Trust Continued

To give you an update, my youngest is adjusting to Kindergarten. She's learning that there are those you can trust on the playground, and those you can't. She's also learned there are those with whom trust is best bestowed (mostly teachers, but not all).

Which brings me to last week's edition of BusinessWeek (Sept. 28 issue date -- 100 Best Global Brands).

ADDED SEPT. 26. You're wondering, what does Kindergarten, playground and teacher trust have to do with Brands -- more on that in a moment.

First, kudos to Avanade parents -- Microsoft ranked #3 and Accenture #45.

You may have also seen the article titled The Great Trust Offensive. It's been a long week, and I'm sitting at Seattle Tacoma Airport waiting to board Southwest to Oakland, but let me share a few thoughts on the piece.

The first thing that caught my attention was this statement: "Trust is what drives profit margin and share price." So says Larry Light, CEO of brand consultancy Arcature, who comes from McDonald's and BBDO advertising. I couldn't agree more. But then this from the writer: Not long ago, trust and reputation were the domain of the PR department. Marketing executives, by contrast, pushed products and brands using the classic Procter & Gamble two-step: spending huge sums to maintain "share of voice" ... and it went on.

The rest of the article basically says that trust is now in the hands of marketers. Yet, when you look at many of the examples in the article, it is all classic PR: do good, get recognized for the good you do and EARN trust.

ADDED SEPT. 26. Like my Kindergartner learning to whom to bestow trust, with all due respect to my marketing colleagues, trust is still the domain of PR. But what the article does show, and I support, is that brand is a promise, and trust is built when companies deliver on that promise. Marketers aboslutely play a central role in partnership with PR in that capacity.

Take note. McDonald's collaborating with PETA to force egg suppliers to raise the living standards of hens. Highlighting the quality of ingredients to focus on food, nutrition and fitness. Ford is focusing on the quality of the cars, their independence from government handouts (stability), fuel efficiency, and then aggressively communicating those facts.

In essence, "branding" is moving from an emotional appeal (at least in some categories) to a rationale appeal. And for brands that relied heavily on "experience" -- like a Starbucks (after all, it's not rationale to pay that kind of money for a cup of coffee, though I'm guilty of doing so) -- it is harder for brands that rely heavily on "experience" or emotion to recover in this sort of economy. Why? When money is tight, people buy with their head. When money is abundant, people buy with their emotion.

What's really fascinating is the bottom line impact of this "trust" offensive approach for Ford. "Ford is now spending $1,800 less on incentives per car than it did a year ago, and consumers are forking over on average $1,300 more for Ford models ... a combination that drives a leading booster of customer trust: resale value." That's a powerful stat.

But the final quote of the article is an absolute fallacy.

"Trust-related marketing only works if there is a message that people want to believe in. You cannot spin an audience that doesn't want to be spun."
- Eric Dezenhall, crisis management consultant.

You're wrong, Mr. Dezenhall. First, you're assuming people want to be spun. They don't. Second, you can't spin trust. You earn trust. Third, it's not about messaging. It's about delivering on a promise, pure and simple.

The Cost of Trust

September starts next Tuesday. The summer holiday has come and gone. Though I think I missed the holiday part. And at 106 degrees today in the East Bay, it seems as if summer is trying to leave August with quite a statement.

So much has changed in the past three months, too. My youngest turned three. Celebrated 20th wedding anniversary in Mendocino, Calif. Went to Sea World, Coronado Island and Lego Land with the Family. And school started this week, with one child starting Kindergarten and the other starting 7th grade.

My wife and I took them to school. By way of contrast, my youngest had us walk her to class, hold her hand while we walked, helped her unpack her things into her desk, took a picture with her teacher and we stayed as long as we could before we were forcibly removed from the class.

My oldest told us to drop her off at the curb.

So starts the fall semester.

My youngest was walking into whole new territory. She didn't know how things worked, how the school does things (or its culture), the rules, the school's lingo (jargon), where things are located -- like the bathrooms or the lunch room and so on. Fortunately for her, most of the other kids were new as well. But some had attended the preschool that's located on the campus, so they are one step ahead of her.

She was nervous, but she was brave. She didn't cry. She smiled as we left. But she said several times that evening that she missed mommy.

My oldest, on the other hand, had no interest in having us walk her to class and all that sort of stuff. She'd been at the school since 4th grade. Many of her same friends were there. She knew the school, the system, the people, the cultural norms and so on. "Drop me off here." And off she went.

For my youngest, there was a level of trust with the situation because mommy and daddy said it's ok. Trust in us, not necessarily her new environment.

Dov Seidman, CEO of LRN, is a former client of mine in 2003 (I think) when I was at Fleishman-Hillard. It was a short-lived relationship, as we were not successful getting him in places like BusinessWeek fast enough. But, in this week's BusinessWeek, Mr. Seidman has an opinion piece (congratulations) titled Building Trust by Trusting (subscription might be required).

In the piece, he says that to build trust, you need to extend trust. I think there's some merit to his point. I just think his illustrations don't do an effective job at making the business case with hard data.

