Ask around among business executives about ways to streamline operations, and they'll likely bring up automation, outsourcing, or perhaps business process reviews. But few, if any,will mention "trust building." Stephen M.R. Covey would like to change that. Covey, author of the 2006 breakthrough book The Speed of Trust, has been out on the lecture circuit for the past couple of years talking about the often-overlooked power of trust. Without exception, says Covey, doing business is faster (and cheaper) when the parties trust one another.
If you consider the time and cost of, say, post-9/11 airport security or post-Enron Sarbanes-Oxley compliance, you'll immediately see Covey's point. But he argues that it's equally true of routine business transactions. If trust levels are low, he contends, people end up verifying, validating, checking, fact finding, and questioning— all of which takes time and costs money. By contrast, he says, "when trust goes up in the relationship …, speed goes up. Everything can happen faster. Cost comes down."
A Harvard M.B.A., Covey is the co-founder and CEO of the training and consulting firm CoveyLink Worldwide. Along with speaking to audiences around the world on trust, leadership, ethics, and high performance, he consults to Fortune 500 companies as well as with small and mid-sized private sector and public sector organizations. As a consultant, he draws on his experiences as president and CEO of the Covey Leadership Center, where he personally oversaw the strategy that made a business best seller out of The 7 Habits of Highly Effective People, a book written by his father, Dr. Stephen R. Covey. Under the younger Covey's stewardship, the Covey Leadership Center became the largest leadership development company in the world. The company was valued at only $2.4 million when Covey was named CEO; within three years, he grew shareholder value to $160 million in a merger he orchestrated with Franklin Quest to form FranklinCovey.
A few weeks before he was due to deliver the keynote address at the Warehousing Education and Research Council's annual conference, Covey spoke with DC VELOCITY Group Editorial Director Mitch Mac Donald about trust and why trust building is particularly important to today's supply chain managers.
Q: When you take the stage as the keynote speaker at next month's annual conference of the Warehousing Education and Research Council (WERC), what message do you plan to deliver?
A: The core message will be the premise of my book, The Speed of Trust. The whole idea will be to take this topic—trust—which is often seen as a soft, nice-to-have social virtue, and show how trust is a hard-edged economic business driver. Trust always affects speed and cost, and you can measure speed and cost.
The second key idea—and one that's particularly likely to resonate with the executives attending the WERC conference— is the importance of establishing and building relationships of trust in today's economy, where technology and globalization are changing everything. The upsurge in border crossings and the use of multiple technologies have put a greater premium on the need for trust than ever before. Logistics, by default, requires partnering, collaboration, interdependence, and teaming. Those things drive or die based upon the presence or absence of trust.
The third part of my message will be that you can do something about this. You can actually get good at creating trust and establishing it and growing it and extending it and even, where needed, restoring it. You can turn trust into a strength as well as a competence. It's not something you either lament that you don't have or just feel grateful that you do. Instead, you make it a competency. It's something you can learn and get good at.
Simply put, trust is the critical competency of leadership needed today in this network-centric economy.
Q: So how do you go about building trust in the supply chain?
A: First of all, you can't just say "we've got to build trust" and leave it at that. Trust has to become a core part of who you are as a person, as a leader, and as a company, and of the way that you operate. It's really a process that works from the inside out, beginning with yourself and extending on out from there. You have to ask yourself and your team: Do we give others a sense that they can trust us, our team, our process? Once you're satisfied that you've reached that level of trustworthiness, you are now truly positioned to build and sustain trust in external partnering relationships at a different kind of level. You can't skip that and go straight to the external partner; it works far better when it's from the inside out. You are modeling this. Your own team sees it. They build that trust inside as well. That helps them sustain it as you go down the line and get into these broader supply chains.
External relationships are becoming increasingly vital today. It has always been important, but today, it's even more so because of the way work is being done and this whole network-centric approach. It requires a far greater degree of real partnering and collaboration. You cannot partner without trust. You can't really collaborate without trust. You might cooperate or you might coordinate if there is no trust, but real collaboration and partnering requires a level of trust and understanding that will extend to everything else once you have established that. It's important that we build relationships of trust so that we can repeat actions again and again and again, faster and faster, as opposed to delivering the result this time, but doing it in a way that is diminishing the trust. Otherwise, the next time we go to deliver, it becomes a little bit harder. It takes us a little bit longer because the trust has gone down from our prior actions. So, it is really a whole new approach—one that requires us to acknowledge that building trust is a priority and not just an afterthought.
Q: Now as trust relates to speed, are you saying it is simply easier to execute business decisions swiftly and repeat steps when you're dealing with a partner you trust?
A: Absolutely. When trust goes down in any relationship, on a team, in a company, or in a supply chain, speed will also go down. Everything will take longer to do and cost will go up. Everything will cost you more to do because you have to verify, validate, check, fact find, and so on. You are wondering. You are questioning. All of which takes time and costs money. I call that a low-trust tax.
By contrast, when trust goes up in the relationship, on a team, in a company, or in a supply chain, speed goes up. Everything can happen faster. Cost comes down. Everything costs you less. That is the high-trust dividend. It is really that simple and that predictable. Those are the economics of trust.
