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(I’m attending #CODECON this week). Trust in digital technology is a nascent hot issue. The headlines are a target-rich environment for emerging trust issues: from GDPR to autonomous vehicles to fake news to ad tech to AI to cyber-hacking. Tech leadership is scrambling to stay out in front of the EEC, the Justice Department, and – most of all – public opinion.
Trust is not yet the crippling threat that we see in financials or pharmaceuticals; brands are still strong, the sector is relatively regulation-free, and money is being minted. But the clouds are on the horizon. According to Edelman PR, “Trust in technology is showing precipitous decline.” Smart leaders know not to ignore the canaries in the mine.
The usual solutions are – to be kind – all over the map. They include governance, “best practices,” re-skilling, communications efforts, transparency initiatives, compliance programs, and mission statements.
If you feel these “solutions” are all vaguely unsatisfying – you’re right. What they all lack is a fundamental understanding of the basics of corporate trust, as applied to tech.
At the root of it all: people trust people more than organizations.
Trust – the Basics
Consider three basic, commonsensical tenets of trust:
- Trust is a dynamic relationship between trustor and trustee;
- Trust is created when a trustor takes a risk, to which the trustee responds (or doesn’t), creating higher levels of trust (or not);
- The strongest trust is between persons; trust in organizations by contrast is pale, or ‘thin.’
Here are a few counter-intuitive corollaries of those basic principles:
- Working directly on the perception of corporate trust – through PR, advertising, reputation management – is pushing on a string. Corporate messaging urging you to trust the corporation is impersonal, viewed skeptically, and weak by nature;
- Risk mitigation doesn’t help trust, it destroys it. All trust begins by a trustor taking a risk; no risk, no trust.
- The best way to create a trusted organization is to create a Trust-based Organization: one in which all persons are trusting and trusted by all those they encounter, in all their interactions.
The failure of corporations to articulate coherent approaches to trust can be traced to their failure to fully appreciate that trust is primarily personal, that it requires risk, and that it is driven by employees interacting with others based on core trust values.
A positive (or negative) personal interaction with a Lyft driver does more to create (or destroy) trust than a revised TOS agreement, ad, or app feature. Ditto for an Airbnb host, a Google technical service rep, or a Salesforce account exec. Corporate trust is created by the aggregation of personal interactions at the platform/customer interface.
Trust Basics Applied to Tech
The tech industry, like most, has a few peculiar wrinkles. For one, tech inherently deals with inanimate, impersonal ‘things,” whether that be iPhones or algorithms. It’s an uphill battle to personalize trust.
Another signature trust challenge for tech is scaling. This typically means data capture, digitization, and algorithms-cum-procedures. Trust can also scale – but through values, not algorithms. Corporate trust ultimately rests on personal trust, which rests on personally-demonstrated values:
- Southwest Airlines’ reputation emerged unscathed from recent disasters that would have sunk United, because its demonstrated emphasis on deeply personal interactions inoculated it against the impersonal “big company” image;
- Facebook has a great trust advantage in that its core subject is personal relationships. But it gained a reputation as being “creepier” than Google because, once hacked by fake ‘friends’, our sense of personal betrayal is far greater than for a flawed algorithm about buying preferences.
Transparency in tech is big – but often misunderstood. Transparency per se is not key – it’s how open you are about what you’re being transparent about. Ten pages of “disclosed” Terms of Service is like the small print at the end of your bank statement – more a cause for suspicion than a gesture of openness. Tech customers – like all people – will accept a wide range of behaviors as long as they feel you’re being intentionally open about them.
What is To Be Done?
The answer is simple, albeit not easy. Create a Trust-based Organization.
As noted above, that means an organization in which the cultural DNA is rooted in individual relationships, in which people know how to be trusting and trustworthy in all their personal interactions, and in which the organization supports such traits through some specific shared values.
- Trusting. The key skill of trusting is intelligent risk-taking. This is less about risk-aversion, and more about knowing how to be personally vulnerable and emotionally connected. The skills of empathy, listening and transparency are, to paint with a broad brush, not widely practiced in tech – but they are as key to trust as anywhere else.
- Trustworthiness. The Trust Equation lists the four factors of personal trustworthiness: (Credibility + Reliability + Intimacy) / Self-orientation. Tech people love the equation-based formulation, but tend to focus overwhelmingly on the two ‘rational’ components of Credibility and Reliability. Yet our research shows that, in fact, the single most powerful factor driving personal trustworthiness is Intimacy. Again, not a core strength in most of tech.
- Values. The Four Trust Principles – Collaboration, Relationships over transactions, Transparency, and Other-focus – offer a values-based beginning point for cultural transformation. There are many things an organization can do to become trust-based, but chief among them are conscious role-modeling on the part of leadership: in particular, role-modeling of the virtues of trusting and being trustworthy.
(It’s worth noting that the traditional tools of change management – metrics, KSFs, incentives – are not only not very helpful in trust, but can even be counter-productive: we don’t trust others if we think they’re incentivized to appear trustworthy just to gain personal advancement).
In sum, people don’t trust YourCo. They trust the people in YourCo, and they do so based on how those people interact with them and with all others.
If you’re serious about improving trust in your company, don’t lead with your communications department – lead with your leaders. Personally.
