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TechWatch: The Technology Factor in Business Trust

Trust is an essential ingredient in business. Imagine how difficult it would be to conduct business if each transaction was like the most untrustworthy one.

David Gautschi, in his Ethix essay “Trust in Exchange: Adam Smith’s Presupposition” (October 2002) wrote, “It was Adam Smith, the founder of modern capitalism more than 200 years ago, who identified trust as a foundational ingredient of capitalism.” Francis Fukuyama in his excellent book Trust argues: “If people who have to work together in an enterprise trust one another, doing business costs less. By contrast, people who do not trust one another will end up cooperating only under a system of formal rules and regulations which have to be negotiated, agreed to, litigated, and enforced, sometimes by coercive means” (p. 27).

Business continues to be radically transformed by information technology. So the question is: what role does this technology play in business trust? Does technology enhance or interfere with business trust? Not surprisingly, the answer seems to be “both.”

This suggests that any business leader should consider the trust question when incorporating new technology. I will examine several areas where this question is vital.

The Pace of Change

Recently the Associated Press reported (February 13, 2003): “Intel co-founder Gordon Moore predicted this week that the semiconductor industry will maintain its torrid pace of development for at least another decade, regardless of normal fluctuations in the economy.”

Remember, twenty years ago PCs were just starting to make significant inroads in the office. Ten years ago only a small percentage of businesses had a web presence. Ten years from now we can expect to look back to see additional significant changes that have come into business through technology.

Change, even when needed, can be disruptive and undermine trust. Paul Song, then the CEO of Aries, commented in an Ethix conversation in 1999, “In our era, the pace of technological change has vastly accelerated—while the ability of people to absorb and adapt to those changes hasn’t improved at all.” Richard Sennett in The Corrosion of Character argued, “Deeper experiences of trust are more informal, as when people learn on whom they can rely. The short timeframe of modern institutions limits the ripening of informal trust.”

We conclude that the wise leader will have to deal with technology in a careful way or risk undermining trust simply due to the change and disruption.

Trusting Data from the Internet

The technology explosion has led to two new types of data: data from the Internet, and data that come from increasingly complex calculations. Both raise the trust question.

Data from the Internet is not necessarily reviewed, edited, or published in any traditional sense. Hence there are obvious questions about source, bias, and validity. Data on the Internet should be approached with a healthy distrust. I say healthy, however, because this is a good practice with any sources we encounter. We all know the editorial bent of the New York Times and the Wall Street Journal are very different from each other, so we are prepared to add our “grain of salt” to what we read. (Of course, even the most carefully edited sources may be a problem as the Jayson Blair case of fabricated stories in the New York Times has shown.) For most sources on the web there is no knowledge of the editorial bias.

Does this make the Internet un-useful? Of course not. The Internet is an incredibly valuable source of good information. We simply need to understand some of the material may be untrustworthy.

Trusting Data from Complex Calculations

More capable computing allows us to perform very complex calculations. Mathematical models of automobiles crashing, airplanes flying, large power grids dealing with outages, or buildings in an earthquake all represent this kind of calculation. In the 1970s, these models used to have hundreds or thousands of variables and were not particularly accurate. Today they have millions of variables and provide incredible insight. The difference is made possible by the pace of change referenced earlier. Since no one can check this much computation manually, how do you trust the results?

This computation can be understood and trusted, but it does require an understanding of the assumptions and limitations that went into the models. Sometimes this is ignored to the user’s peril. One way to enhance this understanding is to spend time experimenting with the models to develop a “feel” for how they work. Too often, this step is neglected, leading to either mistrust or (perhaps worse) false trust when the models are misused.

More recently, models have been developed to create financial derivatives that would never have been possible without the computational capability. Alan Greenspan and Warren Buffet have disagreed over the use of such derivatives. In a recent article in Forbes, Alan Weinberg compared their views:

“Although the benefits and costs of derivatives remain the subject of spirited debate, the performance of the economy and the financial system in recent years suggests that those benefits have materially exceeded the costs,” according to Greenspan. Buffet, on the other hand, said ” We view them as time bombs, both for the parties that deal in them and the economic system.” Buffet is arguing that the complexity of such instruments may mask unknown behavior much like the mathematical model that is applied outside of its range of validity.