For example, he uses a doughnut shop to point out that the owner put change out on the counter so people could make their own change. He says the owner could serve customers faster and won loyalty and left customers behind. He doesn't back the story with any specific data, so it's hard to draw any conclusions from the illustration. However, he also uses Radiohead's release of their album online and letting fans decide what to pay and generating more revenue than all its previous releases. Could that be simply the band making more money because they don't have a record label to share revenue with? Not sure. He then uses a good part of the rest of the piece to talk about LRN.

There is a cost that comes in building trust. Trust is not free, it's hard work, doesn't come fast and is easily lost. Trust is the foundation of relationships, and relationships are built over an extended period of time. Successful relationships require many things, but two very important ingredients come to mind: mutual benefit and effective communication. This is true in marriage, friendships, business/customer, doctor/patient and so on.

My oldest will continue to learn the importance of building trust, extending trust and doing so by establishing foundational relationships that are mutually beneficial where effective communications abounds.

My Kindergartner will learn that too. But for now, she's just trying to get over new school jitters. I think she'll do fine.

Forbes-IT after the Recession: Gartner Q&A

I just came across this, so assuming others haven't seen it either, I thought it worth passing along from Forbes interview with Mark McDonald of Gartner.

According to McDonald, the IT model will change significantly as we exit the recession. What does that look like?

Some excerpts, but read the full Q&A.

The response we're getting back from our survey and interviews with CIOs is they've cut back on consultants, software and hardware purchases and they're renegotiating vendor contracts. They're changing the amount of money they spend outside of IT as a way of coping with this budget change.

IT demand is very strong. Companies have had to work harder than ever to make money in this environment and also to be able to drive the types of innovation that will keep customers interested in new things they're offering. But CIOs are meeting that demand with existing IT assets rather than buying new assets.

Of the CIOs we surveyed, 38% expect to see a recovery by September 2010, and another 32% expect a recovery by March of 2010. Only 24% said it would be beyond September 2010.

If the economic recovery begins at the end of this year, IT budgets will lag by one or two quarters.

What's also interesting, though, is we're starting to see IT look at cloud computing as a sourcing option. They can source with a provider or source with a cloud. Oracle, Dell, Amazon and Google now start showing up in RFPs (requests for proposals) where you would traditionally see an IBM, Tata, AMS or Accenture. They're starting to consider the cloud not as a technology but as a sourcing option. It's taking a fixed expenditure and turning it into a variable expenditure.

A love story of a father and his kids

I don't normally get too personal in this blog. I've tended to keep my personal life separate from my professional life, but in this post I digress from my usual format.

Friday was Henry's birthday. He turned three. So the week before Father's Day, I thought I'd share the story of Henry. To me, it is a remarkable account of surprises on the grandest of scales.

I don't believe chance, and have no tolerance for the concept of coincidence. This is a tale that is pure and simple an act of God -- the uninsurable kind found in homeowner policies and the like.

Silicon Valley, CA -- June 12, 2006. I'm sitting in my cube at Solectron, where I was director of public relations prior to getting acquired by Flextronics. My wife calls me on my cell phone. A mild panic in her voice suggested to me I should take the call outside.

But before I go on, you need to meet Clara. And before you meet Clara you need to meet Isabella ... as all three children are inseparably linked. Not by blood. But something much deeper.

Los Angeles -- Fall 1996. I went for a routine physical exam. I was told to come back to retake a blood test. Turns out I had a blood disorder. Origins unknown. Even to this day. One possible link could be leukemia. A bone marrow tap dismissed that as the cause. My doctor chose not to put me on medication. In December 2006 we learned that Antonia was pregnant with Isabella. After Isabella was born, a new hematologist put me on a medication immediately for fear of possible consequences. This medication, had I taken it a year earlier, would have meant we would not have been able to have biological children. No Isabella.

In 2003 we decided to consider adoption to add to our family. We prayerfully determined foreign adoption was the best choice for us. After considering many countries and many different children with varying degrees of ages and needs we determined South Korea was our country of choice. In March 2004 we learned that a little girl was ours. Clara arrived home Oct. 6 of that year.

August 2005, I started a job with Solectron and moved with my family to Silicon Valley.

Ten months later, in her mildly panicked voice, Antonia informs me she received a call from the social worker, Ann, who we worked with on Clara's adoption. We learned that Clara's birth mom had given birth to a boy, and wanted to know if the family who adopted Clara would be open to adopting her son.

In more than two decades as a social worker, this has never happened to Ann. She's was stunned as we were.

You have to know that in the adoption process with our adoption agency (Holt) in South Korea, we never met the birth mom. As soon as the baby is born it goes into foster care. So the birth mom has no idea who we were, who had her daughter or where we lived. All she knew is that someone adopted her daughter, and she hoped the two siblings could be put in the same family.

Throughout the entire phone call with Antonia, I uttered one word repeatedly. "Wow!" Nothing else would come out of my mouth, until the next bit of information that she shared carefully -- we had about five days to tell Holt our decision. I uttered two words: "Wow. Wow."

