Smart Trust
By Stephen M.R. Covey and Greg Link with Rebecca Merrill
(Free Press, 296 pages, $29.99)
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When Pierre Omidyar founded eBay Inc. it was an unlikely candidate for business success, given that it brought together buyers and sellers from around the world who would conduct single transactions without knowing each other. Suspicion and distrust seemed a huge barrier. But Mr. Omidyar believed that most people are basically good and could be trusted, and the site flourished.
When Muhammad Yunus founded Grameen Bank, he was also making a bet on humanity’s inherent trustworthiness. He lent money to people who nobody else would dream of giving money to: impoverished individuals with no collateral, no steady employment, and no verifiable credit history. But in the end repayment rates at his bank were significantly higher than traditional banking loans.
When Warren Buffett buys a new business for his Berkshire Hathaway empire, he places his trust in the executives of the company he is taking over. Rather than dismissing them immediately, or easing them out after a short interval, as so many other firms do after acquisitions, he only buys companies with executives he would want to keep and then leaves them alone – trusting them to make money for him. Mr. Buffett’s headquarters staff is only about 20 people, who oversee 77 operating companies and 257,000 employees, a sign of the trust in the leaders of those companies.
We live in an age of cynicism and distrust. But in a networked world, consultants Stephen M.R. Covey (son of Stephen R. Covey, author of Seven Habits of Highly Effective People) and Greg Link argue that trust has become the new currency, a critical competency for individuals, teams, organizations, and even countries.
“More and more it is becoming abundantly evident that in today’s economy, the bottom line is directly connected to trust. Put another way, there is a ‘business case for trust’ – and it’s a compelling case,” they declare in Smart Trust, written with Rebecca Merrill.
But it can’t be blind trust. It has to be smart trust, which combines the propensity to trust, as illustrated in the stories of Messrs. Omidyar, Yunus and Buffett, with analysis to make sure your trust doesn’t go awry. In other words, as the Russian proverb puts it, “Trust, but verify.”
You must establish provisions to deal with the rogues who will take advantage of your trust. At eBay, for example, there is a solid foundation of transparency and feedback procedures that help the traders to police the site.
But the company also has sophisticated measures to detect inappropriate behaviour, fraud and attempts to hawk counterfeit goods. “In other words, the system is clearly based on trust, but it’s not blind trust. Though it leads out with a high propensity to trust, it combines it with equally high analysis,” the authors observe.
They set out five actions to help build trust:
Choose to believe in trust
Belief is the foundation for getting results in any area of life, and it applies to trust as well. We are guided by instincts that predispose us to trust and also not to trust (dating back to childhood, when we were warned by our parents against strangers). These instincts encourage us to believe that we are worthy of trust, that most people can be trusted, and that extending trust is a better way to lead.
Start with yourself
Beyond belief in trust, you must also behave with trust – starting with your own actions. It will be easier for people to trust you if you are seen as honest, straightforward, dependable, and genuinely concerned about their welfare. Ask yourself whether your character and competence add up to a person others can trust.
Assume the positive
