THE POWER OF TRUST
IN BUSINESS, AS IN life, trust is elemental. We all cherish it. Most of us think we deserve it. Few of us think we violate it. But what exactly is it? At its core, trust means willingly ceding a measure of control to another—be it a person, organization or institution—and without the apparent safety nets of a binding contract or other means of coercion in place. Although we trust with an expectation that others will respond in kind, vulnerability is the psychological hallmark of trust. We’re taking a risk, sometimes based on limited evidence. Trust is a leap of faith rooted in optimism.
We take trust for granted, not conscious of how it pervades relationships. Partners rely on partners; employers on employees; companies on each other; nations on other nations; families on other family members. And in a world in which the peer-to-peer economy is gaining ascendance—with individuals sharing cars, boats, and apartments—trust is all the more indispensable. Understanding the underpinnings of trust, therefore, is increasingly important as companies become more global, more competitive, more diverse culturally and demographically. Each new thread of well-founded trust adds strength and richness to the complex tapestry of our interwoven economic and personal lives.
But trust doesn’t just happen. It takes initiation, nurture, evaluation, and repair. Trust is earned. Trust builds over time, fostered not only by decency but also by enlightened self-interest, a recognition that trust works to everyone’s benefit. As a lubricant, trust accelerates decision-making, results in agreements that are both durable and flexible, and makes life infinitely more pleasant. Trust creates a bond among an organization’s associates, customers, and suppliers, which in turn accelerates its ability to deliver on its promises to each group. But trust is neither an end unto itself nor merely a technique for achieving a desired outcome. Trust is the operating system for a life well lived.
There is power in being trustworthy. In the economy of trust, what goes around comes around. The more we look out for others, the more they look out for us. The more we trust, the more we are trusted. When trust is the medium of exchange, people collaborate and altruism can grow, again to everyone’s benefit.
Evolutionary biologists David Sloan Wilson and E. O. Wilson propose a thought experiment for the relative power of selfishness versus generosity: Two groups are placed on separate islands with no way to communicate. On one island, it’s each person for himself. On the other, everybody works together to achieve broader goals. A few generations later you’ll find two very different societies: one in a state of constant, near-psychopathic conflict, the other successful and harmonious. Summarizing the essential argument for building trust, these scientists conclude: “Selfishness beats altruism within groups. Altruistic groups beat selfish groups. Everything else is commentary.”
Put simply, high-trust (altruistic) organizations prevail over low-trust (selfish) organizations, and over time, high-trust leaders are more successful than low-trust leaders. Contrast the high trust levels of the legendary teams built by Alan Mulally at Boeing and then at Ford, with those at Enron, where temporary success ended in spectacular failure. Just as important, selfish (low-trust) groups, besides losing to altruistic (high-trust) groups, suffer misery within their ranks. One need only review Stanford University professor Bob Sutton’s bestseller, The No Asshole Rule, to see how untrusting workplace behaviors wound productivity and morale.
Like air, trust is invisible, and when abundant, it is taken for granted. But again like air, when trust is in short supply, people must find ways to cope. When suspicions arise, people reach for legal documents, policy manuals, and other prophylactic measures—the scar tissue of strained trust. Worse, when trust breaks down altogether, responses to the ensuing wreckage can vary from giving up altogether to grabbing power, from threatening to litigating.
Make no mistake: Building and maintaining trust are hard work. Trust can be fragile. One bad actor can damage it. A single act of deceit can destroy a reputation for being trustworthy that was built over a lifetime. Be it in the boardroom or in statecraft or in literature—Hewlett-Packard or Caesar or Othello—betrayal is poison. Bernard Madoff’s investment firm and Bernie Ebbers’s WorldCom will forever live in the annals of capitalist infamy. There’s a good reason why being called an Iago is among the worst stains on a reputation.
But if you live in a world of suspicion or selfishness, you may not even be aware that you and your necessarily low-trust teammates are like runners on a relay team lugging around heavy oxygen tanks in order to cope with the short supply of trust. You may not notice that your attention has shifted from the potential of posting a winning time to avoiding the risk of finishing last. Your energy is spent securing a replacement for the air you’d enjoy naturally in a high-trust environment. You look past innovation, optimization, and mutual gain in order to obsess over threats, downsides, and coercion. You look out only for yourself. As a result, low trust begets even lower trust.
The following 10 Laws of Trust lay out attitudes and behaviors you can count on to increase the odds that the flow of trust in your enterprise will not be interrupted. Their implementation will arrest the decline of trust and keep you from burning all of your energy to protect against low-trust behavior on the part of others.
