What if everyone could be trusted? And everyone became willing to trust?
Unrealistic? Sure, if you insist on all or nothing.
But if we moved directionally toward those goals, it’s not hard to envision significant improvement. Increased trustworthiness, and increased propensity to trust, would most likely lead to:
- Fewer and simpler contracts
- Fewer lawyers and lawsuits
- Less transaction complexity
- Lower insurance costs
This is not pie in the sky. There is an emerging part of the economy that does precisely this: it’s called the Sharing Economy, or Collaborative Consumption.
The Sharing Economy
The Sharing Economy is composed of assets which were previously owned by single entities (either persons or corporations), but which have been freed up to be used by many. Perhaps the best-known example of the concept is ZipCar.
In principle, the concept can apply to any asset used at less than its full capacity. That includes all manner of goods. Airbnb has made a business of helping people rent out their homes. Couchsurfing is just what it sounds like.
This can sound like pure 20-something left coast social experimentation, but it’s also gotten the attention of General Motors. It’s not fundamentally different than when McDonalds figured out it could use its under-utilized real estate to serve breakfast.
In fact, the Sharing Economy is resurrecting some 19th century ideas like the Grange Movement that helped stimulate the Great Plains agricultural economy.
For that matter – remember libraries?
Trust: the Backbone of the Sharing Economy
The Sharing Economy is, pure and simple, about trusting strangers. How, in an age of global markets and internet-based communication, can we do that? Or to make it more personal: what would it take for you to rent your house or apartment for a week to someone from France you met online? And how, finally, can you make that answer scalable?
That, it turns out, is one of the fascinating aspects of the Sharing Economy. It doesn’t make sense for each sharing business model to develop its own proprietary database, any more than it makes sense for every mortgage lender to develop its own creditworthiness database.
Hence, the race is on to determine who will develop the FICO score of trustworthiness, the most dependable metric, the database that will provide the underpinnings of a potentially considerable amount of economic activity.
I have written a White Paper on this subject: Trust and the Sharing Economy: A New Business Model. [I should add here – full disclosure – I am an advisor to and have a financial interest in one of those players, TrustCloud.]
The Sharing Economy is a microcosm for observing trust concepts I’ve been writing about for years. For example:
- Trusting vs. being trusted: If you have an apartment you’d like to rent out, you are the one doing most of the trusting; your question is about potential renters – are they trustworthy? So often missing in general discussions of trust (“trust in banking is down…”), the distinction is obvious and vital here. What’s needed is trustworthiness ratings of the potential renters.
- Reputation vs. trustworthiness: It’s easy to mistake reputation for trustworthiness, and some previous online trust metrics have done so. The result is data that suggest Perez Hilton and Justin Bieber lead the pack in trustworthiness. Does not compute.
- Trust comes in several flavors, and is all about context. Unlike digital recordings, some forms of trust don’t travel well (remember the game of “telephone?”). Or as I’m fond of saying, I trust my dog with my life – but not with my ham sandwich.
In the race to build trust metrics, it’s tempting to over-emphasize the technical aspects of the problem. But in the case of trust (as with knowledge management), the more important problem to solve is to correctly define trust and its indicators.
I’ll be writing more about this in future.
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@example.com.