Page 246 - Performance Leadership

Chapter 12 Performance Networks • 235

an increase in trust might lead to less transparency, as formal controls to
compensate for an earlier lack of trust become less needed. Transparency
and performance don’t lead to trust immediately. In order to trust one
another, stakeholders should be aware of each other’s strategy, and more
importantly, their values, what drives their business model. The link
between performance and trust is influenced by many other factors. 12

• Different stakeholders have different expectations. If the strategy is
aimed at cost leadership and the organization is doing a good job,
the cost-related performance indicators will show it. However, this
doesn’t necessarily mean that the organization is trusted. If it is
quality or speed that is expected, the company will get bad grades
regardless of the success of its own chosen strategy. Trust is earned
only if there is a fit between the organization’s strategy and the
external stakeholder’s expectations, not by good performance
per se.
• Customers may have a certain brand perception, regardless of
how the organization is performing. A well-known anecdote (the
story is not true, but it makes a great point) is about Mercedes
and Brand X each doing a similar recall of a specific line of cars
that contains a certain defect. All owners are advised to report to
the car dealer and have the car serviced, free of charge.
Mercedes sends its customers a recall letter and gets applauded
for being diligent and quality oriented. Brand X sends a similar
letter but gets a negative response because quality problems
were exactly what was expected of that brand.
• Large enterprises often have a broad portfolio of products and
services. The perception of performance is made up by the
overall performance of that organization, and not the
performance that is delivered by the business unit a customer
may be dealing with. If a quality-oriented upscale manufacturer
of watches is bringing a new line of products on the market
priced more attractively for middle-class consumers, it will be
trusted, even if the market has no experience yet with the new
product line. Conversely, an underperformance business unit
will affect the trust that external stakeholders have in a well-
performing business unit.