Summary: Smart Trust

Review and Analysis of Covey and Link's Book

BusinessNews Publishing

• Verlag: Must Read Summaries
• Jahr: 2016
• ISBN:
  9782511024225
• Thema: Business
• Thema: Business Ethics

The must-read summary of Stephen M.R. Covey and Greg Link's book: `Smart Trust: Creating Prosperity, Energy and Joy in a Low-Trust World`.

This complete summary of the ideas from Stephen M.R. Covey and Greg Link's book `Smart Trust` shows how trust is what keeps commerce running. In their book, the authors explain the principles of trust and why it is so important to the smooth running of your business. This summary will teach you how to generate trust within your company and why it is something you should focus on.

Added-value of this summary:
• Save time
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• Expand your business knowledge

To learn more, read `Smart Trust` and discover the importance of trust within business.

Summary of Smart trust (Stephen M.R. Covey and Greg Link)

1. What is Smart Trust and Why Does It Matter?

Smart Trust is where you make a deliberate and conscious decision to trust someone else and act accordingly. Smart Trust requires that you optimize two key factors:

1. A propensity and inclination to trust other people.
2. Analysis that shows the other party is trustworthy.

“Trust is like the air we breathe—when it’s present, nobody really notices; when it’s absent, everybody notices.”

– Warren Buffett

The world today has becoming increasingly low-trust. In almost every survey Gallup follows, the results are the same – fewer people today trust their counterparts to do the right thing. It’s not a stretch to state there is a crisis of trust in society as a whole.

This is unfortunate because trust is the new currency of the global economy. Trust is what makes markets work. When trust goes down, the price of doing business goes up, people feel less engaged or innovative and relationships of all kinds become less dynamic. Trust is a principle of power and there is a direct relationship between the level of trust and the power you have.

However, even in the midst of a crisis of trust, there are a few shining lights which have prospered by choosing to operate in a high trust environment of their own making. Companies like Zappos and Muhammad Yunus (the founder of Grameen Bank) have shown how liberating and profitable operating in an environment of trust can be. Others like Wipro and Lego are also working to create high-trust cultures. There is something of a renaissance of trust coming and this promises to lift all boats like an incoming tide.

It’s becoming increasingly clear trust is not exclusively an either/or proposition. Rather, there is a third alternative which is starting to bubble to the surface. You can elect to trust people in a smart way. Companies which have learned to do this have prospered. Great examples are eBay and Netflix. eBay’s entire business model is it lets people transact business openly and transparently so self-policing will weed out those who cannot be trusted. Netflix also assumes most people are honest and won’t steal DVDs which are worth more than the monthly subscription fee.

These companies aren’t operating in an environment of blind trust. Instead, they use Smart Trust. They make a judgment call which minimizes risks but at the same time maximizes opportunities. Smart Trust has two essential elements:

1. A propensity and bias to trust rather than distrust someone

You need to have an inclination, a bias or a strong preference to trust people right at the outset of any dealings with them. You start with the mindset people can be trusted until proven otherwise. This doesn’t mean you open yourself up to be taken for a ride but your starting point in any transaction is the other party is honorable and will act that way.

2. Analysis which shows that trust is well deserved

To exercise Smart Trust, you also need to be combining a high level of trust with an equally high level of analysis. Successful organizations have systems in place to weed out those who abuse the trust they have been extended. For example, eBay detects those who are behaving inappropriately or fraudulently and suspends their privileges. The company invests in sophisticated systems so it can detect inappropriate behavior and then tenaciously weeds out traders who are untrustworthy.

The whole point is Smart Trust is built on an inclination for high trust combined with an equally high degree of analysis. In-depth analysis is a vital dimension of Smart Trust but this is tempered by the initial default setting to trust people until proven otherwise.

A Smart Trust analysis generally involves assessing three important variables:

1. Opportunity – clarify what you’re trusting someone with and what you expect them to do.
2. Risk – figure out the degree of risk involved, the possible outcomes and the likelihood any specific outcome with be realized.
3. Credibility – determine the character and the competencey of the person or people involved.

Put another way, Smart Trust is all about getting to the top right-hand quadrant in the trust matrix:

Smart Trust matters because if you can wisely extend trust and in turn be trusted by others, you can achieve more faster than if you operate in a low-trust environment. There is a high degree of reciprocity which comes to the fore. When you extend trust to others, a virtuous upward cycle is ignited. The e...