Summary: "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 Amazon.com, 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. Golden Egg 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. GEM #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,
