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3 Tips to Build Trust and Drive Business Transformation The importance of culture and building trust within an organization often gets overlooked when it comes to business transformation when it's actually the most critical aspect.

By Michael E. Hansen Edited by Amanda Breen

Opinions expressed by Entrepreneur contributors are their own.

When I walked in the door for my first day as CEO of Cengage Group in the fall of 2012, I didn't know what to expect. Immediately, it became clear that I was charged with leading an organization that had fundamentally lost its confidence in itself. The company lacked a shared mission that was connected to business outcomes, and as a result was incredibly risk averse. Most people had adopted a silo mentality. They had lost the belief that they could impact the bigger picture, so instead were trying to optimize their little piece of the puzzle. Without a shared goal, employees weren't excited about diving into work on behalf of our customers.

I realized that the most critical thing I needed to do that first year was rebuild our culture and define our company mission. When people think about what it takes to transform a business, they jump to areas like strategy, resource allocation or technology … all of which are correct answers. Yet, what often gets overlooked is much more foundational the importance of culture and building trust within an organization.

Making major changes to the culture and business direction requires asking employees to make a choice: Do they want to sign on to be part of this new journey, knowing there will be challenges?

Being daringly open with employees exposing all the details and expectations for the business evolution helps build trust. Trust, in turn, builds organizational confidence and productivity. If employees know their leaders will candidly share information about the company's performance without prompting they will stop looking over their shoulders, waiting for the next "shoe to drop." As a first step, CEOs must be transparent about what employees are signing up for.

For leaders looking to revitalize their culture and transform their business, here are some tips from my ongoing journey to transform Cengage Group.

1. Respect the foundation that already exists

There are different approaches leaders can take when working to transform a business. Well-known innovators like Steve Jobs achieved success by defining their vision the future state and getting people chomping at the bit to be part of it. This top-down approach works but is more difficult for leaders who are inheriting a business with a long, rich history.

Cengage Group is a company with a 100-plus year heritage our origins date back to 1903. We couldn't take the Steve Jobs approach because the established history of making an impact in education was worth preserving. Instead, we utilized a hybrid method to building a culture and business strategy. The executive team defined what was important to them, but then held hundreds of group discussions with employees to source their feedback. Many of our employees saw their role within the company as more than just a job we needed their help to clarify that purpose.

Working closely with the executive team, we held dozens of town hall-style meetings to understand why people worked at Cengage Group at this point in their career, their aspirations in their roles and how they wanted to leave their mark on the industry. These town halls weren't scripted, and no question was off limits; we needed to hear the good, the bad and the ugly around what aspects of their job employees cherished and what they wanted to improve. From there, we developed our company credo, our statement of purpose that employees felt strongly connected to. Our credo became the launchpad for our transformation. It all started with one simple sentence: "We believe in the power and joy of learning." Today, the Credo guides the actions of over 4,300 people.

CEOs have the opportunity to help crystallize the shared purpose, the shared meaning and the shared platform where everyone has a voice. However, leaders must remember that a new beginning shouldn't disregard the learnings and foundation of the past. No matter what company culture you're walking into and no matter how damaged it is, there are still parts of it that are resonating with employees. It's important that leaders continue to honor that history and articulate how the new strategy reflects it.

Related: Use These 2 Strategies to Unlock Your Greatest Leadership Potential

2. Embrace ambiguity

Companies ripe for transformation often exist in unsteady markets. It's on leaders to embrace these ambiguities and use them to their advantage.

Ten years ago, when I started at Cengage Group, employees were hyper-aware of the evolving education market, and they constantly expressed concerns about how shifts could impact the success of our business transformation. For too many years, publishers (including Cengage Group) had ignored the affordability problem brewing under the surface in higher ed. We needed to squarely focus on affordability for students while dramatically accelerating our transition to an education-technology company. It was a tall order in such a volatile market.

As a result, during our regular town halls, the most frequently asked questions were not about new products or the new company direction, but "Are you going to close this office?," "Should we expect smaller annual bonuses?," and "Are we eliminating specific roles or departments?" As a leader, you want to paint a brighter picture for the future, but to build trust at the outset, I knew I had to address these questions honestly with, "I don't know."

Ambiguity provides an opportunity for transparency and inclusion. Being a good CEO doesn't mean having all the answers; saying "I don't know" allows leaders to illustrate that we're all in this together. This is especially relevant as we enter the post-pandemic workforce. We're living in a time of enormous ambiguity, and it's important that leaders embrace the challenges to come whether they're aware of them or not and work through these hurdles candidly.

Related: I Invited My Employees to 'Ask Me Anything.' Here's What I Learned.

3. Vulnerability isn't a weakness

When you think of the CEO role, descriptors such as strong, powerful and disciplined likely come to mind. What if I told you that one of the biggest leadership traits that led to my company's successful transformation was vulnerability?

Business leaders should admit their shortcomings and communicate openly about how they plan to work around them to be successful anyway. This level of transparency is critical to creating a trusting, productive work environment. For Cengage Group, one such moment was our proposed merger with McGraw Hill. This was a move that we initially saw as beneficial for our company and the industry, but as the deal evolved and our world changed in the face of a global pandemic, we realized that that path was no longer in our best interest. Building momentum coming out of that abandoned merger was a unique ask, one that required defining and reinforcing our new sense of direction as we continued to be aggressive to gain market share. This kind of large-scale pivot had to be discussed openly with all employees. Instead of pointing fingers, we took the time to work through the situation, sharing an analysis of what happened with all levels. Our culture has only become stronger since, thanks to our transparent, honest post-mortem process.

By recognizing and openly sharing that we are all in unknown territory, CEOs can help employees feel like they're included in the circle of trust. In addition, vulnerability provides greater motivation for employees to be part of the solution and support in driving forward the new business strategy.

Related: Why Servant Leadership is Becoming the Leadership Style of the Future

No company worth talking about has been steady and stagnant for too long. Business transformation is a never-ending iteration, but one that must be first grounded in a strong culture and shared mission. To successfully lead through a transformation, CEOs must respect their company's past, understand that they can't predict the future and be agile enough to navigate the day-to-day challenges in the present.

Michael E. Hansen

CEO of Cengage Group

Michael E. Hansen is the CEO of Cengage Group. Under his leadership, Cengage Group has transformed from a traditional print publisher into a global education-technology company that advances the way students learn through quality digital experiences.

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