Trust produces better results in business and in life. It’s an irresistible force. We talk about it in most all of our programs.
A few years back Stephen M.R. Covey wrote a breakthrough book called The Speed of Trust, which sold over one million copies. He and his partner Greg Link are out with their new book, Smart Trust, and I can’t recommend it enough.
I’m going to copy some stories from the book here to get you thinking, especially about your professional life. If you’re intrigued, go to this site and order the book. You can also participate in an interactive broadcast they are doing this coming Thursday.
Here are stories and commentary from Stephen’s and Greg’s book:
-Steve Jobs… In 2007, Ted Morgan, the CEO of an unknown location-finding technology company called Skyhook, had been trying for months to get major companies to use his technology. Then one day when Morgan checked his voice mail, he found that a caller had left the following message: “Ted, this is Steve Jobs from Apple. I’d like to talk to you about Skyhook. Call me at . . .”
Thinking the message was a joke played by someone on his team, Morgan deleted it. Later that day, he told Mike Shean, Skyhook’s cofounder, “Good try, but you gave it away by pretending to be Steve Jobs. You should have said you were Scott or one of the other managers we just met at Apple.” Shean said he knew nothing about the message. When Morgan realized the call had actually been from Steve Jobs, the CEO of Apple asking to meet with him, he sat up in a hurry.
Morgan returned the call and met with Jobs, and things started happening quickly. It looked as though a great deal was in the making. Then one day, Jobs called Morgan and said that Apple had a big Macworld event coming up, that it was close to doing a deal with Skyhook, and that he wanted to model Skyhook’s technology at the event—but he couldn’t do it without Skyhook’s code. So Jobs asked Morgan to give him the code.
While still on the phone, Morgan turned to his management team and whispered, “He’s wanting our code.” The immediate response of the team was “No! No! No!” Morgan said to Jobs, “Steve, as you might imagine, we’ve never given out our code. That code is our intellectual property. It’s everything we have.” Jobs replied, “I know that. You’re just going to have to trust me.”
Against the advice of his team, Morgan gave Jobs the code. We later asked Morgan, “What do you think would have happened if you had said, ‘Steve, I just can’t?” He replied, “You never know. But personally, I don’t think he would have done the deal. I think Steve would have moved on.” Instead, Jobs rewarded Morgan by personally demonstrating Skyhook’s technology at Macworld in January 2008, giving an animated explanation of how the technology worked and adding, “Isn’t that cool? It’s really cool.”
Morgan called Jobs’s spotlight on Skyhook “the biggest publicity event any company can have.” Skyhook’s WPS became the primary location engine for Google Maps and other applications used by both the iPhone and iPod Touch until April 2010, and the company continues to provide location-based services for Apple as well as other technology giants such as Samsung, Motorola, Dell, Qualcomm, and Texas Instruments. Its software powers thousands of mobile applications and is being used on tens of millions of devices around the globe. Morgan’s leap of trust turned out to be a huge positive game changer for Skyhook. It also affirms that although there is risk in trusting, there is often greater risk in not trusting.
-Moments of Trust… Almost daily, most of us have what we could call “moments of trust,” single instances in which our behavior enables us to build, extend, or restore trust or to diminish it. How we respond in those key moments, large or small, often has a disproportionate impact, sometimes beyond our wildest imagination.
One remarkable moment of trust occurred for Mark Zuckerberg right after his social networking service, Facebook (then called Thefacebook), was launched in 2004. Zuckerberg had entered into a verbal agreement for critically needed funding with Donald Graham, the chairman and CEO of the Washington Post Company. Just a few weeks later, the Accel Partners venture capital firm bettered the offer by $4 million. At a dinner with one of Accel’s co–managing partners, who was trying to close the deal, Zuckerberg appeared to tune out of the conversation. He left to go to the bathroom and didn’t come back.