In the past few weeks, one Southwest Airlines flight suffered the first US airline casualty in a decade, while another flight had to be diverted when a window ruptured. While there have been some notable exceptions, I think it’s fair to say that the media and public response has been pretty much crickets.
By contrast, imagine what the public and media reaction would have been had the airline in question been United. This despite the fact that the airlines are indistinguishably safe.
Question: Why does Southwest get a pass, where United probably wouldn’t?
Follow-up Question: How do you get your company to be perceived like Southwest?
I’m going to suggest a simple, unverifiable assertion: we trust Southwest more than we trust United. But what does that mean, and how can a company create corporate trust?
Where Not to Look
Don’t look to crisis management experts or plans. Don’t look to branding, or to reputation management. These are all second-derivative measures, aimed at direct manipulation of perceptions, rather than at fundamental first order causes. (And for heaven’s sake, don’t look to regulations and compliance).
You could say it’s all about corporate culture, and you’d not be wrong – it’s been said that Southwest’s culture is what creates our trust in the company. Or you could point out that Southwest continually ranks first in customer experience.
But culture is too vacuous a concept for serious managerial intervention. Culture is the end result of doing a whole lot of other things. You can’t act directly on culture, it’s a byproduct.
Customer service, while closer to tangible, is still the result of a thousand little things. How do you get a company to do those thousand things, and do them right?
Again, I think the answers come into focus when we reframe the question: How does one create a trusted company?
TrustProofing Your Company
Another assertion: most trust is at root personal. Robert Putnam talks about “thick” and “thin” trust, the first applying to close relationships, the second to indirect or reputational relationships. Corporate relationships are even ‘thinner.’ Tip O’Neill famously said, “All politics is local.” In that same sense, “all trust is personal.”
We don’t trust Facebook, we trust Zuckerberg – or not. We sort of ‘trust’ Apple’s design, but we trust more those smart/nice folks in blue shirts at the Apple store.
What this suggests is that we don’t trust companies per se in any rich, thick, deep sense – we trust the personal interactions that we have with people at those companies. Let me call those companies “Trust-based.” And so, Rule 1:
Rule 1: A trust-based company is one in which all employees behave in trusting and trustworthy ways with all stakeholders.
Also, because trust is personal, it’s important to understand the basic dynamics of interpersonal trust. Trust is an reciprocating relationship between a trustor and a trustee. The trustor is the one who takes a risk; the trustee is the one who then proves to be trustworthy, or not. If the trustee is trustworthy, then the level of relationship trust is increased – and the trustor/trustee roles reverse. Rinse and repeat.
Rule 2: Employees must embody the virtues of trustworthiness: credibility, reliability, intimacy, and low self-orientation.
But personal virtue is not enough to make a corporate culture. Organizations have a large impact on people’s attitudes and behaviors, enough to bend and shape even individuals’ innate predilections. We also need what’s conventionally known as ‘values.’ Of course, merely having a list of values is worthless unless:
Rule 3: Organizations must systematically enforce and reinforce a set of trust-enhancing values that support trusting and trustworthy interactions.
Pick your own, but we’ve found that four fit the bill nicely:
- An instinctive focus on the Other
- A propensity for collaboration rather than solitary or competitive action
- A default to transparency, except where illegal or hurtful
- A relentless focus on long-term relationships rather than short-term transactions.
My colleague Andrea Howe and I have written at greater length about this in Creating a Culture of Trust: Virtues and Values.
The Trust-Based Organization
In the tech crowd, we ‘trust’ Amazon to run great algorithms and distribution systems; but it’s going to have to go to another level to get us to trust the “Amazon guy” who wants to put packages inside your door or your car trunk.
Facebook developed great trust because it fostered personal networks: until those networks got infected with fake personal relationships.
What about your company? Are you trying to gain customers’ trust by focusing on written policies, social media outreach, or good PR? Are you focused just on data security, or customer service, or great privacy policies, or compliance enforcement?
You’ll be better off by focusing on building a trust-based organization: one that consists of people who are virtuous and skilled at trusting, and that supports trust-based interactions according to a set of values that encourages such relationships.
This is a guest-post by Matti Kurvinen, a former Accenture partner, now an independent consultant focusing on service strategy and operations and warranty management. We welcome him to Trust Matters.
This blog has recently addressed what to do when someone abuses your trust. Of course, most of our business partners are fully honest and trustworthy. Still, if you don’t know which one is which – how can you trust your partners?
The issue is not hard to frame for individuals. But what about at scale? How can you establish systemic trust-based business relationships, when you can’t directly assess the trustworthiness of every relationship at all times?
The Case of Automotive Warranty Service
A case in point is manufacturers who outsource their warranty service to external service agents – for example, automotive dealers. An automotive OEM rightfully sees dealer productivity as a key route to effective end-customer service, and dealer satisfaction as a route to end-customer satisfaction. As the OEMs put it, “It is our role to support our dealers in serving our customers and not burden them with unnecessary controls.” (The same applies to white goods, IT, mobile devices and consumer electronics in relation with their authorized service vendors).
The problem is, an OEM with thousands of service agents globally will quite likely have tens – maybe even hundreds – who will take advantage of any holes the OEM has in its warranty control.
Hence the dilemma: how to enforce trust, positive incentives, support and frictionless procedures with the honest majority of your business partners, while at the same time having adequate control and discipline to deal with the few dishonest exceptions?
