Clever Geek Handbook
2 July 2025

Trust Agents

Recommendation

Archimedes, the Greek mathematician and inventor, once said, “With a lever large enough, I can move the world.” Today, the internet can be that potent lever “for increasing the power of what you do,” according to social media gurus Chris Brogan and Julien Smith. The most effective way to use the web to improve your brand’s “influence, reputation and profits” is to become a “trust agent” online. That requires developing strong, sustaining relationships with consumers who believe in you, respect you and see you as a helpful resource, credible expert and honest person. In this illuminating, witty guide, the authors explain who trust agents are, what makes them special and – most important – how you can become one. BooksInShort recommends Brogan and Smith’s tales of what individual trust agents have been able to accomplish in cyberspace. You’ll realize all over again that the internet is a remarkably interactive, powerful medium – a lever indeed capable of helping you move the world.

Take-Aways

  • People today are less trusting than ever before, but companies can use the internet to win consumers’ confidence, thus enhancing the power and reputation of their brands.
  • “Trust agents” are genuine, technologically savvy people who “humanize” their firms.
  • To emulate these highly influential individuals, act on six interrelated principles:
  • First, “make your own game” by breaking free from your industry’s traditions and differentiating yourself from your competitors.
  • Second, relate to people authentically, so web communities accept you as an insider.
  • Understand that “credibility, reliability and intimacy” increase your trustworthiness in business, and “self-orientation” diminishes it.
  • Third, leverage the power of the internet, your relationships, your reputation and your resources to reach your business goals.
  • Fourth, be a “connector” among your networks. Build and nurture them so you can potentially become the “Agent Zero” at their core.
  • Fifth, develop your “interpersonal” or “soft” skills, so you can become a “human artist.”
  • Sixth, organize your contacts into an “army” that can accomplish far-reaching goals.

Summary

“Trust, Social Capital and Media”

People are no longer as trusting as they once were. In fact, “the general public’s level of mistrust is at an all-time high.” But savvy companies can use the internet to build trust among consumers, thus enhancing the power and reputation of their corporate brands. Rather than trying to conceal information about their operations, these firms embrace the web’s connectivity and transparency and even use these properties to advance their business objectives. By establishing or harnessing “trust agents,” or “non-sales-oriented, non-high-pressure marketers,” they develop a genuine, credible presence online.

“The whole web is one gigantic lever, and you can use it to accomplish pretty much anything more easily than before.”

Why are trust agents so influential? They are “power users” of the internet’s latest, most potent tools. These champions of online connectivity don’t aggressively promote their companies. Nor are they “infiltrators,” or spies who join online communities for ulterior motives. Instead, trust agents are honest, straightforward people who “humanize” their firms. They recognize that online communities want to be “cared for,” not “managed.”

“We’re asking you to balance being genuinely part of an online community with being aware of business opportunities, and how executing the trust agent’s strategy can realize business goals.”

To understand how web communities currently perceive your company and its competitors, and why they might trust or distrust your firm, create a “listening station” using several free or low-cost internet tools. Start by setting up a Gmail account, so you can use the wide range of Google applications. Then sign up for Google Reader (google.com/reader), a web-based aggregator. Next, visit the Technorati website and insert your company’s name into the search field. When the results appear, right-click on the RSS button and choose “copy link location.” Then return to Google Reader, click on the plus button and paste in the information you copied. [Editor’s note: This enables you to view results from Technorati in Google Reader.] Follow the same process for any other terms you want to research, such as the names of your specific products or services.

“Seeing life as a game allows you to see the map, to see where you’re going.”

Online, you can connect with and influence others through blogs, videos, podcasts and other tools. The content you publish exists permanently on the web, so it continues to reach new audiences long after you post it. You don’t have to be physically present to continue sharing your message. Thus, responding to people’s most common questions and concerns on your blog or through another public venue often has far more impact than answering them in private emails. By publishing this type of information on the web, you create a useful resource and build your reputation as an expert in your field. Being helpful to others enables you to accrue social capital, which is crucial to your success online.

“Do not go where the path may lead; go instead where there is no path and leave a trail.” (Ralph Waldo Emerson)

So how do you become a trust agent? All trust agents act on six interrelated principles:

First Principle: “Make Your Own Game”

The internet is a great place to innovate and break free from your industry’s traditions. Online, you can set your own rules. Take, for example, the Arctic Monkeys, an English music group that creatively used MySpace to promote a new album, which soon became the “fastest-selling” ever in the U.K. Another group, Radiohead, made its album available on the web with a unique “pay-what-you-want” pricing option. It sold three million digital copies. In effect, these bands jumped the gate. They found a way to differentiate themselves by bucking long-standing systems.

“Building any kind of following online...requires solid leadership skills, the ability to create a sense of belonging, a gracious attitude, transparency about who you are and empowering the community to feel important.”

