Leadership Insights: Measuring Success

Transcript

Mike Vizard: Hello and welcome to the latest edition of the Digital CxO Leadership Insights video series. I’m your host Mike Vizard. Today we’re with Michael Bondar, who is a principal for the Risk and Financial Advisory Practice in Deloitte. We’re talking about that most important thing of all, digital trust. Michael, welcome to the show.

Michael Bondar: Thank you so much for having me, pleasure.

Mike Vizard: What exactly is digital trust in your mind? Because, you know, it’s one of those things that seems to me to be in the eye of the beholder, and different people will look at it and come to different conclusions. So, from your perspective, what is it that we need to establish?

Michael Bondar: Excellent question, and it’s a question that we set out to solve about three years ago, a little over that at this point. We looked at what drives trust in today’s business environment, and to do that, we looked at longitudinal studies, we looked at anecdotal examples, we talked to academics, we talked to industry experts. And we ultimately kind of landed on a couple of things. First, at the very core, it’s about a combination of competence and intent. Competence is doing a really good job and delivering on your promises, and the intent is the motivation, the rationale, the why behind you taking all those actions. Now, the intent, as you’ve mentioned, is very much in the eye of the beholder, which in today’s environment includes not only customers and employees, but also shareholders, the board, the community at large, investors and so on and so forth.

And so, at the very core, that being the basis of our definition, we then looked at how do we better articulate what this means to organizations. And again, through quite a bit of research and iteration, we identified what is now 18 organizational domains, we call them trust domains, that are enabled or driven or activated by over 90 trust drivers. Which are those individual steps, activities, and actions that every organization must execute at a high level for the right reason, going back to that competence and intent, in order to earn trust in the eyes of its different stakeholders. Those domains really span the spectrum of the organization, and again, have a disproportionate impact on trust. They include things like financial integrity and health, cyber posture, conduct, workforce experience, customer experience, and that thread of digital is woven throughout all of these domains to some level and some extent. And so, that model, that framework, is how we have brought the concept of trust to life.

Mike Vizard: How do I extend that sense of trust out to folks? How do I gain it and how do I earn it, as they say, because trust is always hard to come by and easily lost.

Michael Bondar: You know, the saying that I love – I love hearing over and over again, is that trust is earned in droplets, but lost in buckets. And it’s certainly true in today’s environment. One of the things that we have tried to stress to our clients, and that point seems to really resonate, is that in today’s world especially, you cannot be reactive when it comes to trust. Meaning, you cannot wait for that breech, that incident, that crisis, before you start trying to, you know, rebuild or earn trust back. It’s about taking proactive steps and actions to earn trust in the eyes of your different stakeholders, and they may require different things. And by the way, some of them expect actions that are indirectly impacting them.

Today’s employee is impacted by how you deal with your customers, and vice-versa, your customers may leave depending on how you treat your employees, how you maintain data privacy, or your organization is impacting buying decisions for your customers, and so on and so forth. So, being proactive in this area, and we like to refer to this concept as trust equity, doing the right thing for the right reasons, doing a good job at it, tends to create that layer of protection, layer of resilience, or trust equity. So that when the crisis does strike, which inevitably at some point some crisis will, you are better protected against it. And that crisis can be more of a blip on the radar versus a catastrophic event.

Mike Vizard: It also seems like there’s a subtle thing about trust in the sense that we see a lot of people doing digital business transformation, but sometimes it’s unclear to me what the motivation is. It feels like instead of making the customer’s life easier, they’re trying to make the vendor’s or their provider of the service’s life easier, and sometimes that’s, like, by pushing more of the weight of the process onto the customer or the partner of somebody else. And that kind of is the first step to losing trust, I think, ’cause people will quickly figure out whether or not this new process that they’re being presented with is in their interest or somebody else’s interest.

Michael Bondar: I think you’ve said it really well. The way, in my mind, to respond to that, or to mitigate that issue, is transparency. You know, for years, this digital transformation was exactly what I drove for clients all over the globe, and one of the key things was being very deliberate and outlining your north stars: “What do we plan to accomplish as a result of this implementation? What are those key performance indicators for the organization that we’re gonna look at to see if we’ve been successful as part of this transformative effort?” And then also, being proactive and identifying the needs of your different stakeholders that are impacted by a transformation effort like this. So that you’re clearly not only asking them the question, but then, taking that input and ensuring that you are solving for those challenges throughout the implementation.

And by the way, when you’re done, it’s not just, you know, popping champaign and celebrating. It’s going back and seeing if you effectively solved for those issues, or if you put unnecessary burden or complicated the lives of these stakeholders more so, through unintended consequences as a result of this implementation. And so, it’s continuous connectivity, transparency, and going back to that notion of intent, Mike, as we’ve talked about. If you’re really intending to be impacting the lives or the jobs of these stakeholders for the better as a result of the transformation, you will follow up with them throughout, and post _____ to ensure that sort of the north stars were effectively met.

