You’ve heard the cliché: trust is the grease that lubricates business. Without it, transactions become time-consuming and expensive because everything must be negotiated, tested, verified, and, perhaps, litigated. Innovation and nimbleness suffer. Partners and consumers go elsewhere.
The confidence needed to try the next new thing evaporates.
Trust in government, science, NGOs, business, and other major institutions has been eroding for decades. Business stands out as the exception. In Edelman’s 2021 Trust Barometer report, business is the only institution seen by people worldwide as both ethical and competent. What are the implications for business leaders? Does it create an opportunity? An obligation?
The basis of trust is changing. Throughout most of human history, trust required proximity: you learned who to trust by observing the behaviors and hearing the stories of people you knew and encountered. To use lodging as an example: when traveling, you stayed with people you knew or places endorsed by people you knew. Proximity trust became less effective as society industrialized, mobilized, and urbanized. For society to function, trust needed to come from different sources. People needed to learn how to trust food that came from afar, currency based on credit, dependability based on brands, and expertise based in professions. A new source of trust emerged to replace our own eyes and connections: referees, regulators, authorities, experts, watchdogs, and gatekeepers. Trust became an attribute sought, earned, managed, and protected by brands, political parties, media outlets, professions, universities, science, government, and other institutions. To continue the lodging example, we trusted where to stay based on a hotel brand’s reputation.
Institutional trust is eroding for three reasons:
- Declining accountability: not all people and institutions get punished for wrongdoing.
- End of expertise: eroding confidence in gatekeepers and referees such as scientists, professionals, and other experts.
- Echo chambers: segmented media that limits access to some information while reinforcing access to other information.
In Who Can You Trust, Rachel Botsman argues that we are living through a trust transition. A new form of trust — distributed trust — is emerging and it is transforming markets and governance. Trust has turned on its head. Rather than flowing vertically, down to users from experts and brands, it now flows horizontally, from and among other people and, in some cases, from and among programs and bots. The consequences, good and bad, cannot be underestimated. How should you respond?
All three trust models are similar in that they rely on the following three evaluations: Is the actor competent? Is the actor reliable? Is the actor honest? It doesn’t matter if you decide whether to trust a bank, lawyer, neighbor, hotel, or renter; you will evaluate the same three questions. Distributional trust differs from institutional or proximate trust in how these evaluations are conducted and shared.
Distributed trust is supported by digital technology that allows crowdsourcing evaluations from the users — consumers, citizens, lodgers, renters, you, me, everyone. Continuing the lodging example, Airbnb’s trust model relies on transparent evaluations. Renters evaluate lodgers using evaluations posted by other renters and lodgers evaluate renters using evaluations posted by other lodgers. Your evaluation matters in a distributed trust model because it impacts others’ reputation just as their evaluation impacts your reputation. The towels you would leave on the floor of a hotel you hang up in an Airbnb, because the lodger’s evaluation matters to your online reputation and ability to find subsequent lodging opportunities.
How are businesses responding to the changing nature of trust? You will be familiar with the following innovations, but thinking about them through the lens of trust may help you see new opportunities:
- Branding: Sophisticated monitoring of social media and timely response to critiques and compliments. Good consumer service and highly visible corporate social responsibility.
- Employee Recruitment and Retention: Co-create, promote, monitor, and report tangible, meaningful, and visible corporate social responsibility mission and metrics. Distribute responsibility for deciding who is an acceptable client and what is an acceptable project.
- Community Operations and Relations: Provide clear, transparent, accessible metrics about economic, social, and environmental impacts.
- Investors and Access to Capital: Monitor, report, and manage for indicators such as those developed by the Sustainable Accounting Standards Board.
- Supply Chains and Other B-to-B Arrangements: Demand, monitor, report, and base decisions on sustainably accounting metrics such as CDP and GRI. Organize and engage in roundtables such as Responsible Soy or Sustainable Beef.
- Consumers: Meaningful and actionable product certification and labeling.
- Purchasing Agents: Engage organizations such as the Sustainable Purchasing Leadership Council.
Of course, there is a potential dark side to distributed evaluation. Botsman describes an Orwellian-like trust-scoring system in China called the Social Credit System that rates its citizens’ trustworthiness based on their honesty in government affairs, commercial integrity, societal integrity, and judicial credibility. The system is currently in prototype, and the details are not exact, but it might evaluate everything from bill paying to court appearances to online browsing activity. The resulting “Citizen Score” would help everyone assess your trustworthiness and could be used to determine your eligibility for a mortgage, employment, where your children attend school, or even just your chances of getting a date.
What is next for your organization?
