The Traveling Salesman? Or the Prisoner’s Dilemma?

The Prisoner’s Dilemma is a classic conundrum in game theory. It purports to explain why two people might not cooperate, even if it is in both their best interests to do so.

It turns out that the solution to The Prisoner’s Dilemma is also the solution to a great many sales problems—those in which your customer doesn’t trust you. Are you living in the Dilemma? Or are you living in the solution?

The Dilemma of the Prisoner

Here is a classic version of The Prisoner’s Dilemma:

Two suspects are arrested by the police. The police have insufficient evidence for a conviction and, having separated the prisoners, visit each of them to offer the same deal:

  • If one testifies for the prosecution against the other (defects) and the other remains silent (cooperates), the defector goes free and the silent accomplice receives the full 10-year sentence.
  • If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge.
  • If each betrays the other, each receives a five-year sentence.

Each prisoner must choose to betray the other or to remain silent. Each one is assured that the other would not know about the betrayal before the end of the investigation. How should the prisoners act?

What’s a poor prisoner to do?

If you analyze the situation rationally (the way a game theorist or economist defines that term), your odds are a lot worse if you remain silent – either you get 10 years or six months. But if you rat on your partner, you either get out free or, at worst, five years.

So, reasons the economist, Option A’s average “value” is five years and three months in prison. Option B’s average is two and a half years. “Ah ha,” says the economist’s rational player, “I’ll go for Option B.”

Of course, the other player does the same math and comes to the same conclusion. As a result, each gets five years in prison—a total of 10 prison-years between them.

The dilemma is that – if only the prisoners had cooperated with each other, they could have each gotten out with just six months in prison – a total of one prison-year between them.

The question is: why don’t they cooperate?

At least, that’s the economists’ question. In the real world, cooperation is quite common.

So the real question is: why do so many people listen to economists?

The Dilemma of the Salesperson

Before answering the Prisoner’s Dilemma, let’s note the similarity with The Salesperson’s Dilemma.

The salesperson has a similar series of trade-offs. For example:

  • “I could take some extra time to study up on tomorrow’s sales call, getting to know more about the prospect. That would improve the odds of my getting a sale tomorrow.”
  • “On the other hand, I could make another cold call with the time saved if I don’t spend it studying up for tomorrow’s call.”

Or, another example:

  • “I could tell them we have very little experience in this area, which would increase their sense of my honesty, which would help me in the long run.”
  • “On the other hand, experience might be the key in getting this job, so perhaps I should make the best case I can and fudge the rest.”

Still another:

  • “I could share a lot of my knowledge with them, which would really impress them and make them grateful to me.”
  • “On the other hand, if I give it all away in the sales call, they might just steal my knowledge and not pay me for it – perhaps I should wait until after we have a signed contract.”

And one more:

  • “I could go out on a limb and make some really far-sighted observations that would help them—it would go way beyond what they asked for.”
  • “On the other hand, we don’t have much trust built up yet. They might see that as presumptuous or unprofessional; I’ll just answer the questions they asked.”

Just as with The Prisoner’s Dilemma, if the salespersons continually choose Option B, they will sub-optimize. They will do cold calls, leading with no relationship, taking no risks, treating the customer like a competitive enemy, and offering no great help.

In other words, they’ll lose. Just like the prisoners.

In theory, the prisoners are identical, whereas the salesperson and the customer are distinct. But that’s theory. In the real world, sellers somehow tend to find buyers who are similar to them. Sellers who are fear-driven and guarded somehow often find buyers who justify their worst fears. (Or, what amounts to the same, sellers project fear, and buyers reciprocally return the same – as humans are wont to do).

Both seller and buyer often operate from the Prisoner’s script. And the result is just as sub-optimal.

The Prisoner’s Solution

As postulated by economists and game theorists, The Prisoner’s Dilemma is usually presented with two key assumptions:

  1. The game is played only once
  2. The players do not know each other

The solution lies in changing each of those assumptions. If you tell the players the game will be played 10 times, cooperative patterns begin to emerge. If it’s played 100 times, cooperative strategies take over.

If the players are given information about each other, they become less abstract to each other. If the information is personal, then the relationship changes tone as well.

