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Trust-based Selling in the Real World: Bruce Abbott

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Judy and I were in San Francisco a few months ago and ducked into a shop in Ghirardelli Square full of gorgeous wood carvings—One of a Kind. I’d been there before; beautifully turned bowls, unique tables—if you love wood, you’d love this store.

We noticed a unique sculpture—a Balinese statue of a woman, 5 feet tall, nearly Giacommetti-thin, carved from a single piece of wood. We quickly realized it was the piece we’d been looking for to fill an important empty corner at home.

The price was surprisingly reasonable. We bought it.

Bruce Abbott, the proprietor, took complete responsibility for the packaging and shipping, saying he’d personally supervise the packing, advising us on insurance, etc. Incredibly busy, he nonetheless managed to serve us impeccably and with great conversation (ask him about Bill Clinton asking to use the bathroom on a recent visit.)

The piece looks great at home. And I sent Bruce a note complimenting him on running a good set of business processes and an obviously successful business. Here’s his response (excerpted):

"People rarely appreciate all the details and "process" involved in a business like this, which starts at the "roots" and gets refined into pieces such as the one you received. I spend time in the woods selecting woods for my production and take care of pretty much everything else. I have help in my own production in the shop and also buy from several others, several of whom receive the wood they need from me.

"The store, at the moment, is full and very beautiful. I no longer worry so much about the cash flow but just try to produce and keep the store at higher and higher levels of fine woodworking and yet affordable. We have many things under $30, $20 and under $10.00, all of which are still cool pieces. I just make it difficult for people to walk in and not find something they’d like to have even if they cannot buy at the moment."

“I just make it difficult for people to walk in and not find something they’d like to have even if they cannot buy at the moment.”

Think about that as a trust-based philosophy of doing business. He’s saying:

• I’ll carry inventory that’s not likely to sell just now
• I don’t sell, I just make it easy to buy
• I focus on customer needs, not cash flow
• I’m building a store for your next visit, and the one after that.

The essence of trust-based selling is a paradox. If you stop trying to make the sale, and instead focus on helping the customer get what they want, you will end up getting more sales.

I won’t get into the psychology of it now; just enjoy clicking through pictures of some beautiful pieces at One Of a Kind .

If you go there, say hey to Bruce for me, and tell him I’ll be back again.

Are You Connected? Or Just Linked?

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Are you connected? Or just linked? You know the difference when I phrase the question that way. It’s obvious.

• If you’re three degrees of separation away from someone on LinkedIn, you might be a Linker—but you’re not connected.

• If someone’s birthday is in your Act or Outlook database, and it links to their MySpace page and auto-triggers digital happy birthday emails from you to them, then you might be a Linker—but you’re not connected.

• If someone picked up your business card at your tradeshow booth, you might be a Linker—but you’re not connected.

We all know the difference.

But we all forget it—frequently, regularly, unconsciously. And we all suffer because of it. Here’s what I mean.

The ability to “link” is what freed up the mortgage industry. When a local savings bank sold loans to a larger aggregating bank, it “linked” to them by a financial contract; you pay me X, I give you rights to a mortgage. Ditto for that same savings bank paying mortgage originators to find mortgages. And for the aggregating banks to securitize their mortgages, and link to buyers of mortgage-backed securities.

The links, in every case, were one-off contractual transactions. They replaced connections. Connections were relationships, not transactions. They were ongoing, not one-off. They were between people, not just between corporate entities and lawyers. Connections presumed lots of links; but links alone don’t presume connections, any more than one night stands presume relationships.

The wholesale replacement of connections by links is a key feature of the economic landscape today. It is by no means all bad.

“Linking” has been key to outsourcing, and to globalization. Chop business processes up into smaller and smaller pieces, then Link them to a third party, maybe in Bangalore, maybe in North Dakota. The result is global scale of processes; global markets; and global risk-sharing. All good, per se—as far as they go.

“Linking” has meant greater efficiencies of the things being linked. Ten companies all with separate HR departments cannot run HR as efficiently as one company outsourcing HR services to ten users. One Match.com does a dramatically better job of forming markets for daters than a thousand bars in the Naked City could ever do.

There’s just one thing wrong with Linking. If allowed to entirely replace connection, linking will destroy connection.