Writing your own rules helps you build a reputation as an expert in your field, thereby earning people’s trust. But to succeed, you must be able to view “life as a game.” According to BoingBoing.net blogger Douglas Rushkoff, children interact with games in three ways, using methods that parallel and describe how people relate to culture, both online and offline:

  1. “Playing” – With any new game, you first learn to play it “as it was intended.” In a trial-and-error process, you discover the mechanisms of the game, how to have fun playing it, the traditional and “house” rules, the objectives, the role of competition, and so on. The feedback you get about your choices along the way continually reshapes your strategy. These principles also apply to building an online presence. On the web, you may receive feedback in the form of “links, comments, revenue, friends and followers,” and even “sentiment,” which you can measure in “positive and negative mentions.”
  2. “Cheating” – Once you learn a game’s rules, you become an efficient, competent player. Eventually, you begin to look for nontraditional ways to play the game. Though Rushkoff calls this process “cheating,” a more apt word for it may be “hacking,” because it relies on alternative thinking, not dishonest strategizing. For example, your firm might find a new, innovative way to sell an existing product.
  3. “Programming” – Sometimes you can gain greater rewards by starting from scratch, rather than modifying an existing game. This requires ongoing experimentation as you define a new game and discover its rules. Take a risk, whether it’s launching a “content marketing blog” about a topic you know well or creating an entirely new internet community. Explore ideas that are “so crazy” they “just might work.”

Second Principle: “One of Us”

In 2004, Microsoft employee Robert Scoble began to blog about his company, often roasting its products. Because of his honesty and courage, Scoble gained credibility with online communities, becoming one of the web’s first trust agents. People who read his blog regarded him as a technically competent, highly knowledgeable contributor. They accepted him as a trusted member of their online groups. To earn the confidence of online communities, as Scoble did, you must “be human” in all your interactions. That means sharing your true opinions and speaking like a real, live person, not an advertisement. You must also understand the “trust equation,” which David Maister, Charles H. Green and Robert M. Galford identified in their 2001 book, The Trusted Advisor. According to the authors, “credibility, reliability and intimacy” increase your trustworthiness in business, and “self-orientation” diminishes it. This trust formula also holds true for the online world, though some of “the signals have changed”:

  • Credibility – In the past, people strengthened their credibility by demonstrating authenticity and competence. On the internet today, what others think and write about you matters more.
  • Reliability – Once, individuals proved their reliability through their actions. For instance, if someone arrived on time for a project or meeting, people believed that person would be prompt in the future. Today, what others say about you – for example, in their online reviews – has greater influence than what you yourself do.
  • Intimacy – Whether people are comfortable with you, and how they feel about you emotionally, indicates the level of intimacy you share. On the web, an absence of “nonverbal social cues” has made “verbal intimacy” increasingly powerful.
  • Self-orientation – The more you exhibit high self-orientation by putting your own needs first, the less trustworthy you will seem to others. But if you, say, recommend a competitor’s superior offerings over your own, people will be more likely to trust you.
“Everyone is not your customer, and everyone isn’t the audience you want to influence, which is the difference between a trust agent and a ‘brand evangelist’.”

Many of these changes point toward a clear trend: On the internet, groups, not individuals, play a major role in establishing trust. Indeed, trust is linked to “a sense of belonging,” to acceptance in a web community.

Third Principle: “Archimedes Effect”

Archimedes was a Greek mathematician and inventor from the third century B.C. who once claimed, “With a lever large enough, I can move the world.” Like Archimedes’ lever, the web can help you attain far better results than “normal human effort” could achieve. It enables you to supercharge your professional or commercial activities. Online, your time, your reputation and your relationships can also provide leverage for reaching your business objectives. However, never “sell to your audience.” Rather, serve as the “gatekeeper” for your community.

“The key to developing a solid network is first to build a presence online, then meet in person and then sustain the relationship with several more online touches over time.”

Understanding what leverage is and how to use it requires some knowledge of “multicapitalism,” the ability to perceive “multiple, varying forms of value and to know how to exchange one type of capital freely for another.” Consider Donald Trump, the real estate mogul. He leveraged his wealth to develop his TV show, The Apprentice; then he leveraged his high profile on the program to develop Trump University.

Fourth Principle: “Agent Zero”

Trust agents are natural relationship builders. These individuals often exist at the hub of various online networks, constantly bringing together different groups and disseminating ideas. Their central position in their networks has earned them the moniker “Agent Zero.” Because they serve as the human links in their communities, they often have access to powerful, important people, and they are “quick to share” these connections. Agent Zeroes create, expand and strengthen their networks by being helpful. For instance, they might use their networks to solve problems. They go out of their way to post positive comments on blogs and to respond quickly to Twitter messages, and they call attention to others’ achievements. As they follow their natural inclinations to do good and assist others, they increase their social capital and influence. Their communities’ trust in them grows, enabling them to accomplish even greater feats online. Such agents perform their beneficial acts selflessly, always staying out of the spotlight. But count on it: People know they are there.