These two dimensions – time and relationship – are critical. Without a sense of continuity over time, and without a sense of personal relationship, those playing the game will opt to “rat out” each other – even knowing that the result, system-wide, is negative for them on average. But given time and relationships—the optimal solution emerges. Everyone is better off.

In other words, the solution to behaving stupidly is to develop personal relationships over time. Now let’s see how that insight applies to selling.

The Sales Solution

The sales solution should look pretty obvious now. Suboptimal behavior is the result of short timeframes and shallow relationships. In a Prisoner’s Dilemma world, both buyer and seller fear each other, suspect the worst, don’t have relationships beyond the transaction, and are interested primarily in their own self-aggrandizement, without regard to cost to the other party.

If that sounds familiar, just look at what sales topics are hot these days: sales automation, lead screening, CRM, social media lead generation, predictive analytics, search-based prospecting, multi-channel messaging. Think about the last step in nearly every sales process model you’ve seen—closing.

What all these subjects have in common is a view of selling that is a) transactional and b) impersonal. In other words, they have short timeframes and weak relationships—two things sure to hurt sales.

Selling benefits from longer timeframes and better personal relationships. If you can stop thinking like an economist and work to eliminate the fear you and your buyers have, you’ll benefit from the long-lasting trustworthy relationships that develop as a result.

Are You Selling to Vulcans?

Nowhere am I so desperately needed as among a shipload of illogical humans.

Mr. Spock in ‘I, Mudd’

The iconic Mr. Spock from Star Trek was half-Vulcan, half-human. It’s the former we first notice in Spock – Vulcans are governed entirely by logic and rationality, unencumbered by emotions.

But it’s his human heritage that takes Spock from caricature to character. Spock mirrors our own schizophrenic, rational / emotional natures. He is the sock puppet for humanity, allowing us to look at ourselves afresh.

That much is evident to the casual sci-fi viewer, or any fan of The Big Bang Theory. But you wouldn’t know that from looking at economists, strategy consultants – or much of the B2B sales literature. They suggest that people – particularly smart business people – are mostly rational decision makers, persuaded by well-established rules of scientific evidence, logic, and the inexorable rules of mathematics.

In other words – they treat buyers like Vulcans. Only trouble is, at most, they’re like Spock – half-human. And truth be told, most B2B buyers are even less Vulcan and more human than Spock.

My Brain’s Bigger than Yours

I’ve now spent four decades working with B2B sales organizations.  Lately, I’m reminded even more of how much businesspeople have bought – hook, line and sinker – the idea that customers buy through rational decision-making. The economists’ models are live and well in sales training programs.

Feeding the ratiocinating Vulcan side of buyers is necessary. But it is almost never sufficient. The true role of the intellect in B2B buying is as follows: Buyers scan options rationally, but they make their final selection with their emotions – then rationalize that decision with their brains. In other words, buying is a sandwich – rationality is the bread, but the meaty filling is a rich, emotive set of feelings, finely honed over eons of civilization.

The cognitive role in buying is vastly over-stated. Brains don’t rule. Spock is not 100% Vulcan. Neither is your customer. Not even by half.

Your Customer is Not a Vulcan

Question: What do the following things have in common? Value propositions; challenger selling; strategic fit; problem definition; pricing; negotiation; objection-handling.

Answer: In B2B sales, they usually center around analytical economic value, assuming that the rational resolution of each issue is the key to helping a buyer achieve a decision. Look for these buzz-phrases; clients buy results, show the bottom line, demonstrate value, value proposition, business case, and so forth.

Nothing wrong with that list – it’s all necessary. But it’s not sufficient. What’s missing are the things that actually trigger a buyer’s decision – not just justify it. Those include, for starters:

  • confidence that the seller can deliver what (s)he promises, and
  • the resulting ability to sleep through the night
  • integrity
  • belief that the seller will adjust their commitment to accommodate changing circumstances
  • character
  • commitment to principle
  • a long-term relationship focus
  • a sense that the seller has the buyer’s interest at heart
  • the seller’s ability and willingness to defer gratification
  • vulnerability of the seller
  • a set of values beyond the purely economic
  • a sense that the seller is a safe haven for conversation.

In short – trust in the seller.

Your customer is not a Vulcan. Your customer is barely even Spock.

