The Extinction of Trust
Can we afford it?
Can you imagine living in a Society where you cannot trust anybody? Where nothing can be taken for granted and everything must be checked?
To answer these questions, I analyse the more general form of Transactions between Entities:
which reads: “Entity 1 enters in a transaction with Entity 2”.
Personal relationships or commercial deals, individuals or organisations, this simple equation is general enough to encompass them all. The focus of this book is on underlying factor that accelerates the speed of transactions, which we commonly call Trust: it is much easier and faster to enter a transaction with “someone you trust”.
So we shall call T1,2 the level of trust that Entity 1 (individual or organisation) feels towards Entity 2 and it is obvious that T1,2 may not be reciprocated, i.e.
The book attempts to analyse what are the components of the Trust and how some of these are critically challenged by the transformation of the Society we live in.
The Fundamental Equation of Trust:
says that “your Trust of an Entity is directly proportional to your Knowledge of such Entity (direct and indirect) and inversely proportional to the Value at stake”, i.e. how important is this transaction.
Kd derives from your DIRECT experience with the Entity while Ki captures what others think about them (something also called Reputation); V may represent a monetary but also sentimental importance.
Kd and Ki are complementary factors: when you know someone very well (very high Kd) you do not care too much for his/her Reputation; of course, when the Value (or importance) of the occasion needing trust is very high, you will be prompted to exercise more caution.
Finally, we add a constant T0 because when your contact with the Entity happens within a Common Frame, such frame may carry a “default” level of trust: take for example trading platforms like eBay or Amazon, who feature built-in rating systems to attribute an artificial trust to entities trading on their platform. Or think of the Stock Exchange, which require a certain amount of disclosure to allow a stock to trade.
What is changing?
There is ample literature on how to professionally establish and maintain Kd and Ki : Customer Relationship Management and Reputation Management have created whole service industries.But how are such established techniques changing vis-à-vis the profound transformation of the landscape where information is exchanged and shared?
I will look at how Kd is influenced by others, analysing the concept of Customer Journey, whereby someone moves from the consideration set (a range of possible Entities with whom to enter the transaction) to a short list (a much smaller group which you directly compare with each other) to finally enter the transaction.
But while the relationship never stopped there, modern times give the next phase as much (and often even more) visibility than the previous ones: existing clients can heavily influence the decisions of other by sharing their own transaction experience, therefore heavily influencing Ki.
I will also look at how “modern times” Ki and Kd depend more and more on direct contact between Entities: in this frame, the job of professional communications intermediaries, or journalists (to assess the veridicity of what Entities proclaimed to offer readers their own, filtered view of the facts) depended on a business model that has been largely disrupted.
The consequence of this disruption is twofold:
- communications intermediaries are not able to sustainably continue to perform their duties therefore Ki becomes solely the result of “what people say” (largely experiential and un-managed)
- T0 plunges towards zero: people develop a radical distrust for all they hear anywhere
Can we live without Trust?
The world has been made much simpler: each Entity is assigned the task of preserving the factors contributing to its Trust factor. No one else will. No external contribution can be negotiated, managed, cajoled or extorted.
People judge us on how we behave, not on what we say.
People check out everything, because they will assume that we will lie through our noses.
Imagine the cumbersomeness of a commercial transaction where your counterpart does not trust credit rating and asks for a full audit before extending credit.
Imagine intensive background checks for job candidates; imagine every diploma or certificate must be checked.
Imagine having to prove beyond doubt anything you say or claim.
Imagine financial transactions, contracts, marriage promises…
My conclusion is that we need Trust to preserve the functioning of Society as we know it, so we need to think quickly about how to preserve Trust from Extinction and what actions we can and should collectively take to uphold this universal value.