Fifth Principle: “Human Artist”

Trust agents have superior “interpersonal” or “soft” skills. Naturally social, they tend to read people well and be empathetic. They are, in effect, human artists, a capability that makes them immensely valuable to their employers. To become a human artist online, learn who your target communities are. Interact with them on their own terms, not yours. Get inside people’s heads. Find out what matters to them. You can hurt your online reputation if you wittingly or unwittingly violate social norms, so honor unspoken community standards and protocols on the web. This requires good listening and observation skills. For example, before posting comments about online content, examine what types of comments others post. Whatever you do, don’t market to new online friends. They will likely remove you from their “friends” lists and may even write negative blog posts about you. Follow the Golden Rule, which “ports nicely to the web.”

Sixth Principle: “Build an Army”

Internet tools, programs and applications, including wikis, Yelp, Facebook and Twitter, enable trust agents to get in touch with a vast number of people online. They can use their influence to point large crowds toward the same worthwhile purpose. Because of the internet’s amazing connectivity, individuals and groups can now collaborate together on complex projects in ways unimaginable in the past. Wikipedia, the immense online encyclopedia that developed through crowdsourcing, is a terrific example of this remarkable internet capability.

“Trust agents build networks almost reflexively by being helpful, by promoting the good work that others do, by sharing even their best stuff without hesitation and by finding ways to deliver even more value on top of all that without asking for anything in return.”

By building an army on the web, trust agents accomplish great things. Consider General Motors’ GMNext.com program, wherein GM made a customer-friendly wiki available, along with other “user-editable areas.” Droves of GM customers used these online tools to tell stories about the GM cars they own and love. The program succeeded because GM didn’t try to sell anyone anything. Instead, it gave its customers the opportunity to demonstrate their deep appreciation for their GM vehicles. That’s great – and credible – marketing.

Techniques for Getting Started Online

Follow a few strategies to advance your online (and offline) goals: Join Facebook and any other relevant social networks. Develop a “friends” base and expand from there. Don’t be afraid to “friend” people you do not know. Use Twitter to learn what you can about others online. Frequently communicate by posting comments all over the web – on people’s blogs, on forums and on other internet venues – and regularly “check in” with members of your online community. Make being “the best communicator the web has ever seen” your primary goal.

About the Authors

Chris Brogan is co-founder of PodCamp, which sponsors “UnConferences” for social media enthusiasts and professionals, including bloggers, podcasters and social networkers. Julien Smith, a trend analyst, has directed web communities for more than 10 years.

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Trust Agents

Book Trust Agents

Using the Web to Build Influence, Improve Reputation, and Earn Trust

Wiley,
 


2 July 2025

Seven Lessons for Leading in Crisis

Recommendation

Business legend Bill George learned about corporate crisis firsthand as a novice manager in his 20s. His timing was impeccable: The day before he began a new job as Litton Industries’ assistant general manager for microwave ovens, the U.S. surgeon general announced that microwave ovens posed a potential health risk. When George arrived at Litton’s Minneapolis office for his first day on the job, the place was in bedlam. If the Food and Drug Administration (FDA) had ordered Litton to take its only product off the market, the company would have gone under – and George would have been out of a job. For nine months, he worked around the clock with Litton’s engineers to make sure its microwave ovens could meet tough new FDA standards. What a welcome to the business big leagues! In his book on corporate crises, George says calamities either make or break executives. Litton’s microwave crisis did not break George. He went on to a storied career as a respected CEO and a professor at Harvard’s School of Business. BooksInShort recommends his wise, savvy book to CEOs and other senior executives who will derive valuable lessons from its strategies and its many fascinating case studies.

Take-Aways

  • A crisis will severely test a company’s chief executive officer and its other leaders.
  • Some CEOs are able to weather such storms; others flounder.
  • If you act boldly, a crisis can be your finest hour. Follow seven lessons.
  • First, don’t deny the hard reality of the crisis your firm faces.
  • Second, don’t try to solve the crisis alone.
  • Third, discover the true causes of the crisis.
  • Fourth, don’t expect that short-term or halfway measures will resolve the crisis.
  • Fifth, use the crisis as a time to reorganize your business and make it better.
  • Sixth, be careful how you communicate during a crisis. Mistakes will matter.
  • Seventh, apply seven additional strategies to exploit a crisis in order to set a new strategic direction and define your organization.

Summary

Chinese Curse: “May You Live in an Important Age”

Crises uniquely test executives. A crisis will ruin some CEOs and elevate others. The leadership skill you will need during a crisis is not something you can learn in an M.B.A. program. Rather, you will discover it as the crisis develops. If you weather the storm, your leadership ability will shine bright. If you make mistakes, but keep your company afloat, you will still be able to learn valuable lessons. Thus, you will be better prepared for future emergencies.

