Paradoxes, Selling and Trust

One great thing about paradoxes is that they keep on teaching.

Looking at a paradox, you’re first struck about the confusing, “wrong” nature of it. And you must rediscover how to get out of it.
Think of an optical illusion—the old lady young lady vase, an Escher print. Think of the Cretan Epimenedes’ paradox, “all Cretans lie.”

Or, think of Trust-based Selling®.

How can you trust someone if they’re trying to sell you? If I get you to trust me in order to sell you, aren’t I being untrustworthy? How can you trust someone who says ‘trust me?’ If you’re getting paid a commission or a quota for selling me, aren’t your interests in conflict with mine? How can trust exist between two parties, one of whose job it is to convince the other to give him his money?

What I do for a living is explain that and similar paradoxes to others—and, to teach it, I must rediscover it for myself every time. Paradoxes are slippery.

The “answer” to the trust-based selling paradox is to accept it as paradoxical—like the apparent paradox of quantum physics. Is it a wave, or a particle?

Yes.

The best way to sell is to stop selling. The best way to influence others is to stop trying to influence them. The best way to get what you want is to help others get what they want.

Put that way, it’s not hard to “get.” The Beatles got it (“the love you take is equal to the love you make”). Henry Ford got it (“the secret of success lies in the ability to get the other person’s point of view and see things from his angle”). Dale Carnegie got it (“You can close more business in two months by becoming interested in other people than you can in two years by trying to get people interested in you.”)

But the majority of businesspeople, I think, don’t get it. Even many in salespeople don’t get it. Here, in part, is why.

Consider some of the accepted-wisdom mantras of today’s business gurus, magazines, exec ed programs, and business schools.

• Define people development in terms of behaviors, not motives or feelings.

• Define measurable skills gaps, develop programs to augment skills, and measure their behavioral impact.

• Claim that if you can’t measure it, you can’t manage it.

• Align rewards and goals—particularly with extrinsic, financial rewards.

• Pay for performance—defined as financial contribution to the firm.

• Examine all processes to maximize efficiency, effectiveness and profit.

• Examine customer acquisition, loyalty, retention and customer profitability, through highly detailed metrics. The aim is to improve your profitability. Then refer to it as “customer-centricity.”

• Make sure all behaviors, expenditures, human “capital” development and processes are continually monitored to maximize their return on shareholder investment, and their contribution to sustainable competitive advantage.

Consider the collective impact of that set of beliefs when they come up against a concept like “do the right thing for the customer.”

“Do the right thing” has a snowball’s chance in hell.

Here’s what usually comes back:

“OK, but we need to make sure it’s working.”

“The right thing can’t be code for charity.”

“If the right thing is profitable, then let’s incent it.”

“We need to be careful about how we define “right.”

“We need 2nd and 3rd order metrics for ‘the right thing’.”

“You can’t let them take advantage of you.”

“That’s OK when times are good…”

“Great, but you still need to up the closing rate for this quarter.”

So: should you do the right thing? Or should you close the sale?

Yes.

The paradox is—if you truly do the right thing, you will close more sales, be more profitable, get higher loyalty. But only if you do the right thing for the customer.

If you do the right thing in order to close the sale, etc.—it’ll blow up on you.

A Wall Street broker once told me, “Trusted Advisor? Sounds good. Anything that’ll give me greater share of wallet, I’m all for it.” You can pervert anything with bad intentions.

If a boss yells "quarterly quota" in your ear, remember: the best short-term results come from long-term customer focus—not from forced closing.

If you are a boss yelling quarterly quota in your salepeople’s ears, try retuning the message—“I want you all to do the right thing by your customer. If your numbers are bad, I’ll assume you’re doing the wrong thing by your customer; and that hurts us too.”

The best sales come from trust. It helps to rediscover that paradox every time.

Working and Feeling Good

The Gallup people have done some interesting research on the idea of employee engagement. In fact, I think they initiated the idea in 1999.

They have defined three groupings of employees—those who are engaged, those who are not-engaged, and those who are actively disengaged—and analyzed correlated statistics.

Their research and that of others has shown correlation with intrinsic motivation, and with profitable performance.

