Trust and the Sharing Economy: A New Business Model

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White Paper

Trust and the Sharing Economy: A New Business Model

by Charles H. Green

 

 

About Charles H. Green

Charles H. Green is co-author of The Trusted Advisor and The Trusted Advisor Fieldbook, author of Trust-based Selling, and founder of Trusted Advisor Associates.  Based on the trust equation introduced in 2000 in the first book, the Trust Quotient (TQ) is a self-assessment test that has been taken by over 25,000 people, validated by University of Chicago PhD psychometricians, and field-tested over the years in work by clients like Accenture and Deloitte. It is aimed at describing the level of trustworthiness of individuals.

Preface: After many years consulting on trust to major corporations and other organizations, I was asked by an angel investor to look into the sharing economy. More specifically, I was asked by angel investor Miles Spencer and his firm, Vaux les Ventures, to look into the bottlenecks in the sharing economy.

Obviously, Spencer had connected Trust and Sharing long before I had ever heard of the developments in Web 2.0 that were empowering that new eco-system. What followed was a deep dive into many of the participants, and eventually a summary of my findings in this white paper. Full disclosure: I have been engaged by, and have a deep belief in the benefits of TrustCloud, mentioned below. TrustCloud is a portfolio company of Vaux les Ventures.

I. The Economic Context of Trust
“Trust” plays many roles in society, one of them being economic.  As the Sharing Economy has emerged, so have attempts to address the prime friction in the market: how can one take real-world risks with real human assets, based solely upon information found online?

This paper will examine ways to solve that problem from several angles, and propose a path forward for the market.

The Sharing Economy, in my view, stands at the edge of some fundamental economic shifts, with Trust at the center. I start by articulating those shifts, and then describe implications for business models.

A. Trust and Economic Progress

Over the past few centuries, the bulk of economic progress has come from the combination of scale economies and division of labor, relentlessly driving down the cost of everything.

In the 1930s, economist Ronald Coase defined another part of the equation: transaction costs. These are costs which are, by themselves, unproductive, but which enable scale economies: contracts, cost accounting, safety inspectors, for example. As long as transaction costs are exceeded by the savings they create, they’re worthwhile.

By 2005, one study estimated that transaction costs had grown considerably over the 20th century to a level of “from 35 to 60%” of total costs.

Also in 2005, the Boston Consulting Group’s Philip Evans and Bob Wolf wrote an HBR article titled Collaboration Rules, one of the first mainstream business publications to highlight the critical role of trust in lowering transaction costs.

Time-share condominiums lowered the transaction costs of taking vacations – they replaced buying your own property. They are not a new idea, but the transaction costs required to make them work are still large: sales staff, legal contracting, marketing.

By contrast, the next level of transaction cost reduction, Airbnb, lets everyone get into the time-share business, without the transaction costs once deemed necessary.

Rental cars have also been around for decades, but the transaction costs of renting with Hertz are enormous.  Conversely, ZipCar stripped costs radically, making for far greater car utilization.

In both cases, Trust is at the heart of the matter.

B. Trust and the Sharing Economy

The early stages of a future Trust Economy are being seen in today’s Sharing Economy, where early adopters meet low-hanging fruit, offering up massive economic improvements.

The Sharing Economy matches under-utilized assets with potential users. As McDonalds realized in the 70s that it could increase its real estate productivity by 50% just by adding breakfast , so have ZipCar and Airbnb also transformed idle assets (inventory) into economic value – with one difference.

McDonald’s didn’t need to drastically change social behavior or replace transaction costs in order to open for breakfast. But in the Sharing Economy, those are precisely the changes that must take place: people must become comfortable enough trusting others that they will forego the expense of insurance contracts, police, lawyers, security systems and even private ownership, to enjoy the benefits of sharing assets.

As trust mechanisms develop, the first “transaction costs” to disappear will be the redundant ownership of assets. As the mechanisms develop further, other opportunities will arise.

The Sharing Economy is itself a play in a much grander fundamental shift. It is a shift from an infrastructure that protects people from each other, to an infrastructure that helps people trust each other. Getting the fundamentals of trust right will make it easier to navigate a series of reinforcing positive economic waves.

C. Trust Beyond the Sharing Economy

Airbnb and asset rental companies are, in many ways, still working off the paradigm of scale economies, the low-hanging economic fruit of our time.

Trust metrics will offer even greater economic value down the road, when massive economic gains can be reaped by applying them to things like:

  • Improving actuarial science for auto insurance companies
  • Improving management control systems for corporate organizations
  • Changing parole policies for sentencing guidelines in the prison system
  • Altering bonding requirements for positions of responsibility
  • Lowering default rates on credit cards and mortgage lending

At the same time, the Sharing Economy represents a significant and exploding business opportunity here and now, apart from any future developments. 

II. Modeling Trust
The Sharing Economy involves the most accessible examples of transaction cost reductions – situations where players have actually replicated assets in order to prevent the risk of working with others (Airbnb, RelayRides), or where an individual is to be given access to owned assets (TaskRabbit).

In such cases, the transformative event is from sole to shared ownership of (or access to) a previously private asset.

In trust terms, this is a straightforward case. There is a clear trustor, a clear trustee, and the burden of trust rests on the trustee to show trustworthiness. A successful trust model will address this clear archetypal trust opportunity, but with an eye at the same time to future applications of Trust that require more nuance.

A. Near-Misses in the Trust Game

There have been some attempts to quantify social relationships, but these have not precisely addressed Trust.  For example, Reputation.com is really about a person’s bona fides, about what others are saying.  But what people say about someone is at least one step removed the attributes of that person, and at best, only a part of what people consider when deciding to trust someone.

Klout, another popular tool, measures a person’s influence. Being trustworthy may increase someone’s influence – but so can notoriety, publicity, popularity or visibility. None of these are precisely Trust.

Neither reputation nor influence account for all the subtleties that accumulate into trustworthiness, or that help the decision to trust. Trust, reputation and influence are not subcategories of each other, though they all overlap.

There have also been several attempts to create trust-based business, but these have failed. While I can’t comment on the technical merits of those ventures, it’s clear they were doomed on substantive grounds.  Along with the financing and technical, a successful business model must get the Trust aspect right or it will fail.