In The Facebook Effect, David Kirkpatrick wrote: Cohler [one of the first executives hired by Zuckerberg] got up to see if everything was okay. “There, on the floor of the men’s room with his head down, was Zuckerberg. And he was crying. Through his tears he was saying, ‘This is wrong. I can’t do this. I gave my word!’,” recollects Cohler. . . . “So I said, ‘Why don’t you just call Don up and ask him what he thinks?’” Zuckerberg took a while to compose himself and returned to the table. The next morning he did call Graham. “Don, I haven’t talked to you since we agreed on terms, and since then I’ve had a much higher offer from a venture capital firm out here. And I feel I have a moral dilemma,” Zuckerberg began. Graham had already talked to Breyer, so he was disappointed but not surprised. But he was also impressed. “I just thought to myself, ‘Wow, for twenty years old that is impressive—he’s not calling to tell me he’s taking the other guy’s money. He’s calling me to talk it out.’” Graham knew that even his first offer was very high for a company so tiny and so young. . . . “Mark, does the money matter to you?” Graham asked. Zuckerberg said that it did. It could, he went on, be the one thing that could prevent Thefacebook from going into the red or having to borrow money. . . . “Mark, I’ll release you from your moral dilemma,” said Graham after a twenty-minute conversation. “Go ahead and take their money and develop the company, and all the best.” For Zuckerberg, it was a huge relief. And it further increased his respect and admiration for Graham.
Obviously, Zuckerberg has many years still ahead of him, but what has happened following that “moment of trust” has been nothing short of astounding. Today Facebook has more than 800 million active users worldwide and is literally redefining our world in ways both small and great, from enabling youths to share everyday thoughts with friends to fueling massive social movements, such as the 2011democracy uprising in Egypt. In 2010, Zuckerberg was named Time magazine’s Person of the Year, and today the company is valued at more than $80 billion and continues to rise.
-The personal congruence that leads to self-trust instills in us the confidence and credibility to inspire others. The two of us have seen countless examples of leaders—many times informal ones—who reach inside themselves, rise to the occasion, and turn the tide in leading a team or organization. One of the more inspiring stories we recall to illustrate this point is from the NBA basketball championship series of 1980. The Los Angeles Lakers led the Philadelphia 76ers three games to two in a best-of-seven series. The Lakers’ star player, seven-foot, two-inch center Kareem Abdul-Jabbar, had severely sprained his ankle in game five and would not be traveling with the team to Philadelphia for game six in the hope that he could heal enough to play in game seven, if necessary.
An unlikely hero presented himself in the form of a nineteen-year-old rookie just drafted from Michigan State University, Earvin “Magic” Johnson. Johnson sensed fear and hopelessness in his more experienced and somewhat jaded teammates, who had relied on Kareem for the entire season and had just watched him miraculously score fourteen points in the fourth quarter on a badly sprained ankle to win game five. In the words of coach Pat Riley, as recorded in Tell to Win by Peter Guber, when Johnson heard his teammates say they were going to lose, he said, “I know what the problem is. All you guys are afraid because Kareem isn’t here. Well, I’ll be Kareem.” Riley continued, “We get on the plane for Philadelphia, and 1A is Kareem’s seat. Even when he was sick, nobody ever sat in 1A. He’d put a sign there: don’t sit in my seat. I’m Kareem. But Magic sat in his seat and said, ‘Hey, I’m Kareem. I’m here.’ ”
According to the NBA encyclopedia: Johnson’s confidence lifted his team’s spirits, and then he backed it up with one of the most remarkable games in NBA Playoff history. He began by jumping the opening tap in Abdul-Jabbar’s place, then went on to play every position on the floor at one time or another, from his customary point guard role to Abdul-Jabbar’s pivot spot. Johnson scored 42 points, grabbed 15 rebounds and handed out 7 assists as the Lakers stunned the 76ers 123-107 to clinch the first of his five NBA championships. After the game, he looked into the TV cameras and sent a message to Abdul-Jabbar back in his Bel-Air home: “This one’s for you, Big Fella!”
Magic’s confidence was not about himself; it was about his desire to rise to the occasion and draw on his trust in his own character and competence to inspire his team. As Guber commented, “The irony is, Earvin Johnson’s greatest act of magic was the story he told to move his team into believing he was their hero. It was a pretty gutsy story for a rookie, but he pulled it off because he knew he was up to the role and because his ultimate goal was to benefit them all.” That Johnson’s character and competence typified him over time is evidenced in a New York Times article written eleven years later: “Magic Johnson gained the respect of many because, among other things, he devoted much of his off-the-court time to raising money for charities. On the court, he kept making himself better in his profession, no matter how good he got. And that, too, seemed to indicate the heart and mind of the man.”