The Cognitive/Emotive Disconnect

I spend my time with smart, complex-business, B2B professionals. Every single one of them will acknowledge the importance of the above list. Yet every one of them lives in an organization where 90% of attention is focused on the buyer’s Vulcan side, doing slide decks, spreadsheets, valuations and scenario0

Buyers often (rationally) screen sellers. But they quickly form favorites, unconsciously, and usually before the sellers have even had a chance to address the issue. All the Vulcan-targeted approaches are aimed either at forming a buyer’s opinion (too late, already done), or changing a buyer’s preformed opinion (already set in concrete).  It rarely works.

Proof? Ask yourself how many times your customers failed to see the brilliant case you had made, because they were somehow biased against you. You tried to sell to the Vulcan in your Spock-customer; but that human side kept rearing its ugly head.

How Complex B2B Buying Really Works

Very few buyers will tell their boss, “Gee, I guess I bought from those guys because, you know, I really trust them.” That’s career suicide. Buyers need the air-cover (and, to be fair, the reality check) of a rationality-based argument. It’s our job as sellers to deliver that rationale to them, bullet-proof and logic-tight as it can be.

Because in business, we all need to pretend we’re Vulcans.

But deep down, we all know what’s really going on. People buy with the heart, and rationalize with the mind. Brains are a necessary but not a sufficient condition. Being right, by itself, is a vastly over-rated proposition. Being right too soon just pisses people off. All else equal, a trust-based sell will always beat a rationality-based sell.

The truth is, our emotional instincts are extremely powerful (not to mention frequently accurate). We make our decisions first based on those emotions, and then struggle to justify them according to the rules of the game.  Unlike Spock, we lead with the human, and bring in our Vulcan sides as a check.

Many, many of my clients say: “That may be true for lots of people, but not for my [boss] [client] [customer]. They’re completely Vulcan, data-based, just-give-me-the-facts people. You’ve got to treat them like Vulcans, because they demand it.”  But the fact that they demand to be treated like Vulcans is 95% about ego – and that’s their human side.

Ironically, all this is especially true for those who believe the world works on brains. They are prone to buy even more emotionally, because their self-worth is tied up in thinking that emotions don’t matter – which renders them oblivious to their own human decision-making process.

Even if your customer thinks they’re a Vulcan – treat them at least like Spock. Address the human side – then give them Vulcan-food to justify their feelings.

It is curious how often you humans manage to obtain that which you do not want.

– Mr. Spock in ‘Errand of Mercy’

Trust, Honesty and Authenticity

A few years ago, Deborah Nixon posted an interesting question on LinkedIn. She asked: “Is there a difference between authenticity and honesty?”

She got about 35 answers. Here’s what I sent in:

Deborah, I’m sure you would agree the two terms cover a lot of territory in common. The trick with these definitional things is not to discover some underlying reality, because there is none; these are conceptual models that help us explain the world. They are good or bad insofar as they help us; so I’d suggest starting there. What’s the most useful way to distinguish the two?

One way might be to say that authenticity is largely passive, and honesty is largely active. When we say someone’s honest, we usually mean they tell the truth, and go out of their way to do it.

Sometimes we also mean that they don’t tell a lie – but that’s far from all the time. You often hear someone way ‘well, he was honest – he didn’t actually tell a lie.’ In such a case, ‘honesty’ just means I didn’t utter an untruth; it’s perfectly consistent with covering up all other kinds of truth. So the casual use of ‘honest’ may rule out sins of commission, but not sins of omission.

That’s why the legal language “the truth, the whole truth, and nothing but the truth” is required in court; to prevent the ‘honest’ witness from conveniently leaving something out, or snow-jobbing the court with irrelevancies.

Authenticity, on the other hand, I think usually implies a lack of attempt to control another’s perception. It means letting others see us as we are, warts and all. I think it also goes one more step: it means letting everyone see us in a way that’s no different from how anyone else see us: that is, we don’t play favorites in terms of constructing alternative fictions to respective people.

At a corporate level, a company might support a claim of honesty by pointing to the truthfulness of its statements, or the lack of court cases against it. Again, ‘honesty’ conveys a sense of ‘never knowingly told an untruth.’ Whether it includes consciously allowing other people to make incorrect inferences by not telling them something – well, that’s not entirely clear.