“Lesson 1: Face Reality”

In 1991, Salomon Brothers was in big trouble. It faced possible criminal prosecution for “submitting false bids” to the U.S. Treasury. The firm’s senior managers refused to accept the dangerous reality of the situation. However, Warren Buffett, Salomon’s major shareholder, quickly assumed control of the company and told the top executives to leave the firm. Lawyers and public relations professionals counseled the company not to “provide complete transparency” to the U.S. government. Buffett did the exact opposite, ordering Salomon to be fully transparent, even if the government used information it provided to prosecute the firm.

“A crisis provides a unique opportunity to create transformative change in your organization.”

Buffett could see that the U.S. government surely would bring criminal indictments against Salomon if its leaders kept stonewalling. This would have made it impossible for the firm to bid during government auctions, which would have pushed the company into bankruptcy. Only by putting his reputation on the line could Buffett prevent such a disastrous chain of events. Without his leadership during Salomon’s crisis, the firm certainly would have gone down.

“In the glare of the lights, your ability to stay true to your values is put to the test. You can make or break your reputation in an instant.”

Denial is a bigger career killer than incompetence. Crises often start small. At first, leaders can easily avoid facing a looming problem. They assure themselves that nothing major is happening and that a “quick fix” will work. Soon, minor issues inflate into major ones. Leaders must realize that crises do not magically heal. Ignoring a developing storm will only make a bad situation more difficult to rectify later. Accept reality. Acknowledge your role in contributing to the crisis.

“Lesson 2: Don’t Be Atlas; Get the World off Your Shoulders”

As a CEO, are you supposed to support the whole world on your shoulders in times of trouble? You are not. Turn to your colleagues for assistance. Learn from Morgan Stanley CEO Philip Purcell. When his firm faced numerous problems in 2004, Purcell could have spent his time on the trading floor getting a fix on things from his traders. He could have met with his executives to work out solutions. Instead, he sequestered himself in his office. That is not leadership. Former Morgan Stanley executives united to influence the board to fire Purcell. John Mack took over, put new leaders in place and got things rolling again. The company survived its crisis of confidence.

“Like being in a war, crises test you to your limits because the outcome is rarely predictable.”

Why do some CEOs retreat during crises? Some may worry about failing and losing prestige, but walling yourself off helps no one. During an emergency, turn to trusted colleagues, friends and relatives. In advance, make sure you have a support team in place. If you can, include a mentor. Relying on others in times of trouble does not demonstrate weakness. Instead, it lets you connect with people in a meaningful way that motivates them. When you are open and available, your team can rally around you to develop solutions to your organization’s problems.

“Lesson 3: Dig Deep for the Root Cause”

In 1982, someone tampered with Tylenol capsules and three people died from cyanide poisoning. Jim Burke, the CEO of manufacturer Johnson & Johnson, immediately recalled all the Tylenol in distribution. His calming presence on the nightly news reassured the public. Within weeks, his company introduced “tamper-evident packaging.” Soon, it was selling as much Tylenol as ever. However, in 1986, a young woman named Diane Elsroth also died after using poisoned Tylenol capsules. Burke again pulled all Tylenol from the shelves. This time, at a cost of some $150 million, the company reintroduced the product with a tamper-proof “pill design.” During a news conference, a reporter asked Burke, “What would you tell the mother of Diane Elsroth?” He answered, “I would tell her I wish we had implemented this solution four years ago.”

“Staying on course is much easier when things are going well.”

As the Johnson & Johnson experience proves, corporate leaders often fail “to get to the root cause” of their emergencies. Firms under pressure often misidentify symptoms as problems. Unfortunately, treating symptoms does not solve problems, so the root causes continue to fester and can strike again. When dealing with a crisis, get all the facts with no sugarcoating. Adopt the military approach of “trust, but verify.” Digging out the root causes of your problems is difficult, but crucial, even if your findings have unnerving implications. To address a company’s most serious risks, its leaders must bravely confront their fears.

“Lesson 4: Get Ready for the Long Haul”

Never prematurely signal that a crisis has been overcome until you are sure that it has. Former U.S. President George W. Bush learned this the hard way during the Iraq war when his staff displayed a banner reading “Mission Accomplished” aboard the USS Lincoln. U.S. soldiers stayed in combat years after Bush’s premature public relations event.

“There could not be a better testing ground for leaders than the global economic meltdown.”

Often, executives think they can weather a crisis with short-term tactical moves like reducing production until consumers resume purchasing. But if such short-term fixes don’t work, fundamental changes may be in order. Don’t be afraid to make them.

During the 2008-2009 economic crisis, many executives ignored early signs that subprime mortgages were in trouble. Even the “forced sale of Bear Stearns to J.P. Morgan” failed to awaken them. They began to see how badly things had deteriorated in September 2008 when Merrill Lynch, AIG and Lehman Brothers “all blew up in the same week.”