Here are four potential pitfalls for a Trust business model:

  1. Trust is only weakly transitive. If A trusts B and B trusts C, it follows only weakly that A trusts C. Business models that focus on testimonials (e.g. early RapLeaf) are inherently weak. Behavioral indicators are far superior.
  1. Trust requires context. It makes no sense that say that “Joe is trustworthy” without specifying “to do what?” I may trust my dog with my life – but not with my ham sandwich. Business models that treat Trust as a single attribute will be unable to migrate across multiple business cases.
  2. It takes two to trust. Trust happens when one person (the trustor) trusts, and another (the trustee) is trusted. To say “trust in banks is down” doesn’t tell you whether banks have become less trustworthy, or that customers have become less inclined to trust. Business models that do not clearly distinguish metrics for each role will be erratic.
  3. Trust is risk mitigation. Ronald Reagan famously said, “Trust but verify,” but that’s an obfuscation. Trusting means you don’t verify. Trust itself is risk mitigation. Risk is borne by the trustor, and is largely mitigated by the trustee. Business models that do not clearly identify the risks and the risk-takers will be vague and confusing.   

B. Getting the Trust Model Right

In the Sharing Economy, a good Trust model must take the following points into account:

  • It is the trustor (the owner of the apartment to be rented, the owner of the tools to be shared) that bears the risk of an asset-sharing transaction;
  • It is behavioral data about the trustworthiness of the trustee that is needed to mitigate risk to the trustor;
  • Sharing Economy trust metrics will be context-meaningful. The traits of reliability and integrity to deliver on a commitment will be more relevant for rental businesses; there will be situations, however, where other attributes, like credibility or familiarity, will be more desirable.

C. Examining TrustCloud™’s Trust Model

There are many models of Trust. For example, the General Social Survey has massive amounts of data gathered over time, but it’s largely data about the propensity to trust – not about trustworthiness.  In his excellent book, The Decision to Trust , Fordham professor Bob Hurley lists 10 factors affecting trust, ranging from trustworthiness to trusting-ness to environmental factors.

For reasons articulated above, the Sharing Economy needs a clearly defined model of personal (not organizational or environmental) trustworthiness (not trusting-ness). It needs to be behavioral in nature, and offer enough flexibility to be contextually relevant.

This model has been at work in my book, The Trusted Advisor, and within my firm, Trusted Advisor Associates.  Since the 2000 publication of The Trusted Advisor, we have articulated the Trust Equation: a four-factor model of personal trustworthiness. An online version of the equation called the Trust Quotient has been taken by over 25,000 people, validated by University of Chicago PhD psychometricians, and field-tested over the years by clients including Accenture and Deloitte.

In its original form, the model is:
T = (Credibility) + (Reliability) + (Intimacy)

(Self-Orientation)

Where:
T = Trustworthiness
C = Credibility: truthfulness, competence, credentials, transparency
R = Reliability: dependability, track record, integrity, predictability
I = Intimacy: others feel secure sharing information, empathetic, discreet
S = Self-Orientation: focus of attention (self vs. others), selfishness, self-absorption, self-preoccupation

To make the equation more accessible to retail audiences, I suggest restating the equation as four positively-stated variables, with less psychological jargon.

Credibility + Reliability + Familiarity + Sociability
Between these four concepts, nearly all common forms of ‘trustworthiness’ are covered.

D. Trust Players in the Sharing Economy

In the capacity-shifting examples of the Sharing Economy, one person or entity is the owner of the asset – that person is the trustor. The other person is the potential renter/user of the asset – that person is the trustee.

The Trust Question for the trustee is, “How likely is it that the asset I rent will meet my expectations?” It is not a high-risk question, and it can be answered through conventional marketing and media channels.

The Trust Question for the trustor is far more important:  “How likely am I to get my asset returned in good condition?” The inability to answer that question is what’s kept people from inviting strangers into their homes, from lending tools to others, and in general placing their personal belongings and properties at risk to people they don’t know.

The ability to answer this question is critical, and TrustCloud™ is an early leader in the space. To serve the Sharing Economy, data must be provided to the trustor about the trustee. Using the model above, the ideal data will be:

  • About the trustee, not the trustor
  • About the individual’s behavior in context of a transaction
  • Behavioral, not just reputational
  • Indicators that mitigate risk of property damage: primarily reliability and sociability (credibility and familiarity skills are less relevant)

D. TrustCloud’s Value Proposition

Trust metrics productively scale far beyond the capability of any one application. For Airbnb, TaskRabbit and RelayRides to source their own trustworthiness data makes no more sense than for them to build their own tablet computers.

TrustCloud aims to be the FICO Scores of Trust, offering custom-designed metrics to fit a range of trust-improvable segments.

This value proposition is straightforward within the Sharing Economy. It’s also valid for the broader Trust Economy of lowered transaction costs on the horizon – though the particular data relevant for an auto insurance company may well be different from those needed by Airbnb.

TrustCloud’s intent is to build a data collection and translation model capable of scaling through both economies; this offers the flexibility to offer customized Trust metrics to customers with differing needs, within the Sharing Economy and beyond.

III. Managing Two Parties: Trustors and Trustees
Some businesses only have one set of customers to worry about. Others – real estate brokers, executive search firms – must manage relationships with both parties in a transaction. TrustCloud falls into this group.

Selling Trust metrics to Sharing Economy buyers is, like selling market research, not complex. By contrast, the trustee side – the people about whom trustworthiness data will be collected – presents some unique and challenging issues.

A. Selling Data to Trustor Communities

Trustor communities are “in business.” They may be companies looking to rent owned assets; they may be broker businesses looking to facilitate transactions between retail customers; or they may be individuals, acting not as companies but still as economically self-interested parties.

It’s not conceptually difficult to sell to such businesses. It boils down to a simple statement of value: how much economic improvement will the trustor get from the ability to use trustworthiness data about buyers, and what would it cost the trustor to get that data on their own. It may or may not be a simple sale, but the concept is not complex.

A good example of this is the Trust-E website product and how it got acceptance from website owners who desired their “stamp of approval.”

