Trust

So what does trust mean in a digital world? There are seven elements of trust that are important in this environment:

• Durability. How long have you been developing a history based on interactions over time and collected among data points? Put another way, How long has your firm been trusted, and by what standard? Seven straight years in a row of earning J.D. Power and Associates awards is an old-fashioned example. In the digital world, we’re talking about how often you’ve been praised on Yelp for your services, if you’re a restaurant, or if you’ve received kudos from highly rated experts or influencers about your product over time from relevant sources. This durability is important. Durability is the foundation of trust.
• Consistency. Consistency measures not just how long a business can maintain trust but under what circumstances. Can you deliver the same level of quality or better with each interaction for that service level? Are you consistently keeping your promises? That’s an important part of establishing trust.
• Competency. Competency is the demonstration of achievement. If durability and consistency are about not violating expectations, competency is about living up to them. Competency is about how well a company succeeds, not simply how well it keeps from messing up. In a world where we no longer merely sell products or services but have moved to outcomes and experiences, can you consistently deliver on that brand promise, and for how long? And how do you get there? As you can see, durability, consistency, and competency are very closely related.
• Timeliness. Timeliness enables open and honest communication. You’ve got to be timely in terms of your response. You’ve got to be timely in terms of your communications. You’ve got to be timely in terms of delivering information quickly and as openly as possible with each other. Timeliness is an important factor in establishing trust, because if you’re withholding information, or if it seems like you’re late on something, people are not going to trust you.
• Meritocracy. Meritocracy is especially important in the digital world. It involves the need to distribute fair rewards for actions. In other words, you have a value system where if you treat people right, they will participate and interact, and they will be rewarded for that in certain ways. But this is really about customer participation. Think about it. Companies should not expect customer participation without rewards. But the reward can’t just be tied to who shouts the loudest. A system based on meritocracy means that rewards are distributed according to who does the most good for the company’s entire network. Who does the most good for the other trusted entity? That’s not just a simple set of circumstances. This idea of meritocracy helps people understand that there’s an implicit bargain in play for simply engaging or for certain types of actions.
• Accountability. Accountability means that you will do what you say you’ll do. Small deviations from this promise actually nibble away at your trust. They widen the brand promise that you are out to deliver. Accountability is important. Stakeholders need to know who’s in charge, and for what actions. Accountability sets expectations as to what will be delivered and what will happen if expectations are not met. You are judged by your actions and your inactions here.
• Respect. Companies are by definition designed to create a level of respect and trust. You have to treat companies like people. For people, the trust that’s required by mutual respect is the corporate brand. That brand must respond like an individual. And there are different ways to get there. But however it happens, companies need to build a sense of respect between parties and see customers as people, even lots of people, rather than open wallets. Companies have to take the view that there needs to be respect in each customer relationship and be out to prove that. Respect has a lot do to with what’s going on in the trust side.

These seven elements are what drive the trust equation. As I mentioned earlier, trust and transparency go hand in hand. If trust is a new currency, radical transparency is inevitable. In fact, we’re entering a world of radical transparency. In this digital world, there’s no hiding the truth. It’s everywhere. It’s almost as if every day is a day on The Truman Show. Our actions and interactions are consistently being tracked. There is a level of openness in digital that is crazy. The ability to build interaction histories becomes the foundation of this new transparency.

It’s not just the history of interaction that makes transparency inevitable, it’s the speed. The time it takes information to travel is measured in milliseconds. Transparency happens instantly. It’s the foundation of open and honest communication. Think about this: trust is about taking a person at his word, and it’s required when there’s a lack of transparency.

But when you have both transparency and trust, digital networks gain optimal efficiency, because everything that is carried along the network can be measured. And transparency is measured—this is the data aspect. All this data and all this information is the foundation of digital business, and this data is providing us this transparency to really act on what’s next. But transparency is a hard thing to sell inside the companies we work with.

Most companies associate transparency with either endangering intellectual property or simply being less invincible or sharing information that could be conceived as a competitive advantage. But that’s not what we’re talking about. We’re talking about transparency as the acknowledgment that we’re living in a digital world, that all that history is in front of us, behind us, around us. And how we share that interaction history, how we share that transparency with one another is what’s important, what makes these digital business networks effective. In some cases, we don’t even have a choice about how that information will be distributed, because we’ve left a trail. It’s been captured by others during their screening process. There is no digital disposal mechanism for this digital exhaust. Attempting to hide, conceal, or equivocate your actions—well, that becomes a very expensive denial of reality that adds friction to the process and makes digital business very hard to succeed at.