“In the early stages of a crisis, it is easy to mistake the first symptoms that appear for the real problems.”

However, Goldman Sachs had been alert to the problem all along. More than a year earlier, when it had a $1.2 trillion balance sheet, it had suffered a minor loss in subprime mortgages. A careful internal review of its subprime mortgage business revealed that Goldman Sachs could be in big trouble unless it made major changes. The firm quickly discontinued working with subprime mortgages, even as Countrywide, Citigroup, UBS and AIG strove to build up their subprime portfolios. The business crashed the following year. Was Goldman Sachs just lucky? No, it had carefully analyzed the heavy risks of subprime mortgages, understood the dangers and immediately limited its exposure. Many people don’t see that bad situations can get worse. Goldman Sachs’ leaders saw.

“Lesson 5: Never Waste a Good Crisis”

The Chinese character for the word “crisis” consists of two separate symbols, one signifying danger and the other signifying opportunity. This is apt. Visionary CEOs always see opportunity in crisis. They often use crises to overhaul and transform their operations. This is what Wendy Kopp did with Teach for America (TFA), the firm she founded in 1989. Dedicated to providing teachers for inner-city schools, TFA did well in its first few years. However, in 1995 it fell into trouble. Sponsors fled. Teacher applications faded. TFA faced a $2.75 million deficit.

“Even when an organization is in a full-fledged crisis mode, many people assume that they just need to make tactical changes to get through the crisis.”

Kopp was spending 100 hours a week trying to get things back on track. Finally, she stopped to think. After careful analysis, she restored TFA’s “core mission.” She cut 40% of her payroll costs, killed two new initiatives and developed a five-year plan. With these sweeping changes, Kopp turned TFA around. By 2008, it had 10 times more teachers and 22,000 alumni, 60% of whom stayed in education. Kopp used a major crisis to make TFA better.

“Lesson 6: You’re in the Spotlight”

In 2007, customer complaints prompted Mattel Toys to test the lead content in its products. Lab reports showed that the lead levels exceeded safety standards. Mattel recalled millions of toys. During his congressional testimony, Mattel CEO Robert Eckert stated that the firm’s Chinese suppliers were responsible for the lead content problem. “[The] contractor’s failure to follow well-established rules forced the recall of millions of toys with lead paint,” Eckert said.

“The modern media world with its multiplicity of new information sources presents myriad pitfalls and opportunities.”

As a result of Eckert’s testimony, the U.S. public immediately went on the warpath against Chinese toy manufacturers. U.S. Senator Sam Brownbeck added to the clamor by saying, “Made in China has now become a warning label.” But who truly bore responsibility for the dangerous toys: the Chinese who made them, or Mattel, which ordered and sold them?

“When you find yourself getting into a crisis, it is human nature to think things couldn’t get any worse...Things could get a lot worse.”

As the public relations outcry against Chinese manufacturers increased in volume, Mattel’s executive vice president publicly “apologized to the Chinese minister” for blaming China. “Mattel takes full responsibility for the recalls and apologizes personally to you, the Chinese people,” the VP said. When Mattel placed its logo on the toys, it certified that they were safe. Eckert was wrong to shift the blame away from his company. He damaged Mattel’s good name and his own.

“It is tempting to think of crises as events to weather until things return to normal.”

When a company crisis hits, the media go into overdrive. Of course, businesses must also now contend with social media, such as blogs and YouTube. Under pressure, a CEO easily can say the wrong thing and aggravate a bad situation. Don’t make this mistake. Transparency should be your watchword. Open up to the media. Do not dissemble. Reporters and the public will respect your firm for its honesty. What about whistle-blowers? Transparent organizations demonstrate they have nothing to hide. Thus, whistle-blowers become irrelevant. Make unambiguous statements to get “out in front of the crisis.”

“Lesson 7: Go on Offense; Focus on Winning Now”

Don’t batten down the hatches during an emergency. A crisis is a gift you can boldly exploit to restructure your business so you come out stronger than ever. Follow these seven steps:

  1. “Rethink your industry strategy” – To do so, you need to develop an acute understanding of your customers and their needs.
  2. “Shed your weaknesses” – This is what Xerox CEO Anne Mulcahy did when she cut 28,000 jobs during a business crisis in order to regain competitiveness.
  3. “Reshape the industry to play to your strengths” – This exposes the weaknesses of your competitors.
  4. “Make vital investments during the downturn” – What could be bolder than making a new strategic move “when you’re on your knees”?
  5. “Keep key people focused on winning” – While you ensure that the company stays afloat, assign an executive team to develop a “post-crisis strategy.”
  6. “Create your company’s image as the industry’s leader” – Wall Street’s recent PR traumas opened the door for a financial industry executive to demonstrate leadership. In April 2009, Lloyd Blankfein did so by detailing the need for systemic industry changes, including in such areas as regulation and compensation.
  7. “Develop rigorous execution plans” – New strategies are worthless without sound marketplace implementation.

