The SPEED of Trust: The One Thing that Changes Everything

by Stephen M. R. Covey

  3. Enhanced InnovationII

  High-trust companies are innovative in the products and services they offer customers, and they have strong cultures of innovation, which only thrive in an environment of high trust. Innovation and creativity demand a number of important conditions to flourish, including the open sharing of ideas, an absence of caring about who gets the credit, a willingness to take risks, the safety to make mistakes, and the ability to collaborate. And all of these conditions are the fruits of high trust.*

  Indeed, trust is the foundational enabler of innovation—particularly because of how it increases people’s willingness to take calculated risks and to learn through failing. Apple CEO Tim Cook declared, “[W]e take risks knowing that risks will sometimes result in failure, but without the possibility of failure there is no possibility of success.” Interestingly, Apple was named by Fast Company magazine in 2018 as the #1 Most Innovative Company in the world.

  I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments to get there.

  —JEFF BEZOS, FOUNDER & CEO, AMAZON

  As evidence of how significantly trust enables innovation, consider The How Report study, conducted in 2016 by consulting firm LRN. Their research shows that people who work in high-trust cultures are “thirty-two times more likely to take risks that might benefit the company, eleven times more likely to see higher levels of innovation relative to their competition, and six times more likely to achieve higher levels of performance compared with others in their industry.”

  Some benefits of innovation are clear: opportunity, revenue growth, and market share. But other dividends that may not be as obvious, such as optimizing the benefits of diversity and inclusion and leveraging differences for enhanced creativity. Innovation thrives and even derives from diversity—that is, where there is a collision of differences in an environment of trust. Without trust, however, differences often create suspicion, divisiveness, or even destruction. But with trust, differences become a primary source of creativity, synergy and innovation. Bottom line, when people trust each other, differences are strengths; when they don’t, differences are divisive.

  4. Improved Collaboration

  High-trust company environments foster the collaboration and teamwork required for success in the new global economy. Different than the traditional approaches of coordination and cooperation, real collaboration creates the key opportunity model of today’s world. In fact, many are terming the new environment in which we’re operating today as “the age of collaboration,” or as “the collaborative economy” (which includes the sharing economy). And this collaboration isn’t just internal to an organization—it’s also with external customers and partners. Forbes highlighted this “collaboration as opportunity” trend a few years ago, underscoring trust as the “bedrock” of collaboration. With low trust, collaboration is merely coordination—or at best, cooperation—both of which fail to achieve the benefits and possibilities available to true collaborators in our digital and disruptive world. Tellingly, you don’t need much trust to coordinate; but the farther you move up the continuum toward creative collaboration, the greater the level of trust that’s required. It is trust that turns mere coordination into true collaboration, just as it’s trust that turns a group of people into a team.

  5. Stronger Partnering

  The Warwick Business School study I mentioned earlier confirmed that partnering relationships (such as outsourcing deals) that are based on trust experienced a high-trust dividend of up to 40 percent of the value of the contract. Those that rely on the contract language, and not on a relationship of trust, fare far worse. The report reads: “We found that contracts with well-managed relationships based on trust—rather than stringent SLAs [service-level agreements] and penalties—are more likely to lead to a ‘trust dividend’ for both parties. Real trust is not naïve. It . . . is earned from performance.”

  According to a Gallup survey, the best partnerships are almost always characterized by high mutual trust. By contrast, in poor partnerships, less than 3 percent strongly agree that they trust each other. In most situations, mutual interest is simply not strong enough to override mutual distrust.

  Trust is the linchpin of a partnership. With trust, both people can concentrate on their separate responsibilities, confident the other person will come through . . . . Without trust, it’s better to work alone . . . . No trust, no partnership.

  —RODD WAGNER AND GALE MULLER, GALLUP EXECUTIVES AND AUTHORS

  6. Better Execution

  High-trust companies are better able than low-trust companies to execute their organization’s strategy. For leaders, teams and organizations that operate with high trust, such trust becomes a multiplier—and an accelerator—of their ability to execute the strategy. When there’s low trust, everything takes longer and costs more—or gets derailed altogether.

  Of course, high trust is not a panacea. We still have to create a good strategy and execute it well. Put simply: High trust won’t necessarily rescue a lousy strategy, but low trust will almost always derail a good one. At a minimum, low trust will slow it down.

  The importance of execution was made clear to me on my first day at Harvard Business School. At the end of a four-hour case study, my professor said something I will never forget: “If you only remember one thing in your two years at Harvard Business School, let it be this: It is better to have grade-B strategy and grade-A execution than the other way around.” Ironically, most business schools in teaching MBA students, spend about 95% of the time teaching strategy and only 5% of the time teaching execution.

