In today's dynamic business environment, transformation is not just a strategic option—it’s a necessity. However, despite the importance of these initiatives, many fail to deliver their intended outcomes. Among the various factors that contribute to these failures, one of the most significant and often underestimated obstacles is a lack of trust within the organisation. Trust is the cornerstone of successful transformation, and without it, even the most well-conceived plans can falter.
So what is trust? How do you create it?
Let’s look at an example of two different leadership styles and how each one builds trust.
Which leader would you prefer to lead a transformation at your company?
Leader 1: The Strategic Expert
During the company’s transition to a new digital platform, Leader 1 quickly became the go-to person for all things related to the change. From the outset, they established a clear roadmap, complete with detailed timelines and milestones. Every week, they hosted meticulously planned meetings, where they provided updates, answered questions with precision, and addressed concerns with well-thought-out solutions.
Their background in project management and deep knowledge of the digital platform reassured the team that they were in capable hands. Whenever a challenge arose, Leader 1 was the first to offer a solution, often backed by data and a carefully considered plan of action. They were always on top of deadlines, ensuring that every aspect of the transition was on track and executed flawlessly.
While Leader 1 didn’t spend much time on the emotional aspects of the transition, their competence and consistency made the team feel secure. They were the kind of leader who inspired confidence through their expertise and their ability to deliver exactly what was promised.
Leader 2: The Empathetic Guide
As the organisation began its journey through a significant restructuring, Leader 2 took a different approach. They started by holding small, informal meetings with various teams, asking questions about how they felt about the upcoming changes and what concerns they had. Instead of pushing their own agenda, Leader 2 spent time listening, often sharing their own experiences of navigating change and the lessons they had learned along the way.
In larger meetings, Leader 2 encouraged open dialogue, making sure that everyone had a chance to voice their thoughts. They often adjusted the plans based on the feedback they received, showing that they valued the team’s input and were willing to adapt to meet their needs. Instead of focusing solely on the end goals, Leader 2 emphasised the importance of the journey and the well-being of each team member along the way.
Even when the path forward wasn’t clear, Leader 2 remained calm and reassuring, helping the team to navigate uncertainty by focusing on what they could control and supporting them in areas where they felt vulnerable. They made sure that the team knew they were all in it together, and that success would be a shared achievement.
Which Leader is better?
Did you choose Leader 1: The Strategic Expert?
Good choice! This leader clearly knows what to do and when. It’s reassuring to be guided by someone with such expertise and confidence. But with all that strength, do you think there might be something missing? Perhaps the path this leader chooses isn’t always the best for the people working at the company. Would you be able to sustain the energy needed to implement these challenging changes if it took six months or more? Especially knowing that, due to the leader’s sharp decisions, some of your colleagues might lose their jobs along the way? The vision is clear, but often rigid, with little room for negotiation. Leader 1’s sharp mind knows what to do, but doesn’t it sometimes feel a bit harsh or overly rigid?
Or maybe you chose Leader 2: The Empathetic Guide?
Great choice! This leader ensures that even tough decisions are made with empathy and understanding. Instead of rushing to fire someone, they initiate conversations and look into the root causes of problems. It feels reassuring, and you’ve probably spoken to a few people who had to be let go, who at least understood the reasons why. The rest of the team feels secure because the decisions and reasons behind them are clearly explained. But how much progress do you actually see? With every decision seeking consensus, it takes a long time to reach a conclusion. And even when a decision is made, it sometimes gets reversed because of objections. There are delays, occasional confusion, and a lack of clarity on who is ultimately making the final decisions.
In reality, there’s no clear answer as to which leader is better.
It depends on the situation and the type of change required. Leader 1 might be more effective in scenarios where clear direction and execution are critical, while Leader 2 would likely excel in environments where team cohesion, adaptability, and emotional resilience are paramount.
However, there is a way to combine these approaches. To build trust during change, we can delve deeper into the components that create trust and learn how to use them consciously.
The Trust Equation
The Trust Equation, developed by David Maister, Charles Green, and Robert Galford, provides a framework for understanding the components of trust. It consists of four key elements: credibility, reliability, intimacy, and self-orientation. Each of these plays a critical role in how trust is built—or eroded—during a transformation initiative.
Credibility: Credibility is about the trustworthiness of what leaders say. In a transformation initiative, leaders must demonstrate deep knowledge and clear understanding of the process and its challenges. When leaders lack credibility, employees are likely to question their decisions and intentions, which can lead to resistance and disengagement.
Reliability: Reliability refers to the consistency of actions over time. Employees need to see that leaders are dependable and follow through on their commitments. If leaders are inconsistent or unpredictable, it creates confusion and anxiety, causing employees to lose faith in the initiative and in the leadership itself.
Intimacy: Intimacy in the Trust Equation is about the closeness and safety in relationships between leaders and employees. It involves leaders being approachable, empathetic, and genuinely concerned with the well-being of their people. During a transformation, it’s crucial for leaders to listen to their employees' concerns, understand their fears, and acknowledge their resistance. By building this level of intimacy, leaders can foster an environment where employees feel safe to express their thoughts and contribute to the change process.
