Management Perspectives

This epiphany started with a question asked at a business event attended by senior corporate leaders, credentialed academics, consultants, and a few entrepreneurs and business owners like me. The question: “What is the most important principle in business?” “Operational excellence,” said one person. “The business model,” said another. “TAM” said a third voice. “Innovation,” said another. And so on.

Most of the responses focused on similar strategic and tactical attributes leveraged by smart and successful businesses. However, I believe they missed a critical component that impacts true business performance. Most businesses think of themselves in narrow terms, describing themselves by the category they operate in or the type of work they do. “We’re a manufacturing . . . services . . . creative . . . transportation . . . etc. business,” they claim. This is a trap. What they need to realise is that really, at the root, they are in the people business.

As Peter Drucker, the most influential business thinker of our generation, said: “The only reason for a business to exist is to create and keep a customer.” Customers of business are people. Suppliers to business are people. Employees of business are people. Businesses exist only because people serve people. And the tie that binds these three critical stakeholders in any business is one word: Trust.

Trust is one of the most vital management principles. It is a belief in the abilities, integrity, values, and character of any organisation. Trust is essential for building successful relationships and can have a huge impact on business performance—from improved financial outcomes and customer loyalty to employee engagement and resilience.

Customers expect a business to deliver on its promise and will only be loyal to the business that consistently meets, and preferably exceeds, their expectations. Suppliers expect the business to appreciate the value they deliver by treating them as true partners. Employees desire the business to see them as passionate advocates and critical drivers to its success. There is compelling data that proves this thesis.

According to a study in Harvard Business Review, employees at high-trust companies report 74 per cent less stress, 106 per cent more energy at work, 50 per cent higher productivity, 13 per cent fewer sick days, 76 per cent more engagement, 29 per cent more satisfaction with their lives, and 40 per cent less burnout than people at low-trust companies. Another study by Watson Wyatt Worldwide, an HR consulting firm, revealed that high-trust companies outperformed low-trust companies in total return to shareholders by 286 per cent. In a research done by Edelman, a leading PR agency, 81 per cent of consumers said trusting a brand to do what is right is a determining factor in their purchase decisions. And in the same research, 65 per cent of consumers stated that they will not buy from a company they do not trust. The same is true about relationships with suppliers and partners. A survey by Accenture and the Economist magazine found that 43 per cent of executives believe that the lack of trust is the biggest obstacle to successful collaboration with external partners.

There is a clear framework for building and maintaining trust

For these results we must first understand that the equation of trust is to set clear expectations and then consistently meet and exceed these expectations. While this might be easy to understand, it is terribly hard to execute. However, it can be accomplished by leveraging a framework grounded on proven social science principles, ancient wisdom, and modern-day management approaches. This can ignite powerful and sustainable business growth.

How do social science principles influence trust?

Trust is a fundamental aspect of human society. It enables people to interact with each other, exchange resources and information, form groups and organisations, and comply with rules and norms. It also affects the quality and outcomes of social relations, and it is the glue that holds society together, as well as a lubricant that reduces friction and uncertainty.

However, trust is not a given or a fixed attribute. It is a dynamic and context-dependent phenomenon that varies across time, space, and situations. It is influenced and challenged by various personal and societal factors.

Sociology is a branch of social science that studies trust as a construct and a property of social relations. It helps define and measure trust by providing conceptual clarity and empirical tools. It also provides frameworks and evidence to explain how trust is formed, maintained and changed. This science of today is rooted in the wisdom of ancients.

Trust has been a foundation of every historical narrative. From the Odyssey by Homer (celebrating the journey of the Greek hero Odysseus) to the story of Genghis Khan, who built the largest contiguous empire in history, the foundations of amazing accomplishments lay in building and maintaining trust with a wide and diverse range of people.

One of my absolute favourite epics (not just because it is from my home country) is the Mahabharata. At 100,000 verses, it is the longest epic poem ever written, thought to have been composed in the fourth century BCE or earlier. It is regarded as both a text about dharma (moral law) and history. In essence, the epic story represents an extended exploration of the responsibilities set forth by the code of dharma. In addition to recounting a heroic tale, the Mahabharata contains a collection of writings on a broad spectrum of human learning, including ethics, law, philosophy, history, geography, genealogy, and religion. It is a powerful source of wisdom and moral lessons that are relevant even today. The multiple ways the Mahabharata portrays trust help inspire actions in every aspect of life and business. It defines three foundational aspects: Trust in self, and how it helps us achieve our potential and fulfill our destiny; how and when we trust others, building strong and lasting relationships that create bonds and community; and finally, trust in God that can provide spiritual support to help overcome difficulties and challenges in life.

Modern business approaches amplify the impact by making it actionable.

After talking about social sciences and ancient wisdom, we need to ensure that these principles and wisdom can be organised in a way that we can execute in today’s world. This is why the third foundation of the trust framework needs to use the Techmanity™ Management Approach, which integrates technology with a deep understanding of human needs to shape desired behaviours across all critical business stakeholders.

This approach—an integrated, coherent framework and not a mishmash of different processes—is based on scientific methods, empirical evidence and rational analysis, and it is extremely important in today’s highly dynamic environment. It leverages data across all aspects of the business: operational and transactional; syndicated, primary, first party- and zero-party data, providing a structure to make the fact-based, data-driven decisions necessary to shape desired behaviours.

The critical dimensions that are prioritised are customer-centricity, employee empowerment, continuous improvement, supplier support, data-driven decision making, and an abiding commitment to DEI If you’re a leader, how do you build trust?

As a business leader, you play a crucial role in building trust. You set the tone for the culture and values of the business and establish norms of behaviour. Here are five ways you can create the best ecosystem of trust:

1. Set clear expectations. Make sure every stakeholder of your enterprise—employee, supplier, partner, customer, investor, etc.— understands what you will do for them, what they need to deliver and how you will treat them.
2. Consistently meet, and frequently exceed, these expectations. Do not get complacent and do not take any of your stakeholders for granted, as many business leaders do. They become successful and forget what brought them there. Do not be one of them; stay committed to raising the bar every minute of every day.
3. Create a culture of integrity and transparency. Make sure that your people understand the importance of truth and the need for openness and candour. Encourage them to challenge existing paradigms. Ask them to push further than you have yet envisioned. Most importantly, banish any and all ‘white elephants’ from your business.
4. Treat every person in the business ecosystem with respect. Do you treat your suppliers, partners, and employees the same way you treat your clients and your boss? Treat everyone around you and everyone in your ecosystem with the consideration and care that they deserve. Be even-handed, empathetic, and authentic.
5. Reward people who take chances. Less than 10 per cent of people are willing to put themselves on the line to solve problems that they see in their companies. The potential for positive change is huge if you encourage experimentation and reward failure, and this will reap benefits that you can’t even imagine. It is a simple, yet, extremely potent, way to convert your critical stakeholders into trusted partners.

Most business leaders focus on various aspects of their business to drive success. Of course, operational excellence, business model, TAM, innovation, etc., are all important. However, treating the people who make your business what it is—your customers, suppliers, employees and other stakeholders—with the respect of clear expectations that you meet and exceed at every interaction is the one guaranteed way to success. By leveraging the framework grounded on social science principles, ancient wisdom and the Techmanity™ Management Approach, and building and maintain trust with all your constituents, your business can not just survive, but also thrive, even in today’s ever-shifting business landscape.