Authenticity is a whole ‘nother level. It means not hiding out, opening the door in things that are not excluded through standard rules of privacy, letting the chips fall where they may. Further, I think it usually entails a commitment to be authentic, not just a convenient lifestyle.

Seems that of the two, we might say that authenticity is broader (i.e. it encompasses being honest, but goes beyond that to proscribe sins of omission).

On a practical level, people who strive to be honest often talk of it as a struggle: to resist temptation, to not gossip, to say things that can be embarrassing if they are true.

People who choose to be authentic have, in a way, an easier time of it.  For someone who is authentic, the daily default way of life doesn’t involve decisions or will power: the default is openness, there is no issue of control vs. transparency.

Things are what they are, and there is no threat about them.

What’s trust got to do with it?  To trust a person or a company, honesty is table stakes.  If you suspect they’re lying, trust is stopped dead in its tracks.  But even if they’re honest, that’s nothing compared to authentic.

An Open Letter to Timothy Ryan, PwC’s US Chairman Re: Oscars and Trust

Mr. Ryan,

Some days as Chairman must be fun. Others, like the Oscars the other night – not so much.

I recognize you, in fact, know a lot about trust.  There are probably particular circumstances that make the Oscar boo-boo a unique event. You may also have taken some steps like those I suggest below.

But this is such a teachable moment for the area of trust recovery that I hope you’ll forgive my suggesting Three Steps that someone in your position should consider – on principle – taking.

 

Step One. Offer to resign the Academy account. Do so unreservedly and genuinely.

  • If they accept your resignation (they probably won’t), it looks better than being fired; and hey, it did happen.
  • If they reject your resignation, you will look gracious. (And why should they let you resign – look at all they just invested in training you!)

Step Two. Tell the Academy precisely what went wrong, and precisely what you’re going to do to ensure nothing of that type, flavor or category will ever happen again.

  • Then fund somebody to start writing a paper on what implications this event has for improving audit industry practices at large.

Step Three. If anyone dares to suggest firing the poor gentleman at the heart of this most unfortunate event, tell them what the Academy will hopefully tell you: “Why would we ever let go someone in whom we just invested so much in training?” He just became one of your most valuable future cautionary story-tellers.

One of the many paradoxes about trust is that trust recovered can often end up stronger than trust unchallenged.

I’m rooting for you.

 

 

 

 

A Better New Year’s Resolution

Ten years have passed since I first wrote the following thoughts on New Years resolutions. Frankly, it was good. And frankly I haven’t been able to write a better one. Next year, maybe.
So, apologies to those who have read it year after year—though I suspect some of you won’t mind.

Happy New Year.
——————————————-
My unscientific sampling says many people make New Years resolutions, and few follow through. Net result—unhappiness.

It doesn’t have to be that way.

You could, of course, just try harder, stiffen your resolve, etc. But you’ve been there, tried that.

You could also ditch the whole idea and just stop making resolutions. Avoid goal-failure by eliminating goal-setting. Effective, but at the cost of giving up on aspirations.

I heard another idea: replace the New Year’s Resolution List with a New Year’s Gratitude List. Here’s why it makes sense.

First, most resolutions are about self-improvement—this year I resolve to: quit smoking, lose weight, cut the gossip, drink less, exercise more, and so on. All those resolutions are rooted in a dissatisfaction with the current state of affairs—or with oneself.

In other words: resolutions often have a component of dissatisfaction with self. For many, it isn’t just dissatisfaction—it’s self-hatred. And the stronger the loathing of self, the stronger the resolutions—and the more they hurt when they go unfulfilled.  It can be a very vicious circle.

Second, happy people do better. This has some verification in science, and it’s a common point of view in religion and psychology—and in common sense. People who are slightly optimistic do better in life. People who are happy are more attractive to other people. In a very real sense, you empower what you fear—and attract what you put out.

Ergo, replace resolutions with gratitude. The best way to improve oneself is paradoxical—start by begin grateful for what you already have. That turns your aspirations from negative (fixing a bad situation) to positive (making a fine situation even better).

Gratitude forces our attention outwards, to others—a common recommendation of almost all spiritual programs.

Finally, gratitude calms us. We worry less. We don’t obsess. We attract others by our calm, which makes our lives connected and meaningful. And before long, we tend to smoke less, drink less, exercise more, gossip less, and so on. Which of course is what we thought we wanted in the first place.