If no one is connected across the whole mortgage business—if no regulators or companies or customers have stakes in the system as a whole—then the “market” will eat itself alive, as everyone maximizes their own good. The Invisible Hand simply does not work in a Linked-only system—it works only if someone has a stake in the market as a whole, and over time. A market of strangers linking once-off and then disappearing into the haze of transaction-land is what you see in dating bars at closing time, operating by rules of caveat emptor.

This is why eBay has buyer ratings. This is why stocks go up when governments intervene after linking-only has gotten pathological enough. This is why the internet (and new media channels) will drown in spam if they are nothing more than links. To be vibrant, these new marketplaces must find community—a sense of connection.

Our financial markets right now don’t suffer from just liquidity, or even solvency. They suffer from lack of trust. And nothing kills trust like the drowning of connection in a sea of links.

Top Ten Ways for Your Business to Deal With a Recession

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Global equity markets set all-time upside records yesterday. But US credit market trading was closed. By the time you read this in the morning, you may or may not think you need to worry about a recession.
Hint: you still do.

So here are some ideas. I have readers in large companies and solo consultancies; lawyers and salespeople; private and public sectors. Tweak the ideas to suit your own situation.

And please generously share your own ideas by commenting!

1. Shift some of your marketing budget to sales. You’ve planted the fields; now pay the harvesters to go to work.

2. Hire some key people from competitors in your industry. Increase your strength and get good PR for doing it.

3. Buy capital equipment now (or soon), when it’s off-cycle, suppliers are desperate, lines are short, and customers like you are welcome. When the up-cycle returns, you’re set to cash in, while others pay high prices and wait in lines with the other unfaithful.

4. Set a new metric; be in the slower half to lay off people. Not as wishful thinking, but as a conscious strategy to invest in people, and to be seen as and known for doing so.  Did you believe that stuff about people you said?  Now’s the time to walk the talk.

5. Higher levels of management—take a pay cut. Not just bonuses, either. The higher the level, the deeper the cut. What part of “leadership” didn’t you understand?

6. Tell your shareholders to suck it up. Not all stakeholders benefit equally at all times. This is not their time. Their time will come again, and even better—if they have the foresight to help customers, suppliers and employees when it is they who need the help.

7. Ask your key customers what you can do for them. They know you’re short on cash; offer services, advice, free consulting, and non-cash expenditures.

8. Tell your key customers that you’re extending your receivables terms by 15 days—because you understand how things are.  Do not stiff your suppliers.  And don’t hide these two particular lights under a bushel; tell customers and suppliers personally what you’re doing, and let them thank you.  Personally.

9. Identify a local charity in severe trouble. Make a contribution to them. It will have outsized impact, you’ll make an impression, and others—like board members and the community—will notice it. This one you do hide under the bushel.  Don’t worry, it’ll be noticed. 

10. Talk to your bank about why you’re doing steps 1 – 9. Say you want them to know you’re not just cost-cutting to make it through each month, but intelligently investing in the future through a longer timeframe than your competitors. In other words—you’re the kind of responsible customer they should want to lend to.

There are a few common themes here:

• Don’t fall prey to short-termism
• Do well by doing good
• Meet transactional opportunism with relationship strategies
• Be there for others now, and they will be there for you later
• We remember those who helped us when times were tough
• Now’s the time to prove you’re trustworthy—worthy of trust.

When Well-Intended Mistrust Masks Oppression

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Item 1. I went to my 40th high school reunion this weekend. We took a tour of the old gymnasium and the (new) pool. The women in the group were visibly touched. “Remember those stupid blue bloomers we had to wear?” “Look at all those trophies—we never got to play those sports.” “Thank god for Title IX, my daughters had these opportunities.”

Item 2. Some of you will know the name Kathrine Switzer. She was the first woman to officially enter the Boston Marathon; Jock Semple, who organized the event, tried to eject her, but some male friends body-checked him and she finished. She went on to run 35 more marathons, ranking as high as 3rd in the world.

Item 3. A black woman I know, now in her 50s, remembers the first paper she wrote for an advanced English class in her freshman year at college. She was talented, and worked hard on it. But the paper was graded an F. Upset, she went to the teacher to find out how she could have misjudged herself so badly.