A good example is their article Feeling Good Matters in the Workplace, from 2006.

It’s the kind of research that I sometimes find eye-glazing at first blush. But it has some interesting data.

For one thing, the biggest single factor affecting engagement appears to the degree to which the direct supervisor focuses on their strengths or positive characteristics. In other words, appreciation expressed by one’s boss.

That provides an interesting corollary with John Gottman’s work on marriage, which also suggests, if I recall, that the ratio of positive to negative comments to each other is correlated with the success of a relationship.

Gee.  Maybe it is kind of common sense.  But uncommon enough that it still caught my eye.

The other strong correlation in the Gallup article is that between happiness and happiness derived from work. 45% of engaged workers say they get “a great deal” of their overall happiness from work, vs. only 19% and 8% of the other two categories.  Though in a way that’s surprising—if less than half the happy people get most of their happiness from work, then work must not be very happiness-inducing.

Some would say, again, duh. But I found it interesting.

Gallup is careful not to attribute causality. In these matters, it’s easy to fall victim to confusing cause and effect, when causality is inherently unprovable, and often messy.

So, let’s review. Happy people are engaged people.  Or engaged people are happy people.  I suspect it’s hardly one-way causal, but more of a virtuous circle; happy people attract more happiness, disengaged people suck the air out of the room and alienate others, etc.

What I find really interesting is that this sounds very commonsensical.  Yet, it contradicts some received wisdom in business.  Particularly the idea that people are primarily motivated by rewards.

The matching up of extrinsic rewards is virtually an article of faith among compensation consultants, sales organizations, change management theorists, and anyone doing anything with the word “implementation” in it. “You get what you measure,” they say.

No you don’t.

You get what you value people for. You get what you praise in them. You get out of people what you see in them intrinsically—not what you extract from them in work effort for incentive comp.

Want great organizations?  Get happy people. Want happy people? Don’t “align their rewards with their goals and behaviors”—talk to them, challenge them, praise them. Above all, value them.  And not as human capital—as human. 

Argentinian Trust

I’ve just returned from a week in Buenos Aires—my first time back in 20 years. My trips to South America generally haven’t gotten that far South.

Like most Americans, I’m first struck by the blend of European appearance and Latin feeling. I had the added delight of spending two evenings with four wonderful friends from the past, Argentine expats of a sort who have found themselves back in the homeland. Among other things, we talked about trust.

To American eyes, Argentina can appear untrustworthy. It has had several military governments; in 2001, it had four presidents in a matter of weeks, followed by a 60% devaluation.

While I was there, the vice-governor of one of the provincial governments accused the governor of corruption, and said he was taking over the government as a caretaker. There was a bit of shooting, and it took a few days and police to roust the governor from his offices. Also last week, the president took away air traffic control from the military and gave it over to civilian control. Not quite ho-hum stuff for the Argentines—but considerably lower-key news than if the liuetenant general of, say, Massachusetts, took it upon him- or herself to declare the governor ousted and bring on the state police.

Strong stuff for those of us accustomed to a certain level of stability and rectitude in our civic institutions. A tear in the social fabric of trust, etc.

And yet—trust is absolutely alive and well in Argentina. Seeing why says a lot about the nature of trust.

It is one thing—and a glorious thing indeed—to be able to trust a system based on law. Courts, precedent, police, prosecutors, defenders, regulations, legislatures, and respect for the law. There is a certain kind of trust that comes from that.

But all that does nothing to create another kind of trust. The kind of trust that is expressed in a handshake, that comes from a personal sense of honor, which is that much stronger for being internalized in a way that legal compliance can never reach.

My friend Oscar told of a man who offered to guarantee a price for some real estate for a month to an American woman. The woman’s daughter insisted that her mother get a receipt as a guarantee; the man, quite rightly, said there was no guarantee in this world a receipt could provide, but that his word of honor was as close as one could get.

A Singaporean friend of mine worked for ten years to help make a Chinese multi-millionaire into a mega-millionaire, and did well himself in the doing. All ten years were based not on a contract, but on a handshake.

I’m no expert in Argentine (or Singaporean) politics or social affairs, and there are thieves and honorable people in every country. My point is that, in the absence of institutional trust, the power of personal trust becomes very apparent. It is so in Argentina in dozens of little daily ways.