“Your Defining Moment”

In 1933, when U.S. President Franklin Delano Roosevelt took office, America was in dangerous straits. The country was in the midst of the Great Depression. One out of four people was unemployed. Business investment was off by 90%. Banks had closed in 34 states. During his inaugural address, Roosevelt said, “The only thing we have to fear is fear itself.” He rallied Americans, pulled the U.S. out of the Depression and, later, helped lead Allied forces to victory in World War II. During these multiple crises, Roosevelt defined himself as a great leader.

“Leaders often fail to see the crisis coming.”

Going through a crisis will define you, so write the definition yourself. “It is in...crisis that you learn who you really are.” Be bold when crisis hits. Demonstrate leadership. Always stick to your values. Don’t let a crisis blow you off course.

About the Author

Bill George, professor of management practice at Harvard Business School, is the former chairman and CEO of a leading medical technology company. The Academy of Management recognized him as Executive of the Year.

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Seven Lessons for Leading in Crisis

Book Seven Lessons for Leading in Crisis

Jossey-Bass,
 


2 July 2025

None of Us Is as Good as All of Us

Recommendation

McDonald’s statistics tell the story of its impressive business achievements. The company serves 58 million customers daily at 32,000 restaurants in 118 nations. It employs 1.6 million people, and had 2008 sales of more than $70 billion. That’s a lot of “secret sauce.” Through its vaunted Hamburger University, which opened in 1956 in an Illinois restaurant basement, McDonald’s teaches store managers, owners and operators how to do things “the McDonald’s way.” Author Patricia Sowell Harris is in charge of diversity at McDonald’s. She must be doing a good job, given that Fortune magazine cited McDonalds as the number one company for diversity two years in a row. Though Harris’s book is, by nature, promotional, she does a good job of explaining how diversity works at McDonald’s, why a diverse workforce is important and why it makes good business sense. BooksInShort recommends her lessons on equitable employment to CEOs, as well as to human resource personnel, and training and hiring managers.

Take-Aways

  • With 1.6 million workers worldwide, McDonald’s is remarkably diverse.
  • However, when it opened in the 1950s, McDonald’s was not at all diverse.
  • One rule was that only men could work in the restaurants.
  • McDonald’s started to hire women in the mid-1960s when the U.S. military draft made it hard for McDonald’s to find enough male employees.
  • Its leaders began to understand that the company had to become more diverse to succeed in minority neighborhoods.
  • Early efforts to diversify McDonald’s corporate staff did not always go smoothly.
  • Diversity requires committed, active top management support, plus strong networking, education and training.
  • McDonald works with minority community leaders and helps on major civic projects.
  • Diversity must become an everyday thing, despite business ups and downs.
  • Diversity encourages and enhances teamwork, and employee loyalty and solidity.

Summary

McDonald’s: A Slow Start on Diversity

In 1955, when Ray Kroc founded the McDonald’s Corporation – based on a hamburger restaurant owned by the original McDonald brothers – he envisioned the company as a “three-legged stool”: the firm, its suppliers and its franchisees. If one leg failed, the stool would topple.

“McDonald’s restaurants were owned by the people in the community, they hired employees from the community, earned the loyalty of customers in the community, and reached out to support the community.”

Although he didn’t understand the need for diversity at first, eventually Kroc came to see that to sell more hamburgers than anyone else, he would need to make McDonald’s as diverse as possible. He particularly needed to match his workforce to the minority communities where some of his restaurants were going to be located. Once Kroc was convinced, he put his training and educational staff to work to support his diversity effort. He made sure everyone on McDonald’s managerial staff supported the campaign and understood how to lead a workforce made up of people of many different backgrounds. The company became a beacon of diversity.

“We have ... learned that diversity is a sound business strategy – the smart thing to do if you wish to serve a diverse customer base.” (Jim Skinner, McDonald’s CEO)

Using a career-building model established by its “minority and women owner/operators network” McDonald’s now has employee networks for African Americans, Hispanics, Asians, gays and lesbians, young professionals and working mothers. This success did not come easily or quickly. In McDonald’s tenth year in business, 1965, the company had 738 restaurants and employed only men. That rule made exceptions only for “the wife or daughter of [a franchise] owner.” Kroc hired only men to eliminate the possibility of employees flirting on the job. Kroc’s policies were not unusual in the 1960s, when diversity was an “alien concept.” Roland Jones, who became “the first African American employee to work as a field consultant” for McDonald’s, later wrote a book about his duties advising franchisers on their business operations. In Standing Up & Standing Out, Jones describes Kroc as, initially, “less than sensitive to the broad social issues of racism, sexism and other forms of prejudice.”

