Smart Trust

Summary Written by Joel D Canfield
"In today's networked world, trust has become the new currency."

- Smart Trust, page xxiii

The Big Idea

Trust Changes Prosperity, Energy, and Joy

"He studied how other banks set up their loan operation, and then he set up a bank, the Grameen Bank, that did the exact opposite ... Contrary to almost everyone's expectations, an amazing 98 percent of Grameen Bank borrowers do pay back their loans ... [T]o date the organization has made more than $6 billion in loans to more than 8 million borrowers."- Smart Trust, pages 7-8

Distrust slows processes. It requires more paperwork, more checks and balances, more conversations, more people, more time. Businesses working in a low-trust environment incur a tax. Everything they do costs more.

Trust not only eliminates that tax, it acts as a performance multiplier. Two studies quoted by Covey and Link found that high-trust organizations outperformed low-trust organizations and the market in general by almost three times.

High-trust relationships amplify the engagement and innovation of all involved. Worrying less about hidden agendas frees the players to dig in and do the work. A chart showing the relationship between trust and happiness within countries shows a tight connection: higher trust brings greater happiness.

Trust is the difference between happiness, success, progress, and stagnation and misery.

Insight #1

Balance Propensity to Trust with Analysis

"Smart trust… optimizes two key factors: (1) a propensity to trust and (2) analysis."- Smart Trust, page 57

You’ve known both types: the gullible trusting sort who’s always taken advantage of, and the paranoiac misanthrope who has their own mother sign a receipt. Most of us fall somewhere in between, with a strong leaning toward one or the other.

Smart trust is not about balance, trusting enough but not too much. It is about trusting just as much as possible, while keeping an eye on the downside.

Getting the analysis right is the trick. Covey shows us three areas to analyze: opportunity, risk, and credibility. How great is the opportunity? Some outcomes are so worthwhile they warrant the risks which are necessary to get there. Other times, the risks are so great that no outcome validates them.

Risk is where this often falls apart. Covey and Link tell two brief stories: one, about the commander of a nuclear sub who pointed out that they had regulations about everything right down to using the bathroom. Nobody was about to change that, because if something goes wrong on a nuclear sub, the outcome can be a world-class disaster. On the other hand, newspaper companies accept the risk that when someone drops a quarter in the machine, they just might take two papers instead of one. Newspapers probably recycle more than is stolen. Low-risk, that. So in your analysis, ask yourself, are we talking about nukes or newspapers?

When the other party has credibility, that combination of character and competence, it intrinsically lowers the risks.

For those of us who tend to trust first and ask questions later, learning this type of analysis is a practical tool. For those who have a low propensity to trust, the lesson is that we learn to trust by trusting. Monitor your analysis, and balance the risks and opportunity. Weigh in the credibility of the other party. Begin with low-risk situations. Extend trust, even though it’s uncomfortable. As you realize more opportunities, others’ credibility will grow, as will your propensity to trust.

Join our newsletter

Sign up for the very best book summaries right to your inbox.
We care about your data in our privacy policy.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Insight #2

Take the 5 Actions of Smart Trust

"[F]ive specific actions that, remarkably, an incredibly diverse variety of high-trust individuals, teams, and organizations from all over the world have in common."- Smart Trust, page 83

Covey and Link continue the tried-and-true method of giving us a list, a process, an overview of practical steps to improve our own quality of trust while simultaneously planting seeds of trust’s benefits in the lives of those around us. They call these “The 5 Actions of Smart Trust.”

1. Choose to believe in trust – The greatest benefit of smart trust is that it isn’t credulity, blind trust. It allows us to have reasons to believe in the practical value of trust, to extend it to others, and to act in a trustworthy manner without undue concern about being taken advantage of. Believing in trust also means believing that most people are basically trustworthy. Again, smart trust shows us how to extend that trust with a minimal downside, growing our propensity to trust bit by bit rather than requiring huge leaps of faith. When we understand the principles of smart trust, it is the obvious choice for leaders.

2. Start with yourself – Trust yourself. Self-doubt can be managed with smart trust principles. Give others a person they can trust. (This leads into the next two actions.)