But the real truth is—it wasn’t the resolutions we wanted in the first place.  It was the peace that comes with gratitude.  We mistook cause for effect.

Go for an attitude of gratitude. The rest are positive side-effects.

The Cost of Freedom, the Savings of Trust

We don’t usually think of trust and freedom as existing in a trade-off relationship. But in an important sense, they do. Thinking about the two factors this way allows us to view trust from an unusual perspective.

——

Kathy Sierra has a great post on the degree to which software designers should design in user freedom – there are limits.

On the face of it, freedom is good. More freedom is better. In fact, if it doesn’t threaten us bodily harm, then more freedom is way better. Isn’t it?

Not so. Sierra offers a 2×2 matrix relating payoff to effort. The payoff is good for things like Amazon. But digital home thermostats and new stereo systems give us too much freedom for the payoff. They’re just a pain.

There is a limit beyond which freedom of choice generates shutdown. Barry Schwartz’s The Paradox of Choice explores it well. After a while, complexity overwhelms the desirability of choice.

Sierra and Schwartz happen to illustrate the economic relationship between freedom and trust. In a nutshell, we give up freedom of choice in return for more efficient use of our time. We do it with trust.

Branding is the corporate version of trust. Rather than analyze every brand of bottled water, every version of jeans, or every make and model of HD-TV, we abdicate our freedom to do so in return for the security of a brand name. We trust Sony, or Coke, or Amazon, to make acceptably acceptable selections for us—so are freed to make other decisions.

But trust is about more than branding.

The last two centuries of global economic development have been driven by the search for division of labor. Adam Smith’s pin-makers organized around 19 specialized operations; it was far cheaper to assign individuals to distinct operations than to have each operator do all operations.

The transaction cost of coordination was well below the benefits of specialization.

At a corporate level, transaction costs remained high at the turn of the 20th century; early US auto companies made their own tires rather than incur the cost and risk of buying tires from others.

As transaction costs declined, it became more feasible to contract work out – the history of the auto industry is one of moving from integrated manufacturers to contract assemblers.

In recent years, we’ve seen diverging trends: lower unit transaction costs, and higher volumes of transaction costs. The net effect has been driven more by volume than by unit cost. Transaction costs as a percent of GDP have been going up. By one estimate, they now exceed 50% in the US.

We are reminded constantly of the internet’s effect on lowering unit transaction costs; but we don’t notice that the total of such costs is rising.

Here’s what it means: for further economic efficiency, the ability to reduce transaction costs is going to become more critical than further division of labor.

The more technically and globally integrated we get, the more freedom of choice we get. But at some point, freedom of choice becomes overwhelming.

If I want to make and sell jeans, I probably have dozens (hundreds? thousands?) of ways to contract the work out. Past some point, I don’t want more options—I want someone I can trust to make that decision for me.

In other words, I’ll give up freedom in return for lower transaction costs. The currency of that exchange is trust.

In an economy where half the costs are transaction costs, the currency of trust is massively valuable. Think of the transaction costs between auto producers and their suppliers: lawyers, agreements, contracts, specifications, bonus systems, QC, compliance, etc. Suppose they were 100% obliterated by trust. What kind of marketplace cost reduction would that provide?

Trust is not soft stuff. In a world that is getting massively more connected, greater trust has a very real economic role to play.

Giving up freedom for trust can be, paradoxically, a very freeing thing.

Trusting: the Other Side of Trust

Much has been written about trust.  However, it’s often not clear in the writing whether the subject is trust, trustworthiness – or trusting.  If trust in the government is down, does that mean that the government is less trustworthy? Or does it mean that people are less inclined to trust?

Most of my work has been about trustworthiness (e.g. The Trusted Advisor). Other people write more overtly about trusting – a good example is the HBR article ReThinking Trust, by Stanford Professor Rod Kramer, which focuses on the danger of trusting.

Some people write about the big subject of trust itself – the end result of the interaction between trustor and trustee. A fine example is Francis Fukuyama’s classic Trust: the Social Virtues and the Creation of Prosperity.

Finally, many other sources end up talking about all three; think Covey’s Speed of Trust, or Bob Hurley’s The Decision to Trust.

