nielsenandcompany.com | the blog

Trust comes in many flavours, and in a developed market economy trust should in the best of worlds be an unambiguous concept. It isn’t. The most obvious difference between ‘trust’ and ‘trust’ in a developed market economy is the one you find in the number of connections or degrees between you as a consumer and the product/provider.

1st degree trust can be defined as direct contact with the provider. You know the provider, and you trust them. This makes you buy their product.

2nd degree trust is contact via referral. You know the referrer and you trust him/her, hence you trust the provider. This makes you buy their product. Not as willingly as a 1st degree, but a buy is a buy.

But a regulated market economy put forth more complex trust scenarios since you may also get additional sets of 1st degrees, which is what we at nielsenandcompany.com calls the marketer’s wet dream. The most common example is when the provider needs to follow a set of rules and regulations that confirm the quality of the goods you buy, rules and regulations that the customer is aware of - rules and regulations that reinforce the actual sales of the goods. If you when using this 1st degree trust as a provider, you will get a doubled 1st degree trust. But if you end up in a critical situation, this may become a double-edged sword.

In Sweden we have an interesting sequence dealing with minced meat where a provider’s representatives have created new best before-dates in order to sell out-dated minced meat one more day. The sequence consists of stressful, extraordinary as well as critical situations since now the customers don’t trust the provider (1st degree) due to the fact that they’ve actually broken the law (broken their second 1st degree).

In order to deal with this, the company in question started out blaming it all on their processes and not on the behaviour of their management and their employees. Major mistake, because they by doing so didn’t address both sides of the double-edged sword. The sword in this case consists of rules/regulations and behaviour non-supportive of the rules/regulations as well as non-supportive of the company brand.

In this case, it all boils down to behaviour.

If you erase your trust with your customer due to behaviour, you need to rebuild trust with new behaviour. Forget all you’ve read about communication strategies, repeated corrected behaviour is what it takes. When repeated behaviour has been established, you can start communicating it e.g. by engaging your advertising agency or you PR-agency.

For more info from a multi-disciplinary consultancy on how to solve it, feel free to contact us.

When working with a sequence involving stressful, extraordinary and critical events and situations, one of the challenging issues is making the management understand what they are facing and the impact it may have on the company. To do so in a very simple manner, you can use the three-layer golf-ball as a metaphor.

Any stakeholder you ask will say that companies can be summarized into three simple statements: (1) What the company is - The brand; (2) What the company can - The organization; and (3) What the company does - The output.

You don’t need to be a golf player to understand that the golf ball’s shell can be compared with the output, output as in products, services and everything else that is visible for all stakeholders. The next layer, which is a little softer in a golf ball, often functions as an enhancer as well as a “glue” between the shell and the core. Very much just like the organization functions, as a reinforcer making it possible to execute the brand into an output. Finally you have the ball’s core, which symbolizes the company brand. The golf ball’s core is the one that creates the long drives - just like the brand is the core that creates the long-term company.

So, how can this metaphor help management in assessing the impact of a crisis? Well, you just need to find out where the ball got damaged. Did you get a dent in the shell? Did you have an eroding mid-layer resulting in for example a non-performing organization? Or did you in fact build the company on non-existent values making the core an empty one?

Wherever the damage is, you need to correct it in order to have a ball going straight - to continue doing your business. But remember that the closer the issue comes to the core, the more wiggling and unstable the ball will be when set in motion making the long drives impossible. And finally, it is a complete waste of time and efforts to use your communications skills or communications channels to explain the reasons for the ball wiggling as long as you don’t rectify the problem causing the wiggling.

But what about the users of the golf ball - the customers and the other stakeholders - don’t they matter? They do, but that’s another blog story.

—

This blogpost is the extreme summary of a three hour talk from the
multi-disciplinary business consultancy nielsenandcompany.com
on how you prepare against and deal with risks, issues and crisis.

Contact us for more information.

The common view on this issue, is that personifying or personalizing a company is a modern innovation that came with mass-marketing and branding. But actually, the basis for the personified company came about much earlier.

From a legal point of view, it started with the Companies Acts of 1862 in UK which became a popular model copied throughout the world. With the introduction of Companies Acts you could create separate legal entities (just in the same way as individuals are separate legal entities) making it possible for an organization to get a life of its own, working in its own interest and being responsible for its actions in such a manner that it also could be sued by its owners (for example as Ericsson are being today).