“You obviously plagiarized,” the prof said. “No way you could have written this.” Dumbfounded, she was speechless, finally finding the words to deny it. “Don’t lie to me,” he said. “Affirmative action doesn’t mean you can plagiarize.” It took her days to convince him she had written it herself. (It shouldn’t be relevant, but she was not an affirmative action admission either). She became a successful IT consultant and telecoms exec later in life.

What these vignettes have in common is that they’re examples of excuses given to not trust people.

Most people—not all, but most—now believe that young women benefit from organized athletics as much as do young men. But that’s recent. The excuse given back then was that women were too delicate, and had to be protected. By the majority, of course—in this case, men.

Which meant my female classmates appeared in the yearbook in the Future Homemakers Club and the Home Economics Club; not in athletics. And my black woman friend could never avoid being reminded—usually in more polite, subtle ways—that she couldn’t be trusted to achieve at a level to which the majority (in this case, white) people were held.

We know to condemn sexism and racism. But when they’re served up as good intentions, we can get confused. Poor Xs; we can’t expect as much of Xs as we can of Ys. In fact, to even allow them the chance is just setting them up for failure and hurt; we can’t trust them to know their own limitations. We’ll just have to manage that for them.

Years ago Herbert Marcuse wrote about “repressive tolerance,” the idea that majority tolerance of a minority was an effective form of repression. This is something akin. To distrust a minority—using the language of altruism—is a form of repression.

Girls’ athletic programs have made progress (though are constantly threatened by demands for lower taxes). Progress against racism has been made (though the majority culture is always in a big hurry to over-state just how much).

But what are the new frontiers of repressive mistrust? Here are a few starters. What do you think?

  • Doctors and corporate lawyers who mistrust paraprofessionals “for the sake of” the paraprofessionals and the customers.
  • Ditto for teachers and teachers’ aides, and for those involved in real estate closings.
  • Consumer protection laws that substitute reams of language for common sense.
  • National trade laws that decry “shoddy foreign goods” as a cover for protectionism.
  • Politicians and media who rationalize least-common-denominator sound-bites by appeal to market demand rather than taking responsibility for talking up, not down.

What do you think? From the standpoint of 40 years from now, what will appear in the rear view mirror to have been aother case of repressive mistrust?

Do Lawyers Behave Rationally?

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Of course they do. Just ask them.

They—at least those in the US—will also tend to define “rational” as based on linear, deductive thinking. Not unlike the law.

Dispute resolution, from this perspective, is largely a zero sum battle. That “win-win” stuff may work in business, but not when the chips are down in a court of law. Right?

Well, not so fast. Jim Peterson is a lawyer who handled European litigation for one of the global accounting firms; an American in Paris, he has a lot of perspective. And he shared with me this story:

I picked up a valuable lesson early in my expatriate experience in Europe – where the importance of personal contacts and relationship-building can elude the grasp of typically impatient Americans.

When I first arrived in Paris, I inherited a file on a long-standing claim by a French company against my American client. The suit was pending in Germany, where it had been largely dormant for five years, partly because of the ponderous system for large commercial litigation but more because local German counsel felt they were handling an annuity matter that would fund their retirements.

With this lack of urgency, the parties had had only desultory contacts about settlement, and the case management budget steadily hemorrhaged legal fees.

My first task was to contact my opposite in-house number about some trivial interim topic. From a brief telephone call that barely got beyond the “new guy in town” introductions, it was clear that for the time being the two companies had nothing to talk about.

Notwithstanding, as a new resident I triggered a follow-up call, to invite my French adversary to lunch. The explicit condition was that we were not to transact business or mention the litigation.

In summary, a good time was had, over an excellent meal.

More years passed, with no activity other than the ongoing drain of fees, until suddenly the settlement cork was pulled. Led by the Germans, there was real progress but an eventual make-or-break impasse. The local clients and outside counsel had gone as far as they could.

We inside counsel re-convened in France. Drawing on the modest but real stock of personal good will built up over lunch those years before – in truth not much more than the prosaic “How’s the family”– we were able to negotiate successfully and bring the matter to a mutually satisfactory close.

Could it have happened other ways? Perhaps. Had a long-term friendship been established? Clearly not. But I would never underestimate the value of the pay-off, from two hours invested in the sole achievement of a fine French meal and a measure of camaraderie.