Here are the interesting questions; I don’t claim any great basis for my own answers to them.

• Does having trusting and trustworthy people guarantee high-trust social institutions? That is, is individual trust sufficient to create institutional trust? I think not; Argentina may prove the point.

• Can a country gain high-trust social institutions without trusting or trustworthy individuals? That is, is individual trust a necessary condition for institutional trust? I think it is necessary—though sometimes it seems as if the US is trying to disprove that theory by treating personal situations as social or legal cases.

• Can’t we aspire to both? I don’t see any reason why not.

But if I had to pick one excess to live in, my heart would incline toward a world of high personal trust and sloppy institutions, rather than the reverse. Own some property in France or Miami, keep some cash in Geneva; but live in Buenos Aires.

It’s a personal thing.

Un abrazo a Oscar y Beth y Ambrosio y Maureen.

Why I Write About Sales

Some of you read this blog because it’s about selling. Most of you read it because it’s about trust—perhaps despite it also being about selling. Let me address the latter group on why the former is so important.

Sales is the new marketing.

Nearly 50 years ago, Ted Levitt (Marketing Mypia, Harvard Business Review) crystallized the shift from producer-oriented to customer-oriented. It put marketing front and center, and broadened strategy industry definitions.

We’re now on the cusp of a shift at least as big.

Companies started as safe havens for doing business. You couldn’t trust anyone out there, so you vertically and horizontally integrated. If you made cars, you made most of the things that went into them. That way you controlled budgets, salaries, cost accounting, promotions, quality, and processes. The corporate form made possible massive scale economies over the last hundred years.

What’s changing now—look to The World is Flat, or Wikinomics , or How We Compete —is that companies no longer must own the means of production in order to produce. Increasingly goods and services can be outsourced. This trend dates back to 1910, but the internet, high speed telecomm and other IT services have vastly accelerated it.

Further, those who can integrate services outsourced by others have access to greater scale economies in those services than did the original companies.

Fast forward to a world where transactions that used to happen within companies now happen between them. Outsource a few functions; all transactions that were internal become external. Spin off a supply business; more internal transactions become external. The new model for business is to focus on your world-class strengths, and buy everything else from those who are world-class in their own areas.

That increases sales events by orders of magnitude. Add to that increases in stock ownership volatility, job-hopping, strategic alliances, decentralization and empowerment and you have vastly more people involved in the “sales” function more broadly defined.

Let’s define sales: it is the activity of personally influencing other people or businesses in a direction that is mutually beneficial.

In the old world, this “personal influencing” was done disproportionately on a vertical employment basis—bosses and subordinates. We worried about things like span of control, giving and receiving feedback, and the secret sauce that separated “leaders” from, I guess, followers. Call that the vertical model.

Today, the world’s looking more horizontal. Transactions, and relationships, are tilting to those between equals, with no reporting relationships, if not working for other organizations then working in matrix organizations within a company.

The world of business is less about monolithic vertical companies competing against each other. It’s becoming far more a model of inter-company commerce—transactions between businesses, and people.

That looks like “selling.”

Selling is the point where one organization meets another—and where economic value is acknowledged. It’s getting more and more common.

To make a vertical world work, you need power and control.

To make a horizontal world work, you need trust.

Trusted relationships between those who transact business have always been the best form of sales. Now sales is becoming the paradigm model for inter-company relationships.

That’s why selling is so important for all of us.

 

Trust Tip 35: Reciprocity, Sales and Suicide Hot Lines

In his classic best-seller Influence: The Psychology of Persuasion,  Robert Cialdini lists the main forces or dynamics which explain how we come to be persuaded to believe what another tells us or asks us to do.

Chief among them is the idea of reciprocity: if you do for me, I will do for you.

For those in sales or advice-giving roles, It’s tempting to read this as a suggestion to exchange favors.  But it would be wrong.

Michael Lindemann tells of his experience on a suicide prevention hotline in Manhattan.  Earnest volunteers, eager to help those in arguably the greatest need, must be trained to contradict their instincts.  Those instincts are to persuade and convince the person of the value of continued life.

