Ethics – It's Pronounced Chookshaw

Trust model stolen from<br /> Paul English<br /> (http://paulenglish.com/trust.html)

Trust model stolen from Paul English

In my forever-ago last post, I talked about personal branding and reputation, but realized that I might have missed the point. In all the conversations taking place online, from marketing, ‘personal branding’ and credibility to religion and politics, trust seems to be at the core of what everyone is talking about. How do we build trust? How do we keep people from thinking us untrustworthy? Who deserves our trust in the first place?

A friend and I were having a couple of beers post-finals and got to the question of trust. We came to the conclusion that trust is in crisis: the Catholic Church is waging a battle for survival as a result of a sexual abuse scandal that might point to the Pope himself; a movement of vocal activists are declaring their distrust of government, accusing it of attempting to become a socialist state; and banks are being charged with fraud for purposefully selling investors funds that were specifically designed to fail.

This wouldn’t be such an issue except that we’re built to trust, we need to trust. We don’t have the energy to evaluate all of the things in our life every day, so we find those cornerstones that we can lean on. When those things crumble, we have to find something new. We’re now forced to evaluate everything in our lives for trustworthiness and are incredibly quick to pull the trigger on the least hint that it is being violated. This isn’t healthy but we’ve been given little other choice.

This article by Pete Blackshaw in Advertising Age speaks well to the current challenges facing marketers attempting to build trust. He mentions the study showing that peer-to-peer trust is down significantly as a chilling reminder that we’re not even trusting our friends’ opinions anymore. And why should we — a recent study that I can’t seem to track down concluded that Gen Yers work very hard to manage their online presence to show their ideal selves (pictures attending parties vs. winning 1st place at math camp). Perhaps the best point he makes is that we have many more questions than answers.

My personal theory on trust was well summarized by Dave Popelka from Mullen Advertising, who wrote a great article about striving to be good rather than the best. He talks about the challenges and pitfalls of measuring your business (or, as I think about it, yourself) against others and suggests that shooting for “good” is the best approach. In my world, this means being good, being consistent and doing as much as possible to avoid our human tendency to pass blame to others when I’ve failed.

Overall, I see trust as an incredibly personal thing. Attempting to manipulate people’s perceptions of you lowers that trust, makes the relationship (be it you or your products) superficial and renders already fragile brand loyalty null and void. However, I still don’t see this as an answer, but rather the beginning of a series of questions that helps us to figure out what trust means to us and how we allocate it to the people, companies and brands we interact with.

I was discussing with a couple of folks who work with entrepreneurs and startup companies a rough design and production plan my team was planning to use in a venture we’re in the process of launching. One of the strengths of our plan, I said, was the use offshore design and production, which will allow us to sell our product at a beyond-competitive price (more than half than our next competitor). One of the people with whom I was having lunch turned to me and asked, “do you really feel comfortable with using foreign labor?” He was making a significant point with a simple question. I justified the decision, saying that I knew the people involved in managing the manufacturing facility and was aware that each employee was paid well, was provided with health care for themselves and their families, worked reasonable schedules, and worked in a safe environment. However, no matter how well the employees are treated, the fact remains that production isn’t happening in the U.S.

On one of my first major projects, I had fought for using for domestic manufacturers to produce some of our components. While the management team believed that we couldn’t get a competitive price in the U.S., I insisted that we price all of our parts domestically. The result? Most everything we priced was four-to-10 times more expensive in the U.S. than through our international suppliers. While there were arguments to be made that the savings weren’t worth the opportunity cost (time between ordering and getting the product in the door, for instance), it was almost universally impossible to make our margins work using domestic suppliers.

Since those early fights, I hadn’t really thought about domestic vs. offshore supply chain. Every project in which I’ve been involved has used an offshore provider in order to be price-competitive. I realized that I had moved on from the ‘Buy American’ value that had been passed down from my grandfather, a foreman in the famous Homestead Steel Works.

It’s not just in physical product development. At a presentation I attended at AlphaLab last year, one of the portfolio companies, a social networking web site geared toward a specific audience, openly discussed their use of Indian programmers. It struck me at the time — for a city like Pittsburgh that is so rich in IT talent, it still made sense to offshore the work.

I’m truly conflicted about this issue. On one hand, I think it’s important to support U.S. jobs in order to maintain a robust economy. On the other hand, few startups can raise the type of capital, and make workable margins, using domestic labor and suppliers. How can entrepreneurs pass on the opportunity to increase their product margins, which will make their companies more likely to be funded, financially successful, and viable? Is this an ethics issue or values issue? Do entrepreneurs really have a choice?

Category: Ethics

Thoughts on Trust

To Offshore Or Not To Offshore…

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