The Power of Trusting

The sources above are largely academic. In the popular press, by far the most common topics are trustworthiness and the state of trust itself (trust as the result of an interaction between trustor and trustee). Throw a dart into a pile of 100 popular press articles on trust, and you’re likely to find Congress, investment bankers, and the Madoff-du-jour scandal as the subject.

This means most public policy debates focus on trustworthiness.  Most examples are negative; hence trusting is positioned as cautionary, i.e. watch out for car salesmen, lawyers, etc. The moral of the story is tut tut, another untrustworthy group, watch out.

And all this focus on negative examples of trustworthiness is having an effect on people’s inclination to trust. How could it not! And that is a terribly unfortunate thing. Because the scarce trust resource increasingly is not trustworthiness, but the willingness to trust.  We need to start focusing on the trustor, not just on the trustee.

The power of trusting is enormous. When it comes to trust, there is an answer to the chicken and egg dilemma of which comes first, the trustor or the trustee?  The answer is trustor.  Consider:

  • Until one party decides to take a risk and trust another, trust does not come into existence
  • Trusting has a profound impact on trustworthiness – think “the fastest way to make a man trustworthy is to trust him,” or “people live up or down to the expectations of them”
  • Trusting is inherently an act of optimism; a decline in trusting in the business world drives down innovation, and prevents collaboration and alliances.

 

Traveling Trust, Reciprocating Trust

I was in Munich for a one-day stopover en route to Bucharest. I left New York a day earlier than planned to avoid some weather. And I realized yet again – travel has a way of doing that – what an extraordinary level of trust we all take for granted in our modern world.

Yes, the news is full of the opposite. Doctors have a hard time trusting pharmaceutical manufacturers. Patients have a hard time trusting their doctors, and doctors have a hard time trusting their patients. Some patients trust the internet more than their doctors, often with bad results. And trust in most institutions is down over time (the military being a notable exception).

A Trusted Trip

With all that going on, it’s easy to forget some basic things. I can freely cross national borders with some mere papers. I can trust the exchange rate when I buy Euros. I can trust the flight controllers that govern the airspace, the airline handling companies that do catering, the bus and taxi systems I encounter.

But most of all, I know I can rely deeply on the basic human decency of people I run into to help with any simple issues – even though we may not speak the same language, and we’ll never see each other again. I can trust that people will give me directions, help me with travel issues, take a moment to help sort out a problem. And I’m almost never, ever wrong in that basic level of trust.

Which motivates me, of course, to try and return the favor whenever I can. And you do the same, I know.

What’s Really Amazing

What’s really amazing is not how often trust goes wrong, but how often it goes right.  Our modern life is unbelievably complex, and yet runs remarkably well.

I don’t want to be Pollyana-ish about this. The fact that trust is so pervasive is precisely the reason we notice and feel trust violations so deeply. We are all right to be deeply offended by untrustworthy behavior; if we lose our capacity to be outraged, we have lost our ability to recover.

Lots of things can be said about lost trust, but I want to highlight one. Trust is reciprocal. My trusting you causes you to trust me, and vice versa. An absence of trust starts with one party. The presence of trust starts with one party. The question facing all of us is, will you be the one to start?  Or will you always insist on the other party going first?

Do you insist on your vendors insuring you against all losses?  Then don’t be surprised when they don’t trust you.  Do you have all your employees sign cutting-edge non-compete clauses?  Then perhaps you can understand why they might seek ways around it.  Do you give lie detector tests to your employees? Then you might gain insight into why you have a shrinkage problem.

You can do your part as an individual too. To be trusted, be trustworthy.  And if you think others are not trustworthy as you – try trusting them first.

For starters, that’ll make your travel a lot easier.

Trust is Not Reputation

Four words can have a big impact: Trust is not reputation.

But what does that mean? This year especially it seems the two words have been thrown around interchangeably for some time.

I took a look back at the last time I addressed the difference of the two words and how their definitions got confused along the way.

I trust my dog with my life – but not with my ham sandwich.

That is but one of dozens of humorous ways to indicate the multiple meanings we attach to the word “trust.” It’s remarkable how good we are at understanding the word in context, given its definitional complexity.

One interesting aspect of trust is its relationship to the concept of reputation. This issue is coming to the fore in the so-called “sharing economy” or “collaborative consumption” movement.