Did Jim pursue a “rational” approach? If by “rational” you mean did it make sense, did it achieve outcomes, quickly and inexpensively? Absolutely.  In fact, the "French lunch strategy" beat the crap out of the usual adversarial system.

But if by “rational” you mean according to cognitive rules, case law and the procedures of the court—no way Jose. The traditional “rational” approach would have resulted in, as Jim said, only in an annuity for many lawyers.

Sometimes it makes sense—a ton of sense—to completely avoid the “rational” set of logical processes and systems.

Sometimes it’s rational to just be human. (Not to mention more pleasant). Yes, for lawyers too. Even American ones. In fact, for all service providers. (And it probably even works with California wines).

(Jim used to write a column for the International Herald Tribume. It continues at Re:Balance, where his current post compares Lehman Brothers’ fall with that of Arthur Andersen).

How Obama and McCain flubbed the trust question and how they could have answered it right

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In the second US presidential debate October 7th, citizen Theresa Finch stood to ask her question of the two aspirants to the office of FLOTFW (Former Leader Of The Free World).

How can we trust either of you with our money when both parties got us into this global economic crisis?

A perfectly fair question any day; an especially relevant question these days. And—since this was an overt trust question—let’s talk here about what the answers were, and what they might have been.

Let’s begin with the Trust Equation (credibility + reliability + intimacy, all divided by self-orientation) as a route into the question. What constitutes a good answer to the “why should we trust you?” question? Salespeople have to face this question all the time. Let’s see how The Two answered it.

Answer A “Well, look, I understand your frustration and your cynicism, because… you’ve got a family budget. If less money is coming in, you end up making cuts. Maybe you don’t go out to dinner as much. Maybe you put off buying a new car. That’s not what happens in Washington. And you’re right. There is a lot of blame to go around.” [Proceed to attack other and promote self.]

Answer B Well, Theresa, thank you. And I can see why you feel that cynicism and mistrust, because the system in Washington is broken.” [Proceed to attack other and promote self.]

Their answers are nearly identical. Their first words were to channel Bill Clinton, minus the sincerity. “I understand your frustration. You’re right. I can see why you feel….”

Trust hint 1 Do not assert, after hearing a total of one sentence from a stranger, that you “understand what you mean” or “can see how you feel.” You don’t, you can’t, and even if you could, it’s a form of arrogance to assert it. Low marks on intimacy (faking it) and on self-orientation (clearly focused on their own agenda).

Trust hint 2 Avoid the non sequitur. If there’s a logical link between the faux Clinton opening and the blatant self-aggrandizement that follows, at least give it a few sentences to establish the logic. Low marks on credibility (illogical), and again on self-orientation.

Trust hint 3 At least attempt to answer the question. Their concluding sentences—which ought to close the loop on the question—were “The key is whether or not we’ve got priorities that are working for you,” and “I know how to fix this economy, and eliminate our dependence on foreign oil, and stop sending $700 billion a year overseas." Huh? Say what? Again, high self-orientation and low credibility.

Robert S. McNamara, Secretary of Defense during the Vietnam War, said, “Never answer the question they ask; answer the question you want to answer.” Was there ever a better reason to mistrust someone than that philosophy? Yet it persists in politics.

In fairness: how can you be trusted when you need 51% of the vote—every vote?

Let’s hear from you. How might either candidate have answered? To get us started, I’ll take a shot at it.

“Theresa, I happen to think that’s the most important question of the night. Lack of trust is what lies beneath liquidity and solvency in our banking crisis; is what’s causing us to spend massively on defense; and is costing us a mint in wasted litigation and transaction costs.

You’re right to point out that both political parties have mud on their hands. Regaining trust lost is doubly hard; and the country doesn’t have the luxury of saying ‘wait and judge us on our track record.’

So my answer is, partly—because you have to. We have no viable third party, and we’re still a stable democracy. Only we two are running. Still, that’s a big choice. You can choose X, or you can choose Y. Whichever you pick, a lot of people will agree, and many more will disagree with you.

Given that you’re stuck, the answer to “how will you trust” has got to morph into “what can I do to help make us a better country?” And I’d say this: hold us accountable. Don’t fall for us when we talk down to you in slogans. Write letters. Engage. Open your minds. Read magazines and blogs. Change the channels. Go talk to someone you disagree with. Don’t settle for someone who panders to the lowest common denominator. Figure out how to trust someone who’s leaning to vote the other way—then tell us all how you did it.