Self-Orientation: Self-orientation is the degree to which employees perceive that their leaders are focused on their own interests versus those of the organisation and its people. High self-orientation can be detrimental, leading employees to believe that leaders are more concerned with personal gain than with the success of the transformation. Leaders who demonstrate low self-orientation by focusing on the collective good and empowering their teams can build a stronger foundation of trust.
Trust as the Foundation for Successful Transformation
Trust is not merely a component of successful transformation initiatives—it is the very foundation upon which they are built. The absence of trust, whether due to a focus on self-interest, or a lack of credibility, reliability, or connection, can be the single greatest obstacle to achieving lasting change.
Moreover, trust must be reciprocal. Leaders should not only emanate trust through a clear vision, credibility, and the ability to listen to their teams, but they must also extend trust. This involves believing in the capabilities of those who will implement the changes, listening to their ideas, and involving them in the decision-making process. By doing so, leaders create an environment where employees feel valued and empowered, which in turn strengthens their commitment to the transformation.
Building trust through intimacy—by understanding and addressing employee concerns and fears—is equally crucial. Leaders who make an effort to connect with their teams on a personal level, who are genuinely interested in their well-being, can create a safe space where resistance can be transformed into cooperation.
Ultimately, trust is both given and received. It’s about leaders trusting their employees to contribute to the change process and employees trusting their leaders to guide them through it. And it doesn’t end on the leaders. For a transformation to succeed, all stakeholders must build trust—among employees, with clients, and with vendors. In the ever-evolving landscape of business, this mutual trust is the critical factor that can turn a potential failure into a resounding success.
Real-world examples
Here are a few real-world examples and case studies that illustrate how trust (or the lack thereof) has impacted organisational transformation efforts:
1. Nokia’s Transformation Failure
Context: In the late 2000s, Nokia was the leading mobile phone manufacturer. However, the company failed to respond effectively to the smartphone revolution led by Apple and Google.
Trust Issues: Internal trust issues within Nokia were a significant factor in the company’s downfall. Leaders lacked credibility and reliability as they failed to provide a clear and consistent strategy for the company's future. Additionally, a culture of fear and a lack of transparency stifled open communication and innovation. Employees did not trust leadership’s vision, leading to disengagement and a slow response to market changes.
Outcome: The lack of trust contributed to Nokia's inability to innovate and pivot effectively, ultimately resulting in the company’s dramatic decline and eventual sale of its mobile division to Microsoft.
2. Microsoft’s Cultural Transformation under Satya Nadella
Context: When Satya Nadella became CEO of Microsoft in 2014, the company was seen as losing relevance in a rapidly changing tech landscape. Nadella initiated a significant cultural and strategic transformation within the company.
Building Trust: Nadella focused on building trust by being credible, reliable, and transparent. He promoted a culture of empathy, collaboration, and learning, breaking down silos and encouraging open communication across the company. Nadella’s emphasis on “growth mindset” encouraged employees to embrace change and innovation, and his transparent leadership style helped restore trust between leadership and employees.
Outcome: Microsoft’s transformation under Nadella has been widely regarded as successful. The company revitalised its product offerings, became a leader in cloud computing, and experienced significant growth in market value.
3. General Electric (GE) and the Impact of Poor Communication
Context: GE, once an icon of American industry, underwent several transformation initiatives to adapt to changing markets, especially during the leadership of Jeff Immelt (2001-2017).
Trust Erosion: GE’s failure to maintain trust among employees and shareholders contributed to the struggles of its transformation efforts. Immelt’s optimistic communication often clashed with the company’s declining performance, leading to a credibility gap. The lack of transparency regarding the company’s financial situation further eroded trust, creating confusion and disengagement among employees and investors alike.
Outcome: The erosion of trust contributed to GE’s downfall, resulting in significant layoffs, a sharp decline in stock price, and the company’s removal from the Dow Jones Industrial Average in 2018.
4. Ford Motor Company’s Turnaround under Alan Mulally
Context: In 2006, Ford was struggling financially and operationally. Alan Mulally was brought in as CEO to turn the company around.
Building Trust: Mulally focused on building trust through transparency and reliability. He implemented the “One Ford” plan, which emphasised teamwork, communication, and a unified vision for the company. By holding regular meetings where executives were expected to openly share progress and challenges, Mulally fostered a culture of trust and accountability.
Outcome: Ford’s transformation under Mulally was a success. The company returned to profitability without needing a government bailout during the 2008 financial crisis, and it restored its reputation as a leading global automaker.
5. The Transformation of IBM under Lou Gerstner
Context: In the early 1990s, IBM was facing significant challenges due to the shift in the tech industry. Lou Gerstner was brought in as CEO to lead a transformation.
Building Trust: Gerstner rebuilt trust within the organisation by focusing on clear communication and aligning the company around a new vision. He was credible in his approach, as he took the time to understand IBM’s culture and challenges before implementing changes. His reliability in following through on his commitments helped to build confidence among employees.
Outcome: Gerstner’s leadership and the restoration of trust within IBM were instrumental in turning the company around. IBM successfully transitioned from a hardware-centric company to a leader in services and software, ensuring its survival and growth in the tech industry.
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