Hello from Hamburg,
In my last newsletter, I wrote about the Chinese home appliance manufacturer Haier, which has split its company into 4,000 separate firms. This gives its employees the opportunity to become entrepreneurs themselves in one of the subsidiaries. One reader asks: “Where do the decision-makers get the confidence that what emerges from this will be in the company’s best interest? And that it won’t turn into a hodgepodge of businesses with no clear identity?”
Ruimin Zhang, CEO of Haier and the creator of the model, says: “To create a rainforest, you can’t decide which trees you want and which you don’t. You can only prepare the soil in a suitable climate, provide light and water (…). The rest is evolution.” Haier’s executive leadership naturally sets guidelines within which the individual companies should operate—for example, regarding medium- to long-term profitability or the strategic direction of newly emerging business units. Fundamentally, the founder’s words reflect a strong trust in his colleagues and confidence in what is emerging, even without knowing exactly what that will be.
The most important ingredient for an environment in which we can expect entrepreneurial and personal growth is, in fact, trust. Unfortunately, the opposite is also true: We see that established companies need much more time to develop innovations or implement their plans than they can actually afford. There are too many coordination loops, too many attempts to play it safe—which are ultimately nothing more than expressions of mistrust. But behaviors driven by mistrust and control cost time and money. If we want to move faster, we need to build more trust.
Easier said than done. It’s a truism that trust takes time to build but can be destroyed in an instant. As a leader, how can I build trust in my day-to-day work and learn to place trust in others?
I find the interpretation offered by Harvard professor Frances Frei compelling; she says that trust consists of three elements: authenticity, logic, and empathy.
- Authenticity: Research shows that it takes 15 seconds to tell whether someone is being authentic or putting on a facade. Authenticity requires self-awareness and constant critical self-reflection. As leaders, we can’t always say everything we know—for example, when making personnel decisions or when a company is being reorganized. But openly admitting that we don’t know something or can’t say it, and explaining why, helps build trust even in critical situations.
- Logic that also encompasses technical and analytical skills. According to Frei, anyone who has a weakness in this area tends to introduce a topic in a long-winded and convoluted way and fails to get to the point. For example, if I spend a long time explaining the context, the current situation, and the broader environment to an employee, only to finally let the cat out of the bag: “I mean, you should take on a different task.” While I’m talking, the employee wonders, “What on earth is my boss trying to tell me?” And with every detour, they become more suspicious: “Is she going to fire me?” Frei’s recommendation: Present the conclusion first, then the reasoning: “I suggest that you take on a different task, specifically … Because …”
- Empathy, the extent of which is evident, for example, in the patience one shows while listening. This is particularly noticeable in meetings, which participants often use to vent and assert themselves in front of others (which is a problem in itself, but that’s another topic …). The attention span of leaders who experience an “empathy wobble,” as Frei puts it, hits rock bottom within seconds of a meeting starting and stays there until they lose their temper. Because I think I’ve known the answer for a long time. I admit that I’m a “wobbler” in this regard. Frei recommends that “empathy wobblers” shift from being self-centered to being other-centered. For example, by asking questions that encourage participants to find solutions on their own—solutions that might be better than what I have in mind: “Do you have any ideas on how we can solve this?”
Listen. Be open to surprises. That’s how I build trust. When I trust people to handle a task—even at the risk of things going wrong—I see them go to great lengths to live up to that trust. Just like at Haier, whose corporate success over the past 20 years has been based on trust and confidence. In any case, mistrust and control won’t get us anywhere—or at least not fast enough—in these times.