3. Declare your intent, and assume positive intent in others – Make it obvious to others what you’re going to do, and why. We all have an agenda. Make yours public and others will see that your words and actions are aligned. Trust can’t be earned by invisible actions. Assuming positive intent in others has been shown to be key in creating trustworthy behavior in others.

4. Do what you say you’re going to do – Obvious, yes? Then why is it so rare? There are four options in the “say/do” matrix. Underpromising and underdelivering causes a gradual erosion of trust. Overpromising but underdelivering is the obvious trust-destroying action. “Underpromise, but overdeliver” is a common business mantra, yet it leads to very slow trust growth. It’s also a great way to be invisible. When we promise to achieve the minimum, nobody cares. The final option, promise and deliver (in the best case, overdeliver) results in the greatest leaps in trust. Big promises stand out more than little ones. When we deliver, even overdeliver on those big promises, we enter the rarified air of world-class trust.

5. Lead out in extending trust to others – Leaders, by definition, go first. Extending smart trust to others produces tangible results. It increases trust, because we’ve created it when we extend it, and because it leads to reciprocity. Yes, extending trust involves risk. Multiple examples in the book show that the risks are usually less than we’d think. Zappos’ 365-day guarantee has resulted in increased business, not abuse and loss. Zane’s Cycles, one of the largest bicycle stores in the US, lets any customer take a bicycle for a test ride without asking for identification or collateral. Hot prospect for bike thieves, right? They’re almost begging you to steal the bike. Actual losses amount to 5 bicycles stolen per year, compared to 5,000 sold. If a $13 million business can extend trust, we can, too.

Trust is a very personal concept in my life. Born in a rural area of northern Wisconsin, I grew up in a home where we intentionally left our doors unlocked when we left home, in case a passing motorist broke down and needed shelter from life-threatening weather. We loaned things just because we were asked. We believed what we were told.

Read the book

Get Smart Trust on Amazon.

Stephen M.R. Covey

Stephen M. R. Covey is co-founder and CEO of CoveyLink Worldwide. A sought-after and compelling keynote speaker and advisor on trust, leadership, ethics, and high performance, he speaks to audiences around the world. He is the author of The SPEED of Trust, a groundbreaking and paradigm-shifting book that challenges our age-old assumption that trust is merely a soft, social virtue and instead demonstrates that trust is a hard-edged, economic driver—a learnable and measurable skill that makes organizations more profitable, people more promotable, and relationships more energizing. He advocates that nothing is as fast as the speed of trust and that the ability to establish, grow, extend, and restore trust with all stakeholders is the critical leadership competency of the new global economy. Covey passionately delivers that message and is dedicated to enabling individuals and organizations to reap the dividends of high trust. Audiences and organizations alike resonate with his informed, practical approach to real-time issues that affect their immediate and long-term performance.He is the former CEO of Covey Leadership Center, which, under his stewardship, became the largest leadership development company in the world. Covey personally led the strategy that propelled his father’s book, Dr. Stephen R. Covey’sThe 7 Habits of Highly Effective People, to one of the two most influential business books of the 20th Century, according to CEO Magazine. A Harvard MBA, he joined Covey Leadership Center as a Client Developer and later became National Sales Manager and then President & CEO. Under Covey’s direction, the company grew rapidly and profitably, achieving Inc. 500 status. As President & CEO, he nearly doubled revenues to over $110 million while increasing profits by 12 times. During that period, both customer and employee trust reached new highs and the company expanded throughout the world into over 40 countries. This greatly increased the value of the brand and company. The company was valued at only $2.4 million when Covey was named CEO, and, within three years, he grew shareholder value to $160 million in a merger he orchestrated with then Franklin Quest to form FranklinCovey.Over the years, Covey has gained considerable respect and influence with executives and leaders of Fortune 500 companies as well as with mid- and small-sized private sector and public sector organizations he’s consulted. Clients recognize his unique perspective on real-world organizational issues based on his practical experience as a former CEO.Covey currently serves on the board/advisory board of several entities, including the Human Performance Institute—the leader in energy management technology—where he serves as Advisory Board Chairman.Covey resides with his wife and children in the shadows of the Rocky Mountains.

Subscribe to digest
Read about our privacy policy.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.