The Ugly Truth about Warranty Fraud
Warranty cost is a significant factor for manufacturing companies, typically ranging from 1 to 4 % of company sales, and 5 to 25 % of company profits (sometimes enough to make the difference between profit and loss).
Most companies see warranty costs as driven mainly by product quality, and secondarily by service network efficiency. However, there is another factor to be considered – warranty fraud. This kind of fraud ranges from opportunistic small-scale overbilling to industrial-scale fraud perpetrated by organized crime. Estimates suggest that from 3 to 15% of warranty billing is fraudulent, making it a billion-dollar issue in the USA alone.
The warranty chain is no different from any other field of life or business. For some small fraction of people and companies, the opportunity for financial gain, weighed against the likelihood and consequences of getting caught, is a calculus that leads them to take advantage of loopholes in warranty control.
Some companies take this very seriously; others are not even aware of it. Still others believe it may be an issue, but “not for us.” Stanford professor and trust scholar Roderick Kramer states in his HBR Article Rethinking Trust: “… people underestimate the likelihood that bad things will happen to them, and detecting the cheaters among us is not as easy as one might think.”
I have witnessed this several times, with comments like, ”Yes, the numbers from this dealer look really peculiar – but I can’t just go and accuse them of being dishonest, now, can I?”
Most participants in the warranty chain are honest – but not all
The good news is that most participants in the warranty service chain are normal, honest people and companies. But this makes fraud control tricky; how to have control and discipline for the dishonest minority, while enhancing trust, positive incentives, support and frictionless procedures with the honest majority?
The same issue, of course, can be found in many other areas: think on-line commerce, credit cards, mobile payments. The challenge is to make processes fast and easy for the honest people, yet still have adequate controls and fraud prevention processes.
Both false positives and negatives are undesirable. It’s inconvenient to have your credit card refused because of a false alarm. But it’s at least as troublesome to see payments go through with stolen credit cards or identities.
Enforcing trust while managing the dishonest minority
In my experience, there is no single silver-bullet solution. However, by applying the following five principles to your business, you’ll improve the odds considerably.
- Trust your partners by default. The business relationship between the OEM and the service agent must be based on mutual trust. The OEM assumes that the service agent doesn’t do warranty fraud, and the OEM accepts that the service agent is entitled to earn a share of the profits for serving the end-customer. The alternative – a default assumption that the service agents are dishonest – is corrosive of all trust. Even good service agents can turn bad if you consistently suspect them of being so.
- Set a culture and expectation of high integrity and honest work. This should be enforced and communicated upfront – along with clear consequences of breaking the rules.
Some of our clients have been puzzled when catching fraudulent vendors – “What do we do now?” One leading automotive OEM sends a very clear message to their dealers: “We trust you, but if you violate that trust, you are out!”
This is consistent with Kramer’s advice of sending strong signals on willingness to trust others, coupled with strong promises to strike back if that trust is abused. This not only attracts other desirable trusters, but also deters potential predators, who can sniff out easy victims who send out weak and inconsistent cues.
- Keep core operations simple and effective. In daily operations and service vendor management activities there should be no excessive control points; the focus should be on smooth operations and minimal administrative burden for the service agent. You trust the service agent enough to let them be the interface with your end-customer – let that trust also be visible in the back-office, and help them to serve customers with maximal productivity.
- Use analytics and audits to support warranty control and rule-based claim validation. Use extensive analytics to detect service agents with suspicious or fraudulent behavior. But analytics alone are not enough; they should be augmented by regular operational reviews and more detailed audits – executed randomly, or as a follow-up based on the analytics findings.
It’s important to keep the human touch and judgment alongside the analytics. Beware of taking drastic actions before you are sure of the findings, and don’t settle for anomalies or suspicious cases where you don’t understand the underlying reasons.
- When necessary, take determined action. Occasional sloppiness and over-charging is best dealt with directly with the service agent, with a clear expectation of corrective actions. In the case if direct fraud or several suspicious elements, take determined action according to the upfront stated policies, such as:
- Enforcing tighter process controls. You might require additional process control points from service agents with suspicious cases or too many cases in the gray area. Be very clear about this.
- Claiming back the over-charges. Typically, it is easier to prevent over-charges than claim them back. The circumstances and time-frames for that should be stated in the service contract.
- Do you still feel you can trust your business partner in the future? What are your other options for warranty (and non-warranty) service? Consider having a case for contract termination or even going to court.
- Companies are often reluctant to let others know they’ve been a victim of fraud. However, communicating the issue and the consequences enforces the message that your control processes work and you don’t tolerate wrongful behavior.
In many cases we hear clients say, “We don’t have warranty fraud, we know our service agents and we trust them,” or “We are the market leaders, our dealers don’t have the guts to cheat us.” Still, we have seen the whole spectrum from occasional sloppy procedures and over-charging to systemic criminal activities and truly large-scale fraud.
Those who dismiss this as a non-issue typically have a very expensive issue about which they are just wishfully ignorant. Those who have a clear approach without overly burdening their service agents can save a lot of money and simultaneously have a more satisfied and effective service network.
It’s become a truism: you can’t manage what you can’t measure. (Actually, it’s quite a debatable proposition.) A corollary is that therefore what matters are observable behaviors, hence the essence of training is to develop skills that generate those behaviors. We’ve all seen, in the opening page of nearly every corporate training session’s objectives statement, “Participants will learn the skills associated with the behaviors of…”
But focusing on skills alone produces dangerously myopic results. Let me use a sports analogy here – let’s go with golf.
