The
Speed of Trust:
Trust, Branding & Competitive Advantage
An Interview with Stephen M.R. Covey
by Christian Sarkar
A
sought-after speaker and advisor on trust, leadership, ethics,
and high performance, Stephen M. R. Covey is cofounder
and CEO of CoveyLink Worldwide.
He is also the author of The
SPEED of Trust: The One Thing that Changes Everything,
an eye-opening book which challenges age-old assumptions about
trust. In this interview, Covey explains why the notion of trust
as a soft, social virtue is a myth and instead demonstrates that
trust is a hard-edged, economic driver—a learnable and measurable
skill that can give your business a competitive edge.

Why
do you claim that "Trust" is the key leadership competency
of the new global economy?
Covey:
If you look at the nature of the world today, a foundational
condition in Thomas Friedman's flat
world is the presence of trust. Put simply, today's increasingly
global marketplace puts a premium on true collaboration, teaming,
relationships and partnering, and all these interdependencies
require trust. In the book I point out that partnerships based
on trust outperform partnerships based on contracts. Compliance
does not foster innovation, trust does. You can't sustain
long-term innovation, for example, in a climate of distrust.
In
issue after issue, the data is clear: high trust organizations
outperform low-trust organizations. Total return to shareholders
in high trust organizations is almost three times higher than
the return in low trust organizations.
So
we assert that trust is clearly a key competency. A competency
or skill that can be learned, taught, and improved and one that
talent can be screened for.
Trust
is the one thing that affects everything else you're doing.
It's a performance multiplier which takes your trajectory upwards,
for every activity you engage in, from strategy to execution.
How
do you identify a high-trust or low-trust organizations?
Covey:
Trust is a powerful accelerator to performance and when trust
goes up, speed also goes up while cost comes down -- producing
what we call a trust dividend. How
do you know if you have a high trust culture? By observing the
behavior of your people. In high trust, high performance companies,
we observe the following behaviors:
Information is shared openly
Mistakes are tolerated and encouraged as a way of learning
The culture is innovative and creative
People are loyal to those who are absent
People talk straight and confront real issues
There is real communication and real collaboration
People share credit abundantly and openly celebrate each
others' success
There are few meetings after the meetings
Transparency is a practiced value
People are candid and authentic
There is a high degree of accountability
There is palpable vitality and energypeople can feel
the positive momentum
Another
very visible indicator is the behavior of your customers and suppliers.
What is your customer churn rate? Do you have a history of long-term
customer and supplier relationships? What is your reputation or
brand equity in your marketplace?
Conversely, when the trust is low, there's a trust tax
which changes your trajectory downwards. In our work with organizations,
we find that low-trust, low-performance organizations typically
exhibit cultural behaviors like:
• Facts are manipulated or distorted
• Information and knowledge are withheld and hoarded
• People spin the truth to their advantage
• Getting the credit is very important
• New ideas are openly resisted and stifled
• Mistakes are covered up or covered over
• Most people are involved in a blame game, badmouthing others
• There is an abundance of “water cooler” talk
• There are numerous “meetings after the meetings”
• There are many “undiscussables”
• People tend to over-promise and under-deliver
• There are a lot of violated expectations for which people make
many excuses
• People pretend bad things aren’t happening or are in denial
• The energy level is low
• People often feel unproductive tension—sometimes even fear
These
behaviors are all taxes on performance.
The
work we do is to establish trust as your organizational operating
system. That's a high-tech metaphor, but it's appropriate. We
know how trust works, how to measure it, how to establish it,
grow it, extend it, and sustain it – with all stakeholders.
Why
is trust such a hidden variable to many otherwise competent managers?
Covey: Unfortunately, too many executives believe the myths
about trust. Myths like how trust is soft and is merely a social
virtue. The reality is that trust is hard-edged and is an economic
driver.
For
instance, strategy
is important, but trust is the hidden variable. On paper you can
have clarity around your objectives, but in a low-trust environment,
your strategy won't be executed. We find the trust tax shows up
in a variety of ways including fraud, bureaucracy, politics, turnover,
and disengagement, where people quit mentally, but stay physically.
The trust tax is real.
