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The Importance of Trust in the Web 2.0 Economy
July 24th, 2007 by StephenPosted in Cluetrain, Community, Culture, Trust, Web 2.0 |
Welcome back! It's good to see you again. Please note that I am now publishing all new material at my hub site: StephenPSmith.com
After posting my “audition” at Slacker Manager yesterday, I had an interesting conversation with Dave Seah about the concept of trust and how it underscores every part of the marketplace.
Seah’s first comment addressed the ideas of loyalty and culture:
Trust has always been the currency of the world…it’s what underlies actual money, and it’s what allows Organizationally speaking, I think the various types of corporate structures have minted their own bank notes for trust: in the hierarchy, the implicit promise is that if you do your job, you will be rewarded and taken care of. This has broken down as people realize that the companies themselves do not have the same loyalty to them as they expect from their employees. And thus, that particular type of trust has become devalued within the organization itself and becomes worthless.
Culture is an interesting way of describing “shared goals and values, and methods for achieving them”, which is how I think of it. Culture is then a generator of trust.
~Dave Seah
I heartily agree with this idea. It is the breakdown of trust (between employer & employee, between buyers & sellers, between consumers & marketers) that has jeopordized so many companies and led to the proliferation of social networking websites where consumers can post their own quality statements on products and services that they have used.
I would submit that “trust” is becoming more important, especially interpersonal trust and intra-community trust. Both of which are gaining ground where institutional and governmental trust are declining. The whole idea of Web 2.0 is that conversations are growing, and while a market may cover the globe, its members are connected more closely than ever. And they are relying on each other for trusted information and evaluations of products and services, rather than the Marketing and PR companies that dominated the late 20th-century marketplace.
As you mentioned, companies no longer trust or show loyalty to their employees, so new conversations are taking place, new cultures are being developed.
~ Stephen
Seah had an excellent response to this, which I shall quote in full, as it addresses all of these concepts:
On “trust” becoming important, I would agree. I think it’s always been important in general, but trust itself as distinguishable ingredient in our transactions is relatively new. Institutional Trust has been failing, at least here in the USA, since Nixon, when we lost faith in government.
And in the post-bubble, post-Enron era, more and more people are starting to realize that they just don’t trust organizations for the sake that they’re organizations. Before people would presume that trust was an inherent part of the makeup of any institution or government agency at the very core, but now people are starting to recognize that it’s really people you meet that matter.
I saw a recent episode of House where a girl said that our lives are defined by the people who happen to be in the room with us. Culture I think is part of the shared value and vision. I think Community is also part of it…not exactly the same as culture, though they are intertwined. What it comes down to is that people are looking for “good people” they can trust to be authentic and straight with them.
The new heroes are not the ones that have been erected by institutional forces, but ones that have the semblance of democracy (American Idol, in a perverse way) or are ordinary people who have started to speak what they think is the truth. Truth is the foundation of trust, and in the media world today it’s difficult to find.
~ Dave Seah
This is precisely what I was aiming at! Seah’s statement that “…it’s really people you meet that matter…” is at the heart of the concept of the Web 2.0 culture that is flourishing in today’s economy. The question is, will business get the message?
Seah goes on to describe a five-point evolution of this process:
- Trust has always been part of any successful social endeavor.
- Our naïve trust in organizations and what they say has been eroded over the past 30-40 years because what they have stood for and said was good for Americans has proven to be a façade built from special interests.People have had to adapt by separating trust from authority and success, whereas before trust was automatic.
- Trust is the “gut check” that people are now applying to their daily interactions, and they are growing increasingly canny. Kids today, for example, are incredibly media-savvy compared to their grandparents. The emphasis has shifted from “I trust that company” to “I trust what that person is saying is true”.
- The next stage of actualization would be, “I trust that person to do what he says” followed by “I have seen what he said and did, and it was good.”
- Companies that reach to consumers have had to adopt this model, an interesting combination of business brand and public relations work.
Culture serves as a beacon to more easily find a certain type of trust and compatible mindset. The social need to flock together, however, is what Community is all about. Culture is the surface expression of values, and community is the underlying sense of belonging. That’s my hypothesis, anyway.