Whether you’re stroking a 3-foot putt or hitting a long drive, two kinds of things can go wrong:
- You may do something incorrectly, e.g. swing in a bad plane or aim the club face wrong. This will result in the ball going other than where you intended.
- You may think incorrectly, e.g. correct some last-minute perceived error or try to set a course record. This too will result in the ball going other than where you intended.
If the results are the same, which error do you fix? Does it matter? Remember that mental errors manifest in physical ways. A desire to “kill the ball” may result in swinging in a wrong plane. Worrying about missing the putt is likely to cause you to over-control and flinch, thus aiming the club face wrongly at point of impact.
Fixing the “doing” is improving our skillsets. It includes things such as altering the grip or moving the ball forward in our stance. Fixing the “thinking” is improving our mindsets. It includes advice such as “swing through the ball” or “trust your swing.”
Mindsets and Skillsets
The metaphor for sales is clear, I hope, though it applies equally to other fields of advisory business relationships. Sometimes we do or say the wrong thing. More typically, we don’t do or say the right thing. But how do we know which issue-set to focus on in sales? Does the golf metaphor give us guidance, or does it just help define the problem?
It’s been my experience that when it comes to sales – here comes a gross generalization – we put too much emphasis on skillsets and not enough on mindsets. A couple of qualifications: my experience is mainly built around B2B sales, with a heavy focus on complex and/or intangible products or services, and a concentration in professional services. So, I have my biases, just to be clear, in what follows.
We Live In a Skillset World
In the Western world of business, the sub-world of sales has not been immune to some larger trends. Those include, first and foremost, a recent massive trend toward quantification.
Cloud computing is relatively new. iPhones are only 10 years old. Computer laptops are only a few decades old. The web didn’t exist before the 90s. The spreadsheet was invented only in the late 70s. And the 1981 IBM PC had one (big) floppy disc that held 64K (another optional drive doubled capacity all the way to 128K).
Two other phenomena are worth mentioning: the creation of Michael Hammer’s Business Process Re-engineering strategy and the invention (courtesy of the Boston Consulting Group and Michael Porter) of the quantitative approach to competitive strategy.
These big three—computing power, process perspective, and competitive calculation—changed the way business is done. In a nutshell, we began hearing that mantra about “If you can’t measure it, you can’t manage it” and “You get what you measure.” Business began to view organizations as processes, not hierarchies, with all the data that come with processes (not to mentions manuals and procedures). All this happened within recent times for Gen X managers (but feels ancient to millennials).
These trends greatly influenced (led to?) CRM systems. Sales trainers (influenced by behaviorally trained organization trainers) began to phrase training in terms of measurable behaviors. And after all, isn’t sales the ultimately quantifiable function?
In a skillset world, two assumptions keep popping up: one is a linear approach to cause and effect, and the other is a belief in breaking things down into pieces. The first belief views sales as “a sale, repeated over and over.” You’ve all seen depictions of sales processes, typically rightward-moving arrow diagrams. They all boil down to, “If you do X, you’ll get Y.”
The second assumption is that we gain greater control over a process by breaking it down into finer and finer pieces. This assumption has been greatly enabled by the availability of data. (It’s also been only a few years since the word “analytic” was turned from an adjective to a plural noun).
Of course, with data and behavioral skillsets come many advantages. But there are two advantages to focusing more on mindsets.
First is that the more complex the situation, the more difficult it is to map out all the appropriate skillsets. A level of generalization, an ability to deduce specifics from the general, allows not only more customization, but more speed. With skillsets alone, all we can generate is practiced behavior. With mindsets, we gain the ability to improvise.
Put another way – mindset scales; skillsets don’t.
The second benefit of mindsets is that the more human the buyer, the less likely they are to respond to mechanistic behaviors (or the perception thereof). Sometimes we just want to interact with a chatbot, and we want it to just plain work. But other times, we want to interact with a human. And when we do, we want the person to do more than just recite rules, try to manipulate us, or emulate a robot.
Mindsets don’t guarantee behavior. No golfer ever succeeded by simply envisioning a swing and never practicing.
But if all you do is increase your repertoire of behaviors, your customers won’t be able to tell you from an automaton. The really effective salespeople have internalized mindsets, and they can generate the appropriate behaviors “on demand.”
Today, it seems nine out of ten stories in the general media are variations on one theme: trust is down. Whether it’s trust in the media, trust in politics, trust in business – it all seems to be heading in one direction.
But wait – what does that even mean?
We hear it all the time. Trust in banking is down. Trust in Congress is down. Trust in the educational system is down. We hear these statements, we say, ‘tut-tut what’s the world coming to,’ and we go on about our business – in large part, because we don’t know what to do about them.
Well, no wonder. These seemingly obvious statements mask a fundamental confusion about the nature of trust – a confusion that prevents us coming up with basic solutions.
The problem is this. When trust in banking is down, does that mean:
a. that banks are less trustworthy than they used to be? Or,
b. that people are less inclined to trust than they used to be?
Those are very different problems. Typical solutions to the problem of trustworthiness have to do with ensuring the behavior of the trustee. Think regulations, penalties, enforcement, behavioral incentives and the like.
We too often neglect the other side of the equation – the propensity to trust. The problem is simple enough to state: you may be the most trustworthy partner in the world, but if the other party is unwilling to trust you, nothing will happen.