Turns out, those instincts are what drive jumpers to jump.  The average call lasts twenty minutes—that is, if you spend the first ten minutes listening, which is what volunteers are trained to do.  Listen, then offer advice.  Only then. Reciprocity.  If you listen to me, I will listen to you.

Thomas Friedman (New York Times columnist, author The World is Flat),  said in his commencement address at Williams College in 2005,  "people often ask me how I, an American Jew, have been able to operate in the Arab/Muslim world for 20 years, and my answer to them is always the same. The secret is to be a good listener… Never underestimate how much people just want to feel that they have been heard; once you have given them that chance, they will then hear you."  Reciprocity.  If you listen to me, I will listen to you.

John Gottman, author of The Seven Principles for Making Marriage Work, says “understanding must precede advice. You have to let your partner know that you fully understand and empathize with the dilemma before you suggest a solution.”  Reciprocity. Let me know that you have heard me, and I will then listen to you advice.

Reading Cialdini, it’s hard to doubt that the principle of reciprocity is at the heart of trust, influence, and successful selling.

What’s easy to miss is the most common and powerful form of reciprocity—listening.

Want to persuade/sell/influence someone? Then stop trying to persuade/sell/influence them.  Just listen.

Then let nature take its course.

Built to Last—Not

In 1994, Jerry Porras and Jim Collins wrote “Built to Last--” which it certainly has, ranking #935 on Amazon, lo these thirteen years later. (Collins’ later “Good to Great” ranks even higher). The aim was to diagnose “landmark,” “outstanding,” and “exceptional” companies (adjectives from the bookflaps).

Almost all great books get something very right. In this case, it was the characteristic of “visionary” that they identified. The “vision thing” is as important as ever.

But often, even great books don’t age well. Time reveals a flaw in the foundation, maybe not critical, but a source of confusion—something just not quite right, something that begins over time to annoy.

In this case—it’s the title itself.

The book picks twelve matching pairs of companies—e.g. Westinghouse vs GE, Merck vs. Pfizer, Ford vs. GM—and explores why we think one is better than another. “Better” is also defined in stock market performance terms, so we’ve got long-term value creation as a criterion, along with brand power, and a few others.

Some have critiqued the choices—ditto for "In Search of Excellence"—-for not being valid over time (both Ford and GM today are candidates for the dustbin of history, for example). But the choices stand up pretty well—if your game is to be lasting.

But—what precisely makes “lasting” the criterion for describing a company as landmark, outstanding, or exceptional?

What used to be valuable about continuity over time was:

  • stock market performance for investors
  • employment and economic stability for workers
  • community involvement for host governmental units
  • a dependable brand for consumers.

Let’s see how well these criteria have stood the test of thirteen years.

• The vast majority of owners these days are not shareholders looking to hitch their wagon long term to a particular organization. They are pension and other funds looking for performance, managed by hired guns ready to swap equities at the drop of a quarterly hat, or leave them entirely for the latest hot category, e.g. private equities—hardly bastions of vision.

More importantly—financial instruments have evolved enough that shareholders don’t need to buy a corporate package—they can create the virtually the same performance through a blended mix of instruments reflecting currency, geography, industry and risk profiles. This is not at all a bad thing: it greatly enhances the ability of investors to pick precisely what they want. Which is not, frankly, a lasting organization.

• Employees of a lasting organization are not likely to be well-served unless that organization is participating in most of the global trends affecting its business. Those include outsourcing, globalization and technological investments. Job security at the cost of growing irrelevance is the short-term opiate of the unions.

• Community involvement doesn’t necessarily require a sustained physical presence—the core values an organization carries with it ought to be recognizable quickly with a given locality or other community.

• Branding is a funny thing—it is usually the word we use to describe the retail B-to-C feeling we get when we know what a name stands for. But test yourself: who owns Jif Peanut Butter? Skippy? If a brand clearly conveys something over time, we don’t much care about the visionary nature of the company producing it. The consumers of YouTube don’t seem to be terribly concerned about whether it will last into next month—but it was visionary, and it did what consumers wanted, at least yesterday.

The truth is: focusing on “lasting” as an attribute of a company these days is likely to confuse rather than enlighten. The continued existence of a particular corporate organization is a pretty un-inspiring goal, when you think of it.

