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Commercial practices that support trust

May 29, 2014

Yesterday I asked the question ‘Are you contributing to trust?’ It was based on the most recent PwC CEO survey, which concluded that generating trust is high on the executive agenda. My article suggested that professionals in Legal, Procurement and Contract Management have many ways in which they can contribute to that agenda – or alternatively, their behaviors can do much to undermine trust and organizational reputation.

Beyond the strategic and operational areas that I suggested can be influential, I wanted also to touch on a more fundamental question of business role. This highlighting of ‘trust’ and ‘ethics’ takes me back to my days at IBM in the late 1980’s. At that time, IBM was growing fast and still held what many considered a dominant market position. It was also operating in the wake of a major anti-trust settlement which had arisen from its ‘bundling’ of products and services, in ways that were deemed to lock out competition. As part of the settlement, IBM created a function known as Business Practices – essentially a group that was charged with overseeing ethical standards and compliance with the settlement.

The Business Practices department acted as reviewer of any significant new marketing or sales initiative, including review of new product introduction and the crafting of any related contracts and terms and conditions. It oversaw questions of integrity and sustainability, in many ways acting as ‘the voice of the market’ in assessing proposed actions.

There were weaknesses in this. Some staff struggled with the judgment needed between enforcing standards and responding to market needs. It became known as ‘Business Prevention’ in some quarters. But as I look back, I think this role brought tremendous strength to the company and, with the right measurements, it could have remained a very powerful force for business benefit. Indeed, I think IBM has retained many of those standards within its culture, even though the function is long-gone.

I just wonder whether we might see the emergence of new ‘Business Practices’ groups as a component of the need to build trust; I think it would be a good thing for organizations to consider.

 

 

 

3 Comments
  1. kulbir lamba permalink

    The idea of Business Practices department, really a nice one. IBM managed it and could continue it.
    What should it be for companies involved in specific domain/ industry (say hydrocarbon) and providing Services (consultancy) not the products ? Which parameters can be made foundation for “Business Practices department” of such organizations ?

  2. Lance Jameson permalink

    As a former Enron employee; such a structure may have resulted in far fewer dubious decisions being made. The risk is, however, precisely what caused the IBM nickname of Business Prevention. The risk of bureaucracy seriously affecting nimbleness and market agility must be managed as a component of such controls.

  3. Social science theory is a good place to turn to understand the best way to govern. The University of Tennessee has published a great white paper sharing some insights from social science theory that can help companies achieve the same effects as a “policing” – but through “self governance” with stakeholders. The lessons can be profound if you extend them to your organization and how you manage your suppliers. The white paper is titled “Unpacking Collaboration Theory” and is a free download here… http://www.vestedway.com/vested-library/

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