You want to trust one of us? Demand that we be worthy of your trust. Don’t settle. And why should you trust one of us? Because if you don’t, and don’t work at your part of it, you just withdraw from the game. And we need you to play your part.

Over to you. Post your own “why should we trust you” answer right here. I will personally pass on the winning answer to my good buddies Barack and John (both of whom could use it).

(Thanks to Stewart Hirsch for suggesting this post).

 

 

Failing Trust Has Led to Failing Markets

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Trust has taken a leap to the foreground given the implosion of financial markets. And rightly so.

Irish economist and market researcher Gerard O’Neill writes:

"…the essence of the present financial crisis is a collapse in trust: including trust between banks and other banks; between banks and their customers; and indeed between banks and governments."

O’Neill cites a BBC program that asks the question, “Is trust evaporating in contemporary society? Does more monitoring of people and politicians increase trust, or encourage paranoia?”

Robert Reich, former US Labor Secretary turned academic, has also been waxing eloquent on the subject, on TV Talk Shows and on the radio:

…why are the free marketeers in the Bush Administration rushing to Wall Street’s aid? The answer goes deeper than the subprime mess. The Street has suffered a serious decline in trust…Yet trust is its most important asset. Financial markets trade in promises — that assets have a certain value, that numbers on a balance sheet are accurate, that a loan carries a limited risk. If investors stop trusting those promises, Wall Street can’t function.

…It worked great as long as everyone kept trusting and the market kept roaring. But all it took was a few broken promises for the whole system to break down.

There are two debates going on now. One is political, built on pent up resentment and schadenfreude—the Main Street vs. Wall Street argument. The other is ideological—free markets vs. regulation. Both are somewhat bogus, but I’ll stick to the second.

Pure free markets exist only in economists’ imaginations—thank god. Competition is inherently instable. The goal of every competitor is not to maintain a state of competiton, but to obliterate that state—often by colluding, sometimes by winning. Imagine a football game without referees. Every functioning market needs some regulation to avoid imploding into a black hole of monopoly.

But neither is “more” regulation the right answer. Regulation by bureaucrats, cronies, incompetents or the venal is not much better than anarchy.

“Who” and “how” are critical regulatory questions. And there are some basic principles. You’d think they’d be obvious, but they are frighteningly easy to lose track of.

One is transparency. Nothing cuts out envy, suspicion, and temptation better than sunlight. Yet the SEC and Congress allowed an entire set of financial products and markets to be invented—out of sight. Opponents of mark-to-market accounting—please explain to me how politicians can make valuations more transparent than accountants plus a market can do?

Another is time. The more fragmented and transactional the business model, the more is needed some timeframe over which society can see relationships and consequences between those transactions. If the industry manages itself solely through zero-sum one-off deals, then regulators must provide that longer-than-a-nanosecond view.

A third is the connection of the parts to the whole. The mortgage industry is a perfect example: it used to be that mortgage agents, lenders, home-owners and mortgage-holders interests’ were all aligned. A year ago I wrote about a 1995 economists’ view of the industry as it looked then, vs. the disaster-in-the-making it had become. The difference was all disconnected parts with no one minding the holistic store—no one in industry, no one in regulation.

I usually write about personal trust; that’s the “pure” version of the stuff. But make no mistake, trust is critical socially. Some industries can self-regulate, based on the three principles above. Though just now, offhand, I can’t think of any examples.

 

What Happens in the Global Financial Crisis Stays in the Globe

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What’s the global financial crisis got to do with a fluff Hollywood summer date movie? A lot, it turns out.

In “What Happens in Vegas”  Cameron Diaz and Ashton Kutcher separately go to Vegas on a whim, party hearty, and wake up together—to their mutual chagrin—married. Then they hit a slots jackpot.

Problem: how to split the money. They rapidly end up in court, where the judge sentences them to several months of—marriage. Cue the fights, which get nasty. But once they’ve had to get along together, they fall in love. Cue the violins.

Hold that thought. Flip the metaphor to Wall Street. From the Financial Times:

David Gergen, who heads the Center for Public Leadership at the Harvard Kennedy School, said Monday’s vote marked a high-water mark of public distrust in US leadership.