Imagine. A major life-changing decision in five days. It's not that we were opposed to the idea of adopting again, but we weren't pursuing it.

Needless to say it was a quick, and relatively easy, decision. Yes!

Six months later we were in Seoul holding our son. He was six months old. Today he is three. Now Clara and Henry -- blood brother and sister -- share a bedroom and a bunk bed. While two and a half years apart, they enjoy playing together and fighting together -- though fighting is incredibly rare (I can dream, can't I?).

I realize that most people hear this story and smile and dismiss this as a case of good karma or something. I've heard people say how good we are to adopt these children. Nice sentiments, but both notions are completely false and incompatible with reality. We are not good, and hence by definition it could not be good karma, at least as good karma has been defined. The truth is the adoption of Clara and Henry were acts of God, and the entire orchestration of events is a tribute to His love and grace. Neither of which were earned or deserved. Only received thankfully.

I've done the math. I'll be close to retirement when Henry graduates from college. As I see friends my age on the cusp of being empty nesters, I salivate.

But that is not what God had planned for me.

As Antonia tended to her visiting friend today, I cleaned up the Play-doh Henry got for his birthday. I played chase with all three kids in the front yard. I gave Clara and Henry baths. I tucked them into bed.

It's a great story.

It's a story that continues to be written today.

It's a love story between a father and his kids.

VIDEO: The Day the Media Died

Set to the tune of Bye Bye Miss American Pie. Entertaining and depressing at the same time.

Newsweek's Relaunch: A new media model for old media?

No newsflash here ... the news industry continues its miserable decline. One traditional media title that has actually grown in circulation and navigated a tough economic climate fairly well -- The Economist.

Newsweek has taken notice. In a Financial Times article today, Newsweek, part of The Washington Post Co., reported that Newsweek's revenue declined 13% -- faster than even the Post.

Newsweek will rollout a new print and online edition in May.

So what's the plan to get revenue up? More white space, bolder photos, popular writers and columnists. Oh, also reduce circulation, increase subscription rates, attract upscale readers ($100,000 annual income and higher) and, in turn, luxury advertisers.

If The Economist is a model for other traditional media, I'm not sure that more white space, bolder photos, popular writers, reducing circulation, increasing subscription rates is the winnable formula. Insightful, compelling, probing writing and analysis is. And that, apparently, is what people are willing to pay for.

But who am I to critique Newsweek's strategy? I'm a traditional media junkie. I still read the local newspaper, a national business newspaper and an international business newspaper. Plus five magazines -- Fortune, Forbes, BusinessWeek, Fast Company and TIME.

I thoroughly dread the day when those traditional print titles are relics, like the LP. I might need to consider saving one copy of each title I currently subscribe to, frame the cover of each to show my kids in the future and hang them in my office.

Now, it's time to publish this post on traditional media in a new medium. Call me conflicted.

Corporate Reputation in an AIG Era

I always enjoy reading the annual rankings from FORTUNE and FORBES.

But only one ranking evaluates corporate reputation -- FORTUNE's Most Admired Companies.

A successful reputation is predicated on good corporate policies and values that lead to good business practices and results. Reputations are built over an extended period of time by delivering on the brand promise.

But that's not enough to have a positive reputation. A reputation is not what a company thinks of itself. It's what others think of the company. Hence, it's equally important how the public (including employees, customers, shareholders, communities, government bodies, etc.) perceives the company.

The Most Admired Ranking -- found in the March 16 issue of FORTUNE -- comes at an interesting time in the corporate world. We've just experienced one of the biggest breaches of trust by business leaders in recent memory. You only need to look at the headlines in the past week regarding AIG to see just far public trust in business has eroded.

Edelman, Avanade's Americas PR firm, has conducted a survey for the past 10 years. Called the Trust Barometer, it tracks the trust levels of the public in a variety of institutions, including business.

Not surprising, trust in business is at an all-time low globally, but especially in the U.S. Interestingly, when segmented by industry, technology is the most trusted sector. That's good news for Avanade. The Most Admired list bears that out. 12 of the 50 companies on the list (nearly 25%) are technology companies.

It's great to see our parents in the top 50 -- Microsoft at #10 and Accenture at #49.

Like pornography, reputation isn't always easy to define -- you know it when you see it. But FORTUNE does a good job in providing some parameters for defining reputation (note all companies are publicly traded firms). And Edelman's research confirms that a strong reputation is an indispensable element to business success.

What research has indicated is that companies with strong reputations typically have stronger customer loyalty. They are typically more resilient to economic fluctuations (though not immuned) and typically come out stronger in good economic conditions. These companies also typically have lower staff turnover and perform well among other rankings, such as FORTUNE's Best Places to Work rankings (though Most Admired and Best Places have different criterion and as a result not necessarily the same companies on both lists).

From a communications standpoint, PR can't create reputations, and no amount of PR can recast the egregious acts of greed we have seen on Wall Street. But strategic PR that is rooted in companies with good policies and values that lead to good business practices and results will help shape positive perception and understanding of those companies, and in the process help foster trust in and respect (admiration) for those companies.