From a communications point of view, it started earlier. Although critics during the late 1800s regarded companies as “soulless institutions” - which critics still do - the personifying of offerings had been around for an even longer period. In his book “The Art of Rhetoric”, Aristotle (384 BC – 322 BC) pointed out that when convincing someone it is always easier to make people identify with a problem or a solution if you are creating an example (a paradigm or a parable) instead of making a deduction or an inductive reasoning (an enthymem).

So how modern is this innovation?

That used to be a simple question to answer in the old days. Nowadays - especially when dealing with Web 2.0 solutions - the question becomes a little more complex.

Nowadays customers are very seldom possible to define as only one person or entity. You need to define your customer even further by defining the customer roles. The B2B-industry have been doing it for years, now it is up to B2C to embrace the same issues.

In B2B you have several customer roles, which when defined will help you in the sales/communications process. You have the one ordering the product/service, you have the one using the product/service and you have the one paying for the product/service. Each of the roles must be addressed during the sales process. Old news for B2B-agencies, rather new news for the B2Cs .

Next time you are in the process of introducing a new product or a new service, think about the customer roles. If you don’t find a solution, feel free to contact one of the consultants at nielsenandcompany.com.

Yes, what’s up with Ericsson?

I got the question on the phone from a friend of mine a couple of weeks ago. He was driving through Sweden while talking to me.

- Their five year plan has expired, I replied, using my gut feeling in combination with my knowledge of Ericsson the last 10 years. - They probably haven’t updated it.

- What do you mean?

- Obviously they predicted some problems in 2001, which made them create a 5 year plan remedying the problems based on an analysis of current status. The plan commenced rather immediately. I remember a lot of friends with leading positions at Ericsson that had to go during that period. The problems hit real hard the year after, 2002, and Ericsson stuck to the plan making the cure a little easier. A “qualified” guess is that the cure hasn’t been updated all along. Now we see 2007, and here goes…

- Sounds like hindsight if you ask me.

- Sure, hindsight it is. When dealing with hindsight, I promise that we’ve got 20/20 vision as all other consultants. But you asked me a question regarding current status and not Ericsson’s future. A better question from you would have been: What’s the next move from Ericsson?

- Uhh?

- Let’s go back to 2001 and 2002 and see if we can learn from history where they can go. In 2001 and 2002 the mobile phone industry was experiencing a fierce positioning. They still do. But nevertheless, Ericsson made some strategic choices that were successful when dealing with restructuring. But probably, during the process which included saying good bye to some of their employees, some advisors went the same way hence making it difficult for Ericsson to keep up with an ongoing positioning and re-posititioning. Actually I think they haven’t been doing their homework with their stakeholders the last couple of years. Stakeholders meaning their markets and their customers. Yes…I am not only talking about the stakeholders as the ones bringing them money financing their next move, the ones suing them right now, but the stakeholders buying their…

Our phone call dropped. Still the phone industry hasn’t solved the issue when the person you are talking to is driving into a tunnel in the middle of nowhere.

Dear John

I have a friend with a really good web 2.0 project that I am seeking finance for. We have received a lot of good feedback on the functionality and the looks of the site, and now I want to go forward seeking finance. How should I go about it? PS. We haven’t really started the project yet.

Dear oh dear,

your friend should first of all ask whether he or she is committed to the project or not. If the person is not so much committed that he/she will start up or continue without finance, the person should quit wasting other people’s time presenting it. Besides business opportunities, investors look for personality and commitment. If your friend is not interested in investing his commitment or personality in the project before seeking financing, it is a dead project.

My best suggestion would be that the person in question commit before seeking finance, for example by starting the project, trying it out, checking customer interest and then get back to me.

—

Previously posted in the Facebook-group Dear John, 24 August. The reason for re-publishing it in our own blog is that we still get wannabe-entrepreneurs telling about their great idea. Their problem is that they haven’t the ambition or the drive to go on or even start up without finance on products and services that doesn’t need an early stage-financing. Think about it: if you were true to your heart, would you as a VC invest in some project or somebody not willing to commit? I wouldn’t.