‘Trust’- the ultimate business currency


Do Not Trust MeJust recently I  was staying in a hotel in central Auckland on work.  I was pleasantly surprised when logging on and a message popped up saying ‘Guests can enjoy FREE wifi with no data cap or time limit’ .

For me as a hotel guest this signalled that they trusted us the customers, to do the right thing and not to abuse wifi privileges.

Rachel Botsman in her TED talk   discusses how trust is the currency of the new economy . In  The Speed Of Trust, Stephen M.R.Covey points out that high trust equals high speed and low cost, whereas low trust means low speed and high cost.

We have all experienced this in our business and personal lives.  When you trust someone, things are smoother and faster.

Covey cites the case of aviation security in the US. Prior to 9/11 one could reach the airport just 30 minutes before flight time and easily make it on board.  Why? Because people had a high degree of trust in aviation security.  Now it takes anywhere from 1.5 to 2 hours.  While the extra security measures have made flying safer, Covey points out that the added cost of security ultimately shows up on every airline ticket.   On the other hand, he gives the example of Warren Buffet deciding to acquire McLane Distribution – a $23billion company – from Wal-Mart in just one two-hour meeting because of high trust.  Besides the speedy conclusion of the deal, both companies saved millions of dollars in legal and investment banker fees.

Companies and organisations spend billions of dollars earning customer’s trust.  But today the shoe is on the other foot and the challenge in the new economy is how do companies show customers that they trust them?  Do you trust your customers and how have you shown them that you trust them?  Free wifi will do it for me every time.

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6 Comments
  • James
    Reply

    To continue on your example of Mr Buffett and Berkshire Hathaway (classic company case study), throughout his successful tenure as Chairman, his business has been guided by this exact tenet. McLane was one of his many subsidiaries, but if you look throughout, the vast majority of his purchases have been through trust. The purchase of the Nebraska Furniture Mart for $55M was based on a cheque, a handshake, no audit reviews on inventory or accounts. Amazing! And why would he want it any other way? Why would we?

    Businesses and customers that transact business with Berkshire will always know that “Berkshire’s ‘cheque’ will always clear.”

    The same goes with his share owners. The trust was set from the outset and applied consistently throughout his business career. Never was he part of excess fads. Thats why you have owners on the register with the lowest turnover of any publicly traded company on the NYSE.

    Trust – “It takes 20 years to build a reputation and five minuted to ruin it. If you think about that you’ll do things differently.” W Buffett

    Great article. Thankyou for your insight.

  • Robert Macey
    Reply

    Years ago I took a trip on the Trans-Siberian railway. Before we departed Moscow station I watched a tourist try to secure his cabin with a chain and padlock. After some time, two locals travelling on the train noticed this and gesticulated that the chain wasn’t needed. The tourist was incredulous, but his announcement to his fellow travellers was unambiguous: I don’t trust any of you.

    Over the next 10 days he and I experienced a very different journey. I felt vulnerable but excited. He was isolated. Trust became a powerful currency on that train; built over time with rewards, or lost in a few moments. Trust supports change, breathes life into corporate values and lets teams become empowered. When leaders articulate change or propose a strategy, they are often saying: trust me with your future and this organisation’s new journey. Their trust account becomes an impediment or enabler.

  • Reply

    How lovely Yamini – it is nice to be trusted.

    I had the pleasure of hearing Rachel speak at an event last year and she is compelling. One thing that she said that really hit a nerve with me is that there is a move to get banks and other institutions to accept “reputation” as currency – particularly as we move into a collaborative consumption society. We no longer “own” things but “rent” the use of services and items for the time we need them… so the concept of collateral against loans will disappear. The only thing that is left is TRUST, which manifests in reputation.

    It really will come down to a woman’s word is her bond.

    • Yamini Naidu
      Reply

      Charly
      Great comment. Absolutely trust and reputation and are the two biggest currencies. Two things money cannot buy and must be earned. And now in a globally interconnected world very transparent as well. Can I throw in a third currency that is high on everyone’s radar – time?
      Regards
      Yamini

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