Case Study Description of Designing Trustworthy Organizations
This is an MIT Sloan Management Review article. In the aftermath of the well-publicized frauds of Enron, WorldCom and Tyco circa 2001 and 2002, there were major efforts in the United States to restore trust and enforce corporate compliance. Among other things, the U.S. Congress passed the Sarbanes-Oxley Act of 2002, corporate spending on compliance increased an estimated $6 billion annually and leading business schools created ethics centers and made ethics training mandatory.Yet despite these reform efforts, corporate trust violations continue. In fact, some of the most insidious practices from the Enron era (notably, disguising financial weakness with offbalance-sheet debt) were front and center again during the global financial crisis of 2008. Why do trust failures continue to occur with such frequency, and how can they be reliably prevented? The authors found that building and sustaining organizational trust is different from building and sustaining interpersonal trust, and that major organizational trust violations are almost never the result of "bad apples"or "rogue employees."Rather, these violations are predictable in organizations that allow dysfunctional, conflicting or incongruent elements to take root. Trust betrayals occur, the authors note, when the organization actively caters to a group (or groups) at the expense of and even causing harm to another group. Given the global prevalence of social media, online global forums and 24-hour news cycles, a breach of trust with any one stakeholder group can rapidly undermine an organization's reputation for trust in its broader stakeholder community. Ironically, the authors note, trust failures can act as catalysts for creating a high-trust organization. Much can be learned about how to establish and sustain organizational trustworthiness by examining how organizations successfully restore trust after a major violation. In analyzing cases of companies that have attempted to repair trust, the authors identified three critical stages: investigation, organizational reform and evaluation. Reforms must be evaluated to ensure they are working as intended, and shortfalls must be addressed. Successful trust repair requires taking a systems perspective to accurately diagnose and reform the true faults in the organizational system.
Authors :: Robert F. Hurley, Nicole Gillespie, Donald L. Ferrin, Graham Dietz
Swot Analysis of "Designing Trustworthy Organizations" written by Robert F. Hurley, Nicole Gillespie, Donald L. Ferrin, Graham Dietz includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Trust Violations facing as an external strategic factors. Some of the topics covered in Designing Trustworthy Organizations case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Designing Trustworthy Organizations casestudy better are - – increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, increasing energy prices, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Designing Trustworthy Organizations
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Designing Trustworthy Organizations case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Trust Violations, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Trust Violations operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Designing Trustworthy Organizations can be done for the following purposes –
1. Strategic planning using facts provided in Designing Trustworthy Organizations case study
2. Improving business portfolio management of Trust Violations
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Trust Violations
Strengths Designing Trustworthy Organizations | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Trust Violations in Designing Trustworthy Organizations Harvard Business Review case study are -
Strong track record of project management
– Trust Violations is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Trust Violations is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Robert F. Hurley, Nicole Gillespie, Donald L. Ferrin, Graham Dietz can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Learning organization
- Trust Violations is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Trust Violations is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Designing Trustworthy Organizations Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Trust Violations has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Trust Violations to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Leadership & Managing People field
– Trust Violations is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Trust Violations in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Trust Violations
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Trust Violations does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Trust Violations in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Trust Violations digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Trust Violations has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Effective Research and Development (R&D)
– Trust Violations has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Designing Trustworthy Organizations - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Trust Violations has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Designing Trustworthy Organizations Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Innovation driven organization
– Trust Violations is one of the most innovative firm in sector. Manager in Designing Trustworthy Organizations Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Trust Violations has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Trust Violations has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses Designing Trustworthy Organizations | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Designing Trustworthy Organizations are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Designing Trustworthy Organizations, it seems that the employees of Trust Violations don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert F. Hurley, Nicole Gillespie, Donald L. Ferrin, Graham Dietz suggests that, Trust Violations is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Aligning sales with marketing
– It come across in the case study Designing Trustworthy Organizations that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Designing Trustworthy Organizations can leverage the sales team experience to cultivate customer relationships as Trust Violations is planning to shift buying processes online.
High cash cycle compare to competitors
Trust Violations has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Trust Violations products
– To increase the profitability and margins on the products, Trust Violations needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Trust Violations is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Trust Violations needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Trust Violations to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Trust Violations, firm in the HBR case study Designing Trustworthy Organizations needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Trust Violations has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Trust Violations even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Trust Violations supply chain. Even after few cautionary changes mentioned in the HBR case study - Designing Trustworthy Organizations, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Trust Violations vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Designing Trustworthy Organizations, is just above the industry average. Trust Violations needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Need for greater diversity
– Trust Violations has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Designing Trustworthy Organizations | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Designing Trustworthy Organizations are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Trust Violations can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Trust Violations can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Trust Violations in the consumer business. Now Trust Violations can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Trust Violations can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Trust Violations can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Designing Trustworthy Organizations suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Developing new processes and practices
– Trust Violations can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Creating value in data economy
– The success of analytics program of Trust Violations has opened avenues for new revenue streams for the organization in the industry. This can help Trust Violations to build a more holistic ecosystem as suggested in the Designing Trustworthy Organizations case study. Trust Violations can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Trust Violations can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Trust Violations can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Trust Violations can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
Loyalty marketing
– Trust Violations has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Trust Violations can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Trust Violations can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Trust Violations to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Threats Designing Trustworthy Organizations External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Designing Trustworthy Organizations are -
Technology acceleration in Forth Industrial Revolution
– Trust Violations has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Trust Violations needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Trust Violations in the Leadership & Managing People sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Designing Trustworthy Organizations, Trust Violations may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Trust Violations will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Stagnating economy with rate increase
– Trust Violations can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Trust Violations.
Shortening product life cycle
– it is one of the major threat that Trust Violations is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Trust Violations can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Trust Violations business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Trust Violations high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Trust Violations in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Weighted SWOT Analysis of Designing Trustworthy Organizations Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Designing Trustworthy Organizations needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Designing Trustworthy Organizations is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Designing Trustworthy Organizations is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Designing Trustworthy Organizations is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Trust Violations needs to make to build a sustainable competitive advantage.