To be clear, self-trust is not ego, arrogance, or unwarranted bravado. It’s a quiet inner confidence that reflects our awareness of the most important kind of prosperity we will ever have—a high balance in our own personal trust account. And whatever our current balance (or the balance of our team or organization) may be, the good news is that we can increase it significantly by making regular deposits through behaviors that both develop and demonstrate character and competence.
Keep in mind that actions and behaviors are things we can choose to change. As the renowned executive coach Marshall Goldsmith said, “When people ask me if the leaders I coach can really change their behavior, my answer is this: As we advance in our careers, behavioral changes are often the only significant changes we can make.”
-When Meg Whitman joined eBay as CEO in 1998, she said the reason was because she was “blown away by the power of trust.” The company was founded by the French-born Iranian-American entrepreneur Pierre Omidyar, and from the beginning, it quickly became wildly successful. Today the company has a market capitalization in excess of $35 billion, with 235 million registered users (buyers and sellers) engaging in more than 1 million transactions a day.
So how has eBay managed to become so successful, especially considering that “success” involves millions of transactions each year between people around the globe who don’t even know each other? The company was built on Omidyar’s high-trust belief that “most people are basically good.”
Whitman said: More than a decade later, I still believe that Pierre was right: the fundamental reason eBay worked was that people everywhere are basically good. We provided the tools and reinforced the values, but our users built eBay. Our community’s willingness to trust eBay—and one another—was the foundation of eBay’s success.
Does that mean that eBay operates on blind trust? Not at all. According to Whitman: Pierre’s premise was not that all people are good; it was that most people are basically good. I agree that it is an optimistic statement, but let’s be clear: we did not build eBay by sticking our heads in the sand. We did not ignore or deny that fraud, distasteful behavior, or unlawful activities occurred on eBay from time to time. Quite the contrary: we invested significantly in eBay’s Trust & Safety division, which policed the site. We created software that looked for patterns that might be signs of trading in counterfeit goods, illegal bidding, or even behavior that was simply inappropriate, such as one user stealing a digital photograph from another user’s auction page. But from day one it was clear to us that such behavior involved only a tiny minority of people.
-Zappos also trusts its customers, giving them the opportunity to order any shoes they want, try them on, and return what they don’t want—with free shipping both ways and a 365-day return policy. In addition, the company consistently behaves in ways that inspire trust. In May 2010, for example, a pricing error resulted in all items available through 6pm.com, a Zappos sister site, being offered for a six-hour period at a maximum price $49.95. Because some of the items carried on that site normally sold for thousands of dollars, the six-hour sale resulted in an enormous loss to Zappos. Nevertheless, Zappos honored the advertised price.
While we’re sure this was a great deal for customers, it was inadvertent, and we took a big loss (over $1.6 million—ouch) selling so many items so far under cost. However, it was our mistake. We will be honoring all purchases that took place on 6pm.com during our mess up. We apologize to anyone that was confused and/or frustrated during our [sic] little hiccup and thank you all for being such great customers. We hope you continue to Shop. Save. Smile. at 6pm.com. What’s most impressive about Hsieh and Zappos is the results they’ve achieved in the midst of an economic downturn. And those are not just financial results, though they are clearly impressive. To Hsieh, the most important results Zappos has created have to do with energy and joy. In fact, delivering happiness to Zappos’ people, customers, and partners is really what defines the company. The company’s vision and purpose statement is clear and distinct: “Zappos is about delivering happiness to the world.”
-High trust is a performance multiplier—a multiplier that translates directly into greater prosperity: increased revenues, profits, economic outcomes, and results. High trust creates a dividend that enhances and increases the productivity and profitability of interactions, thereby increasing prosperity. Low trust creates a tax—a wasted tax—that penalizes interactions and diminishes prosperity.
