In this interview, Shantanu Dutta (conducted by Dr. Nagendra V. Chowdary)outlines what companies should do to rebuild the trust

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The recent crises have also thrown into sharp relief the fact that
many citizens – perhaps with some reason – do not trust businesses.
CEOs of many companies are seen as individuals who care only
about their short-term returns often at the expense of other key
stakeholders.
After having spent quite a lot of time observing the way management
education, management research, MBA programs and Executive MBA programs
have been taking new shape in the last 1-2 decade, what do you think would be
the shape of things to come in the future as far as MBA programs, Executive
MBA programs and management research programs are concerned?
The recent economic and financial crises have highlighted the interdependence between
emerging markets like China and India and more developed economies like the US and
Europe. Emerging markets are no longer mere exporters of goods and services;
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increasingly they are also consumers of products and
services that have been produced in developed markets. This
suggests that businesses, irrespective of their country of
origin, must develop management teams that have a global
mindset. A global mindset is an open way of thinking and
behaving that is able to learn from other cultures and
countries, as well as develop new insights and innovations
for business and society.
MBA programs should think creatively about how to develop
this ability in their students. Management research will have
to focus on identifying those factors and environments that
engender the development of a global mindset. Shantanu Dutta
The recent crises have also thrown into sharp relief the fact is currently the Vice Dean for Graduate Programs at Marshall
that many citizens – perhaps with some reason – do not trust School of Business USC. He is the Dave and Jeanne Tappan
Professor of Marketing. He received his PhD from University of
businesses. CEOs of many companies are seen as individuals
Minnesota. He has done extensive research on Strategic
who care only about their short-term returns often at the
Marketing issues. In particular, he has studied how firms can use
expense of other key stakeholders. Therefore, management distribution, strategic partnerships and pricing capabilities to
programs and research should also focus on how their build competitive advantage. For instance, he has explored the
businesses earn back the trust of their stakeholders. capabilities that firms need to develop in order to price in a
How do high performing companies achieve strong strategic manner. Prior to joining the Marshall School of
Business, he was on the faculty at The University of Chicago. He
results in each area?
was also visiting Professor at London Business School.
If the last two decades are any guide, the next two decades
will see profound technological innovations and changes in He has published extensively on these topics in leading
marketing, economics, law and strategy journals. His work is
business models. These ideas will come from different parts of
widely cited in leading marketing, economics and strategy
the world and from unexpected sources. Those companies journals. He has also been invited to talk in these topics at:
that develop leadership teams, which are able to learn and National Bureau of Economics Research (NBER), Cambridge
adapt to these changes will continue to do well in the market Mass; Marketing Science Institute Board of Trustees Meeting;
place. American Marketing Association (AMA). He has also been
What is trust according to you and why do you think it interviewed and his research cited in Financial Times and The
Economist.
is so important for the companies and companies’
boards to renew and rejuvenate their trust-related He has also taught several executive classes on these topics and/or
dashboards? consulted for companies like BP Amoco, Abbott Laboratory,
Motorola, Distribution Economics Institute of Japan, IEXE
Developing trust implies that employees and other
Mexico, 3M, Marks & Spencer, Nokia, and Vodafone among
stakeholders feel that the company is offering products and others.
services that not only benefit their direct consumers, but also
benefit the surrounding business, environmental, social eco-
systems. Developing this trust is sound and indeed a vital
business practice. Technological advances are ensuring that
information flows are very rapid even in remote areas. This
rapid dissemination of information enhances the likelihood
that bad business practices become widely known. The
resulting blows to an organization’s reputation can impair its
competitive position.
Building trust amongst customers is the biggest
challenge that any company faces. What according to
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you are the best ways to build trust amongst customers? Are there any lessons
from fairly long-lasting brands such as P&G, Nestle, Louis Vuitton, GE, Unilever,
Rolls Royce, etc?
Building trust amongst customers is an ongoing challenge for all companies.
Companies that succeed in this are very good at establishing processes that enable
them to receive feedback from their customers. This should be done in a way that
ensures that the voice of the customer is heard and contemplated without filters or
biases at various key levels in the company. Sometimes strongly held beliefs
amongst senior or middle management is unable or unwilling to listen to customer
feedback. Even the best of companies,including some mentioned above, have
made mistakes from time to time. However a hallmark of a good company is its
willingness and ability to learn from past mistakes.Such companies also take
tangible actions to demonstrate their commitment to build customer trust.
How to build trust in online businesses like e-Bay, Amazon.com, monster.com,
ecch.com, etc?
The growth of social networks is impacting the reputation of companies. Negative
word of mouth spreads quickly. Companies must figure out how they can use the
social network in credible ways. If consumers perceive that companies are
manipulating the networks and are not being transparent, their trust in the
company will be eroded.
The world’s financial markets nearly collapsed in 2008 fall for one reason: lack
of trust. Even big banks refused to lend to each other because they didn’t trust
they would be repaid. What should the banks, the Fortune 500 companies, the
regulators, policy makers, and the researchers learn from 2008 financial crisis?
What are the trust-related lessons from this crisis?
The collapse of the financial markets certainly highlighted the importance of trust.
This lack of trust arose because there was lack of transparency amongst all the key
stakeholders: the banks, the regulators and policy makers. In order to build trust it
is important for all the stakeholders to improve transparency. While it is not
possible for banks to share specific details for competitive reasons, it is
nevertheless critical for these financial institutions to recognize that they are
custodians of the livelihood of many hundreds of thousands of individuals. The
trust that many individuals and small businesses place in the banks puts the onus
on the banks to be responsible stewards. Financial institutions can build trust by
proactively educating individuals on the potential risks of different investment
options. They also have to be transparent regarding any potential conflicts of
interest. They also have the obligation to ensure that they properly align
incentives in such a way that their employees are focused on the long-run
financial health of their customers.
Regulators and policy makers should also take steps to ensure a high degree of
transparency. They must act in the best interests of the economy and not merely
respond to the lobbying efforts of various vested interests.
The interview was conducted by
30 Dr. Nagendra V Chowdary
Consulting Editor, Effective Executive
Reference # 03M-2011-01-06-06
EFFECTIVE EXECUTIVE JANUARY 2011