Guest Column: Trust is the lubricant that ensures lack of a logjam in relationships between various stakeholders: Jay Kumar
The author Jay Kumar on the importance of Trust in brand building
In keeping with the latest issue of the “Most Trusted Brands 2015” survey commissioned by a leading Financial daily, rating and celebrating the trust enjoyed by different brands around the country , it makes sense to get a grip on the building blocks of building trust across stakeholders be it for a marketplace brand, an organisation or a Personal brand. There are humanistic elements that exemplify leadership and personal branding, this is an attempt to connect the dots and learn from established principles of trust to build a successful and resilient brand. In light of recent events that have adversely affected Brands like Volkswagen (VW) globally whereas Maggi and Snapdeal closer to home. Snapdeal might be a slightly different case where the brand ambassador values have been applied to a marketplace brand and resulted in a new form of intimidation – “Appwapsi”
There are stories of epic fails of brands that abound globally and within India. Take the recent case of VW which has been dubbed the "diesel dupe". In September, the Environmental Protection Agency (EPA) found that many VW cars being sold in America had a "defeat device" - or software - in diesel engines that could detect when they were being tested, changing the performance accordingly to improve results. The German car giant has since admitted cheating emissions tests in the US.
When the cars were operating under controlled laboratory conditions, the device appears to have put the vehicle into a sort of safety mode in which the engine ran below normal power and performance. Once on the road, the engines switched out of this test mode.
The result? The biggest car maker in the world was guilty of allowing engines to emit nitrogen oxide pollutants up to 40 times above than what is allowed in the US.11 million vehicles were affected worldwide, 6.5 billion Euros are set aside by VW and they face fine payments to the tune of $18 billion potential fines and this does not cover possible legal action by car owners and shareholders.
VW America CEO,Martin Winterkorn said that his company has broken the trust of our customers and the public before he resigned as a direct result of the scandal and was replaced by Matthias Mueller, the former boss of Porsche."My most urgent task is to win back trust for the Volkswagen Group - by leaving no stone unturned," Mueller said on taking up his new post.
Closer to home, Maggi –a long standing champion from the Nestle India Table went from being the one of the top 5 brands in the country to being the 95th in the latest “Most Trusted Brands 2015” survey.
Maggi has lost $200 million in brand value after Food Safety and Standards Authority of India (FSSAI) ordered manufacturer Nestlé recall all its variants, according to Brand Finance, an independent asset valuation consultancy.
Maggi had to destroy $50 million worth of noodles labelled “unsafe and hazardous” after FSSAI discovered higher-than-permitted amounts of lead in some packets of the noodles. A Nestlé spokesperson said, “Maggi is the consumers’ brand and their trust is our foremost priority. According to Brand Finance, the Maggi brand was valued at $2.4 billion before the recall. The noodle brand was ranked by Brand Finance as the 23rd most valuable food brand in the world. The consultancy calculated the $50 million loss of goods combined with a damaged brand resulted in a reduced Maggi brand value of $2.2 billion. Now that Maggi is back on the shelves, it will be interesting to see how quickly the brand will be able to shore up consumer trust and bounce back.
We have already witnessed in great detail how the scenario played out In the case of these multimillion/ billion dollar brands, drop in revenue immediately, in fact VW declared a quarterly loss for the first time in 15 year. Compliance challenges put them in trouble with regulatory, downgrading of Stock value, and brand value erosion.
Leaders as brands and their loss of trust by their stakeholders and public have gone through similar phases –Cases like Lance Armstrong, Rajat Gupta and Tiger Woods.
What are the elements of trust that influence stakeholders and ensure success in the market and the corner office? Let’s examine this with the Why, What, How filter.
Why is Trust Important?
Trust is the lubricant that ensures lack of a logjam in relationships between various stakeholders, the absence of which leads to second guessing and loss of management energy, time and momentum. Strong relationships lead to shared beliefs and values that form the bulwark of organisation or team building. Strong relationships help in handling conflict in a much better manner.
According to a Deloitte study on Fraud in Corporate India, 56 per cent of corporate respondents said they believed that there would be an increase of Fraud in the next two years. Think about it this way: When trust is low, in a company or in a relationship, it places a hidden "tax" on every transaction: every communication, every interaction, every strategy, every decision is taxed, bringing speed down and sending costs up. By contrast, individuals and organizations that have earned and operate with high trust experience the opposite of a tax -- a "dividend" that is like a performance multiplier, enabling them to succeed in their communications, interactions, and decisions, and to move with incredible speed. A recent Watson Wyatt study showed that high trust companies outperform low trust companies by nearly 300 per cent !
The supporting elements –Purpose, Behavior and Structure :
The Big Why - Why does the organisation exist? What is the bigger purpose that the organisation is involved in? Does that purpose ensure unity in thought word and action within various teams? Is this the reason to exist communicated clearly to all stakeholders.
Behaviour -Sunlight is the best disinfectant –Key Leadership team has to surface underlying assumptions and biases and have tough conversations authentically. Transparency and voluntary self disclosure will work wonders with various stakeholders.
Structure –A structure that supports communication and feedback When communication and feedback flows freely upward and downward,it ensures ambiguity doesn’t creep in and clarity of thought is driven at all levels.
Building Trust and Relationships is like having a bath, one recommends having it as often as possible. Very often, silos are created between teams as there is no unifying vision/goal that enables every stakeholder to see the overall picture. Lots of work needs to be done at the leadership level to be role models for their teams. Most organizations look at rituals, and rightly so, but end up implementing these ideas very poorly. Leadership culture has to change organically and cannot be a product of “team building activities”
There is a formula for TRUST
Credibility X Reliability X Intimacy / Self Orientation
Credibility –is a function of competence and character, Functional competence is the bare minimum that gets you skin in the leadership game and character is your leadership brand that is described by your stakeholders and not necessarily by you.
Reliability is a function of consistency and predictability –There are leaders who are schizophrenic and their stakeholders are constantly kept guessing about the how this particular leader would react.
Intimacy –refers to how well you know your stakeholders, the depth of awareness of their needs, values and norms.
Self orientation –Based on a series of your interactions with your stakeholders, what is your give v take ratio? Are you helping them by investing time and energy?
The author is a Professional Certified Coach (PCC) at Jay Kumar Blue Fire Coaching Consultants.
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