-Successful organizations lead out in extending Smart Trust to their customers. In addition to the companies we’ve already highlighted, you can see this manifested in businesses such as Zane’s Cycles of Connecticut, one of the three largest bike shops in the United States. Zane’s allows customers to go out the door for test drives on their bikes without asking for any identification or collateral. When customers offer to leave their driver’s licenses, they are politely refused. The message Zane’s communicates to its customers is “Just have a great ride. We trust you.” As its founder, Chris Zane, put it, “Why start out that relationship by questioning their integrity? We choose to believe our customers.” The company’s high-trust message also communicates clearly to its employees that Zane’s is in the business of building customer relationships, not merely selling products. The result is $13 million in annual sales, with a 23 percent average annual growth rate since opening in 1981 and a loss of only five of the 5,000 bikes sold each year to theft.
Zane states: Most customers are blown away by how much we trust them, and that goes far in building their confidence in us. As soon as we begin distrusting our customers and treating them like potential thieves, we’ll automatically be putting our relationship in jeopardy. . . . Sure, we may lose those five bikes a year, but the other 4,995 that are test ridden do return.
Zane firmly believes that the customers appreciate being trusted and that they reciprocate that trust by becoming lifelong customers, returning again and again and referring family and friends. So although there’s a risk, with the company losing five bikes a year, Zane is convinced that it’s Smart Trust because it’s selling significantly more bikes than it would without such a high-trust, referral-generating approach.
-People’s growing awareness of the relationship between trust and prosperity was starkly evident to the two of us when we had the opportunity to participate in the summer 2008 meeting of the World Economic Forum in Tianjin, China, the Forum’s “summer Davos.” This respected forum—which is “committed to improving the state of the world”— included 1,400 leaders from business and government as well as selected academics and journalists from more than ninety nations throughout the world. This particular meeting promised to be especially insightful because of the economic crisis at the time. Just two weeks earlier, Lehman Brothers had collapsed, and the markets were in free fall. That very week-end the U.S. Congress and other governing bodies worldwide were meeting in emergency sessions to discuss options. People everywhere were in deep panic as the full extent of the interdependence of the world economy began to surface.
At the closing session of the forum, participants were divided into table groups of ten to twelve participants, and each group was asked to identify the number one challenge threatening global economic growth for the coming year. From the hundred or so tables, the top seven challenges were taken and presented to the group as a whole for keypad voting. Surprising to many who reviewed the results of this informal survey was the fact that—even in the midst of all that was happening on the economic scene, with markets literally unraveling before people’s eyes—the global financial crisis was ranked as only the second biggest challenge facing the world’s economy. What was ranked first? “Loss of trust” and “loss of confidence.” This group of informed decision makers and thought leaders recognized that all other conditions in society—including the global financial crisis— were being exacerbated by a crisis of trust and confidence.
We believe the participants of the World Economic Forum got it right, and in fact, we had seen their very conclusion affirmed that same weekend as we participated in a televised debate about the world financial crisis on CNBC Asia. The participants of that debate agreed that the economic crisis was, at its roots, a crisis of trust. They recognized that governments could put more capital into the system. They could try to improve liquidity in attempts to get money flowing. But without trust, banks were not going to loan money to other banks or to consumers because they didn’t think they were going to get their money back, so money didn’t flow. It had become clear that not only was prosperity a huge benefit of high trust, it was also a casualty of low trust.
-There are times when blind trust might appear to work. In August 2010 New York Post articles told of an ad executive who was approached by a homeless man outside a SoHo restaurant, asking her for some change to get some Vitamin Water. She told him she didn’t have any change, all she had was a credit card. So the man asked if he could borrow her card and get a couple of other things as well. She asked, “Can I trust you?” “I’m honest, yes,” he replied. So she handed him her American Express card. People who saw the interaction thought what she did was insane and told her they doubted he would ever come back. But a little more than ten minutes later, he surprised them by returning with the card in hand. He had bought deodorant, body wash, a pack of cigarettes, and Vitamin Water, totaling about $25. Giving her the card, he said, “Thank you for trusting me.”
That particular extension of blind trust turned out to be a good experience for both the giver and the receiver, and perhaps there are some lessons here that can be learned. However, the blind-trust approach is risky, and it typically does not represent the smartest way to operate in a low-trust world.
Again, if you’re intrigued, go to this site and order the book. You can also participate in an interactive broadcast they are doing this coming Thursday.
Pete