There
are many myths about trust, and in my book I present them in a
table your readers may find helpful:
MYTH
|
REALITY
|
Trust
is soft |
Trust
is hard, real, and quantifiable. It measurably affects both
speed and cost |
Trust
is slow |
Nothing
is as fast as the speed of trust |
Trust
is built solely on integrity |
Trust
is a function of both character (which includes integrity)
and competence |
You
either have trust or you don't |
Trust
can be both created and destroyed |
Once
lost, trust cannot be restored |
Though
difficult, in most cases, lost trust can be restored |
You
can't teach trust |
Trust
can be effectively taught and learned, and it can become a
leverageable, strategic advantage |
Trusting
people is too risky |
Not
trusting people is a greater risk |
You
establish trust one person at a time |
Establishing
trust with the one establishes trust with the many |
So
trust is measurable? quantifiable?
Covey: Absolutely, trust is measurable. Smart organizations
measure trust in three key ways: 1) actual trust "levels"; 2)
the "components" or dimensions that comprise trust; and 3) the
"effects", or impact, of trust.
We
have found that one very simple way to measure trust levels is
to ask one direct question and roll it up and down throughout
the organization. For internal stakeholders ask: "Do you trust
your boss?" to employees at all levels of an organization. For
external stakeholders, like customers or suppliers, you might
ask them: "Do you trust our sales representative or account manager?"
These are simple, direct questions that tell us more about our
culture than perhaps any other question we might ask.
Now,
wouldn't it be great if "trust" showed up on the financial statements
as either a 'tax' or a 'dividend'? Organizations would then use
resources to eliminate the tax or create a larger dividend! Although
a high trust or low trust culture doesn't literally show up on
financial statements, it does show up in the following ways, which
are measurable, observable and economically relevant (all of which
make a strong "business case for trust"):
The
7 Low-Trust
Organizational Taxes
|
The
7 High-Trust
Organizational Dividends
|
1.
Redundancy |
1.
Increased value |
2.
Bureaucracy |
2.
Accelerated growth |
3.
Politics |
3.
Enhanced innovation |
4.
Disengagement |
4.
Improved collaboration |
5.
Turnover |
5.
Stronger partnering |
6.
Churn |
6.
Better execution |
7.
Fraud |
7.
Heightened loyalty |
|
(The
opposites of the 7 Organizational Taxes are also Dividends) |
What
are the competencies, the behaviors that build trust?
Covey: Trust too often has been pigeonholed as based on
character and integrity alone. There's nothing wrong with that,
and that is clearly the foundation, but it's insufficient.
Trust
is a function of both character and competence. Of course
you can't trust someone who lacks integrity, but hear this: if
someone is honest but they can't perform, you're not going to
trust them either. You won't trust them to get the job done.
That's
one reason why trust has a soft image- because it has been severed
from competence and results.
So
how does one apply trust to branding?
Covey: When I look at a brand, a brand is nothing more
or less than trust with the customer, trust with the marketplace.
The principle behind a brand is reputation. The brand stands for
a promise and the ability to deliver on that promise. And in that
promise is a company's character and competence, its reputation.
From
the character side you start with integrity—honesty, congruence,
humility and courage. The courage to be open, to stand for something,
to make and keep commitments. Then there's intent—is there
a genuine concern for people, purposes and society as a whole
or is profit your sole motive? What's the company's agenda? And
how does it behave? Sometimes poor behavior is simply bad execution
of good intent.
On
the competence side, you start with your capabilities—talents,
skills, the ability to deliver. Is your company staying relevant,
are you continually improving, do you have the right technologies
to stay ahead of your competition? Brands need to reinvent themselves
from time to time to stay relevant. Finally, look at your results.
Your company and your brands are constantly measured based on
past performance, present performance and anticipated future performance.
These
four dimensions—integrity, intent, capabilities and results—make
up the credibility and reputation of your brand. When the trust
is high, you get the trust dividend. Investors invest in brands
people trust. Consumers buy more from companies they trust, they
spend more with companies they trust, they recommend companies
they trust, and they give companies they trust the benefit of
the doubt when things go wrong. The list goes on and on. On the
Internet, a trusted brand versus an untrusted brand—the differences
could not be clearer, you only give your credit card number to
those you trust. And look what happens when a brand gets diluted
or polluted or compromised, we see how fast consumers, and investors,
turn away. They quit buying.
These
same principles apply equally to companies and individuals.
What
about the social responsibility of business? Is this part of the
trust equation?
