Quick summary:

• Recent headlines for Meta, Twitter, and crypto exchange FTX have not been good

• These individual stories raise questions about trust in technology firms

• Trust is more important than ever as we shift to a service-oriented economy

• Firms cannot simply rely on good intentions; trust must be built into processes

• Using a “trust model” helps develop and sustain a good reputation over time

A bit of good news and lots of bad news

Earlier this week, the 2022 midterm elections were held in the United States. Which party will be in control of the House and Senate remains in question as ballots continue to be counted, but the good news is that the elections came and went with minimal disruptions. Some commentators made a note of the fact that most candidates who lost conceded the race to their opponent rather than disputing the outcome. This might be considered commonplace in most years, but it was not something experts took for granted after the contentious 2020 elections. We will likely find out more about how well the respective parties fared this weekend and how the next Congress is shaping up, but it is a positive sign that the process was peaceful, and we trust that the outcomes will be fair.

Unfortunately, several other stories this week in the technology and business world are noteworthy for the lack of trust involved.

• First, the morning after the elections, Meta announced its first-ever mass layoffs of 11,000 employees or 13% of its workforce. This move appeared to be quite a shift for the company from its announcement to Wall Street two weeks ago that it was doubling down on its costly investment in the metaverse. Shares tumbled 18% after the initial report, and the sudden change in direction at Meta is due to the adverse reaction of investors, yet has caught employees off guard.

• Not to be outdone in announcing layoffs, shortly after officially taking over Twitter, Elon Musk has had an adventurous week marked by mass layoffs of 7,000 or 50% of its employees, the resignation of several high-profile executive leaders, and concerns among advertisers about the controversial move to allow any user to obtain the famed “blue checkmark” validation for a small fee, which led to confusion and a rise in misinformation immediately ahead of the US midterm election.

• Finally, the crypto exchange FTX filed for bankruptcy this morning after concerns about its liquidity and security of assets stemming from a CoinDesk report. CEO Sam Bankman-Fried resigned, and his net worth went from $16B to zero in a week. (This happened after Bankman-Fried was the second-largest donor to Democratic candidates this election cycle. His co-CEO Ryan Salame also donated millions to Republican candidates.)

Why building trust is more important than ever

Of course, it is easy to say that building trust is essential: social cohesion depends on it, and both businesses and governments must earn it through their actions over time. Some experts, such as Dacher Keltner, author of The Power Paradox, argue that power accrues to those who share it with others - building up trust in their leadership - and dissipates when those leaders accrue too much power and begin to place their interests above those of the collective. Others argue that trust is more important than ever as the problems we face as a society grows in complexity (climate change is just one example). Whether the issue is how many bots are on Twitter or the potential to be fooled by deepfakes, forces related to technological progress also contribute to eroding trust. It should not be surprising that the intersection of technology, society, and power is continually churning our relationships and ability to form lasting bonds.

In a recent book titled The Power of Trust: How Companies Build It, Lose It, and Regain It, authors Sandra Sucher and Shalene Gupta share that the importance of trust has risen over time for companies, in part due to the shift from a product-oriented to a service-oriented economy. In a product-oriented world, trust must be earned at a particular moment: the point of sale. Trust must be earned repeatedly throughout many interactions in a service-oriented world, including “products” offered as a service. Significantly, technology has changed the very nature of businesses to support service models by:

• providing for greater scale and reach than previously possible

• standardizing interactions far more than is possible with humans alone

• allowing for more connectedness and personalization

However, while technology has helped to build trust in business, it also brings with it new challenges, including:

• questions of data privacy and ownership

• the potential for systematic bias and discrimination

• the threat of mass layoffs and greater income inequality over time

When we combine the chaos introduced with rapid technological change alongside other existing social tensions based on politics, religion, race, ethnicity, gender, sexual orientation, and immigration, Sucher and Gupta conclude that “the world is as uncertain and uneven a place as it may have ever been.”

Build trust in processes, not just good intentions

Many organizations recognize the importance of trust and seek to earn it through their actions. However, as Sucher and Gupta state, trust is not merely built based on good intentions: it must be deeply embedded within a firm’s processes and pervasive throughout all areas of the organization. The most significant gap Sucher and Gupta found in their research is that trust is too often a meaningless buzzword: when trust is not well-defined, there is a gap between what firms say and what they do. Sucher and Gupta outline a trust model which consists of four elements:

1. Competence: the technical ability to deliver high-quality products and services

2. Motives: clarity on your intentions and balancing the needs of different groups to minimize negative impacts on any single group

3. Means: the fairness of your processes and treatment of people, allowing all groups who will be affected by decisions to have a chance to weigh in

4. Impact: the overall effect, both intended and unintended, of your actions on other people and taking responsibility when anyone is unduly harmed

According to Sucher and Gupta, the business world has “done a terrible job of understanding the importance of trust…time and time, our community has flunked trust tests and failed to learn from its mistakes”. Firms in the recent headlines this week, such as Meta, Twitter, and FTX, have failed to adequately weave in trust as a critical factor in their decision-making and business processes, thereby causing significant harm to customers, employees, and society as a whole. By contrast, when organizations intentionally layer in trust throughout their use of technology, processes, and decision-making, they gain greater power and ability to change the world for the better.

How is trust defined in your organization? Is trust a core value within your walls? Do you use trust as merely a buzzword, or is it a significant consideration in your decisions and designing your processes? How do you leverage technology to enhance people's trust in your organization? Are the impacts of your decisions considered through the lens of all stakeholders? Do you have a process to capture the input of all groups impacted by changes?