What do you think about the changes in the influence of Culture and Community? Where will it go next? Let’s carry on the discussion.
If you found this post useful, please share it with your friends on Twitter using the tinylink http://tinyurl.com/6dal8g. Thanks, I appreciate it! Feel free to comment below, I enjoy discussing these ideas. ~@Stephen
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July 24th, 2007 at 6:03 pm
I have an example of a trust issue between the corporate entity and it’s customer. I manage my father-in-law’s 30 year old heating and air company. I have been with him for 6 years now trying to help him grow his company into one that will take care of him into his retirement. Being only half his age, we run into conflict after conflict on how the customer should be treated in the way that we advertise to them, how we communicate with them, how we sell to them, etc. I do realize that when it comes to the technical side of things, he’s usually right. He understands that we have to embrace “certain” aspect of the new information culture, his biggest problem is that he won’t commit to the understanding of the evolving customer base. Just last week he prepared a quote for a customer a little closer to my age. The job was quoted at around fourteen thousand dollars for a pretty kick-ass system design that would modernize the heating and air conditioning system of a 75 year old home that a young couple had bought. The problem is that out of all the things that the customer said was important, a networkable and supercharged communicating thermostat control was at the top of the list. Not understanding that this customer had already researched his options online and knew what he wanted to accomplish, the old man told the customer that for their needs, a basic control would do fine because nobody needs to pay eight hundred dollars for a network control. When I spoke to the customer yesterday, he told me that he had chosen another company that he thought could do a better job. I learned that the system components that the other company had sold was not only three thousand dollars more, but it was an inferior design. The deal breaker was the control. Looking back, the customer lost trust in us because he must have assumed that we couldn’t do a control like that, therefore probably could not be trusted to properly install the entire system.
You guys hit a real soft spot with me on the culture of trust between our company and our customers. I’m going to experiment with these younger customers and see if I can uncover something more.
August 16th, 2007 at 1:58 pm
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August 16th, 2007 at 7:19 pm
You raise great points here, Stephen. Conversations are, indeed, growing globally and at an exponential rate. Trust has become the currency of the age, valuable because it creates the bonds that make for repeat customers. Your thread here inspired some thoughts of my own that I’d like to echo here as part of this conversation (I’ve posted more on this subject at http://www.HowBlogazine.com).
Neuroeconomist Paul Zak studies the physiological processes surrounding trust and how we react when faced with various social and economic situations, such as the way our “trust response” fluctuates depending upon who’s in the room. He’s found that our feelings of trust for an individual or an organization largely flow from the action of the nanopeptide, oxytocin. This so-called “bonding hormone” exerts a profound influence on our economic decision-making.
Trust, it turns out, is not an intellectual activity. It is a physical, chemical response in our brain to certain stimuli. Further, our ability to rationally evaluate an economic proposition takes a back seat to these physical responses.
Simply put, for all our research, evaluation, and consideration of information about, say, whether or not to buy a certain plasma TV, in the end it comes down to whether or not the trust response to the information we considered is strong enough to move us to part with our dollars. Consumer ratings and comments (such as those found on Amazon) serve as mechanisms that stimulate unconscious feelings of trust in the providers of our goods and services.
Randell’s comment here hits home: consumers are seeking advice from multiple sources before they even walk in our shop doors…before they become our customers. Asking questions, listening to, and acting on their responses–in short, building a trusting relationship with that customer–allows them to genuinely share their needs with us and we, as providers of goods and services, to genuinely fulfill those needs. Randell may try sharing the Ray family’s considerable knowledge and concern for their overall satisfaction (as evidenced in the comment above) in an open way with their customers. The Rays, in turn, may find a positive effect on their business overall.
These kinds of actions–which I think of as focusing on the HOW over the WHAT–are the kinds of things we need to be thinking about more to truly thrive in the 21st century global economy.
August 17th, 2007 at 4:39 am
Thank you for your comment, Mr. Seidman, your book has had an enormous effect on me, pulling together a lot of information that I had noticed in my own research.
November 10th, 2007 at 8:32 am
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March 13th, 2009 at 3:11 am
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August 8th, 2009 at 12:11 am
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