Ironically, the continued existence of a particularly corporate instantiation probably requires high turnover in shareholders, employees, geographies and even consumers. So who exactly cares if it’s lasting?

The point is not to last. The point is to do great things for all your constituents. Where continued existence helps, great. Otherwise, standing water stagnates. The visionary thing works; but these days, the vision had better be to change, morph, grow, evolve, turnover, shift.

Built to last is not a desirable adjective anymore, it’s likely a critique.

Built to Last—Not

In 1994, Jerry Porras and Jim Collins wrote “Built to Last--” which it certainly has, ranking #935 on Amazon, lo these thirteen years later. (Collins’ later “Good to Great” ranks even higher). The aim was to diagnose “landmark,” “outstanding,” and “exceptional” companies (adjectives from the bookflaps).

Almost all great books get something very right. In this case, it was the characteristic of “visionary” that they identified. The “vision thing” is as important as ever.

But often, even great books don’t age well. Time reveals a flaw in the foundation, maybe not critical, but a source of confusion—something just not quite right, something that begins over time to annoy.

In this case—it’s the title itself.

The book picks twelve matching pairs of companies—e.g. Westinghouse vs GE, Merck vs. Pfizer, Ford vs. GM—and explores why we think one is better than another. “Better” is also defined in stock market performance terms, so we’ve got long-term value creation as a criterion, along with brand power, and a few others.

Some have critiqued the choices—ditto for "In Search of Excellence"—-for not being valid over time (both Ford and GM today are candidates for the dustbin of history, for example). But the choices stand up pretty well—if your game is to be lasting.

But—what precisely makes “lasting” the criterion for describing a company as landmark, outstanding, or exceptional?

What used to be valuable about continuity over time was:

  • stock market performance for investors
  • employment and economic stability for workers
  • community involvement for host governmental units
  • a dependable brand for consumers.

Let’s see how well these criteria have stood the test of thirteen years.

• The vast majority of owners these days are not shareholders looking to hitch their wagon long term to a particular organization. They are pension and other funds looking for performance, managed by hired guns ready to swap equities at the drop of a quarterly hat, or leave them entirely for the latest hot category, e.g. private equities—hardly bastions of vision.

More importantly—financial instruments have evolved enough that shareholders don’t need to buy a corporate package—they can create the virtually the same performance through a blended mix of instruments reflecting currency, geography, industry and risk profiles. This is not at all a bad thing: it greatly enhances the ability of investors to pick precisely what they want. Which is not, frankly, a lasting organization.

• Employees of a lasting organization are not likely to be well-served unless that organization is participating in most of the global trends affecting its business. Those include outsourcing, globalization and technological investments. Job security at the cost of growing irrelevance is the short-term opiate of the unions.

• Community involvement doesn’t necessarily require a sustained physical presence—the core values an organization carries with it ought to be recognizable quickly with a given locality or other community.

• Branding is a funny thing—it is usually the word we use to describe the retail B-to-C feeling we get when we know what a name stands for. But test yourself: who owns Jif Peanut Butter? Skippy? If a brand clearly conveys something over time, we don’t much care about the visionary nature of the company producing it. The consumers of YouTube don’t seem to be terribly concerned about whether it will last into next month—but it was visionary, and it did what consumers wanted, at least yesterday.

The truth is: focusing on “lasting” as an attribute of a company these days is likely to confuse rather than enlighten. The continued existence of a particular corporate organization is a pretty un-inspiring goal, when you think of it.

Ironically, the continued existence of a particularly corporate instantiation probably requires high turnover in shareholders, employees, geographies and even consumers. So who exactly cares if it’s lasting?

The point is not to last. The point is to do great things for all your constituents. Where continued existence helps, great. Otherwise, standing water stagnates. The visionary thing works; but these days, the vision had better be to change, morph, grow, evolve, turnover, shift.

Built to last is not a desirable adjective anymore, it’s likely a critique.

You Empower What You Fear

Non-compete agreements are the topic du jour.

Frank Byrt, in Financial Week, writes that “Companies are blocking more execs from jumping to competitors.