The Company Opens Its Doors to Diversity

Business necessities forced Kroc to change his hiring policies. As the number of McDonald’s franchises rapidly expanded during the 1960s, the owners and operators needed to be able to staff their new restaurants. But this period of growth fell during the years of the Vietnam War, when the U.S. military draft was in effect. With many eligible young men entering the military, it was difficult for franchises to find enough male workers. Therefore, McDonald’s liberalized its hiring. First, it began to employ “Day Ladies,” mothers who worked at the restaurants during school hours; then it hired more female staffers.

“Kroc was proud of his immigrant heritage, and he firmly believed that anyone in America could succeed through hard work and dedication, just like he did.”

McDonald’s began hiring African American workers after the race riots of the late 1960s. By 1967, McDonald’s franchisee in Washington, D.C. had built a track record of hiring black employees and had created the marketing character Ronald McDonald – the company’s iconic clown, initially portrayed by now-famous TV weatherman Willard Scott. When McDonald’s bought the $16.8 million company, its staff included black administrators who had come up through the ranks to become “restaurant managers [and] area supervisors.” McDonald’s promoted some of them to the ranks of its corporate executive officers. At the time, establishing restaurants in minority areas was a huge challenge for the company, in part because it required new franchise investors to operate their own restaurants. Investors needed “about $150,000 for a turnkey” facility. This was beyond the means of many black investors, so to dodge the investor-operator requirement, the company tried to line up “white investors” to fund African American entrepreneurs’ inner-city restaurants. This arrangement was called a “zebra partnership.”

“We hired so many high school kids that we quickly became America’s favorite first job.”

In 1968, Herman Petty, who previously owned a Chicago barbershop, became “McDonald’s first black franchisee.” Petty was a good bet. “Because I had a barbershop down the street, I knew everybody in the neighborhood, and they knew me,” he says. Meanwhile, the zebra partnership concept turned out to be a big problem. Many silent partners did not maintain the proper equipment or pay their suppliers consistently. McDonald’s spent $500,000 to “untangle” the flawed ownership arrangements. It eventually forced out some original investors. After the dust settled, eight new African American owner/operators were running their own McDonald’s restaurants. As the 1960s ended, McDonald’s management had learned an important lesson: It had to alter its composition as the U.S. underwent massive societal changes. Kroc championed the expanding company’s new diversity. He and Fred Turner, former grill man and now the corporation’s president, provided vital executive “air cover” for diversity to become the new normal.

Diversity in the Executive Ranks

Bob Beavers was one of the initial African American employees at McDonald’s in Washington, D.C. He recalls that in 1963, “My girlfriend said there was a sign in the window of a McDonald’s just a few blocks from my house, so I went in and applied, and two days later I was working there.” He began cleaning windows and trash receptacles at the restaurant for $1 per hour. By 1969, he was working in the corporate office. During his first interview at headquarters, he says, “There was not a single person of color in the entire building, which was not a comforting feeling. I didn’t see anybody like me, not even a secretary, not even a clerk, male or female.” Beavers moved up the ranks and joined McDonald’s board of directors in 1984. He served for 27 years and now owns a company that supplies McDonald’s with napkins.

“Managing diversity means operating in a corporate culture where different views, opinions, experiences, educations, religions and lifestyles are respected.”

The early days were not easy for Beavers and other black employees. A manager in McDonald’s regional office in Los Angeles became angry when Beavers visited his location. He asked Beavers why he thought he could enter the office. Turner soon got word of this incident; a few weeks later, the manager was out of the company. At the time, McDonald’s had some 1,300 U.S. restaurants. Turner wanted to add 200 to 300 each year, but he knew that would be impossible without Hispanic and African American franchisees. Beavers’ job was to find promising black entrepreneurs to license as new franchisees. His goal was to sign up 50 “minority franchisees” within two years. He did better than that. Many of the new franchisees took out U.S. Small Business Association (SBA) loans. Because McDonald’s aggressively sought minority entrepreneurs, the SBA bent over backward to reduce red tape and expedite the loans.

Creating Networks: McDonald’s Operators’ Associations

As a field consultant, Roland Jones had his hands full getting new minority-owned franchisees ready to follow McDonald’s precise operational procedures. He began meeting with new owners and operators in groups, launching the networking concept that the company still uses. The initial training group of franchisees met in a Chicago tavern’s basement. The company eventually bought a building on the South Side of Chicago and converted it into a training and educational facility. Minority franchise owners and operators began to fly into Chicago to attend the training sessions.

“Training and education provide the foundation for making diversity work for you.”

McDonald’s leaders understood that networking at the meetings was extremely valuable in indoctrinating new franchisees and enabling diversity. In 1970, a new networking organization, the Black McDonald’s Operators Association (BMOA), started in Chicago. This led to the 1976 formation of the National Black McDonald’s Operators Association (NBMOA), which proved to be a valuable pipeline for blacks who wanted to move to corporate jobs within McDonald’s. The company worked with the two associations to develop the Black Career Development (BCD) training program and the Accelerated Management Development program, which fast-tracked African Americans into executive positions. McDonald’s also helped black employees through a new “Big Brothers and Big Sisters” program. Then as now, part of training minority employees is teaching managers about the importance of diversity.

