As an example consider how President Bush's ratings slipped in opinion polls as the Iraq war has developed. His popularity slumped and many Americans now believe his administration lied about weapons of mass destruction. (This example is not offered as a political comment.) It becomes difficult to pursue any policy without the support of the people.

The same thing happens within business. Top management credibility is essential for successfully implementing any policy or reaching a desired business goal. Empty rhetoric does not provide effective or credible leadership. Quality is no exception. Indeed it often provides one of the finest proofs.

At some time or other, most quality practitioners witness the hollowness of proclamations that “quality is our most important task” and similar, that are soon forgotten when the pressure of a delivery deadline or the likelihood of loss of business or of costly and inconvenient repair or replacement looms. The pressure placed on quality folk to “pass it”, “accept it”, “sign it off” or just turn a blind eye can be unpleasant. And the organization chart’s so-called “dotted line” becomes a pathway, which, if taken, is like running an Arthurian gauntlet of self-preserving managers reminding you they are responsible for your next annual appraisal. When process owners and managers conclude lofty rhetoric is not backed by deed, the quality program becomes ineffective and improvement is then a Sisyphean task.

Trust is vitally important to customers. As they lose trust in product quality or reliability, market share falls. And, the company might not have done anything wrong; it could be that the competitors did better over a period of time.

It is a matter of relative velocity. No matter how quickly a firm improves the quality of its products and services, if competitors are improving at a faster rate, it is being left behind. The automotive industry offers some good examples: Toyota's inexorable ascendancy over a half century to become the world’s largest carmaker; or, Hyundai restoring its image and no longer being a target for TV comedians.

When the firm’s rankings slip, and reputation falls, what does it take to restore them? Answer - consistency and time. Over time, brand names are built or destroyed on trust. Sales and advertising claims are promises and promises must be honoured for trust to be built. Customer experience and word of mouth (reputation) have enormous impact. Hearing the experience of people one knows and trusts is valued and influential.

Nowadays, much is made of 'buzz' marketing. A firm provides its products to carefully selected, key people within a chosen market segment knowing they are seen as leaders and their views influence others in that segment. Favorable or rave reviews are hoped for. The product might become a “cool” possession. But, the strategy is not without risk. The product must live up to expectation. Buzz leaders place their personal credibility on the line when advocating ownership of a product or use of service. They are unlikely to favour a firm whose previous offerings damaged their standing.

When it comes to promises, people might be patient and forgiving for a while; but there are limits. Creating false hopes and expectations eventually seal a firm's fate. Unreliable and untrustworthy, even dishonest, can be fatal epithets bestowed on an organization.

Trust also underpins share price and credit ratings. Laying aside the murky topic of corporate malfeasance, an extreme example of untrustworthy executives, they are largely determined by the product market performance of an enterprise. Such performance, share prices and credit ratings are siblings whose parents are top executives. That is where trust is established - through actions, not rhetoric. Workforces see the credibility of proclamations and policies. The state of products, workplaces, housekeeping and employee churn rates signal it even before the market pronounces judgment on what was offered or sold.

When compared with similar figures from competitors, monetary figures are historic metrics that might indicate the extent to which the market has trusted the firm. But, they confer no firm guarantee of future results (as all investment caveats advise). Corporate leaders come and go. Though future results may be better of worse than those of the past, they will reflect how well they instilled trustworthiness into the organization’s actions.

Just advising 'trust me', won't work forever. At some point, promises and claims must be substantiated: proved as true. As examples:

Claims that cold fusion was successfully performed and that Hitler's diaries were found did not stand up to scrutiny, though some were taken in for a while. The claimants’ credibility will not be regained. Recent revelations, that an Asian scientist had been less than truthful in his research results on stem cells, led to his demise. Regardless of how scrupulous he may be in presenting his future work, his credibility is irreparably damaged for, as Shakespeare observed, wise men folly fallen quite taint their wit.

Back in the 1980s, a top executive of Digital Equipment Corporation’s European operation observed, “quality means keeping your promises”. That is timeless, sage advice. Trust and credibility are to be worked on each and every day at all levels of the organization.

© 2005 Allan Sayle Associates. All rights reserved.

Web: www.sayle.com



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