Building Trust Is an Art

In the Age of Learning, business success depends as much on soft factors like loyalty and trust as on hard factors like technology and finance. The ability to trust is a major difference between a bureaucrat and an entrepreneur. Bureaucrats minimize risk. Entrepreneurs risk failure and trust associates. Profitable partnering relationships between companies are cemented by building trust, not by contract (1). Furthermore, the effective use of information technology requires trust, not only of the information communicated but also between faceless communicators. We fully believe the complex and subtle messages we receive by telephone or e-mail only when we know and trust the senders. In a sense, psychological bandwidth varies directly with the degree of trust between people. Trust cannot be decreed. The willingness to trust is a combination of values and evaluation, attitudes and interests. National culture influences how and whom we trust. But within and across cultures, trust depends on who we consider trustworthy and how well we create trust in others. National Culture The thesis of Francis Fukuyama's insightful book Trust is that a nation's prosperity depends on the values that support trusting relationships: The degree to which people value work over leisure, their respect for education, attitudes toward the family, and the degree of trust they show toward their fellows all have a direct impact on economic life and yet cannot be adequately explained in terms of the economists basic model of man . . . For example, certain societies can save substantially on transaction costs because economic agents trust one another in their interactions and therefore can be more efficient than low-trust societies, which require detailed contracts and enforcement mechanisms (2). Fukuyama shows that different cultures shape trust differently. In Confucian cultures, full trust is reserved for family members. In Taiwan, when a Chinese entrepreneur runs out of sons and sons-in-law, corporate growth stops. These companies lose talented managers who see their way to the top blocked, because they are not members of the owner's family. Taiwanese technical managers told me they were working for an international company for this reason. Japanese entrepreneurs who also practiced Confucian teachings expanded their companies by adopting promising young managers into the family. Japanese institutions, like the keiretsu system of interlocking companies, and practices, such as reciprocal obligations, also build the trust essential for growth. Within large companies, employment security and peer pressure form a family-like culture. However, as Peter Drucker has pointed out, the Japanese find it hard to trust foreigners, and this has limited their global growth. In Germany, participation in cooperative groups and adherence to high technical standards build trust. Swedish managers spend a great deal of time learning to know one another, building consensus, and strengthening shared values. They reward and protect those who put the company ahead of short-term self-interest. Wage differences are narrow, thus dampening envy, which corrodes fellow feeling. This investment in trust pays off in the ability to delegate and to expand. A small country, Sweden is notable for its large companies and international management competence. Where trust is low, as in many less-developed countries, corruption erodes efficiency. Leaders rule by fear, there are huge differences in wealth, and people become cynical. What teamwork exists takes place largely in Mafia-like families or in semi-feudal, authoritarian groups. Trust and Partnering The initial trust required for partnering between companies or between management and unions depends on a shared vision of economic gain, mutual understanding and respect for each other. Inevitably, there will be disappointments as well as successes. Working through the misunderstanding will either strengthen trust or dissolve it. …