“While we were successful in bringing people of color into McDonald’s in the early years, we were not as successful in keeping them.”

In 1980, McDonald’s hired Mel Hopson, a black executive, as its affirmative action officer. It stated a new policy holding managers responsible for diversity. The NBMOA network expanded to black suppliers, and negotiated with McDonald’s to secure a more balanced ratio of the number of black- and-white-owned franchises. The result was an additional 600 black-owned restaurants. Currently, NBMOA represents 1,500 restaurants and “some 325 owner/operator entities.”

“The issues that African Americans have are different from those of women, and they are both different from those of Hispanic Americans, and so on.”

Such advances emerged from the three pillars of McDonald’s diversity program: “strong management support at the top, training and education and networking.” This dedication to diversity paid off for McDonald’s. For proof, look to 1992, when some parts of the Los Angeles black community rioted after the verdict exonerating police for the beating of African American Rodney King. The rioters did not harm McDonald’s restaurants in the area that were run by local African Americans. At the same time, other local businesses suffered an estimated $2 billion in damages. Time magazine reported, “When the smoke cleared...not a single McDonald’s restaurant had been touched...As a result, McDonald’s stands out not only as one of the more socially responsible companies in America, but also as one of the nation’s truly effective social engineers.”

Women and McDonald’s

Women joined McDonald’s diversity initiatives a different way. While McDonald’s needed black owners in their community’s neighborhoods, it had no such need when it came to women employees. At the same time, McDonald’s leaders began to understand that women staffers would make female customers feel more comfortable. McDonald’s president Fred Turner became head of what he called the “Women’s Lib Committee.”

“We moved beyond simply counting heads a long time ago. Today we are intent upon making heads count. So...our definition of diversity includes a broad mix of different ideas, opinions, backgrounds and life experiences.”

In 1979, McDonald’s sponsored “Operation Homecoming,” a national conference on “better utilizing women and minorities.” With Turner’s advocacy, the company instituted a training program for managers and women employees. In 1988, women franchise owners set up the Women Operators Network, followed by The Women’s Leadership Network, which provided mentoring. McDonald’s reached out to female suppliers and helped organize an industry group, “Women’s Foodservice Forum.” The various women’s networks have proven vital to promoting diversity within the company.

“Instilling the principles of diversity and inclusion takes patience and persistence.”

McDonald’s used the same approach with other groups, including Hispanic Americans, people with disabilities, Asian Americans and the gay and lesbian community. In 1977, the company organized the McDonald’s Hispanic Operators Association and, soon, The Hispanic Leadership Network. A few years ago, the company created its “Hispanic Business Vision” to tie “diversity to business results.” This placed it among the most respected business entities in the Hispanic community. In 1982, McDonald’s started the “McJobs” program to help “physically and mentally challenged individuals develop skills and confidence to succeed in the workplace.” The company organized the Asian McDonald’s Operators and its Gay and Lesbian and Allies Network.

Achieving Diversity

Becoming more diverse is difficult. Expect numerous starts and stops as you find your way. See diversity as a process of continuous attainment, not a rigid target like a 15% increase in sales or profits at year’s end. A company cannot achieve diversity unless its senior management champions the effort. Fusty attitudes about inclusion or workforce composition are roadblocks that can set back any diversity initiative.

“A significant number of McDonald’s senior management does more than support diversity – they represent a diverse group of leaders within their own ranks.”

You can use training and education programs to help employees “open their hearts and minds” regarding diversity, and thus break through stultifying barriers. Establishing networking opportunities for minority employees, women employees, gay and lesbian employees, and other diversity groups is also vital. Whatever you do, don’t adopt a standardized approach regarding your company’s diversity efforts. Be sensitive to the special needs and concerns of each diversity group, and set the goal of including everyone in a unified corporate culture. That has been the goal at McDonalds, where the workforce, from fry chefs to the CEO, is now made up of “62% women, 35% Hispanics, 20% African Americans, 5% Asians and 2% Native Americans.”

“Diversity within your organization is not a destination you will ever reach; it’s a journey you decide to take.”

Lee Dunham, an African American owner and operator, and the proprietor of McDonald’s first restaurant in New York, sums up the corporation’s diversity philosophy this way: “If we can stay united and head in the same direction, [then] everybody is represented and valued, and can sit at the table and make a contribution.” Or, as Ray Kroc said, “None of us is as good as all of us.”

About the Author

Patricia Sowell Harris, McDonald’s global chief diversity officer, has spent more than 30 years with the company. Working Mother magazine called her one of the U.S.’s “Top 10 Diversity Champions.”

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None of Us Is as Good as All of Us

Book None of Us Is as Good as All of Us

How McDonald's Prospers by Embracing Inclusion and Diversity

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