  Voted the number one enduring idea by Strategy+Business magazine readers, execution is appropriately a huge focus in organizations today, and execution is significantly enhanced by trust. FranklinCovey’s execution quotient tool—“xQ”—has consistently shown a strong correlation between higher levels of organizational execution and higher levels of trust. In a study on grocery stores, top executing stores had significantly higher trust levels than lower executing stores in every dimension measured.III

  7. Heightened Loyalty

  High-trust companies elicit far greater loyalty from their primary stakeholders—coworkers, customers, suppliers, distributors, and investors—than low-trust companies. The evidence for every one of these relationships is clear:

  • Employees stay longer with high-trust companies—and are more engaged, creative, inspired, and committed.

  • Customers remain customers of high-trust companies—and refer far more business to them.

  • Suppliers and distributors stay partnered longer with high-trust companies—and remain part of a collaborative value chain that, indeed, creates more value.

  • Investors hold their investment longer with high-trust companies—and are more satisfied with both the relationship and the outcomes.

  Dr. Larry Ponemon, chairman and founder of Ponemon Institute, a leader in measuring trust in privacy and security, put it clearly: “Trust is becoming the vital component in customer loyalty and brand strength.”

  • • •

  When you add up all the dividends of high trust—and you put those on top of the fact that high trust decreases or eliminates all the taxes we’ve just discussed—is there any doubt that there is a significant, direct, measurable, and indisputable connection between high trust, high speed, low cost, and increased value?

  [Business executives need to] recreate a trust agenda. Nothing good happens without trust. With it you can overcome all sorts of obstacles. You can build companies that everyone can be proud of.

  —JIM BURKE, FORMER CHAIRMAN AND CEO, JOHNSON & JOHNSON

  As I’ve said: Nothing is as fast as the speed of trust. Nothing is as profitable as the economics o
f trust. Nothing is as relevant as the pervasive impact of trust. And if you have on glasses to see, these realities become unarguable when it comes to building trust with the internal stakeholders in your organization.

  Thus, I again affirm on the organizational level: The ability to establish, grow, extend, and restore trust truly is the key leadership competency of the new global economy.

  FAMILIES ARE ORGANIZATIONS, TOO

  I would not want to leave this section without pointing out that families are organizations, too, and everything we’ve talked about in this chapter applies just as powerfully to the family as it does to any other organization.

  Families have greater trust when they are aligned, when they have structures and systems that recognize values and reward high-trust behavior, when they have symbols that communicate the paradigms that create high-trust relationships.

  One of my associates told me about a conversation he had with a friend. When he asked his friend if his son was going to play basketball, the man said, “Well, his grades were not what they needed to be, so he will not be playing ball this year.” After a brief exchange, he concluded by saying, “I’m trying to raise a boy, not a basketball player.”

  Think about it! Suppose you want to encourage your son to get better grades, but the structures and systems in your family are not aligned. Suppose they’re as follows:

  The rewards system: When he wins a game, you have a huge celebration and take him out to dinner. When he brings home an A, you merely say, “Good job!”

  The communication system: Every week you ask him excitedly, “When’s the next game?” You talk about his grades only once a quarter when report cards come out.

  The decision-making system: Everything you do as a family is based on the next game, the next event. Grades are never a part of the decision.

  The structure: Your son makes his own decisions relative to when he goes to bed, how much television he watches, and how much time he spends with his friends—regardless of his grades.

  The family is perfectly aligned to get the results it’s getting: a sports-focused kid who doesn’t care a lot about his academic performance in school.

  If people really take family seriously, they need to ask the same questions people do with regard to any organization:

  • Does our family have Integrity? Are the values clear, and do the rules and guidelines (structures and systems), and the behavior of the parents support those values? Is there an environment of honesty and humility? Do family members have the courage to express their ideas and opinions freely, and do they do so with respect?

  • Does our family have good Intent? Have we structured a culture of respect and caring? Is the agenda mutual benefit, or is it just the adults, or children, who win? Do our systems reward cooperation?

  • What are our family’s Capabilities? Does the structure provide for and encourage development and growth? Is it safe to learn by making mistakes? Are systems in place to help children develop the life skills they will need to succeed as adults?

  • What Results does our family produce? Are systems in place to create joy in shared accomplishment? Is there an abundance of rich interaction, support, and love? Are family members achieving important goals, both individually and as a family?

  Do we behave in high-trust ways? Do we Talk Straight? Do we Demonstrate Respect? Do we Show Loyalty? Do we Keep Commitments? If not, what structures and systems are rewarding low-trust behavior? And what can we do to create change?

  What are the symbols in our family? Are they aligned with the values we believe in and want to promote?