His centre shows that, of the five least trusted institutions in the US, four were involved in the financial crisis – Congress, business, the presidency and the media. In 2005, 65 per cent of the US public said there was a crisis in the leadership, a figure that has now risen to 77 per cent.

“Over the last few years the trust between the public and the elites has completely collapsed,” said Mr Gergen. “The failure of the bail-out package is a direct result of this leadership vacuum – the failure of any of the players, not just President Bush, to explain to the public why this package was necessary.”

Trust is a multi-faceted thing (see Trust in Business, the Core Concepts). One of those things is the simple fact that trust can only exist in a relationship. Robinson Crusoe had no need of trust; and a competitive “relationship” is an oxymoron.

The business world—particularly the US, and particularly finance—has increasingly been defined by short time frames, expressed in transactions, with an absence of long term relationships, holistic perspectives, and commonality of interests, buoyed up by an increasingly tortured interpretation of Adam Smiths’ Invisible Hand.

Nobody was vested in the big picture. Nobody had an interest in the long term. Everybody was valuable to everyone else only insofar as they could be hustled and turned over to the next sucker before the music stopped.

Kind of like Ashton and Cameron in Vegas, whose lives also became petty, selfish and fear-based.

The dominant fact of today’s world is that we cannot afford any longer to pretend we live separately. The financial world is far more intertwined than the masters of the universe want to pretend. Worse, finance links to economics. We can still run, but we can no longer hide—from each other. Butterfly wings may not drive hurricanes, but the metaphor is actually understated in the business world.

Trust isn’t an outdated idea; it’s ever-more timely and critical. We cannot afford the childish self-infatuation that comes with ideologies of “competitive advantage,” wars-on-the-enemy-du jour metaphors, and the "courage of his conviction" of dumb-asses. While Southern California Republicans channel Ayn Rand and Democratic unionists re-fight the battles of the 60s in the US Congress, banks are failing in Europe.

And so on.

We all need to learn to play nicely in the sandbox, or we will all foul it together. Which of course is just what the judge (played by the deliciously-cast Dennis Miller) ordered Ashton and Cameron to do.

In the movies, it worked.

Where’s our real-world Dennis Miller? (Barney Frank’s trying hard to audition, but…).

We will not regain trust in our institutions, our selling, or our business relationships until we come to grips with the fact that we are flat-out stuck with each other. We all just need to get along. Because what happens on planet Earth stays on planet Earth.

What Con Men Can Teach Us About Trust

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Regular Trust Matters readers know I speak positively about trust. But there is no trust without risk. Trust can be misplaced, or abused. Bad consequences ensue.

Thanks to prodding from regular reader Martin Dalgleish, I think it’s time to explore the dark side of trust. Trust can be violated at a personal level; at an institutional and societal level; and, of particular interest to this blog, in the realms of advice-giving and sales.

Let’s start with the personal level in this post.

“Clark Rockefeller” was in the news this summer for kidnapping his own daughter. Turns out his real name wasn’t Rockefeller. In fact, very little that people thought about him turned out to be real.

Rockefeller is one version of a con man. The Boston Globe’s Boston.com does a nice job of explaining how it is that he fooled so many people—two wives, the social elites of Greenwich and San Marino, California, brokerage firms—into believing that he was a wealthy heir of the Rockefeller fortune.

But how?

From the article:

We size up someone’s trustworthiness within milliseconds of meeting them…it’s the first thing we decide about a person, and once decided, we do all kind of elaborate gymnastics to believe in people….As in other cognitive shorthands, we make these judgments quickly and unconsciously.

Yet human society would not exist without trust…The art of the con is based on a variation of this idea: that trust is more reflexive than skepticism. Once people form an initial impression of someone or something, they seem to have a hard time convincing themselves that what they once believed is actually untrue.

More bad news: research suggests our “trust" is based on things like cheekbone shape and eyebrow arc.

You can fake trust. It’s not easy, but it can be done. There are plenty of slicksters slinging get-rich-quick schemes—the same names appear in boiler-room stock sales, then in death annuities, then in condos, then in no-doc loans. These con men are talented cynics.

Hollywood romanticizes the con man in movies like The Sting and Paper Moon; like the whore with a heart of gold (Pretty Woman), it’s a Hollywood fairytale feel-good staple.