Mike Vizard: Do we need to take a minute, here? Because I feel like, at least, that we’ve been talking about transformations for the better part of five or six years, and then Covid came and everybody kind of accelerated their initiatives and we all patted ourselves on the back. But do we need to take a moment and say, “What was the actual impact of this stuff?” Because a lot of the times, I feel like it’s just a paper-based process that somebody stuck an iPad in front of and didn’t change much of anything. So, do we need to kind of step back for a second?

Michael Bondar: I think it’s about defining or better understanding where you are, to your point, and to taking stock of, “Have we done what we actually set out to do?” And what would be even better, if you’re able to quantify the efficacy of all the actions you have taken, whether they be a, you know, big transformation program or many projects that you have executed, have they moved the needle? What we’ve seen is most companies just keep going, you know, action, new project taking off, “Let’s complete it. Let’s, you know, check, check, check. We’re done.” But to really gauge progress, measure that progress, and especially through the lens of trust, few companies actually take the time to do that.

And we have been pushing this notion quite consistently. In that, you know, when we approach an executive in today’s environment and we say, “How important is trust?” anecdotally and through research we have seen consistent answer: It is critical. We have seen over 95 percent of CEOs say that it’s critical, 90-some percent of board members say trust is critical, and so, that answer is there pretty much every time. But when you follow up that question with, “What are you doing to manage trust for the organization? How effective are you at measuring and quantifying it?” That fervor and enthusiasm very quickly wanes. So to your point, that recognition of, “Yeah, it’s important, we’ve gotta transform, we’ve gotta do all this,” yeah, that’s happening, but you’re not taking those steps where you sit back, stand back, and assess the efficacy of those actions and if you have been successful.

So for us to effectively manage and measure levels of trust for the organization, which, in a sense, measures the success rate of these different initiatives that you have launched or completed, that’s essential. And very few companies take the appropriate measures.

Mike Vizard: In theory, digital processes should lead to more affinity for the particular supplier, but, you know, that’s hit or miss. And I guess my question to you is, do you think the people who are doing the transformations understand that one of the issues is that the cost of switching, for the customer, is much lower as a result, so you need to have their trust and maintain it almost every day, because they can wake up one morning and decide to do something else?

Michael Bondar: I love this question, because that’s – the primary way in which trust manifests itself, to your point, the cost of switching is certainly consideration. But in today’s environment, the likelihood of someone going elsewhere, whether that be a B2B or B2C customer, it must be top of consideration. And we have seen that trust plays a huge role in that decision-making process. We have seen the likelihood to buy, the likelihood of paying more, the likelihood to recommend a brand be definitively and significantly impacted by how much a stakeholder, a B2C or B2B buyer, trusts that organization. And not just kind of overall, but at a very granular level, meaning, if you recall, going back to the beginning of our conversation, I mentioned those 90 drivers.

Each one of those little actions, taking one as an example, the focus that an organization places on data privacy and protection and taking specific and deliberate steps in that, that particular trust driver matters to B2B and B2C buyers relative to how likely they are to buy the product, buy the product again, pay a premium, or recommend the brand. And if you do well in that one particular driver, the likelihood of those actions, those customer behaviors, increases. If you do poorly, the likelihood of those actions exponentially decreases, by huge factors, and the numbers are staggering. And so, again, it goes back to this idea, the uptake is there, but the possibility of someone going elsewhere is huge, if trust is broken.

Mike Vizard: Who is in charge of trust in these organizations? We’ve seen the rise of digital business transformation officers, but there’s no shortage of C-level executives, and every one of them thinks that they’re in charge of whatever domain they’ve been granted. So, whose job is it to kind of step up and think about this at a more holistic higher level?

Michael Bondar: We have seen a rise of the role of chief trust officer, and that primarily began in the technology sector, and is now expanding to life sciences and healthcare, and other parts of the business world, as well. Even in the cases where a chief trust officer is appointed, however, that does not absolve the rest of the C-suite and the CEO of some level of responsibility and accountability for this really big topic of trust. And to be honest with you, in the most effective of cases, where we’ve seen organizations really take this topic by the horns, it’s where the chief trust officer is able to collaborate very effectively with the rest of the C-suite in driving the trust agenda. Especially for organizations that have really adopted this digital-first mantra, you know, digital permeates the company, trust permeates the company.