B. Getting Data from Trustee Communities

Getting data from the trustee community is a different matter. The communities are acting almost always not as “businesses,” but as individual consumers. Individual consumers may be economically motivated, but that’s far from the whole story.
Some trustworthiness data is available from publicly available sources. Much, however, requires the tacit, or explicit, permission of those whose behavior is being described. The issues here fall into two types: privacy and motivation.

Privacy Issues.
The highly-public nature of the social web means that plenty of data is available for analysis – and people know that.  It’s critical, however, to respect the privacy settings of sites like Google, LinkedIn and Twitter.  Working within the privacy boundaries of source networks for data and then emphasizing strict privacy safeguards for both the process and the information gleaned should provide some reassurance in this area.

Motivational issues.

 

How will people come to willingly give up information about their own personal behaviors? There are three possible answers:

  1. Financial. The Sharing Economy, and the broader Trust Economy outside it, are based on fundamental economic value shifts, and typically customers as well as sellers will benefit from such savings. As the Sharing Economy develops, trustor businesses can offer discounts or coupons for customers with TrustCloud-certified information. However, that’s a position that must be earned.
  2. Status. Klout has done well following this strategy. It’s a uniquely valid strategy for “influence,” but not for Trust. While there may be status associated with credit FICO scores, it’s the kind of status that is talked about quietly. A status strategy a la platinum credit cards is ultimately not a good fit with Trust; people will want to feel they can improve their trust ratings, not be focused on the appearance of being ‘low-trust, low-status.’ The Status strategy doesn’t feel appropriate.
  3. Gamification. FourSquare and others have succeeded with gamification. Trust actually fits well with game-playing, because of the collaborative aspects of both; hence there is a psychological appropriateness of this strategy. Also, Sharing Economy trustees will be made up heavily of early adopter, techno-savvy people. Given that badges and the like are well-known to the market, and given that this strategy requires the least capital, it’s the most sensible starting gate strategy.

Yahoo’s Developer Network has a useful classification scheme that outlines differing types of motivation.

IV. TrustCloud: the Data
As per the opening of this White Paper, TrustCloud should approach Trust data strategically: mindful of the nature of trust, and the nature of the issues the communities are facing.

TrustCloud’s data collection effort follows three principles:

  1. High volumes of data in low-risk situations, to get started
  2. A wide range of data elements
  3. Clearly defined taxonomies of trust to organize that data.

A. High Volumes of Data for Low Risk Situations
The alternative to high volumes of data is to rely on very precise definitions of data. Yet this approach has two problems. First, the nature of Trust is so situational that it’s better to custom-construct trust definitions to represent specific client situations than to ‘bake in’ a particular definition.

Secondly, becoming a market leader in trust metrics is best accomplished through sheer volume of data collection; in the data business, more is better.

The recommended strategy is to start with “low-risk” transactional situations to build up a track record, and to ensure against highly motivated data attacks. (An example of the opposite is FICO scores, which are aimed at a very few, high-risk transactions, like defaulting on mortgages).

An example of high-volume, low-risk situations is the track record someone develops online in setting appointments, and then meeting them. A track record of meeting stated commitments over time demonstrates a pattern of reliability. For someone to “hack” such metrics would require them to, in effect, change their life, to a life of greater reliability. In such a case, the metrics could not be gamed without “gaming” the life itself – and it would no longer be ‘gaming.’

B. Taxonomy of Data Elements: Internal and External Uses

TrustCloud should use an over-arching taxonomy of Credibility, Reliability, Familiarity and Sociability as a guide to organizing, defining and collecting data.  All of the data collection would fall under one or more of those categories, or combinations of those categories.

Trust Metrics to Trustor Communities.

Trustor communities vary. The trust metrics that Airbnb requires will differ from those that TaskRabbit would require. A vendor stuck in a data policy based on tight definitions, or on reputational rather than behavioral metrics, is unable to respond appropriately.

TrustCloud should have an ability to fine-tune metrics to fit almost any customer need. As a practical matter, it could offer basic “packages” of data which can be further refined.

For example, to an Airbnb-like customer, an “Integrity” package of trust metrics might fit.  It would draw heavily from the Reliability and Sociability metrics.

Besides the ability to develop customized packages, this approach to data allows for recursive learning. One can track performance at the individual indicator level, and tweak definitions to suit the learnings from the actual data.

Such a recursive capability will be difficult to emulate by competitors who focus on fixed definitions, fewer datapoints, and rely more heavily on transitive or reputational metrics.

Trust Metrics to Trustee Communities.

The situation is entirely different for trustee communities. Given this gamification strategy, the creative use of badges is critical. Unlike the trustor community, the trustees have little if any interest in understanding the underlying taxonomy.

As the market matures, the trustor and trustee communities may come into alignment around definitions, a la the FICO score metaphor, but I do not see this happening at the outset.  The industry should evolve by generating infectious enthusiasm among users, while educating them about the economic value of their Trust scores at the same time.

V. Conclusions: Trust Infrastructure to the Sharing Economy
A highly viable potential market exists for the player(s) who can offer a powerful  “trust infrastructure” to the sharing economy. There are three rationales for that statement – economic, competitive, and strategic.

Economic. There exist significant opportunities to release business value that has been trapped by excess capacity and unnecessary transaction costs.  This can be freed by matching trustors and trustees through valid data. Those opportunities exist in cases of dedicated-usage real estate, and of single-owner properties that are used infrequently. Cars, bikes and apartments are only the beginning.

Competitive. Trust metrics, like most data businesses, are highly scalable; it doesn’t make sense to have more than a very few competitors. The rush for scale and market share will be fast, and heated.

Strategic. Defining Trust metrics correctly will be critical. Players who confuse Trust with reputation (thus basing their approaches too heavily on testimonials) will not have a trustable product. Players without contextual definitions of trust will not have a usable product.

The player who can articulate contextual definitions of Trust and back them up with behavioral data will drive the market.

Layers. While a fragmented market is not likely (due to scale issues noted above), there may be room for several layers of players in the market. Someone could play a standards role, or a privacy role (think ICANN, or Trustee); these do not have to be the same player as the provider of trust data.  It would be in the best interests of the trust data provider to collaborate strongly with other such layers, as they can make trust data more viable and widespread.

