Smart Trust

"In today's networked world, trust has become the new currency."

- Smart Trust, page xxiii

Would you loan me $20?

Unless you know me personally, probably not.

When you buy a book at, do you take the great deal offered by BrandNewSeller#37 and get a “like new” used copy for half price, or do you pay full price to get it from Amazon?

Take a look at Transparency International’s Corruption Perceptions Index. Chart the gross domestic product of each nation, and note the near-perfect correlation between trust to prosperity, worldwide.

From individuals to companies to entire nations, trust affects not only how we do business, but how much business we do. If we are perceived to be trustworthy, business is streamlined. There’s less muss and fuss when both players trust. Warren Buffett has closed multimillion dollar deals on, literally, a handshake, because there was trust on both sides.

Introduced in his first book The Speed of Trust, Covey’s concept of “smart trust” aims to help us find a human and rational balance between our innate desire to trust and our learned fear of being taken for a ride and then asked to pay the fare.

The Big Idea

The Big Idea: The biggest takeaway from the book

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

An actionable way to implement the Big Idea into your life

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.

Insight #2

An actionable way to implement the Big Idea into your life

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.

As I grew up, I extended trust, but without analysis. Over time, experiences shifted me from “a high propensity to trust” to downright cynical. A decade ago I decided that was no way to live, and started my own quest for smart trust, though I didn’t have that term back then. Covey and Link’s books, both Smart Trust and The Speed of Trust, would have been a godsend 10 years ago. At least now I have the terminology, the science, and the evidence for smart trust.

It’s a happier way to live. It’s a more productive way to live.

How’s your propensity to trust? How do you balance it with analysis?

Are you practicing smart trust?

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Joel D Canfield

ABOUT Joel D Canfield

I'm a creative who works mostly with words, sometimes accompanied by music. I write because I have to, and I have very little patience with money and its attendant issues...
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