The propensity to trust is critical. It amounts to risk taking. Despite Ronald Reagan’s famous quote to the contrary, there is no trust without risk. The dictum to “trust but verify” in fact destroys trust by sanctioning acting on suspicion.
The Hitchhiking Problem
In the 60s, hitch-hiking flourished. By the late 1980s, it was dead. Partly, hitchhikers were afraid to hitch; but mainly, drivers were afraid of hitchhikers. And it wasn’t due to an epidemic of violence; it was due to a fear of violence. We lost a great deal when we lost hitchhiking – economically and culturally. (The move to collaborative consumption, interestingly, is a contemporary resurrection of that idea).
Why is hitchhiking relevant to trust in banking? Because one common response to low trustworthiness – perceived or otherwise – is a reduced propensity to trust. Which will kill trust just as surely as will low trustworthiness.
There is a huge cost to low propensity to trust; look at The Cost of Fearing Strangers by the Freakonomics folks. We are great at articulating the risk of doing something; we are awful at noticing the cost of doing nothing.
Want a really Big Example? Next time you’re in an airport, look at the social cost of us not being able to trust grandmothers from Des Moines on their flight to Fargo.
The Laws of Trust
To people schooled in free-market economics ways of thinking, trust is hard to make sense of. If the propensity to trust declines, you’d think the market would respond by creating more trustworthy offerings. In fact, just the opposite happens. Suspicious people tend to attract con artists; skeptics get sucked in by fakes.
The reason is simple: trust is not a market transaction, it’s a human transaction. People don’t work by supply and demand, they work by karmic reciprocity. In markets, if I trust you, I’m a sucker and you take advantage of me. In relationships, if I trust you, you trust me, and we get along. We live up or down to others expectations of us.
We have been teaching and practicing business according to the wrong Laws of Trust. The solution for low trustworthiness is not necessarily to trust less, but to trust more, and more intelligently. Maybe you’ve heard, “The best way to make someone trustworthy is to trust them.”
We’re Teaching the Wrong Laws
Our public education and culture is loaded with the free-market versions of trust. We teach, “If you’re not careful they will screw you.” We passcode-protect everything. We are taught to suspect the worst of everyone, be wary of every open bottle of soda, watch out for ingredients on any box.
Then in business school, we are taught that if customers don’t trust you, you need to convince them you are trustworthy – partly by insisting on our trustworthiness. You can’t protest enough for that to work: in fact, guess the Two Most Trust-Destroying Words You Can Say.
By teaching distrust and confusing trust recovery with messaging, we are teaching entire generations to be suspicious of anyone and everything. By teaching suspicion and distrust, you can make book on it: what we’ll get is a reduction in trustworthiness. Read the Tale of the Thieving Convenience Store Managers.
This doesn’t mean we shouldn’t teach trustworthiness; much of my career has been built heavily around that. But by itself it’s not enough.
We need also to be teaching risk-taking, relationships, and the values of being connected to other human beings –not just than calibrating the dangers of hitchhiking.
Don’t tell me there’s no data. The General Social Survey has been collecting data on the propensity to trust since 1972. One interesting finding: the propensity to trust is strongly correlated with educational attainment. What does that say about the social and economic costs of cutting educational investment in the name of lowering taxes?
And don’t tell me I’m naive. I recall a trip to Denmark a few years ago. I left my wallet in a taxi. By the time I discovered it, my client had left me a message to say the taxi driver had returned it to their offices, and they’d paid him to bring it to my hotel. Which he did.
I expressed amazement at how well it had all worked out. My client said, “Nothing to be surprised at. Anything less would have been surprising.”
And I bet the Danes hitch, too.
This post isn’t quite as wonky as the title would suggest. Bear with me.
Most of us would agree that ‘trust’ is a complex concept. But few of us, I suggest, have any idea how sloppily we think about it.
The Semantics of Trust
Consider some obvious grammatical usages of ’trust’:
- Trust as a verb, as in “I trust James.”
- Trust as an adjective, as in “James is less trustworthy than Jane.”
- Trust as a noun, as in “trust is less common in Russia than in Denmark.”
Now ask yourself: what is the meaning of the sentence, “Trust in banking is down”?
Does it mean:
- that people are less inclined to trust banks these days? or
- that banks have become less trustworthy than they used to be? or
- that the customer-bank relationship is less based on trust than it used to be?
Why is that important? Because if you don’t know what problem you’re trying to solve, you’re just going to spin your wheels.
Is that a real issue? You betcha. It goes to whether we need more bank regulation, better bank PR, or a rebirth of spiritual values.
For an analogy, consider the fact that serious crime in the US has been declining for about two decades – and the mistaken belief held by majorities that it has actually been rising. That’s a PR problem.
Now consider that Wells Fargo consistently and consciously incented its employees to sell unnecessary products for years. That’s a trustworthiness problem.
In the aforementioned link, from the Edelman Trust Barometer, you can find hints of all three meanings. Which suggests, first of all – we have a semantic problem. What the heck does Edelman mean by ‘trust’? Because if that answer isn’t clear, then how can we meaningfully talk about how to create trust (by smarter consumer risk-taking? by better regulation? by broader social change?).