Long Term. As I argued earlier, the Sharing Economy may be an early phase in a longer-term, and much larger, Trust Economy.  If so, it will be through evolution, not revolution.  The trust data collection efforts of the Sharing Economy are not going to be rendered outdated by a new technology.

To the contrary, success built in the Sharing Economy will probably form the foundation of broader applications of Trust data.  The winner here-now has a much greater chance at longer-term success as well.

For continued reading check out: Trust Is Not A Reputation

The Ugly Truth Behind Goldman Director’s Resignation

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A few hours ago, the New York Times published a blistering Op Ed by Greg Smith, a Goldman Sachs director, titled Why I Am Leaving Goldman Sachs. It is getting remarkable coverage in the twittersphere, blogosphere and conventional press.

And no wonder! It is a scathing indictment by a privileged insider of one of the great Wall Street firms. It’s Matt Taibbi’s Vampire Squid story all over again – but this time from the Inner Circle.

I’m going to let everyone else revel in the spectacle of moral outrage, and focus on one statement Mr. Smith makes:

If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.

This is true: but occasionally clients will need a little help from their friends.

Trust or Money?

The public dialogue about trust in business is polarized. One side says, “Trustworthy behavior ultimately pays off.” The other side says, “Get real, only suckers believe that.”

I’m a believer in free markets. I also believe free markets are relatively rare. Here’s how trust plays out in them.

Personal Trust

The market for trust at the most basic level – interpersonal relationships – is very free. If you behave in an untrustworthy manner, you will lose the trust of others, quickly and surely. If you betray a co-worker or a boss, you’ll get your come-uppance quickly. Ditto for one-on-one retail businesses.

It is also at that level – the deeply personal – that trust is strongest. The difficulty always comes in scaling trust.

Scaling Trust

The easiest form of social trust is tribal, clan-based. Think of the Mafia, think Chinese family culture, think sports fans. The way to operate a really successful clan is through culture. Read Francis Fukuyama on national cultures of trust.

Now read Epicurean Dealmaker on Goldman Sachs’ culture, The Fish Stinks from the Head, written three years ago. This movie has been playing for some time now.

When corporations achieve great internal trust through strong culture, they can accomplish great things. They can also accomplish terrible things.

The market for trust at the corporate level is far, far from a free market. The power of tribal trust alone is enough to crush dissenting individuals. Whistle-blowers rarely fare well; and the stronger the culture, the worse they are treated.

We hear too often the debate about whether trust is profitable or not. In the long run, across enough organizations, the answer is yes.  (See Trust Across America for some data to this effect).

The question is: is there a linkage in the shorter term, in fewer interactions? If Greg Smith is right that customers eventually leave untrustworthy companies – how come it takes them so long?

The Wheels of Justice Grind Exceeding Slow

There is no iron-clad “law” of social justice that says high trust will yield high returns, or that good will be returned for good, etc. Despite the best efforts of trust proponents and new-order-capitalism theorists, the trustworthy behavior of one individual or one company is not guaranteed to be rewarded in this lifetime, this market, this quarter.

Worse yet, downright villainous bad behavior can be rewarded very, very handsomely.  Greg Smith quit Goldman today after 12 years; but those 12 years have been astronomically profitable for Goldman. Markets these days are far from free and trust doesn’t pay off quickly.

So let’s not be naïve about the inherent power of trust to vanquish all evil.

The challenge for all of us is to get above tribal trust and climb to a higher level of societal trust.

Can the GOP stop its circular firing squad? Can the US Congress ever serve its broader constituency? Can organizations like Goldman re-learn how to transfer internal trust to external clients? Can salespeople learn to trust, and entrust, their customers? Can the Chamber of Commerce stop fighting regulators?

Goldman can’t be relied on to fix itself. It has failed to do so. The question is not how evil they are or how many more public resignations it will take. It is how long will society wait for corrections to happen?

The Invisible Hand is not all-seeing when it comes to trust. In fact, it can be downright blind. Occasionally, clients need a little help.

What is To Be Done?

You can find your own battle in this framing of the war. Ask yourself: whom do you trust? Who’s your clan? Who do you throw in with?

Then ask yourself: whom am I fighting? Who is the enemy? Who don’t I trust? And challenge yourself to take it to another level.

Don’t be a voyeur watching the Goldman saga turned into TMZ gossip television.  Use it. Do something about it. Up the stakes.

Trust one-on-one is easy. Even tribes and corporate culture aren’t all that hard. The challenge is to remember that we no longer live in a tribal world.

The Ugly Truth in the Goldman story is that it’s not self-correcting. This is not a Greek tragedy with the gods pulling the strings. It’s not even a Hollywood comedy, with script-writers pulling us to a natural resolution.

Social trust is a choice, not an inevitable law of nature. And this is not a dress rehearsal.

Truth In Talking: Calling Things By the Right Name

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I’m going to quote Confucius, something I’d never have done were it not for TAA friend Shaula Evans:

“A superior man, in regard to what he does not know, shows a cautious reserve. If names be not correct, language is not in accordance with the truth of things. If language be not in accordance with the truth of things, affairs cannot be carried on to success. When affairs cannot be carried on to success, proprieties and music do not flourish. When proprieties and music do not flourish, punishments will not be properly awarded. When punishments are not properly awarded, the people do not know how to move hand or foot.

Therefore a superior man considers it necessary that the names he uses may be spoken appropriately, and also that what he speaks may be carried out appropriately. What the superior man requires is just that in his words there may be nothing incorrect.”  [Via Wikipedia]

                         Confucius, Analects, Book XIII, Chapter 3, verses 4-7, translated by James Legge

When “language is not in accordance with the truth of things,” music does not flourish. (Neither do presidential campaigns). It seems rather clear and direct; and hard to argue with. Shouldn’t we all strive to speak the truth?

Exaggeration is nothing new. But Confucius is talking about a good deal more than hyperbole here.  He’s talking about a moral perspective on the way we conduct our social lives.

What would Confucius say about a few aspects of modern life?

The Cops and the TSA

Congresswoman Marsha Blackburn (R-TN) writes in Forbes that the TSA people who screen you in airports have gotten an upgrade in terms of uniform, badges, and title.  They look a lot more like Federal Law Enforcement officials.