Jay Shepherd continues the discussion with The Rising Noncompete Tide in his blog “Gruntled Employees.” He’s a Boston lawyer with a big specialty in non-competes within employment law. He’s done some original research that indicates a pretty major increase in non-compete litigation in the last several years.

More blogs jumped on the topic: the irrepressible Maureen Rogers at PinkSlip has a compelling first-hand take on the subject.

Here’s my take—I can’t back it up with research, so write in and tell me if you can support or deny it.

Non-compete agreements are the manifestation of sick management thinking. They are symptomatic of failed people management. They give the lie to many companies’ claims that they care about their employees. But worst of all—like throwing water on a grease fire—they produce more of the very thing they were designed to prevent.

They are a poster child for the concept that you empower what you fear.

If you fear employees will rip you off, and set up spying processes—you will get ripped off.

If you fear employees will steal from you, and institute lie detector tests—they will steal (see The Perversity of Measuring Trust)

If you fear your employees will talk to search firms, and tell the receptionist to screen calls—they will talk.

If you fear your employees will take your secrets to a competitor, and force them to sign non-competes—they will try to take secrets to a competitor, and if they can’t do that, they’ll bring on a whole lot of other nasty side effects.

You empower what you fear.

Fear may manifest itself as simple paranoia about losing money. Understandable, but it still drives bad behavior.

It may show up in the form of resentment, or vengeance, or of seeking recompense against someone’s perceived act of “disloyalty.”

I worked for two small firms: one did not have non-competes, and in 25 years never had an employee lawsuit of any kind. The other did use them, and on average was involved in two suits per year with its employees.

The first firm had its own problems, but it did one thing right—it treated people issues as management issues. The second firm treated them as legal issues.

People live up—or down—to expectations. You see it in kids. You see it when you approach a dog—if you fear the dog, it will growl and bark; if you approach in a friendly manner, you get the tail-wag response. In this regard, ich bin ein canine, and so are most other people.

What’s the alternative? Simple.

  • If you really care about the employee who left, then be happy for him/her. If you’re not happy for them, then cut out the crap in your website where it says you believe in people development, because you don’t—you believe in the development of "human capital," an oxymoron. People know the difference. Capital doesn’t.
  • If you’re happy for them but wish they hadn’t left, then find out why they left and fix it before the next one leaves. If you don’t want to fix it, then go buy a lottery ticket. The odds of effectiveness are about the same.
  • Make alumni of the people who leave. Your college didn’t go all resentful on you when you graduated; they didn’t make you sign a non-compete about getting a master’s from another university. And when your college phones you to contribute to the fund years later, you still do! (And if you don’t, it’s because your college needs to read this blog). Think of people who leave as graduating advocates of your company—not as disloyal double agents.
  • Let everyone know that you run the company on the basis of rules 1 through 3 above. And tear up the non-compete forms.

There are of course some valid exceptions, mainly in the hard sciences and tech businesses. But the rest? Marketing execs? Consultants? Bankers? Please.

You empower what you fear.

A basic lesson of trust is that if you trust people, they respond by being worthy of your trust.

Substitute trust for fear. It works.

Trust Amongst the Investment Bankers

And you thought it didn’t exist.

Well, pretty much it doesn’t. But it’s interesting to explore why.

A delightful blog, The Epicurean Dealmaker, dusts off an old paper by Harvard Business School academics Bob Eccles and Dwight Crane, which describes the path of trust failure in the investment banking world.

E.D. summarizes it nicely as follows:

1) Markets for capital and strategy get more diverse and complex, leading to more threats and opportunities

2) Formerly monogamous Company XYZ begins to talk with more than one investment bank to identify, analyze, and take advantage of these market threats and opportunities

3) Investment banks which have never had a shot at breaking into Company XYZ before gladly start lobbing in ideas and golf trips to get XYZ’s business

4) XYZ’s CFO and finance staff get smarter about the markets and cleverer at playing the i-banks off against each other for better deal pricing, better ideas, and better golf trips

5) I-banks begin to see they are getting played and begin to play back, lobbing completely unoriginal Ideas of the Week in on a regular basis on the chance one of them will hit and pestering XYZ’s CFO to let them visit the CEO with A Really Big M&A Idea

6) XYZ’s CFO realizes the i-banks are no longer really paying attention to him and gets pissed, doing everything he can to prevent the i-banks from getting into the CEO’s office and screwing them even harder in pricing negotiations

7) Both XYZ and the i-bankers start bitching to The Wall Street Journal and anyone else who will listen that the other is no longer interested in building relationships, but only wants to do deals

As E.D. suggests, skip steps 1 and 2 and you have the story of private equity.