Because we are living in an era of radical transparency, the question is, How do we improve that transaction transparency? Where does radical transparency exist? How does radical transparency take hold in digital business? And what does it mean? Here are some factors to consider:

• Engagement points. Every channel, every connection is now open. People understand these connections. They can be measured, whether it’s a face-to-face interaction (which is less measurable), an SMS text or other mobile connection, or a sensor or other analogical system. Every engagement point is now an area for radical transparency. Actions are being tracked. What was done? Who bought something? Who connected? Was the product delivered? Was it returned? Was it a good process? Every action is part of this.
• Content. Content is experiencing radical transparency in digital. This can be anything from the sharing of a comment that you thought was hidden to a product or a price. Content can be created, read, updated, shared, and trashed. But in the case of transparency, as we’re talking about here, content reflects both what you want to say and what you want people to think. It could be earned, owned, or paid in terms of what has been delivered around you.
• Chronology. “When” becomes very important. What was the sequence of events? What result did they lead to?
• Location. The “where” is also critical in developing transparency. Where did the action happen? Where was something already in motion? At what node does this action occur? Where in that process did it occur?
• Product. In cultivating transparency, people want to know what was exchanged. Was it monetary? Non-monetary? What currency was the product traded in during this interaction?
• Truthfulness. Was the interaction truthful? How do you compare this truthfulness, or veracity, over time?

These areas are all driving the fact that trust and transparency improve authenticity. And authenticity is key.

Fox News

In a digital world, organizations are competing to deliver on brand promises. Those promises are held by trust and transparency. This means that the organization is always the product. The collection of individuals and nodes that form networks in a digital business has to be trusted and show transparency. Because authenticity is earned and cannot be faked in this environment, every node has to be trusted. When they’re not, the brand is in jeopardy of losing its authenticity. Maintaining that authenticity is an important part of disrupting digital business models.

Many organizations, though, are stuck in the mind-set of an earlier era. They don’t let their employees develop distinct credible public brands. In fact, most organizations do not know how to balance an individual’s personal brand with the corporate brand. Yet, one organization that has allowed this employee independence and brand identity is Fox News.

Fox News is known for a lot of things: conservative politics, questionably accurate slogans, the watchful stewardship of Roger Ailes and Rupert Murdoch. But it has also developed the strongest brand of any news network out there. It’s conservative, aggressive, and opinionated. And it puts its trust and transparency on the line every day. It’s a network of personal brands that builds authenticity. In a June 2014 poll from the Brookings Institution, Fox News was named the most trusted news source in America. When people were asked to name the television news sources they trusted the most to provide accurate information on politics and current events, 25 percent answered Fox News. MSNBC came in dead last. And this was a wide sample—conservative, moderate, and liberal.

How does this happen? Fox’s brand may be the conservative news network—in other words, not what you might call fair and balanced—but it’s also the home of a number of folks that people trust, whether it’s Sean Hannity or Greta Van Susteren or Mike Huckabee or Bill O’Reilly. These on-air talents are each given ample room to promote their own personal brand and build that trust and transparency. What’s more, they occupy different facets of Fox News’s brand personality: Sean Hannity, blue collar, jockish; Mike Huckabee, folksy, corn-fed; Megyn Kelly, hard charging, direct; Greta Van Susteren, a former friend of Secretary of State Hillary Clinton, someone who can talk to the other side.

And then there’s Bill O’Reilly, who’s the most combative of the bunch but who takes great pride in avoiding easy characterization. He will be the first to tell his critics that he’s the loudest mouth on Fox News, but he’s also against the death penalty and supports gun control and environmental regulation. O’Reilly’s personal brand, arguably the most successful of all those on Fox News, seems to be, “I’m not quite as Fox News as you think I am.” And what’s interesting about this is that it builds authenticity. That builds trust and transparency in terms of where he’s coming from. Fox News actually gives O’Reilly, like the other personalities it employs, plenty of time to advance his personal brand. In any broadcast, there are at least five mentions of www.billoreilly.com. O’Reilly puts out appeals to over twenty-five charities he supports, including the Wounded Warrior Project, Fisher House Foundation, Doctors Without Borders, Tuesday’s Children, New York City’s Coalition for the Homeless, and the Haitian Health Foundation, and he openly promotes his books on-air.

Would Brian Williams or Scott Pelley or any one of the major anchors on other channels get that type of self-promotional latitude? Even on CNN? Picture any of these news anchors without their networks. Do they have a personal brand at all? Diane Sawyer, maybe, from years of doing in-depth interviews, first at CBS. Brian Williams barely exists in the public mind. In fact, NBC has had to offer a little help in terms of his branding with greater promotional spots throughout its daily programming. And Scott Pelley? Wait, who’s that?

People on news channels are also trying to fill hours and hours of airtime. They have to become comfortable with personal opinion and personal brands, rather than following the protocols put in place by the old-line networks. MSNBC has tried to follow in Fox’s personality-driven footsteps with maybe a little success, even though it came in last in the Brookings poll in terms of news (it is seen more as entertainment than as news). And CNN keeps trying.

