Steven MR Covey's father's book The Seven Habits of Highly Effective People is a global business classic and his own book The Speed of Trust is aiming to expand the family franchise. Opening up with a story of a USD 23 billion deal with Wal-Mart in which no due diligence was done - it was a deal based on trust. A deal could be done with a two-hour meeting and close in a month, versus the months that it takes a Wall Street firm to do a deal based on traditional due diligence. [COMMENT: In the old days this is how it was done on Wall Street, of course, but then people started to move away from personal integrity]. People working with deserved trust is Warren Buffet's approach to his holdings, he has all of seventeen people in his central office monitoring his broad holdings. Steven sees trust as the key to the new economy.

The business case for trust: the conventional wisdom is that trust is a "soft" virtue. Steven sees in fact that trust is a key economic driver that can accelerate business. Restoring trust takes time, but when you understand trust you can build it up effectively. Once you've established it, nothing is faster than the speed of trust. Exercise: write down the name of a person who you trust in your business life. How does if affect how you get things done, the results that you achieve? Versus a low-trust relationship, where communications and results are different - especially in the time of execution. There's a huge gap between the two, guarded, cautious relationships. Trust always affects measurable outcomes. 9/11 took away trust, the security measures have reduced our efficiency because of the lack of trust reflected in security. Corporate scandals pushed down trust in public markets, resulting in regulations that has helped to rebuild confidence, but at a price. These regulations are a prosthesis for trust. Distrust doubles the cost of doing business and triples the time it takes to do business. Covey sees trust as the new currency in the new economy.

It's interesting to reflect on how this concept plays out in the content industry. I have long used the maxim "I trust, therefore I execute" as the basis for business transactions in online ecommerce, especially from my early experience in financial transactions. I was working on a research project for a major financial publisher and was interviewing a portfolio manager who was responsible for buying and selling bonds and other fixed income securities. He showed me all of his high-tech tools but the key insight he has was "When I am doing a twenty million dollar deal I am not afraid to pick up the phone." The bond market is inefficient in some ways but only because of the efficiency of trading partners who trust one another. We see this reflected in the problems with media companies insisting on lock-down DRM controls for entertainment content, rather than developing systems of ecommerce based on trust. It's also visible in the social media arena, in which trusted peers develop efficient systems of developing and sharing information with one another. Wikipedia has its pluses and minuses, as even its co-founder Jimbo Wales has acknowledged, but the rapid acceleration of growth was built on trust.

The key factor is developing filters that let us know when and how to trust one another. This is where credentials come in - an element that was missing in Wikipedia and that bit them hard. By contrast, eBay's ratings help people to learn how to trust one another effectively: there's a system that enables peers to understand who's trustworthy. This ability to build personal brands is key in online ecommerce, and the most successful systems are based on self-regulating controls that ensure a high level of trust. In more traditional content markets peer-reviewed journals have continued to have viable business models in large part because of their long legacies of trust based on systematic input from respected peers.

This was a very good presentation, but it also pointed out a lot of the sad facts regarding trust in the workplace and in the public realm. Covey pointed to research indicating that less than half of the people in the U.S. workplace don't trust their workplace peers. But trust can be turned into a strength, he noted, if you build credibility and behavior. Reflecting on the changes in our society in the wake of 9/11 I must say that it's discouraging to think about how much a sense of trust has been eroded in our society, but it was something that is a constant struggle in society. Our media have not helped this process as we are now captive to a system that tries to create artificial trust based in the power of individuals and institutions to shape advertising and promotions. My hope is that social media will help to create a balance for publishing that will call back more peer-level endorsements that will place pressure on traditional channels to reconsider how they support or undermine society with the propagation of messages promoting products and people.

Labels: SIIA Content Forum 2007, Steven Covey