Biases of Trust Researchers
Psychologists who study trust are, as a group, fixated on trust-the-verb. This is hardly surprising; their view of the world is from an interior perspective, the mind looking out, hence on issues of perception. They focus on the decision to trust, and thus on the attitudes toward risk-aversion and risk-seeking. Trustworthiness as an adjective is dealt with as an issue of perception by the trustor, not as an attribute of the trustee – trustworthiness is all in the eye of the beholder.
Sociologists are concerned with trust the noun, and with questions like why southern Italy is a lower-trust society than Sweden. When they say ‘trust is down,’ they are talking about the likelihood of a surveyed population to have a more suspicious outlook on strangers than they used to. They’re interested in herd behavior, not in the perceptions of individual cattle.
Business writers on trust are the most confusing of all. They pay about as much attention to trust-as-adjective (trustworthiness) as they do to to trust-the-noun. Unlike the academics, however, business writers use the word ‘trust’ to refer to institutions, as opposed to most academic talk (and most talk on Twitter, for that matter), which is about interpersonal trust.
Unfortunately, business writers are often unclear about the distinction (if banks are untrustworthy, is this because bankers are venal, or because ’the system’ is amoral? And is my trusting JPMorgan Chase really not qualitatively different from my trusting Susie?).
Definitions: A Simple Trust Ecosystem
Here’s a simple, five-factor description of the trust ‘ecosystem.’
Trust (1. the noun) is a relationship, between a trustor who trusts (2. the verb) and a trustee, who is or is not trustworthy (3. the adjective). The trustor initiates the relationship by taking a risk (4. the driver of trust); and continues when the roles reciprocate (5. the sustainment of trust).
At the risk of grammatically complexifying what isn’t all that complicated in practice: trust is an asynchronous bilateral relationship initiated by risk-taking and sustained by reciprocation.
If all who wrote about trust simply referred to these five factors, and were clear about what meaning they intended, the trust literature would be much clearer, and recommendations more cogent.
Is technology killing trust in your organization? Are we heading for a dehumanized, low-trust business world? Can technology itself come up with trust-enhancing ways to guard against this trend?
I’m getting asked these questions lately. And while there’s some merit to the question as framed, the news is not nearly as bad as it sounds – provided we remember a few basics.
The Technological Threat to Trust
Think of your own business – how is it being affected by:
- Social collaboration
- Big data/analytics
- The cloud
- Process automation
- Internet of Things
- 3d Printing
- Cognitive systems
- Digital wallets
- P2P lending
Since trust is largely personal – so the logic goes – and the thrust of most of those technologies is to reduce the human connection, if not eliminate it entirely, then we must be heading into a dangerously low-trust future.
- How can you trust a robo-planner the way you trusted a CFP? Alternatively, maybe the robo-planner is actually more trustworthy?
- How can you establish customer relationships when the customer has walked themself through half the buying process online without speaking to anyone? And what if the customer no longer wants those relationships?
- What happens to trust when my firm automates a process? Doesn’t going from trusting a person to trusting a process create an inherent reduction in trust?
What We Forget
In this way of framing the problem, we forget two major offsetting benefits of technology – each a significant cause for optimism.
The most obvious is that there is trust, and there is trust. In particular, there is “soft” and “hard” trust. These correspond to the Trust Equation components as follows:
“Soft trust” — Intimacy and Self-Orientation
“Hard trust” — Credibility and Reliability
In many of the technologies we talk about, there is a direct trust trade-off. What we lose in human contact, we often gain in reliability (in particular). It wasn’t that long ago that people stood in lines to get cash from their checking accounts. You had to walk a distance; banking hours were restricted; and you never knew how long the lines would be.
Would anyone – bank or customer – ever want to give back the freedom that ATMs gave us? In trading off the polite chit-chat with your friendly neighborhood teller, you got reliable convenience, reliably availability, (pretty) short lines, and reliable accuracy. A net plus.
Such is often the case with automation, CRM, the cloud, and other technologies. What we lose in one part of trust, we gain with another.
The Multi-part Solution.
The least obvious offsetting benefit is that all the technologies above have not affected by one iota the basic biology of humans. We still are complex, non-linear, and emotionally-driven in our fundamental approach to people, risks, relationships, and business. Neither Steve Jobs nor Stephen Hawking have come anywhere near close to rewiring humans.
And humans have always resisted purely logical reasoning. Whether you prefer the observations of Daniel Kahnemann or of StarTrek’s Dr. Spock, we like to make decisions based on emotion – then rationalize them after the fact with linear logic.
–We buy with the heart, and justify it with the brain.
–We don’t care what people know until we know that they care.
–The fastest way to make a man trustworthy is to trust him.
What does this mean for the technology v. trust conundrum? Plenty. It means that it’s impossible to engineer out all “soft” trust in most situations – we humanly resist it. And if we have less of an opportunity for ‘soft trust’ creation, then the entire weight of the soft trust creation will rest on the few remaining opportunities for interaction.
In other words – fewer trust opportunities does NOT mean lower trust – it means more trust weight and emphasis being placed on fewer personal interactions. The trust-importance of those interactions is actually increased, not decreased.
Trust Design Implications
What’s to be done? There are two false solutions, and two better ones.
- The technical temptation. It’s tempting to ask technology to solve its own problem, but it’s nearly always the wrong answer. More metrics won’t help if your values are wrong (see Fargo, Wells). Customer sat surveys are as bloodless as the technologies they’re deployed to measure. And no matter our Hals, Siris, and Alexas, we know they’re not ‘soft,’ they’re just software. You can’t get intimate with an avatar (yet, anyway).
