Rachel Botsman is a world-renowned trust expert, lecturer at the University of Oxford’s Saïd Business School, and Young Global Leader at the World Economic Forum. The author of Who Can You Trust?, she was also a keynote speaker at the recent 2017 ASFA Conference. Rachel specialises in writing about and researching how technology is transforming trust and what this means for life, work and how we do business.
I’ve been intrigued for a while now by how important trust is – Why is it so critical to every interaction and relationship? When I wrote my first book, What’s Mine is Yours on the so called ‘collaborative’ or ‘sharing’ economy, I became deeply curious as to how technology could make us engage in behaviours that might previously have been considered a little creepy or outright risky, such as opening our homes and cars to strangers – contravening the number one rule your parents teach you growing up. The currency that makes these ideas work is trust.
At the same time, I was studying how trust was continually being eroded by key institutions in society. Incidences from the lurid and criminal, to the plain stupid and depressingly routine such as the financial crisis, numerous government expense scandals, corporate data breaches and the Royal Commission into the sexual abuse of children, exposing untrustworthy behaviour of institutions like the Catholic Church.
I had a hunch something deeper was connecting these issues. My new book Who Can You Trust? charts a theory, a bold claim: we are at the start of the third, biggest trust revolution in the history of humankind. Trust, the glue that holds society together, hasn’t disappeared; it has shifted.
A situation or relationship always requires some risk, some leap of faith to require trust
Trust is one of those funny words that we use a lot but that is quite tricky to define. My definition of trust is deliberately simple: ‘a confident relationship with the unknown.’ Trust is the remarkable force that pulls you over that gap between certainty and uncertainty. It is literally the bridge between the known and the unknown. Trust is not about knowing the outcome. Far from it. A situation or relationship always requires some risk, some leap of faith to require trust.
When you view trust through this lens it starts to explain how it enables us to cope with vulnerability, place our faith in strangers or just keep moving forward. It shows us why trust is a critical ingredient of innovation and entrepreneurial success, it is required of leaders to take smart risks and allow their employees to dive into uncharted waters to discover new ideas.
Trust has evolved in three distinct chapters. The first was local, where everyone knew everyone else and trust flowed sideways to people in your community. The second was institutional, where trust was intermediated through contracts, courts and corporate brands to create an organised industrial society. And the third is distributed trust, which returns us to the horizontal direction of trust. Instead of flowing upwards to key institutions, experts, authorities and regulators, it now flows sideways to peers, neighbours, colleagues and strangers. I call this the era of distributed trust that can help explain a lot of the complexity and disruption happening in our lives.
That means we’re as likely to trust say, a stranger on the bus or a bot on the web or an Airbnb host or a new cryptocurrency such as Ether or Bitcoin, as we are an established authority or institution. The consequences of this shift, good and bad, cannot be underestimated.
We are at the start of the third, biggest trust revolution in the history of humankind. Trust, the glue that holds society together, hasn’t disappeared; it has shifted
Significantly, this trust shift is taking place in a landscape of rapidly shifting and evolving technologies, from artificial intelligence (AI) to blockchain to the Internet of Things (IOT). We are already putting our faith in algorithms over humans in our daily lives, whether it’s trusting Amazon’s recommendations on what to read or Netflix’s suggestions on what to watch. But this is just the beginning. We will soon be riding around in self-driving cars, trusting our very lives to the unseen hands of technology. It’s an age of trust on speed, one in which we increasingly outsource our capacity to trust to algorithms.
Technology is enabling and accelerating millions of people to take what I call a trust leap. A trust leap occurs when we take a risk and do something new or in a fundamentally different way. And our banking habits are full of trust leaps. For instance, the first-time people switched from bartering real goods to using paper money. Do you remember the first time you used an ATM? How about when you put your credit card details into an internet site? That is a trust leap. Humans are remarkably good at taking trust leaps to break down barriers and to create new forms of value. The difference today is we are being asked to leap faster and higher than ever before.
I’d argue the root causes are similar to the decline in trust of banks globally – a systemic breakdown in accountability and ethics.
Over the past couple of decades, the banking industry has had its skirts lifted to reveal some very grubby underwear. From Freddie Mac to Fannie Mae, Lehman Brothers to Bear Stearns, AIG to Northern Rock, the BHS pension funds to the recent alleged Commonwealth Bank anti-money laundering breaches, the list goes on, and it has taken a hard toll on trust. Unfortunately, it doesn’t matter whether a specific bank brand was involved; perception is everything. Fear, suspicion and disenchantment are deadly viruses that spread, and are being spread fast about the financial industry in general.
Perhaps the biggest blow has come from the fact that only a handful of CEOs, the ‘captains of finance’ who played a role in creating the financial crisis, faced any form of punishment. Yet everyday Australians have to be accountable for say the slightest tax transgressions or they get charged. ‘We cannot have a just society that applies the principles of accountability to the powerless and the principle of forgiveness to the powerful,’ writes American political commentator and author Christopher Hayes in his fascinating book Twilight of the Elites. The systemic breakdown of trust in financial institutions comes down to this application of different rules for different folks.
Ironically, I think the current crisis of trust is a massive opportunity for institutions. We are already seeing this play out with the media. In an era where people don’t know who to trust for the truth, professional journalism is going through a renaissance. For instance, The New York Times in 2017 had its fastest growth in paid subscriptions. But institutions will need to work hard to regain trust by becoming more trustworthy. The key is demonstrating intentions: do your intentions (bank, government, newspaper etc) align with mine?
We’ll also continue to place an increasing amount of trust in algorithms to make decisions on our behalf. In this sense, trust will become more automated and accelerated. However, the organisations that will ultimately win in the long-term are those that become the most human. At the end of the day, trust is a human process.