Scientists point out that a good theory is one that predicts outcomes, giving us a sense of causality. One should expect a correlation between certain behaviors and the development of predictable trust within a team. And while no one has scientifically tested these 10 Laws, I’ve spent a lifetime assessing them to figure out what works and what doesn’t. My bottom line is that investing in trust works to create abundance and is far superior to hoarding power, harboring suspicions, or barricading oneself behind gotcha controls.
Being smart about whom to trust, when to trust, and how to nurture organizational trust is key to implementing the 10 Laws. Understanding the following truths about the very nature of trust—its preconditions, varieties, underpinnings, and risks—prepares a leader to undertake the job of building a high-trust organization.
1. Trust—well-grounded—depends on three conditions. To safely and reliably allow others to act on our behalf—which is what we mean by trusting them—we must be able to count on three underpinnings: Character, Competence, and Authority.
Character means that those we trust will value our interests as their own.
Competence means that those we trust have the requisite intelligence, ability, and training to achieve our best interests.
Authority means that those we trust are empowered to deliver on promises.
When all three conditions are present, trust develops naturally, almost reflexively. But when any of the three is absent, trust must take a holiday. To trust in the absence of any of these three elements is not smart but naïve—and eventual betrayal is almost certain.
Those who meet these three conditions for being granted our trust (Character + Competence + Authority) almost always possess a broader view of life’s purpose than merely securing the best personal outcome in every single transaction, in every conversation, in every negotiation. People who see life as a marathon rather than a sprint, as a narrative in which everything eventually connects, are the best bets for long-term trust. These individuals tend to have an enlightened, all-things-considered self-interest. They choose to act in the belief that trustworthy behavior pays dividends, if only in the harmony that comes from a lifetime of durable, high-trust relationships. Possessing a bone-deep belief that they are accountable to more than just their own interests, they are simply unlikely to betray another’s trust.
2. There are three types of trust. In building a high-trust organization, one must understand the three forms that trust can take: reciprocal, representative, and pseudo-trust:
a. Reciprocal (or mutual) trust exists when people advance each other’s interests out of love, duty. or enlightened self-interest. Most prevalent between spouses and other family members, mutual trust can also be found between interdependent business partners. As with a relay team, the practitioners (and beneficiaries) of reciprocal trust can be confident their combined performance will exceed the best efforts of any single member. Thus, in reciprocal-trust relationships, the results of individual efforts are multiplied, and outcomes are predictably superior to any one member’s independent efforts. Shared goals are achieved faster and more durably than when everyone is on his own—mistrustful of colleagues, wary of leaders. Nobody on a relay team worries that the next person to get the baton is going to run a faster lap. And no single runner will beat a 4x100 relay team.
b. Representative trust is the more common form of reliance on others. When electing officials or, say, hiring a lawyer, we hand over our trust, expecting it to be honored in return. Young children rely on parents to represent them, and parents honor children’s trust by protecting their interests. Similarly, doctors and other professionals honor our trust by safeguarding our welfare, asking that we provide good information in exchange. The uneven economy of representative stewardship makes possible the specialization needed to achieve complex goals. Absent reliable representative trust, society breaks down. Nobody can produce, or be an expert at, everything; we all must trust professionals to represent our interests faithfully.
c. Finally, under the label of trust operates its counterfeit, pseudo-trust, the temporary alignment of one’s self-interests with those of another. While pseudo-trust necessarily forms the basis for many contractual economic relationships, this convenient arrangement shouldn’t be mistaken for the real thing. As a governor of short-term actions, it has less to offer and may actually undermine efforts to build a high-trust culture of collaboration. In the end, pseudo-trust will almost invariably lead to short-term, episodic thinking and, when conditions change, eventual betrayal.
Indeed, many who have not paid the price to build a genuine trust temporarily accrue some of trust’s benefits by simply aligning with the self-interested. Pseudo-trust is dangerous, however. Hitching one’s interests to a counterparty can feel like authentic trust, but only until respective interests diverge. Like Mafia dons thriving by mutual dependence on fear and greed, individuals in a pseudo-trust arrangement (for example, the enemy of my enemy is my friend) often discover that it rarely leads to more than the fleeting security of common interests. Useful for a season, it is destined to fail as circumstances change. Voters often trust politicians to back causes that matter to them without realizing that a politician’s primary interest is being reelected. These voters are destined to experience the betrayal of a flip-flop—a breach of pseudo-trust—the minute their cause no longer appeals to a majority of a politician’s constituents.
3. Underlying motivators establish potential trust levels. Intuitively, we know that different levels of trust exist in different kinds of organizations. No-trust organizations, such as prisons, rely on force. Low-trust organizations, such as dictatorships, live on fear. The motivator in most business organizations is reward. Only high-trust organizations are motivated by duty and love, by a sense of meaning and mission—even calling. The bonds between parent and child often yield this sort of trust within a family, for example.