For the prosaic rest of us, this is the script for your friends on Match.com who bemoan the dearth of relationships (and it’s not just women).

I have also seen this script play out in the paper merchant industry; the brokerage industry; the real estate industry; the commercial banking industry; the consulting industry; the auto supply industry; and a good deal more.

As Step 6 in the progression points out, the end-game is unhappy bitching about how short-term, transactional, and generally untrustworthy the other one is. A crummy ending.

Question 1: at which of the 6 Steps could the provider have done something differently, and turned the cycle toward trust?

Question 2: at which of the 6 Steps could the client have done something differently, and turned the cycle toward trust?

Hint 1: Questions 1 and 2 have the same answer.

Hint 2: The answer rhymes with “all of them.”

Trust and Social Networking

Social networking on the web is hot. Many sites talk about trust. They tell us something about trust in cyberspace—and about trust in general.

Think four archetypes: Zagat’s, Amazon, eBay, and LinkedIn.

1. Zagat’s started off-line. It presents reviews by the "regular folks"—we trust it because the reviewers are presumably unbiased, in a way that commercial directories presumably aren’t. Zagat’s gains trust through clean motives of “people like me.”

2. Amazon has a recommender system—we trust it because we believe their massive databases dependably predict our likes.

3. eBay developed seller ratings. You can trust the person you buy from online because of their reputation among other previous buyers.

3. LinkedIn networks you to others by degrees of separation (a la the Kevin Bacon game) to others. You know Bill, I know you, ergo you can introduce me to Bill’s cousin’s friend. This works on the principle of personal relationships.

The social networks recombine these four types of DNA.

TrustedOpinion.com combines movies, music and restaurant reviews with an “x-degrees of separation” taxonomy. LinkedIn meets Zagat’s.

Crowdstorm.com measures the “buzz” around products, get “points,” and also allows you to rate “trusted” reviewers. LinkedIn meets eBay.

Digg and del.icio.us review content a la eBay meets Amazon—combining massive databases and reputations.

Each type has drawbacks.

1. The “people like me” approach gets hard to sustain at scale; when you get thousands of “people like me,” they aren’t—they’re the crowd.

2. The crowd system—Amazon’s approach of masses of people dependably predicting our likes—depends on large numbers. Can the data be compromised? Sure. See the “let’s make my book #1” schemes, a la American Idol call storming.

3. The eBay-type ratings system is more obviously subject to hacking. See Wired for a good article on hacking reputation sites.

4. The Linked-In model has the great virtue of being based on super-high bandwidth connection—real people we actually know. The trouble is, personal trust has a high decay rate. It’s one thing to ask you to introduce me to your friend; it’s quite another to do so in order to meet his friend.

It’s in this arena that the internet falls down, even laughably, when it tries to promote trust. Consider Opinity and Rapleaf.

From Opinity’s site:

Create a powerful and portable Opinity profile and be trusted! Using your Opinity profile, you can bring your already established reputation to any new site you want. Build your reputation quickly and gain trust.

And you gotta love Rapleaf:

Rapleaf is a portable ratings system for commerce. You can look people up before you buy or sell, and rate them afterwards.
Rate people and they will be encouraged to rate you back. Before long, your Rapleaf profile will reveal you for the honest person that you are. After all, it is more profitable to be ethical.

Do you trust a website to tell you how much to trust someone who has had his friends email in to say how trustworthy he is so that he can make more money by appearing to be trusted?

Lessons from all this:

1. The best trust isn’t very transferable
2. Deep digital trust is a tradeoff for breadth; trusting you to sell me a book doesn’t mean I’ll introduce you to my daughter
3. Saying “I’m trustworthy” means you aren’t
4. As in the meatosphere, all is not what it seems.