  The most powerful way I can build trust as a leader in my home is by modeling the 4 Cores and 13 Behaviors and by creating alignment in the family so that the structures and systems support the values I’m trying to help family members understand and live. And in doing so, I create that geometric multiplier. In our own home, for example, because our son tested us and we held him accountable on his driving, our daughter knows how she needs to drive. We didn’t have to spend the same amount of time training her, and she doesn’t constantly test us on whether or not we will follow through. She can trust that we will. It’s the “discipline one, teach a whole family” dividend. But it has to be consistent. It has to be in the structure and systems to create a culture of trust.

  Whatever your organization—be it a business, a not-for-profit, a department or team within a larger organization, or a family—it’s vital to realize that designing or aligning it in a way that establishes trust may well be your greatest influence. In doing so, you positively affect everything else within the organization.

  * * *

  I. For a video on how to measure trust and its impact on your organization, along with a sample Organizational Trust Index, go to www.speedoftrust.com/book-promises.

  II. To see a video showing how trust impacts innovation, go to www.speedoftrust.com/book-promises.

  III. To see a video on how trust acts as a multiplier of your ability to execute, go to www.speedoftrust.com/book-promises.

  THE FOURTH WAVE—MARKET TRUST

  THE PRINCIPLE OF REPUTATION

  In the end, all you have is your reputation.

  —OPRAH WINFREY

  I invite you to take a look at the logos on the following page, and as you do, examine your reaction. What do you feel as you look at each one? Do you feel the same about all of them? If not, why?

  If your experience is like most, when you look at some of these logos, you have positive feelings. Maybe you know the company. Maybe you’ve had experience with their products and services, or you have close friends or relatives who have. Maybe you’ve heard positive comments on their financials, their leadership, or their sense of social responsibility, or you’ve read other good things about them in the press. As a result, you might buy or recommend a product or service from one of these companies just because their name is behind it.

  When you look at other logos, perhaps you have negative feelings. Maybe you, or an acquaintance, have had an unsatisfactory personal experience with a product or service offered by these companies or heard disturbing things about them in the media. For whatever reason, the feeling is different, and likely you would not purchase a product or service from these companies—nor would you recommend it to others.

  Market Trust is all about brand or reputation. It’s about the feeling you have that makes you want to buy products or services or invest your money or time—and/or recommend such action to others. This is the level where most people clearly see the relationship between trust, speed, and cost.

  In fact, you could say that a “brand” is trust with the customer, trust with the marketplace, or even more boldly, “trust monetized.” Most people understand this at least intuitively, if not also measurably. As a result, companies invest all kinds of money in creating a brand that inspires trust. Some brand-building companies actually have formulas that attempt to quantify the economic value of a brand. Al Golin, founder of PR firm Golin, described their brand-building work as nothing less than “building trust worldwide.”

  Trust is a key building block in the creation of a company’s reputation, and as a direct result, its shareholder value.

  —ROBERT ECKERT, FORMER CEO, MATTEL

  The direct connection between brand, trust, speed, and cost is evident on every level. At one presentation I did for the Sales & Marketing Executives International conference, an executive from a hundred-year-old, multibillion-dollar company came up to me and said, “We have an extremely trusted brand, and it pays enormous dividends. Our renewal rate for our services is an amazingly high 90 percent. That’s the best indicator of our brand’s value. We work constantly to protect the integrity of this trust relationship, which is our most valuable asset. Many businesses want to partner with our brand; however, our partner selection criteria are very stringent in order to protect the trust relationship we have with our customers.”

  In virtually every industry, the trusted brand is the most
profitable.

  —SETH GODEN, AUTHOR AND MARKETING EXPERT

  “BRAND” MATTERS ON EVERY LEVEL

  Obviously corporate brand is important to companies with products and services to sell. But it’s also important to all organizational entities, including governments, school districts, charities, hospitals, cities, and states. When families move, for example, many will investigate the various schools in the area to find out which ones have the best reputation before deciding where to look for a home. This has a significant impact on the amount of tax money available to the school, their priority in the district in terms of new building or remodeling, and their ability to attract and hire administrators and teachers.

  Cities have reputations, which are reflected in published lists of best places to visit or best places to live . . . which translate into tax dollars, tourist dollars, businesses attracted, and home value appreciation. Local governments, state governments, and national governments all have reputations, which affect their ability to transact business, as well as attract business. On a more micro level, the reputation of a particular team or division within an organization has significant impact on factors such as resource allocation and budget planning. Often a manager will think his department is far more deserving of funds because of the importance of that department’s work, only to find his budget request trumped by other departments that have a better reputation for delivering results. In other situations, the reputation of one division in an organization will impact the way the people in other divisions interact with it.