Who can you trust on the Internet to deliver the goods they said they would deliver (think eBay), to leave your apartment in good shape if you lease it on Airbnb, to not be a creep if you call an Uber?

It’s tempting to look at the concept of reputation as the scalable, digital badge of trust that we might append to all kinds of transactions between strangers, rendering them all as trustworthy as your cousin. (Well, most cousins.)

Tempting, but not exactly right.  Because trust, it turns out, is not reputation.

Greenspan’s Folly

William K. Black has written about the dire consequences of Alan Greenspan confusing trust and reputation, saying:

Alan Greenspan touted ‘reputation’ as the characteristic that made possible trust and free markets. He was dead wrong.

Greenspan believed that Wall Streeters’ regard for their own reputation meant that markets were the best guarantor of trust – because they would perceive their own self-interest as aligned with being perceived as trustworthy.

Unfortunately, Greenspan’s belief was probably based more in ideology than in history or psychology, as the passion for reputation was overwhelmed by the passion for filthy lucre, immortalized in the acronym IBGYBG (“I’ll be gone, you’ll be gone – let’s do the deal”).

Early Social Reputation Metrics

Think back, way back, to November, 2006.  A company called RapLeaf was on to something.Here’s how they described their goal:

Rapleaf is a portable ratings system for commerce. Buyers, sellers and swappers can rate one another—thereby encouraging more trust and honesty. We hope Rapleaf can make it more profitable to be ethical.

You can immediately see the appeal of a reputation-based trust rating system. And with a nano-second more of thought, you can see how such a system could be easily abused. (“Hey, Joey – let’s get on this thing, you stuff the ballot box for me, I stuff it for you, bada-boom.”)

Then there’s Edelman PR’s pioneering product, TweetLevel. It does one smart thing, which is to avoid a single definition of whatever-you-wanna-call it. Instead, it breaks your single TweetLevel score into four components: influence, popularity, engagement, and trust.

Edelman says:

having a high trust score is considered by many to be more important than any other category.  Trust can be measured by the number of times someone is happy to associate what you have said through them – in other words how often you are re-tweeted.

According to TweetLevel (back in 2012), here were my scores:

  •             Influence        73.4
  •             Popularity      70.1
  •             Engagement   56.4
  •             Trust               46.9

So much for my trustworthiness.

Guess who owned the number one trust score on TweetLevel that year? Justin Bieber. Now you know who to call for – well, for something.

The KLOUT Effect

It’s easy to poke fun at metrics like TweetLevel that purport to measure trust; but in fairness, because trust is such a complex phenomenon, there really can be no one definition. What TweetLevel measures is indeed something – it’s not a random collection of data – and they have as much right to call it ‘trust’ as anyone else does. Indeed, I respect their decision to stay vague about what to call the composite metric.

KLOUT raised a more specific question: it directly claimed to measure Influence, and is clear about its definition, at least at a high level:

The Klout Score measures influence [on a scale of 1 to 100] based on your ability to drive action. Every time you create content or engage you influence others. The Klout Score uses data from social networks in order to measure:

  • True Reach: How many people you influence
  • Amplification: How much you influence them
  • Network Impact: The influence of your network

I find that to be a coherent definition. If I’m a consumer marketer, I want to know who has high KLOUT scores in certain areas, because if they drive action, I want them driving my action.

Note that Klout doesn’t mention reputation at all – just influence. Where does trust come in?  Klout says, “Your customers don’t trust advertising, they trust their peers and influencers.”

Well, I wouldn’t go there. On TweetLevel, the top three influencers were Justin Bieber, Wyclef Jean, and Bella Thorne. Influencers – definitely. People to be trusted? What does that even mean?

Trust Metrics

One problem with linking trust to reputation is that it can be gamed. One problem with linking trust to influence is that notoriety and fame are cross-implicated. Bonny and Clyde were notorious, so was Bernie Madoff and the Notorious B.I.G. – that doesn’t make them trusted.

Take Kim Kardashian. Is she influential? You betcha: her Klout score was a whopping 92 (Back then! Juts think about today). Does she have a reputation? I bet her name recognition is higher than the President’s.

But – do you trust Kim Kardashian? Well, to do what? (By the way, TweetLevel gives her a 70.1 trust score – way higher than mine. Now you know who to ask when you need a trustworthy answer; I’m referring all queries to her).

