When Trust becomes core to Business. Your Public Value regularly invites experts to share their views on public value. This month, we decided to republish Daniel Aronson’s blog on his understanding of why trust is so needed in business, as his views are well aligned with the ones we promote. DANIEL ARONSON is Founder at Valutus, a startup focused on “uncovering and quantifying The Value of Values” or, in other terms, helping organisations design their own strategy, tools, and metrics to become successful catalysts. Aronson’s blog was originally published on LinkedIn. Feel free to leave comments on his profile or below on our website. We look forward to your discussion!
“Musing on Business Trust
In amongst our struggle for sustainable everything, we’ve been pondering on a somewhat tangential topic: the business of business trust. And, just because, we thought we’d share a few of our musings here.
Now, a quick web search for ‘business trust’ pulls up just a shade under 1.5 trillion entries (give or take a million). Eliminate all the fiduciaries, the ads, the self-promotion pieces and the hand-wringing, and it seems to come down to the following two concepts:
- Trust is absolutely critical to business success
- Trust is extremely difficult to establish, to maintain, to verify. And, in 2019, we still rely on flimsy and moth-eaten methods — signatures on policies, third-party oversight, workplace cameras, etc. — to attempt to reign in the overpowering needs or improper impulses of human self-interest.
Doctors who must choose between the medication most beneficial to their patients and the one most beneficial to themselves. Billable hours spent over golf and martinis. And, of course, the banker who must assess loans to people whose ability to pay is highly questionable, but also highly lucrative.
In this brave new, yet highly fraught, world, a few concepts are emerging that may point the way to achieving actual, self-interested trust in business.
Barbara Brooks Kimmel, a leading voice in the field, asserted in a Globescan interview that, “Trust is a measurable asset. After eight years of collecting data in a systematic way, we are seeing that the most trustworthy companies are also the most profitable.” Yet, she notes, most companies link trust only to financial performance. Generally, she says, trust is “ignored altogether until a crisis hits the organization. Then leaders talk about rebuilding trust when it never really existed in the first place.”
Charles H. Green, CEO of Trusted Advisor Associates, and co-author of The Trusted Advisor — written with HBS Professor Emeritus David Maister — pointed out in a white paper that a shift to shared resources has been tipping trust in a new direction.
“The Sharing Economy,” he writes, “is itself a play in a much grander fundamental shift. It is a shift from an infrastructure that protects people from each other, to an infrastructure that helps people trust each other. Getting the fundamentals of trust right will make it easier to navigate a series of reinforcing positive economic waves.”
Business Trust as an economic model
Citing sharing services such as Zipcar, he notes that what he calls ‘transaction costs’ of rentals with traditional rental car agencies — insurance policies, disclaimers and all the rigmarole that goes into modern-day rentals — is absent in the sharing economy model. Ditto for Airbnb versus traditional hotels, and so on.
Strategist Mark Emmer asserts in a 2018 Inc.com article that truth-telling, pure and simple, is the road to trustworthiness, including truth in accountability should you ever not deliver as promised. This is highly compelling, certainly, and strips trust down more-or-less to its essence. Yet in a marketplace as crammed full of lofty mission statements, advertising that follows us mysteriously from social platform to desktop and back, and anonymous e-voices on the phones, is that enough? Will that break the trust barrier and differentiate one tree in a hoary forest of marketing and noise?
For those who don’t think so, another tack that suggests promise is the notion of trust-in-business models that realign various parties’ interests such that no one party is served by ripping the other one(s) off. CEO Green asserts that all past such efforts have failed, yet a promising new model came to our attention recently. Behavioral economist Dan Ariely, writing in Wired, notes that an insurance firm with which he is involved, Lemonade, is currently using such a model.
In his case, the weary reality that customers want their claims paid while insurance companies would prefer not to pay them is ever-present. The interest-realignment occurs by changing this dynamic and granting Lemonade a set share — Ariely posits 20% — of premiums as income with the 80% balance in a claim-payment fund. The customer makes a claim, Lemonade pays it from the 80% pool with no incentive not to: their share is already in hand. Any remainder goes to a charity of the customer’s choice, thus removing some of that party’s incentive to request an exorbitant settlement.
Genius? Too soon to tell, but the concept of pulling the fangs of self-interest on both sides rather than grappling with constant stress, oversight and mitigation, has the earmarks.
The value of delivery
One sure way to establish trust, though it may seem mundane, is quite simple: deliver. Consistently do what you say you will do. Create a great track record of delivering what, and when, you’ve promised, allowing trust to be established over time. It is clear that the search to be trusted, and to offer trust, is an often elusive one, yet just walking that road has power. We’ve written extensively, in these pages and elsewhere, about the value of having values. We believe in this so strongly we’ve taken Valutus — the Latin root of ‘value’ and ‘values’ — as our goal, our mission, and even our name. One of the things having shared values brings is trust.”
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