Fox News has been criticized for paying only lip service to objectivity, and it is therefore seen as giving its talent total freedom to voice opinion and be self-promotional. But that’s not true. Fox has also been disciplined and removed talent for a personal brand and self-interest that seemed too far afield from the network’s brand. Look what happened to Glenn Beck when he passed beyond the trust and transparency spectrum. The lesson of Fox News within this trust and transparency framework is pretty clear. Employees have their own networks. They develop their own trust and transparency. The collection of those networks creates these personal brands around authenticity. These authentic brands actually form the larger basis of what’s going on with trust and transparency for an organization. And an organization can benefit from these personal brands, these nodes of their employees’ personal brands, where they strike a good balance between how these two brands benefit each other. And this is very important. In fact, what we’re talking about as trust and transparency comes at every node.

Trust and transparency are built over time. They’re actually what are allowing us to build authentic brands in a digital world. And they come from not only people. Trust and transparency come from the fact that the nodes are trusted. There’s an authenticity, there’s a promise behind those brands that’s being delivered. And there’s an important part of digital business in one of these pillars because trust and transparency drive the authenticity that’s required to disrupt digital and drive success.

Bitcoin

Bitcoin is a digital currency created by an anonymous founder, or founders, who use the name Satoshi Nakamoto. Nakamoto posted the original design to an obscure cryptography mailing list on January 3, 2009. The idea: digital money could enable instant payments to anyone anywhere in the world in an anonymous and secure manner. In a 2011 profile of the programmer in the New Yorker, writer Joshua Davis called Bitcoin “all bit and no coin,” which is a really good point, given that this was a complete digital currency. Since the dawn of the internet, many people have attempted to create a digital equivalent of cash, and a lot of them have failed. That’s because they relied on a central authority within an existing global financial system to support a disruptive alternative. That’s just not going to happen. These central authorities would play a role in tracking the creation and expenditure of the currency, which would defeat the purpose. People didn’t want to be tracked. This is the disruptive nature of a cash system that’s direct, which in a P2P world is very different from a centralized currency system. All monetary systems depend on a degree of trust, and traditional currency is about trust in the currency itself and in the issuing body. At a time when people don’t trust their governments’ monetary policies and how they’re printing more money than the countries are worth and inflating currencies and so on, this is a great problem.

Digital currency depends on that kind of trust, plus something else: trust in the system and all its participants. It has to function differently. Bitcoin doesn’t rely on a central authority that manages transactions and issues currency. In fact, the network manages itself, which lends trust and transparency. Money is mined through this interesting algorithm with an absolute limit of 21 million coins. It can’t inflate the coins. This cryptocurrency can’t be inflated, manipulated, or impacted by political pressures, like if we need to raise money for a war or we have to drop interest rates. So, as with all currency and stored value mechanisms, the value depends on the currency holder’s belief that a bitcoin is worth something. So trust is paramount.

This is a great example of trust and transparency. The reason previous systems have failed is that people were trying to figure out how many times a unit of currency was used and who used it. Bitcoin solved this problem by having a third party manage a ledger of all these transactions and then releasing the ledger to the public in a peer-to-peer fashion. It’s one of the things that makes Bitcoin unique—building that trust.

How did Bitcoin establish trust in the currency? By using the seven trust factors we talked about earlier. First, Bitcoin’s encryption is durable. It’s been shown and proven. It’s been going since April 2010. People see how these things are mined. It’s been going on long enough. There have been trading networks.

Second, there’s consistency. Exchanges ensured a safe and secure way to convert bitcoins into other currencies. And the value of bitcoins definitely is not being inflated or manipulated.

Competency—well, people are actually accepting bitcoins as currency. In June 2014, the State of California accepted Bitcoin as a payment mechanism. And this has added to the level of trust. Also, it’s very hard to steal a bitcoin.

The public ledger chain shows a predictable money supply that you can’t hyperinflate. This timeliness of information that shows how this money rate occurs keeps mischief from happening.

Bitcoin also has a meritocracy system, where the mining of cryptographic puzzles unlocks fifteen new bitcoins to those who solve them. So exchange for value immediately occurs when you mine a bitcoin by using computing processing.

As for accountability, only 21 million bitcoins will be produced. Despite anonymity, bitcoins are spent and stored in a public ledger chain that’s decentralized and transparent to everyone.

And finally, because of the anonymity of bitcoin, every user or holder of value is theoretically treated the same. That’s mutual respect. There’s no discrimination in the use of a bitcoin. In fact, your anonymity and privacy are being respected.

Bitcoin has succeeded because of these seven trust factors. They are what drove the initial adoption of Bitcoin.

But that trust has started to erode. Bitcoin, like other cryptocurrencies (Canada’s cryptocurrency, MintChip, is an example), is losing some level of trust because the original design produced 21 billion units of currency. Because people knew it was finite, they started hoarding. And hoarding transformed what was a digital asset from a currency to a stored speculative value. Bitcoins were now bet on like stocks, and it’s hard to control when there’s no regulation to other forms of cash. So trust is eroding over time.

This is a great example of lessons learned on trust and transparency, especially for corporations. Those seven trust factors are critically important. And we also see that over time, you could lose all that trust if you don’t promote those factors. When you don’t focus on durability, consistency, competency, timeliness, meritocracy, accountability and mutual respect, trust and transparency are lost.