The feel-good myth here is that once we uncover everyone’s true motives, the con will be revealed. It was either a real con by a black-hat Evil One; or a pseudo-con by the true white hat who is simply avenging a deeper wrong (Batman, Zorro). Motives determine all in this fairy-tale view of trust.

But here it gets tricky. In truth, the best con cons the con artist as well as the mark.

Most actors try to find a part of themselves that can relate to their character—then act from that deeply-felt affinity. Most salespeople are good at believing in what they’re selling. Most demagogues are true believers.

What we learn from the movies—and from politics, and religion—is that revealing true motives will reveal the con. Ah, so sorry, not true. The best con incorporates sincerity.

A fool who believes he can trust a sincere con is simply a misguided fool. Sincerity may be a necessary condition for trusting someone; it surely is not a sufficient condition. Worse yet, it’s not even a high hurdle to overcome. It ain’t that hard to believe.

The best way to be trusted is still to be trustworthy. And if you’re looking to trust, be careful of using sincerity as a shortcut. As George Burns once said, “The most important thing in life is sincerity; if you can fake that, you’ve got it made.” And the easiest way to fake sincerity is to simply believe your own con.

(Any political parallels the reader chooses to draw are entirely the reader’s own responsibility).

Evaluating Paulson and the Biggest Trust Me Since Iraq

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Economist Paul Krugman , in his NY Times blog, wrote yesterday about The Trust Problem raised by the bailout proposed by US Treasury Secretary Paulson, Fed Chairman Bernanke, and President Bush. Never mind the merits of the case. The point Krugman is raising is about trust:

"The whole premise of the bailout push has been “We’re the grownups, we know what we’re doing, just trust us.” Sorry, but that’s how Colin Powell sold the Iraq war. Fool me once, shame on you, fool me twice … you shouldn’t get fooled. " [revised last line courtesy of GW Bush]

I try not to write about US politics in this blog: but this issue is non-partisan, arguably international—and undeniably huge. It’s an 800 pound gorilla for trust—it can’t be ignored. If trust as a social issue isn’t relevant here, I don’t know where it would be.

So—for someone focusing on trust, these are interesting times. And Krugman’s observation is valid. Let’s evaluate it.

The Trust Equation suggests Trustworthiness is a function of (credibility + reliability + intimacy), all divided by the self-orientation of the one who would be trusted. How does Paulson fare?

As Krugman points out, Paulson’s got a ton of Wall Street cred—less so as a Treasury Secretary. Only months ago he was calling the economy firm, and one gets the strong sense he’s making this up as he goes along—like the rest of us. As evidence, Krugman contrasts Paulson’s plan—which famously and clearly called for no oversight—with his testimony of yesterday, which welcomed oversight. For credibility—maybe a B-minus.

On reliabilty, it’s tough for anyone. Reliability takes repeat experiences. But no one has this issue on their resume. One has to stretch to find comparable experiences, and unfortunately, the line stretches to another Bush cabinet member—Colin Powell and Iraq. Another good man who, it turns out, blew smoke at us. Given that track record, anyone in Paulson’s chair rates a C-minus at best.

The third factor, intimacy, is mainly determined by a willingness to be open and transparent about oneself. Paulson has done nothing to explain the theory behind his plan, which of course leads people to wonder if he has one—or if so, why he’s hiding it. Worse yet, given his mixed credibility and his (and anyone’s) inability to have a track record on this issue, that opacity makes him look even worse. In particular, it calls into question the demand by Paulson (and Bush) for immediate action, and the dire consequences if the demand is not met. Got to give him a D.

Self-orientation, the lone factor in the denominator, is the most powerful of the four. I don’t think anyone doubts Paulson’s commitment, nor his good intentions. Then again, most people this side of psychopaths have good intentions.

It’s not a good sign that he acquiesced to a political demand to reduce high compensation for masters of the universe who would be rescued. It suggests not only that Paulson is politically tone-deaf, but that his plan was not free of moral hazard. It’s not that Paulson is in it for himself, but it suggests there’s a lot in it for his old buddies. And absent a "theory of the case," or data, this looks pretty self-oriented. Another D, I’d say.

Remember the National Lampoon Magazine cover of the cute dog with a guy pointing a pistol its head? "Buy this magazine or we’ll kill this dog," the tag line said.

It sold a lot of magazines. Will it sell a mega “trust me” for a mega-bailout?