I recently had the opportunity to speak with a group of analysts and chief investment officers about best practices in research management and operational due diligence. At one point, our conversation turned to stories about fraud and the reasons people often miss the red flags that, in hindsight, were obvious signs of wrong-doing. A gentleman in our group was several minutes into an animated retelling of the way the firm he worked for in the past became a victim in the Bernie Madoff scandal when one of his colleagues cut him off and said, "look, the simple reason we all got burned by Bernie is that we trusted him, blindly."
His comment reminded me of a passage from one of my favorite books about relationship management called, "Extreme Trust: Honesty as a Competitive Advantage," by Don Peppers and Martha Rogers. In it, they pose the question, "are you trustable or merely trustworthy?" I know it may seem like there isn't much of a difference in the definition of these two words. After all, both words are adjectives that can be used interchangeably in many situations to mean the same thing. However, there are subtle differences in the definitions of the two words that are worth considering (at least in this article!).
TRUSTWORTHY: Able to be relied on as truthful. Example: Not even a newspaper always gives trustworthy information.
TRUSTABLE: Able to be trusted. Example: She is a trustable source of information.
By these definitions, a company can be trustworthy by merely doing what it says it will do. However, it can only be trustable when it whole-heartedly endeavors to align its interests with those of its customer's. In this context, it naturally follows that companies - even those run as inscrutable Ponzi schemes by people like Bernie Madoff - can be considered trustworthy inasmuch as they generally do what they promise to do. However, they're not trustable unless - or until - they modify their fundamental strategy and behave in a customer-centric way.
Take Madoff, for example. The firm consistently did exactly what it said it was in business to do: generate incredible investment returns for its clients. However, from day one until the day it shuttered, Madoff failed to align its interests with those of each of its clients. Ponzi schemes by their very definition may be focused intently on acquiring "customers," but they're most definitely not looking out for every individual.
So what does it mean to be trustable? In their book, Pepper and Rogers describe trustable companies as those that do things right and also do the right thing. Allow me to paraphrase their conclusions below.
Trustable companies DO THINGS RIGHT
A trustworthy firm may do what it advertises, but may only do it in the most basic way. For example, it will be competent enough to answer the phone when you call, but it may then measure the performance of its people by how many calls they can respond to, not by how good a job they do at resolving concerns, building relationships of trust, or setting and managing expectations. Many trustworthy companies have good intentions but are overly focused on themselves and often miss seeing the forest for the trees.
A trustable company doesn't just do what it promises; it cares enough to go out of its way to execute for the benefit of its customer at every stage of the customer journey. Clearly, it must keep its profitability in mind, but a trustable firm continuously does everything it can to understand what it is like to be the customer and to make her journey pain-free and fulfilling.
Trustable companies DO THE RIGHT THING
As stated above, trustworthy firms generally do what they promise to do, but trustable companies always do what is best for their customer even when the customer hasn't asked for it. What this implies is that a trustable company - whether it's a hedge fund, B2B software company, or grocery store - must develop a business model that enables it to create value for the business and its stakeholders while continually acting in the best interest of its customers. Obviously, companies shouldn't peddle their wares at a loss, but they need to be sensitive to their customers' point of view and endeavor to deliver a fair deal.
Many trustworthy companies labor to leverage the gap between what's best for the customer and what's best for their profit margins. Truly trustable companies work hard to figure out what's best for their customers and how to leverage it to nurture a healthy business model.
How do I know if my company Trustable or merely Trustworthy?
There are two groups of people that know the answer to that question: the people you work with, and the customers you serve. If you're not sure where your firm lies on the spectrum of trustability versus trustworthiness, the best way to find out is to ask. Make time to sit down with your peers and talk about it. Call your best, and worst clients and ask them directly. If the results of your inquiries don't measure up to your expectations, get to work! With a little time and some effort, you and your team can fix the problem and earn your customer's trust.