However, says Rep. Blackburn, they’re still being recruited from pizza boxes, and are not being given federal law enforcement training. What you see is not what you get.

Rep. Blackburn didn’t cite Confucius, but she might well have: this is a case where “language is not in accordance with the truth of things.”

Does it matter? It does, Blackburn says, because the “language” of a Federal Law Enforcement uniform commands respect. But if a loosely-recruited TSA employee uses that uniform to get a woman to halt, and then sexually assaults her – well, there’s your harm. It matters greatly.

Confucius and Facebook Friends

At least twelve billion people have pointed out that Facebook “friends” are not quite the same as “real” friends. It’s obvious, right?

Well, when something becomes so “obvious” that we no longer comment on it, you might say it’s entered our subconscious. We still talk about real “friends,” and we still have Facebook friends.

The fact that it’s in-your-face obvious and mind-numbingly common doesn’t alter the Confucian fact that “the language is not in accordance with the truth of things.” It’s not. We are using one word to describe two very different realities.

In Confucian terms, when we speak in this double-speak manner, we are not behaving as “superior men.” If the shoe fits…

Confucius Meets Business Best Practices

Expectations.  One of the more common mundanities of management is the exhortation to “always exceed expectations.” This is – let’s be clear – considered a good thing according to the canons of management.

In other words, we should lead people to expect one thing – and then surprise ‘em by giving them something else. Again, this is considered a good thing.

Except by Confucius, who reminds us that this is a rather clear-cut case of “the language not being in accordance with the truth of things.” Indeed, the whole point of this ‘best practice’ is to intentionally do the opposite of what Confucius suggests.

Public Relations.  What would Confucius make of the public relations industry? According to the Encyclopedia of Business Dictionary:

“The point of public relations is to make the public think favorably about the company and its offerings.”

Perhaps the PRSA (the industry association) doesn’t care for language that so easily suggests manipulation.

The Arthur Page Society, “a select membership organization for senior public relations and corporate communications executives who seek to enrich and strengthen their profession” almost certainly doesn’t like it. Their first of seven principles of public relations is, “tell the truth.”

Well, which is it? Is the purpose of public relations to “tell the truth?” Or to “make the public think favorably about the company?”

Confucianism, like the Arthur Page Society, likes to emphasize the normative aspect of things. The truth of things, they both might say, should accord with the ideal meaning of “Public Relations.” And presumably the Page society strives mightily to bring that goal about.

Meanwhile, in the real world, the one in which the Encyclopedia of Business tries to make sense of common-language usage for the ordinary businessman, the ‘truth’ is “we want you to think of us this way.”

Let’s be honest about that: because that is the fact on the ground, and it’s known and understood by any man on the street. To deny that is to speak language not in accordance with the truth of things.

Confucius and Trust

I am no Confucian scholar. To be more in accord with the truth of things, I am ignorant of Confucian teachings. He may have written on trust, and I don’t know of it.

But any of us can plainly see the eloquence and truth of his words to us, written 2500 years ago. There is a place in life for exaggeration and hyperbole. That place encompasses art and literature, inspiration and motivation. In that context, it is good.

But if we fail to keep our social and commercial interactions grounded in fundamental notions of honesty and candor – if we let our language stray from the truth of things – the music does not flourish. Nor do we, along with it.

Social Media, Reputation, and Trust

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THIS ARTICLE WAS FIRST PUBLISHED IN Raintoday.com 

Social media is a double-edged sword. On the one hand, they foster depersonalized, surface interactions that can erode trust. Yet the same breadth of interaction can leverage reputation gains. The key to managing social media for trust and reputation does not lie in trade-offs or in risk management, but in applying some simple values and principles.

Social Media and Trust Erosion

We’ve all made jokes about the erosion of terms like ‘friends,’ and the hollowness of ‘following’ tens of thousands of tweeters. It is possible to be a huge fan of social media (I certainly am) and still raise a giant eyebrow at some of the ironies it reveals.

For one thing, there is the tendency of lowest-common denominator crass commercialism to overwhelm any new form of social media. We’ll all see whether Google’s decision to start Google+ without commerce gave it a head start of a different sort—or not.

At a personal level, something similar pans out. All new media seem to bring out a gold rush of number collectors. (Interestingly, FourSquare recognized this drive and made it central to its “mayor of…” concept).

The combined commercial and personal drives to conquer quickly erode the personal-ness that many social media users initially found attractive. A thousand corporate entities asking you to be their friend doesn’t induce trust.

And the stakes are being raised. As search engine optimization (SEO) became critical, Google attacked the so-called “content farms.” But the content farmers have raised their game. There are now automated programs trained to “create content” by combining key words into common grammatical constructs, and then using synonyms in new combinations to create hundreds of “distinct” articles and blogposts and “news” stories—all to get higher rankings for keywords.

In other words, the monkeys are jumping on typewriters in a very organized manner—to make you think you’re reading something real. When content itself becomes stripped of meaning, there is a real assault on trust.

Social Media: The Trust and Reputation Upside

At the same time that social media can lower trust, the fact of that lowered trust increases the opportunity for differentiation. If you become less and less trustworthy, and I don’t change at all, then I begin to look more trustworthy—at no particular cost to myself.

Not that many years ago, the rule of thumb was that a customer’s good experience would be repeated to a half dozen or so people, while a customer’s bad experience would be shared with multiples more. In the social media world of today, you might add three zeroes to each of those numbers.

And while we usually focus on the risks of bad experiences, we forget the also-considerable value of thousands of favorable comparisons—with no risk taken whatsoever.

The fact is, as companies and people reveal themselves to be (pick your preferred adjective: shallow, commercial, selfish, disingenuous, etc.), those who benefit are those who remain (pick your adjective: deep, personal, other-focused, sincere, etc.).

At least, that is, if people retain the ability to tell the difference. I suspect they will.

The Relationship Between Trust and Reputation

Aristotle said, “Excellence is but a habit,” the repeated doing of the excellent thing. Similarly, I’d suggest that reputation is the repeated personal experience of trust—or of its absence. We don’t trust companies (with the exception of reliability or track records); we trust the people with whom we interact. Or we do not.