So even if you have established a chief trust officer, the rest of the C-suite is very much engaged, and now their parts of the organization are activated relative to this topic, as well. There were estimates that the role of chief trust officer would have roughly 50 percent of the Fortune 100, by the end of 2022, would have a chief trust officer appointed. We see that pace continuing and more and more organizations kind of taking example from others and establishing that role. But, you know, is it essential? No, but somebody ought to be. We have too many examples of organizations saying, “In our company, it’s the CEO,” or it’s everyone responsible for it. Well, if everyone is responsible, nobody is, you know, you’ve got to have someone at the helm. But, you know, it does not absolve the rest of the C-suite even if that individual is there.

Mike Vizard: Trust, of course, sounds something, you know, it’s esoteric, it’s hard to wrap your arms around, and are there KPIs for measuring trust?

Michael Bondar: Yeah, that was sort of my skepticism when I took the role, to be honest with you, and where I thought to the response I would get from a client executive, it felt like an amorphous topic, quite nebulous, very esoteric. And it was through the generation and iteration of, over these 90 KPIs or 90-plus trust drivers and the, you know, overlaying 18 domains, that we were able to bring structure to it. But in addition to structure, it’s not enough to just say, “Here’s the picture.” You’ve got to quantify it. And so, what we’ve done, Mike, we went out and, so far, we have benchmarked 3,200 companies around the globe, across every sector and industry. And we have gauged their performance across each one of those trust drivers, to see what’s working well, what could be working better.

Not only do we measure performance, we also gauged the relative importance of each one of those drivers and the domains in the context of that sector. Because not every action is weighed the same, and it has, perhaps, different relative impact. And so, having that view of, “This is what good and bad looks like, this is how it’s trending over time, this is the relative weights of importance associated with each driver,” allows us then to come back to those organizations, any organization, and be able to assess them comparatively to these other organizations. Whether within the sector, or leading indicators across sectors, that’s essential, because until we were able to do that, it maintained itself as a very esoteric nebulous amorphous conversation. But bringing numbers to it, in addition to this framework and structure, it changed the dialogue entirely.

Because now you can measure it, you can quantify it, you could see what good and bad looks like, you could identify those gaps, you could action the gaps and then come back and see, “Have those actions moved the needle in the direction we aspired to?” Without that measurement, it very much maintains that level of, you know, “Interesting, but so what?” Once you bring the numbers in, it really changes the entire dialogue.

Mike Vizard: Do you think, to a certain degree, we’ve been measuring the wrong things, or the easy things? Because trust is really, it’s a metric of how much confidence the customer has in you, in the end of the day, and maybe, you know, we haven’t really thought about it from that perspective. We measured everything from, you know, turn time to a process to how much time they’re spending on a website, but are those the things that really matter?

Michael Bondar: I could not agree more with the premise of your question. In fact, I’ll tell you a quick anecdotal story, here. We approached the COO of a major organization, during the pandemic, on this notion of, “Let’s measure trust for your company.” And the response we got from him was, “This is amazing, love the dashboards, love the approach. We don’t need it.” Then we said, “What do you mean?” and he retorted back to us with, “Here are all the KPIs that I currently look at, and they’re all showing, you know, topnotch, could not stock the product fast enough, flying off the shelf, and revenue is at an all-time high,” and so on and so forth. So he was referring to these traditional KPIs. And when we – finally he said, “Okay, let’s go do it.”

When we actually looked under the hood, so to say, we noticed a significant degradation of trust, and trust issues lurking around the corner. They were somewhat hidden by, you know, the crazy demand that the organization was experiencing in the middle of the pandemic. If they did not act on these findings, they would find themselves in a world of hurt coming out of the pandemic, when the demand slightly subsided. So to your point, it’s not enough to simply look at those traditional measurements and say, “Everything’s good.” Trust is a little bit more nuanced than that, and it’s not easily translated or quickly translated to, it’s just a matter of, you know, “Can we retain our employees? What is the customer acquisition cost? How likely are they to buy the product? How long are they sitting in our website?”

That’s not enough. You have to understand what is their sentiment towards the organization, where are their concerns lying, and then, are you facing potential issues? And what is the likelihood of someone turning away from you if they’re starting to lose trust in your organization? That is not the core competency or measuring that is not the core competency of most organizations. So, yeah, to your point, we’ve got to look at some additional measurements and KPIs, to really assess how trusted the company is.

Mike Vizard: All right, folks, well, you heard it here, the only thing harder than earning trust is gaining it back once it’s lost. Michael, thanks for being on the show.

Michael Bondar: Thank you so much.

Mike Vizard: And thank you all for watching this latest episode of the Digital CxO Leadership Insights series. You can find this on the Digital CxO website, along with our other episodes. And once again, thanks for spending some time with us.