- The specialist temptation. Similarly, it’s tempting to view technologists as hopeless cases, and to bring in a special squad (group, team, unit) whose job it is to do trust. Wrong: you’re far better off training technologists to get a little better at trust than you are training poetry majors to talk to technology clients. Anyway, you can’t fix a technologist’s low trust by pointing to someone else’s high trust.
- The transparency solution. However, technology can help in two particular ways. One is simply to leverage the informational power of technology, and move radically in the direction of transparency.
The reason is simple. A big component of people’s trust is whether they think you have something to hide. That is true at the personal and the institutional level. If we sense that the person, process or organization has no axe to grind, no hidden agendas, and no secrets, then we are inclined to trust them.
This kind of transparency is evident even before we meet someone – in our website designs, in our employee and customer policies, in our public responses. In an evolving world, when we start by assuming confidentiality, we are setting ourselves up for failure. The right beginning question is “Why shouldn’t we be sharing this?”
- The design solution. A technical world is one in which users have power. Users include employees, customers, suppliers, neighbors. Most cases are not like the ATM, where zero contact is required. In most cases, some contact is required. The key is to give the participant maximum power over the timing and nature of that contact.
In a sales process, this means make everything feasible available without personal contact – eg. online. Then, when the customer gets to the inevitable point where they actually need, and want, a real-person interaction, make that interaction available:
- immediately (e.g. within a click for text support, two rings if phone)
- with high quality (i.e. a qualified, unscripted support person authorized to talk.
Digitization is not immutably opposed to trust – we’re just not thinking about it rightly. The challenge is for us to get better at trust in the remaining interpersonal situations, and to design the non-personal interactions in ways that respect our analog nature.
Exhibit A. Google conducted a multi-year, multi-million dollar study called Project Aristotle to determine just what distinguishes successful teams from unsuccessful ones. Tons of data were examined, decades of research studied, multiple hypotheses explored.
The answer? Drum roll: successful team members display more sensitivity toward their colleagues, e.g. granting them equal talk time.
If you find that a stunningly unsurprising flash of the obvious, you don’t understand how things work in business these days. Here’s the reaction of one Googler to that study:
“‘Just having data that proves to people that these things are worth paying attention to sometimes is the most important step in getting them to actually pay attention…I had research telling me that it was O.K. to follow my gut,’’ she said. ‘‘So that’s what I did. The data helped me feel safe enough to do what I thought was right.’’
I’m not picking on Google; they are not unique. (And they are, indeed, really smart). But let me restate what Exhibit A is really telling us:
Millions of years of evolution have brought humans incredibly complex and exquisitely tuned neurological systems, capable of instantly intuiting not just friend vs. foe, but parsing a spectacularly wide array of emotional messages being sent out by our fellow humans.
Yet the smartest of the smart among us have determined that you can’t trust that system – unless it’s backed up by years of technological research that couldn’t have been done even just ten years ago. Fortunately, we have now been given permission by that research to ‘trust your gut.’
It’s a wonder the human race stumbled along without that study for so many years.
Exhibit B. We recently got a plaintive email from a genuinely perplexed client.
I hear constantly that being authentic is crucial. But it’s hard to get a clear grasp on the idea. It’s especially hard to figure out how I can know (instead of just feeling or believing) that I am authentic – much less know that someone else is.
Absent knowing we’re authentic, can’t anyone believing they’re authentic just claim to be so? How could anyone prove otherwise? And since we can’t really know authenticity, doesn’t that also mean we can’t measure it, so we can’t compare it across people or time or situations?
Hasn’t someone come up with a way of getting at authenticity by way of knowing, rather than feeling or believing? I’m struggling to know how I can know I’m authentic. I hope this makes some sense.
This person’s pain is real, and deep; I don’t want to appear insensitive by citing it as a cautionary example, we can all relate to the sentiment. Yet, contrary to their hope, the query makes no good sense at all. Instead, it represents the abandonment of commonsense.
Authenticity – to pick that particular example – speaks to an alignment of beliefs and feelings with the cognitive functions that our writer called “knowing.” When we run across someone who accesses solely their cognitive talents, we don’t think of them as authentic – we think of them as Sheldon Cooper. They are inauthentic because they are presenting not their full selves, but only their frontal cortexes to others.
“Authentic” is what we feel instantly in our pre- and sub-conscious instinctive feelings about other people. It is the same kind of feeling we get when we jump away from the speeding car, recoil at the sight of a snake, or feel our hearts tug when a puppy wags its tail at us.
An Outbreak of Reductionism
This is hardly the first outbreak of hyper-rationalization. In the social sciences it has a name – physics envy. It is particularly virulent today in neuroscience, where some, having locating certain emotions in particular areas of the brain, claim to have “explained” those emotions. Description is by far the narrowest form of explanation – it’s more akin to translation.
But the disease affects business as well. We have no trouble smiling at the naiveté of Frederick Taylor and his stopwatch, measuring people like machines. Yet we are every bit as mechanical and naive today.
Today, it is an article of faith in many of our most successful companies that “management” is a matter of decomposing goals into a series of cascading behaviors which, properly measured and carefully matched to incentives, produce an internally consistent, humming machine. All you need is a dashboard, which is easily available in the form of widgets.