This view of reputation suggests it is best achieved as a byproduct of trust; specifically, as a byproduct of acting in a consistently trustworthy manner. By this view, trust drives reputation—not the other way around.

Also by this view, the best way to manage reputation through social media is not by attempting to harness the “power” of social media in service to a “good” message. The method inevitably swamps the message.

Any social media attempt at mass-scale communication, or at mass-produced content, is doomed by its nature to appear impersonal at best, and crassly selfish at worst. It cannot create personal trust. And thus it cannot be a good foundation for reputation.

Reputation Management

Trust-based reputation—the only kind with staying power—comes from a consistent customer experience (ditto for the employee experience). If that experience is to be one of trust, then the people engaged in all aspects of the company, including social media, must behave in trustworthy ways. A quick list of such virtues includes:

Truth-telling, candor, honesty, a disinclination to blame, an ability to confront difficult issues, sensitivity to the needs of others, a relationship rather than a transactional mentality, the ability to defer gratification, reliability, self-confidence, competence.

Some of these can be hired for, some can be trained for. They largely can’t be gotten through reliance on business process design, incentive systems, communications programs, or policies.

Instead, they are best developed through the tools of leadership, corporate cultures, and values. Indeed, those methods are far better suited to the flexible needs of future organizations. This is as true for social media as it is for any other part of the organization.

The lesson is not to avoid social media; you are nowhere in the future if you are not online and in the cloud. But also beware of metrics that have become disengaged from the things they were meant to measure; of ‘best practices’ that are based on reach and volume.

The power of social media, for those willing to see it, lies in making the world more personal, not less so. You do that by simply behaving personally in a trustworthy manner, online as in everywhere else. Your reputation will rise in comparison to those who don’t.

Can Income Inequality and Business Trust Co-exist?

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THIS ARTICLE WAS FIRST PUBLISHED IN Forbes.com

For four decades now, social trust has declined. This may seem like a minor matter, but a modern economy requires ever-greater levels of trust to function well. Both OWS and the Tea Party are evidence that such trust is lacking.

A leading cause of declining trust is income inequality. And despite the problem worsening, no one in business or politics appears willing to touch it. Too bad for us all.

Defining and Measuring Trust

When businesspeople hear, “Trust in business is down,” most think of corporate trustworthiness or reputation management. When academics talk about trust, most think about the propensity of people to believe in the good intentions of strangers. One is about being trusted; the other is about trusting.

Those two perspectives collide around the issue of income inequality. Dr. Eric Uslaner, a trust expert from academia, explains that income inequality is a leading cause of declining business trust – it drives people to be less trusting.

Most businesspeople don’t want to hear that, preferring to believe that trust can be addressed by public relations and changed corporate behavior – that is, via the appearance and reality of corporate trustworthiness.

Simply put: can “good” corporate behavior generate enough trust to overcome income inequality? Or are such attempts doomed without fundamental change?

The Data on Trusting

The General Social Survey has been conducted in the US since 1972 by the National Opinion Research Center. It has always contained questions about the inclination to attribute good intentions to strangers; in short, the propensity to trust.

The general drift of trusting-ness is very slow, but also clearly downward since 1972 in the US. It is not whipsawed by current events, but in the long run is affected by a steady drip.

In academics’ use of the GSS and other surveys, two linkages stand out:

  1. At the individual level, nothing increases the propensity to trust more than educational attainment;
  2. At the societal level, the propensity to trust is not driven by levels of national income, but by high national levels of income disparity.

The Data on Income Disparity

The US has become an economically stratified society. The US Census Bureau this month released data that startled even the Bureau itself: fully one-third of the US population is either in poverty or within 50% of the poverty line.

At the same time, income disparity has grown, especially at the top end; this is the result not just of recent events, but of longer-term policies.

Income disparity is not just a trust issue, but an economic issue as well. AsJames Chanos says:

Income inequality in this country is just getting worse and worse and worse. And that is not a recipe for stable growth.

But stratification is not the only problem. Some find it acceptable as long as one can aspire to a higher stratum. But what if mobility between strata has become ossified?

Unfortunately, income mobility in the United States is now well below that in Canada, Denmark, Australia, Spain, Germany, France, and several other OECD countries. (Great Britain and Italy still have sharper class divisions).

If you’re poor, and have little prospect of improving your lot in life, you are not likely to be a trusting person. Instead, you are likely to be resentful, hostile, suspicious, skeptical, and not necessarily inclined to be law-abiding.

The combined stratification and ossification of our society doesn’t add up to an economically healthy country.

The Problem

The economic value of high trust, at both an individual and a social level, is undeniably enormous.  Yet, our inability to analyze the problem is exceeded only by our political inability to do something about it.

Most “data” about trust consists of little more than popularity or opinion surveys. When we see headlines like “trust in banking declined,” it is impossible to determine whether banks became less trustworthy, or people became less inclined to trust in general. This sort of data is useful mainly just as an indicator of PR effectiveness.

Trust Across America is one group striving to define trustworthiness at a corporate level; on the trusting data side, we have the GSS, but little else. But even as the data come slowly into focus, nowhere do we see a willingness to face the implied political dilemma.

Can business continue to afford the ideology that got us here? A major shiftfrom shareholder value to shared value is underway; various CSR initiativesare gaining strength. But these initiatives are aimed largely at making companies more trustworthy. They are laudable, but it’s far from clear that such changes would have any effect on stratification or mobility.

In retrospect, a variety of social and political policy choices over time got us to the current state of low trust. Yet talk of reducing income inequality or increasing social mobility is the third rail in both politics and business in the US today.

It is probably still true that America is the land of opportunity for those with the right skills and attitudes. Unfortunately, Americans themselves increasingly don’t match that description. And so the prospect of further declines in trust, and consequently in economic health, seems likely.

How Can You Know Whom To Trust

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THIS ARTICLE WAS FIRST PUBLISHED IN Forbes.com

The news is drenched in stories of declining trust. Trust in our institutions, trust in companies, trust in our leaders – all are down. We need not surrender to mass cynicism, but it’s worth exploring: just how do you know whom to trust?

A Trick Question?