We have often thought just the opposite—that trust takes a lot of time to build and slows down the process. I am here to say that once you understand what trust is and how it is established, you can grow far faster than you might think possible. Second, once you have established the trust, nothing is as fast as the speed of trust. You can operate and move at an incredible speed that you can't come close to approximating when the trust has gone down. That is what I mean by the speed of trust. It truly is an economic force.
Q: When you put it that way, it makes a lot of sense. Still, isn't trust something that has to be earned and cultivated over time?
A: I acknowledge that it can take time. You can't artificially force it or mandate it because it's something that people have to give because they choose to give or because it has been earned. What I have learned in all of my work with organizations, leaders, and industries, though, is that you can prioritize the creation of trust. You make it an explicit objective as job one. If we can build a relationship of trust, everything will be better for all of us. Everything will happen faster and will cost us less, and it will create greater value.
In other words, there is no hidden reason for why we are doing this. We want to build relationships with trust not just because it's the right thing to do, but also because it's the economic thing to do. So you become explicit about it. You say things like, establishing a relationship of trust is so vital for all the reasons we discussed. You need to know something about me and about us. If we make you a commitment, you can count on us to deliver on the commitment or else we won't make it. You can be assured that if we say we're going to do something, we're going to do it. When you do that, you take some risks because you raise the ante, but you also accelerate the establishment of trust. People now know what to look for. When they see it, they recognize it. You are held a little bit more accountable, but you also accelerate the creation of trust.
Part of the process is helping people understand what behaviors help build trust. We have identified 13 behaviors that are common to high-trust people, hightrust leaders, and high-trust supply chains. People should behave and act in certain ways. They avoid the opposite behaviors, or the counterfeits. For example, one of the behaviors is to talk straight. The opposite is to lie. That obviously destroys trust. The counterfeit looks like the real deal, but it is really not. This is when people spin, posture, position. They technically tell the truth, but they leave the wrong impression. On paper it might look like they are being real, but they are not. Everyone kind of senses it and knows it and that diminishes the trust. Other behaviors that build trust include creating transparency as opposed to obscuring or covering. If you make a mistake, you right the wrong as opposed to denying the wrong or worse, covering it up. Keeping commitments as opposed to breaking the commitment or to counterfeit, which is when people over-promise and then under-deliver. These are just a few of the 13 behaviors. When people become aware of them and focus on them, when they get deliberate and explicit about it, you actually can build trust far faster than you might think possible. You can build it fast, and once you have established it, everything moves at an exceptional speed.
Q: So you're saying that being open and honest is more than a matter of simple decency; it also has economic benefits, correct?
A: Exactly. There is a convergence between the right thing to do and the economic thing to do. At one level, as you are suggesting, they are common sense. They are human values. They are values that cross cultures. They are principles and they are basic. So at that level you say, well this is not so revolutionary. But maybe what is revolutionary is the recognition, the awareness that, in fact, it is not just the right thing to do, it's the economic thing to do because it increases speed and decreases cost.
If it were so easy, we would all be doing it. And the fact that it's fundamental doesn't make it easy. We are all about trying to make these behaviors common. Whereas I would argue in most corporations, in most corporate cultures, in most supply chains even, the prevailing culture is counterfeit behavior. People are blaming instead of taking responsibility. They are covering up a little bit, and they are spinning instead of talking straight. They are operating with hidden agendas instead of being transparent.
Q: Do you have any closing thoughts you'd like to share?
A: Let me add that I'm not advocating blind trust, where you just go out and trust anybody and everybody because that doesn't work. That is not smart. That's being gullible and people will get burnt. At the same time, I'm certainly not advocating taking it to the opposite extreme and not trusting anybody. Neither extreme is sustainable in the long run without huge economic consequences.
Instead, I am advocating a third alternative—what I call "smart trust." You have an inclination and a desire to trust, but you are also smart about it. You bring your analytical skills to bear to assess the particular situation, the risk involved, and the credibility of the people involved. In some cases, you may trust conditionally because the risk is very high and you're just learning the players involved. In other cases, you're going to trust far more abundantly because you've already built that relationship. You've established it. You go faster.
The notion of "smart trust" is captured nicely in the expression "trust and verify." The sequencing is important. The sequencing is trust as your starting place. Then you add to that verification. Too often, we go with the opposite sequence, where we say verify, then—and only then—trust. There's a danger in that approach. Even though it might look like it's safer because it's important to verify, when that is our starting place, we tend to view the world with suspicious lenses and people tend to reciprocate. When we distrust to begin with, they tend to distrust back. We can get into a vicious downward cycle of distrust and suspicion. I'm not saying to lose the analysis. I'm just saying suspend it for a moment. Begin with the propensity to trust. Then, with that in place, add to that your analysis of the situation. That will make you a better judge of when and how to trust.
The former CEO of Johnson & Johnson, Jim Burke, has said, "I have found that by trusting people until they prove themselves unworthy of that trust, a lot more happens." This is all about judgment. When you recognize the economics of trust, you're more inclined to build trust, establish trust, grow trust. You're also more inclined to learn how and when to extend trust in the supply chain. What an edge that is.