The manifestation of this belief system (codified in “if you can’t measure it you can’t manage it”) is the enormous investment in training, goal-setting, reporting, progress discussion, and performance reviews – all of them non-direct value-adding processes. All of them are built around a behavioral view of meaningfulness, a pyramid view of behaviors, and a system for metrics and incentives.
Every training department knows to use the Skinnerian language (“attendees will learn the behaviors associated with mastering the skills of XYZ…and will be rated regularly thereafter on a four-point scale of Early, Maturing, Mature, and Master.”)
Petrification by Metrification
This is precisely the technique used decades ago by Harold Geneen, who believed in rolling up data from all his subsidiaries and managing by the numbers. Except Geneen was measuring profit margins, inventory turns and capital costs. (And it turned out it was Geneen’s outsized personality, not his system, that made it work).
Today’s managers are applying the Geneen model to manage things like trust, authenticity, ethics and vulnerability – with the same tools they apply to measuring click-through rates. There is a huge mismatch. Entire organizations – and not just Left-coast tech companies – are being managed by cascading goals and KPIs, each firm with its own acronym for the process.
This continued reduction of higher order human functions to behavioral minutiae, coupled with the rats-and-cheese-in-the-maze approach to incentives, succeeds only in hollowing out those functions. Try this thought experiment: How do you incent unselfishness?
In the words of ex-consultant and CEO Jim McCurry, all this leads to “petrification by metrification.” You don’t get the genuine article, but a fossilized replica. It may look real, but it’s checkbox stuff.
Scaling the Soft Skills
George Burns once said, “The most important thing in life is sincerity; if you can fake that, you’ve got it made.”
Ironically, the management teams who try to apply Big Data techniques to rich, basic human interactions are swimming upstream. The right way to scale soft skills and sensitivity not only looks different than the way you incent car salespeople, but it’s a lot cheaper and faster. It has to do with leading with values, engineering conversations, and role-modeling.
But that’s fodder for another blogpost.
Here’s a “Golden Oldie” post from 2011. Has anything changed in the passage of five years?
Trust, in case you hadn’t noticed, has gotten “hot” lately. But much of it sounds very vague—soft, fluffy, nice-to-have, the buzzword du jour.
I’d like to do my part to make it real.
To me, that means breaking it down and making it sound; tapping into the strategy and mysticism, but also staying grounded in the tactical and the practical.
So let’s review some context; then talk about four specific operating principles a business can hone in on to improve its trustworthiness.
Putting Trust into a Workable Context
I’ve suggested elsewhere that “trust” is too vague a term to work with. To do something practical, we need first to identify the trust realm: are we talking about personal trust, or business/organizational trust, or social/institutional trust?
The next question is about the trust role: are we working on being more trusting? Or more trustworthy? They are not the same thing. And “trust” is the result of them both interacting.
Building a Trustworthy Business
In the realm “personal” and the role “trustworthy,” we can point to personal beliefs and behaviors as indicated in the Trust Quotient. But in business, trustworthiness is built through a set of daily operating principles. Trustworthiness is built from habitually behaving in accordance with a set of commonly shared beliefs about how to do business.
I suggest they can be boiled down to four.
The Four Trust Principles
1. A focus on the Other (client, customer, internal co-worker, boss, partner, subordinate) for the Other’s sake, not just as a means to one’s own ends. We often hear “client-focus,” or “customer-centric.” But these are terms all-too-often framed in terms of economic benefit to the person trying to be trusted.
2. A collaborative approach to relationships. Collaboration here means a willingness to work together, creating both joint goals and joint approaches to getting there.
3. A medium to long term relationship perspective, not a short-term transactional focus. Focus on relationships nurtures transactions; but focus on transactions chokes off relationships. The most profitable relationships for both parties are those where multiple transactions over time are assumed in the approach to each transaction.
4. A habit of being transparent in all one’s dealings. Transparency has the great virtue of helping recall who said what to whom. It also increases credibility, and lowers self-orientation, by its willingness to keep no secrets.
Executing on the Trust Principles
What are the tools an organization has at its disposal to make itself more trustworthy? Any good change management consultant can rattle off the usual suspects, but for trustworthiness, the emphasis has to shift somewhat.
The usual change mantra includes a heavy dose of behaviors, metrics and incentives. Some of that works here, but only to a point.
For example, Principle 1, focus on the Other, is contradicted by too much extrinsic incentive aimed at leveraging self-interest–it undercuts focus on the Other. And Principle 3, relationship over transaction, forces metrics and rewards to a far longer timeframe than most change efforts employ.
Another great shibboleth of change is that it must be led from the CEO’s office. But with trust, it ain’t necessarily so. Trustworthiness is a great candidate for infectious disease change strategies; guerrilla trust strategies can work at the individual level, and individual players can lead. Behavior in accord with these principles cannot be coerced; the flipside is, it can be unilaterally engaged in.
The most powerful tools to create a trustworthy organization are things like language, recognition, story-telling, simply paying attention to the arenas where the principles apply—and the will to apply them. Role-modeling helps; some skill-building helps. But most of all, it is the willingness to notice the pervasive opportunities to work in accordance with this simple set of four principles.
Trustworthiness breeds trusting (the reverse is true too); the combination is what leads to trust. Which, by the way, is quite measurable in its impact on the bottom line.