“Whom can you trust?” sounds simple and straightforward enough – but it’s a trick question, for two reasons. First of all, you can’t know the answer with certainty. Secondly, the question is as much about the trustor as it is about the trustee.

No Guarantees. Ronald Reagan’s famous dictum “trust but verify,” was misleading; if you have to verify, you’re not trusting. There simply is no trust without risk. To trust, by definition, is to put oneself in harms way of the actions of another in the belief that the other will not choose harm.

Hockey great Wayne Gretzky put it well: the only way to never miss a shot is to never take one. The only way to never trust the wrong person is to never trust anyone.

It Takes Two to Trust. Asking “whom can I trust,” makes it sound like trust is all about the other person. But it also has to do with us. For one thing, it depends on what’s at stake. I might trust Amazon to guess my preferences in books ­– but not to line me up with a potential date. You might trust someone to recommend a stock but not share with them family health and insurance information. You can’t answer “whom can I trust,” without answering, “to do what?”

Finally there’s your own risk profile. You probably have a friend who takes more social risks than you do and another friend who’s less risky than you are when it comes to investments. Whom can you trust? Whomever you’re talking about, your friends may answer differently. The only answer that counts is your own.

Trustworthiness: The Four Virtues

Of course, there is such a thing as trustworthiness of the other party and it has a lot to do with whether you can trust them. Trustworthiness of organizations is one thing; trustworthiness in people is another. In people, we might thing of trustworthiness as a collection of four virtues.

Credibility. Do you think the person speaks truthfully? More importantly than not lying, do they speak the whole truth – are they transparent? Are their credentials readily present and do you understand them? Can they answer your questions in ways you can understand? While all this may sound objective, there’s an important subject component of credibility as well: do you believe the person?  If your gut instinct is to doubt, and you are not a completely risk-averse person, then listen to your gut.

Reliability. Can you depend on this person to do what they say they’ll do? Do they have a track record with you? If not with you, can they demonstrate a track record with others, as in references?

Intimacy. Does the person listen to you in a way that makes you feel heard? Do you feel they’re being open with you? Do you feel the interaction is two-way? It’s OK to answer this one with emotional responses – part of trust is emotional and this is that part.

Other-Orientation. Is the person focused on themself or on you? Whose interests do they seem to have at heart? Is the conversation largely one-sided? Do you feel your questions are being heard and answered, or being deftly handled and disposed of? This question is partly about process, e.g. sales methods, but also partly emotional; again, that’s a valid part of deciding whom to trust.

You may object that a talented con-artist could fake each one of these traits and you’d be right. There are cases of fake credentials (credibility), faux friendliness (intimacy), and false references (reliability). This shouldn’t be surprising – it just proves these are the right elements of trust to be focusing on.

Reciprocity: The Magic Ingredient of Trust

Despite all the preceding comments, there is one unique factor affecting trustworthiness: paradoxically, it’s your own willingness to trust. It may seem odd, but another person’s trustworthiness can be affected by your own propensity to trust.

It’s been said, “The fastest way to make a man trustworthy is to trust him.” Conversely, if you approach someone with great suspicion, micro-manage them and expect the worst of them – your expectations will probably be met. As another saying puts it, “Whether you expect good or ill of someone – you won’t be disappointed.”

Despite what you read in the headlines, most human beings in most situations are wired to respond positively to people who place trust in them. You may not be able to change physical reality through your thoughts: but you can have an impact on others’ behavior by the way you choose to approach them.

Whom can you trust? In several ways, the answer involves you as well as the other person.

Disclosure Is Not Transparency

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Most people see transparency as a good thing, and disclosure an obvious way to get there.  Often, we don’t distinguish between them.

But they’re not the same thing. And confusing them just lets bad behavior sneak back in through the back door.

What’s the difference between disclosure and transparency?

Transparency and Trust

Besides “able to transmit light,” the dictionary defines transparent as:

  • easily seen through, recognized, or detected: transparent excuses.
  • manifest; obvious: a story with a transparent plot.

In the simplest business terms, “transparent” means you can tell what’s going on.

If the link between transparency and trust isn’t self-evident, here are a few citations to help clarify it:

If I can see what’s going on, I know that I am not being misled. Motives become clear. Credibility is affirmed. Transparency is indeed a trust virtue.

Disclosure

Disclosure is a time-honored tool of regulators to achieve transparency. Food and pharmaceutical manufacturers are required to disclose ingredients, medical authors are required to reveal payment sources, the SEC frequently proposes disclosure as a tool, and so on.

Certainly you can’t find out what’s going on if information is actually hidden.  So disclosure is a necessary condition for transparency. But it’s hardly a sufficient one.

I don’t have much to say about the cost/benefit trade-off of greater disclosure in pursuit of transparency. Sometimes the benefit is obvious, other times not so much, sometimes not at all.

What’s more interesting to me is how the blind pursuit of disclosure can actually reduce transparency – even reduce people’s awareness of the distinction.

Over-Disclosure

Is it possible to have too much disclosure? So much disclosure that information gets lost in the blizzard of data?

On the face of it, disclosure is the handmaiden of transparency. But if disclosure becomes the end rather than the means, if regulators and consumer advocates become fixated on indicators rather than on what they indicate, then disclosure can actually become self-defeating.

Lawyers know that massive responses to discovery requests can overwhelm opposing counsel. Cheating spouses know that the best lies are those that disclose the most truth. Consumer lenders know to fast-talk the disclaimers at the end of radio ads, much like the small print on the ads and loan statements.

If disclosure isn’t accompanied by an ethos of transparency, it can be positively harmful. It is like crossing your fingers behind your back, taking movie reviews out of context, or word parsing a la “it depends on what the meaning of the word ‘is’ is.”

A trustworthy person, team or company will not settle for disclosure, but seek to offer transparency. A competent regulator will always remember that disclosure is just evidence. And a wise buyer will always look for the transparency that may, or may not, underlie the disclosure.

Trust relies on both data and intent.

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Many Trusted Advisor programs now offer CPE credits.  Please call Tracey DelCamp for more information at 856-981-5268–or drop us a note @ [email protected].