Covey: Initially many companies may move into this arena
for PR purposes. More out of fear of not being in the arena, than
really participating with their souls. But there are huge benefits
that flow from this - the difference it makes with your employees
first, then your customers, your suppliers, your distributors,
your investors.
The
distrust we see all around is suspicion, a response to
the corporate scandals and vicious downward cycles of cynicism.
But when a company focuses on the principle of contribution
for all stakeholders, that becomes good business. Executives
need to understand the economic benefits of this trust dividend,
especially when the behavior is real, not artificially or superficially
created as PR to manipulate trust. We will see more and more companies
moving in this direction because it makes economic sense, period.
Trust
varies by geography, as you've pointed out in your book. How do
companies build trust globally?
Covey: There's no question that trust issues are global
issues. There's also a country tax. The Edelman Trust Barometer
tells us, for example, that trust is often based on country of
origin. US companies are being taxed in Europe, in Germany, France
and England, for example. How can companies like UPS improve their
trust rankings?
Trust
can be rebuilt. So how do you build trust? By your behavior. We've
identified 13 behaviors which build trust:
1.
Talk Straight
2. Demonstrate Respect
3. Create Transparency
4. Right Wrongs
5. Show Loyalty
6. Deliver Results
7. Get Better
8. Confront Reality
9. Clarify Expectations
10. Practice Accountability
11. Listen First
12. Keep Commitments
13. Extend Trust
Companies
need to have a strong promise, because the promise builds hope.
Keeping the promise is what builds trust.
My
father has an expression: "You can't talk yourself out of
a problem you behaved yourself into." So it is with trust.
Sometimes
it takes a little time, but you can accelerate the process by
declaring your intent and signaling your behavior, so others can
see it.
People
and companies can learn these behaviors. It's not a simple process
which happens overnight. But it is a systemic, cultural process
which can happen one leader at a time, one division at a time,
one company at a time, and you can see the behavior shifting toward
authentic, real trust-building behaviors as opposed to the more
common counterfeit behavior of spin and hidden agendas and the
like which tend to dissipate and diminish trust.
Is
there a danger in being too trusting or even gullible?
Covey: One thing about trust is that everyone's for it.
However,
there are three big objections which come up. The first one is
that trust is a social virtue, to which I say no, it's much more
than that; it's a hard-edged economic driver. Secondly, and we
hear this all the time: "we can't do anything about trust,
it's either there or it's not there." This too is a fallacy.
Trust is a competency. It's something you can get good at. It's
a strength you personally, and your team and your company
can master. Being good at it will elevate every other strength
you have.
The
third complaint goes along these lines: "We've been burned
before. We can't trust everyone. Are you suggesting we trust everybody?"
That's where I suggest you exercise what I call "SmartTrust."
Most leaders have been burned before, so they become distrusting.
Our society is that way. After Enron and WorldCom, we pass legislation
like Sarbanes-Oxley to force compliance, raising the "tax"
on all businesses. The question is, "is there a third alternative?"
An alternative where you combine a high propensity to trust with
good analysis and judgment, so we can really assess the circumstances,
the risk, the credibility of the people involved, so we can extend
trust, and build into that trust a stewardship or responsibility.
If
you're not trusted, you tend to reciprocate with distrust. That's
how the vicious cycle of mistrust starts and spirals downward.
There
is a risk in trusting people, but the greater risk is not trusting
people.
SmartTrust
says you look at the opportunity, the risk and the credibility
of the people involved. And you add to that verification and analysis.
So you trust and verify. As opposed to verify, then
trust!
Let's
look at Berkshire Hathaway and Warren Buffet. I mention them in
the book as an example of a high-trust company, about the acquisition
they made based on a hand shake without due diligence.
But
did you know that's how the entire company operates?
They
have a 192,000 employees with 42 different wholly-owned companies.
How many people do you think work at corporate headquarters? '
Seventeen!
Why?
Because they choose to operate in a "seamless web of deserved
trust" as Charlie Munger calls it.
This
is real. It's not blind trust, but smart trust.
Thank
you so much. I truly believe The
SPEED of Trust: The One Thing that Changes Everything
will become a business classic, and I hope our readers will go
get a copy.
Christian
Sarkar is the managing editor of The Institute
of Brand Science at Emory University. A management consultant,
Christian is the leading proponent of "double
loop marketing" - a thought-leadership based approach
to online marketing. He is the founder of several sites including
strategyworld.org.
|