With mathematical modeling of physical phenomena, there are underlying models of physics that can be applied. There is no similar foundation corresponding to complex financial derivatives, further undermining trust.

Trusting the Technology Itself

As technology has moved front and center in many businesses, it stops being a “support function” and becomes the critical factor in getting work done. My recent call to an airline for reservations confirmed this, when they told me their computer system was down and I would have to call back. They no longer can process a purchase without the computer system. Thus people have to trust in the technology, and the technology needs to show itself trustworthy.

This goes well beyond the reliability of servers and networks. It requires an increasingly complex system (interaction between many computers, networks, databases, software, and people) to perform flawlessly. In this area, there has been significant progress in the reliability of computer systems. Ed Lazowska, computer scientist at the University of Washington, discussed some of this work in the Ethix conversation in January/February 2003. In spite of this progress, however, people are demanding more and more of their systems. Still, much more work is required to provide truly trustworthy systems.

Trust in Technology Supported Collaboration

Perhaps the most ellusive and important area of trust related to technology is the way computing and telecommunications technologies aid or undermine trust in relationships. By its very nature, telecommunications allows collaboration over distance, and this would seem to enhance trust. But it sometimes does not.

I’ve personally had far too many experiences with lengthy email exchanges that simply went off track. Perhaps it is the lack of facial response, or the way that people face-to-face can show respect for each other. It may also be true because people tend to write emails quickly, not taking the time to consider how another person might read them. I know I am not alone in this.

I vividly remember a difficult email exchange between two people on my staff several years ago. They chose to copy me in their exchange, so I could watch it unfold. At one point I left my office and went downstairs to one of the people involved in the “discussion.” I asked him to go with me and we walked over to the other person’s office. I told them I thought they could work this out if they just talked to each other. They did in about five minutes. The email exchange had fanned the flames of mistrust.

I have also found that a phone conversation can help when email fails. In this case it seems to be the interactive nature of an exchange, including the tone of speech (usually not obvious in the text of email), helps with building trust.

Some have attempted to address this problem through edicts—no emailing to people in the same building. Go talk to them. This is not the right answer. An email has its place in being non-intrusive, and is great for leaving status or other information.

The Team Performance Model ((c) 1999 by Allan Drexler and David Sibbet) offers some insight on this issue. Drexler and Sibbet are focused on managing communication in “virtual teams.” They break communication into three types: trust building (best done face-to-face), goal clarification (same time, any place, using telephone or video conferencing) and implementation (different times and places using email, electronic bulletin boards, and the like). All three types should be used in a project, but the technology works best in the context of a trusted relationship.

To make this subject a bit harder, Stan Shull offered a bit of counter advice in lauding the virtues of technology based collaboration in an Ethix forum. He said, “Some may decry the depersonalization of business through virtual collaboration, and surely it has its downsides. But to the extent that it diminishes the role of “old-boy” networks and golf-course deal making in favor of trust built on objective business criteria, it has its benefits.” His comments came at the close of a significant merger deal done without any benefit of face-to-face communication!

Whatever side you choose, it remains clear that technology-based communication is different from face-to-face. It requires a level of care that, when ignored, leads to mistrust.

Conclusion

Technology plays a surprisingly strong role in preserving, or undermining, trust in business relationships. Because of the importance of trust in business, it is vital that we take the time to think through the potential trust issues every time new technology is introduced. Gordon Moore has promised us that the process of introducing new technology into business will continue for some time to come.

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Al Erisman is executive editor of Ethix, which he co-founded in 1998.
He spent 32 years at The Boeing Company, the last 11 as director of technology.
He was selected as a senior technical fellow of The Boeing Company in 1990,
and received his Ph.D. in applied mathematics from Iowa State University.

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