Killer Apps 2.0: Siri is Just the Teaser

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Last summer I wrote about how speech-to-text software may be a killer app. At the time, I mentioned the rumor about what was to become Siri, the “talk to me” assistant in Apple’s then-upcoming iOS5. I also talked about Dragon Naturally Speaking, a PC-based system.

That was then: this is now. Apple itself is actually understating Siri’s capabilities – and Nuance, maker of Dragon Dictation, has made another huge advance for the you-and-me users out there. In this post, I’ll just deal with Siri: look for the Dragon post shortly.

[Note: I could spin this as being about trust, but that’d be a stretch. Sometimes I just get excited about other stuff – like cool work tools. Hope you like it too.]

Siri: Much More than Meets the Ear

You’ve seen the ads for Siri, seen friends demo it, maybe tried it yourself. And it’s impressive. You can tell Siri “Google the planet Pluto,” or “Remind me to pick up toothpaste next time I’m at the drugstore.” (I use this feature quite a bit).

But the truth is much more powerful. Those are parlor tricks, anthropomorphic gimmicks to introduce a new technology to the masses. You, Trust Matters readers, can handle The Truth. So let me tell it to you.

Forget the virtual assistant. Note instead that speech-recognition capability is now built in to the operating system. That means it’s available to you in almost every window, in almost every app on the iPhone.

What Siri Really Means ­– Now

Let me be clear about what that means. Once inside the data-entry part of an app, you can now speak, and your voice will be converted to text.

For example:

Email: speak your emails – they will convert to text

Messaging: speak your text messages – they will convert to text

Evernote: hit your Evernote app button and just start talking

Twitter: speak your tweets, stop finger-pecking them

Facebook: don’t tap your message, just say it

Google+: don’t type it, just speak it

Search: speak your Google or Bing searches – they will convert to text

Maps: speak your destinations – you get the idea.

You can now speak, instead of type, into almost any text-enterable field in any app. That means Notes, Salesforce, Quora, YouTube, NYTimes, Amazon – you name it.

  • Hate having to type on that little screen? That excuse is no longer valid.
  • Wish you had a dictation service? You do now.
  • Still taking notes by hand until you get home to enter them? Puh-leeze.

The 30,000 Foot View

This technology is not perfect; but it’s even better than the old Dragon app for the iPhone that I wrote about just six months ago, and it’s bound to get better.

As with all technologies, it will be more useful for some things than for others. I find it especially useful in dictating text messages, taking long notes of phone calls or meetings, and dictating thoughts about future articles or blog-posts.

Remember the core value proposition of voice-to-text: We can talk 5x as fast as we can write; and we can read 3x faster than we can listen. That’s a 15x systemic advantage for communications efficiency. When was the last time we saw a technology that improved communications efficiency by 1500%?

Siri is to voice-to-text as a camel’s nose in the tent is to the camel. This will be one very, very big ride.

Next post: voice to text on your Mac or PC desktop as a one-stroke utility – it’s here now.

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Many Trusted Advisor programs now offer CPE credits.  Please call Tracey DelCamp for more information at 856-981-5268–or drop us a note @ [email protected].

There Are Two Kinds of People In This World…

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In a piece called Late Bloomers, Malcolm Gladwell describes writer Ben Fountain, who wandered for decades doing research before he became an overnight sensation.

By contrast, some writers (Melville, T. S. Eliot) instinctively knew their minds and needed no research beyond inspiration. The same is true of painters: think of Cezanne (the wanderer) vs. Picasso (the intuitive).

Reading Gladwell, I suddenly recalled Sergio Leone’s spaghetti western Clint Eastwood vehicle, The Good, the Bad, and the Ugly. In the film, Tuco (the Ugly –  Eli Wallach) and the the Man with No Name (the Good – Eastwood) exchange a meme – “There are two kinds of people in this world, my friend –” followed by parings like, “Those who have guns and those who do not.”

When Sergio Leone and Malcolm Gladwell agree, I submit, you can be confident you’re on to something. Which is, itself, an example of the thing – we humans have a passion for dichotomies.

Whether or not there really are two kinds of anything in this world – we insist on dividing them up that way. It’s a primary sense-making rule for us.

Famous Pairs

  • Men and women, black and white; up and down, day and night.
  • Debits and credits; assets and debts; good and evil; owns and lets.
  • Angels and devils; sound and sight; pens and swords; heavy and light.
  • Classic and modern, north and south, east and west, your ears not your mouth.
  • Innies and outies, type one and type two; comedy and tragedy, feeling up and feeling blue.
  • Eastern and Western, right handed and left, smooth and anarchic, clumsy and deft.
  • Cloudy and sunny, shiny and rusted, aggressive and passive, trusted and  distrusted.

And on it goes.

Reality isn’t binary; our view of it is.

The Primacy of Two

It’s not that we don’t love threes: witness 3-legged stools, the three musketeers, three strikes you’re out, thesis-antithesis-synthesis, the Holy Trinity, and the Three Stooges.

But after that things fall down. Consultants are in love with 2×2 matrices (see my “Rule of the Axes” in – wait for it – You Too Can Be a Strategy Consultant – Three Secret Tools).  But notice, the power of matrices rests in the combination of two binary lists.

When you get to five, forget it; that’s when you start needing mnemonic devices to remember (the SMART model, Every Good Boy Deserves Fun, SNAFU). Heck you might as well be doing Top Ten lists.

No, the upper limit of natural human organizational ability is three; and if we had our druthers, we’d really prefer to be dealing with twos.

The Good and the Bad

It helps greatly to dichotomize the world so efficiently. Think how easy our lives are made when we can label things hot or cold, stop or go, left or right.

Of course, some things in life don’t benefit from such a lack of nuance. Interpersonal relations, politics and trust come to mind. The trick is remembering when to dichotomize and when not to.

But wait – that’s another dichotomy, please forgive me. After all, to err is human; to forgive, divine.  (Damn, did it again).

Roses are red, violets are blue;

Some jokes rhyme–some don’t.

But at least that’s another two!

A Better New Year’s Resolution

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I wrote a good blog post at this time five years ago, and haven’t improved on it yet. Here it is again.

Happy New Year.

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My unscientific sampling says many people make New Years resolutions, but 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 being 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.