While combinations of these motivators are present at different times in most organizations, only those organizations in which exists a sense of responsibility to all constituents, and a sense of meaning or mission, will consistently be moved by higher-level motivators such as duty or love. As Figure 1 illustrates, there is a hierarchy of motivators. The half-life of the motivating force increases as one moves from left (Force) to right (Love), and as the source of the motivator moves from extrinsic to intrinsic.
Naturally, trust grows when people relate to the mission of an organization and have leaders and employees committed to that mission. What tends to motivate people within any organization tells you what level of trust you might realistically hope for.
FIGURE 1. Trust Level by Organization
The good news for leaders is that other than in prisons and asylums, trust levels are not fixed by the nature of the organization. As a leader, you can move the needle. The goal of any leader should be to move to the high-trust end of the spectrum and thereby to reliance on mission, caring, meaning, and duty. Here’s where adhering to the 10 Laws of Trust can make all the difference.
4. As trust declines, people grab power. Another way to contrast low-trust with high-trust organizations is to compare the role of power in achieving desired ends. In low-trust organizations, power plays the key role in attaining goals. In high-trust organizations, authority is still vital, but it tends to be distributed and is aimed at a shared mission. And it is seen not as a personal asset to be wielded by leaders for their own benefit but as both a duty owed to those granting it and a responsibility to those over whom it extends. Figure 2 compares how leaders view power in low- and high-trust organizations.
FIGURE 2. How Leaders View Power
Stanford professor Jeff Pfeffer asserts in Power: Why Some People Have It—and Others Don’t that power flows to those who break rules, make credible threats, self-promote, and use its exercise as a technique to coerce others—the essence of a low-trust organization. In high-trust organizations, however, such behaviors are anathema. Pfeffer’s thesis ignores the essence of high-trust organizations and their leaders. Power in high-trust organizations derives not from scheming or techniques. It is less imposed than freely granted. Durable power derives from trust and is distributed as an expression of trust.
As Rod Kramer, another Stanford professor, has remarked, “Power without trust seems like a hollow victory for a leader and a thin platform from which to lead.” Ultimately, for all the bare-knuckled, power-grasping tyrants who have succeeded (if only for a season), there are many other leaders who have labored to create the greatest good for the greatest number of people. These high-trust leaders have developed durable organizations and flexible, trusting teams, working together to achieve more than any of them would have accomplished individually.
5. Trust risks betrayal. Although trust relationships can, of course, terminate by mutual agreement, they occasionally end in betrayal. In fact, betrayal requires the existence of trust in the first place. Indeed, all three forms of trust are subject to potential betrayal: pseudo-trust by its very nature, and reciprocal and representative trust to the extent you’ve trusted someone without Character, Competence, and Authority.
Betrayal can demolish the trust earned over a lifetime, probably never to be rebuilt. So, people naturally worry about balancing the need to trust with the recognition that treachery may lurk. If betrayal lies ever in wait, what, then, is one to do? Can one ever rely on a handshake, trust someone’s word, take it on faith? Must trust be carefully evaluated to be certain it is well-grounded before taking the leap? In short, how do you know if you’re dealing with George “I Cannot Tell a Lie” Washington or Benedict Arnold?
The potential for betrayal can be minimized by:
Making sure all the elements of trust (Character, Competence, and Authority) are well established
Understanding the three forms that trust takes (reciprocal, representative, and pseudo) and recognizing that the betrayal of pseudo-trust may only be a matter of time
Building a culture rooted in the 10 Laws of Trust
To be sure, trust risks occasional betrayal. But the absence of trust is betrayal—of everyone condemned to work for coercive leaders. Because “[a]ltruistic groups beat selfish groups,” organizations deprived of trust are destined to be surpassed by those animated by trust.
IN SUMMARY, THE ODDS of building high-trust organizations through consistent application of the 10 Laws of Trust increase when their leaders first gain a solid understanding of the nature of trust, as outlined above and restated here:
Well-grounded trust depends on accurately assessing the Character, Competence, and Authority of those to whom we consider granting our trust.
Of the three common strains of trust (reciprocal, representative, and pseudo), pseudo-trust is the least reliable, as it is stable only when interests are aligned.
Different organizations have inherently different potential for trust depending on the primary motivators used by those in charge (Force, Fear, Reward, Duty, or Love).
When trust is low or absent, the vacuum will be filled by those who depend on power to drive outcomes.
The risk of betrayal can be diminished by hiring and promoting those willing to adhere to the 10 Laws.
Over time, high-trust enterprises will successfully compete with their benighted counterparts obsessed with politics, self-protection, and self-aggrandizing power. The satisfaction that derives from collaboration, the innovation that flows from interdependent teams, the joy that springs from knowing you can trust those with whom you work—all are well worth the effort required to understand the nature of trust and to internalize and live by its laws.