So here are a few headlines on trust metrics.

  1. They’re contextual. You can’t say you trust someone without saying what you trust themfor. I trust an eBay seller to sell me books, but I’m not going to trust him with my daughter’s phone number.
  2. They’re multi-layered. Both Klout and TweetLevel correctly recognize that social metrics can’t be monotonic – a single headline number is useful, but it had better have nuances and deconstructive capability.
  3. Behavior trumps reputation. You can get lots of people to stuff the ballot boxes for you; it’s a lot harder to fake your own  behavioral history. Trust metrics based more on what you did, rather than just on what people say about you, are more solid.
  4. Good definitions are key. When people say ‘trust’ and don’t distinguish between trusting and being trusted, they’re not being clear. There’s social trust, transactional trust – it goes on and on. Good metrics start by being very clear.

So what’s the link between reputation, influence, and trust? There is no final arbiter of that question. Language is an evolving anthropological thing, and as Humpty Dumpty said, words mean what we choose to say they mean. So job one is to be clear about our intended meanings.

—-

Full disclosure: I have a small interest in a sharing economy company, TrustCloud. I have written more about the sharing economy and collaborative consumption in a White Paper: Trust and the Sharing Economy, a New Business Model.

(This post was originally published on TrustMatters)

Was It Something I Said? The Trap of High Self-Orientation

Interesting thing happened this week. Even though I’ve been at this business game for some time now – there are still these little gaps, where I fall victim to a little thing that I like to call the “trap of high self-orientation.” I started to doubt, to question if I had said or done something that would cause a potential client to not respond as quickly as we had during an earlier email exchange. Turned out to be all in my head, a self-inflicted ‘trap’ – if you will.

It got me thinking about the last time I reflected on this subject matter. So, here it is – a little insight into the psychology and the spirituality of getting off your S.

—-

It happened again yesterday. It happens about once a week, though I don’t generally notice it until later.

I had a proposal phone call with a potential client. It went well, but they came back a few days later with a concern. I responded at length in an email. The day ended. Another day passed. By then, it had begun to happen.

I started thinking, “Was it something I said? I’ve probably blown it. I knew I should have done X, I shouldn’t have done Y. On the other hand, maybe I should have…” and so on. You probably know how it goes.

I once kept track of these episodes for a month. There were ten of them in that month. And in 9 out of the 10 cases, the result was: the other person was just busy, that’s all. They weren’t thinking those negative things about me, in fact quite the contrary.

9 out of 10 times I was wrong. And not just about what they were thinking, but about how much time they spent on it.

Self-Orientation in Trust

The denominator in the Trust Equation is self-orientation (the numerator factors are credibility, reliability and intimacy). The higher your self-orientation, the lower your trustworthiness. The logic is simple: if you’re paying attention to the other person (client, customer, friend, spouse, whatever), then you’re probably interested in them, care about them, and have some positive intent toward them.

By contrast, if your attention is devoted inward, you will not be trusted. Why should you be? You’re obsessed with yourself. We trust people who appear to care, and who demonstrate that caring by paying attention. He who pays attention largely to himself is not the stuff of trusted advisors. (Note: you can take your own Trust Quotient quiz at the upper right of this page.)

Get Off Your S

For those of us who need catch-phrases to remember (count me in), here’s one: Get Off Your S. That is, stop being so self-oriented.

Here’s the psychology of it. You’re not as good as you think you are, you’re not as bad as you think you are–you just think more about yourself than others think about you. To live between your ears is to live in enemy territory. You empower what you fear. If you have a foot in yesterday and one in tomorrow, you’re set to pee on today. Blame is captivity. It’s never too late to have a happy childhood.

Here’s the spirituality of it. To give is more blessed than to receive. To get what you want, focus on getting others what they want. Treat others as you’d wish they’d treat you. Pay it forward. Put change in a stranger’s parking meter. Do a good deed a day. Humility doesn’t mean thinking less of yourself, it means thinking of yourself less. Fear is lack of faith.

Here’s the business of it. Never Eat Alone. Listen before making recommendations. To get tweets, give tweets. Inbound marketing not outbound marketing. Customer focus. Customer service. Samples selling.

———

Oh, and my potential client? They were just busy. They’re going to buy, they always were.

It’s not about you. It never is.