This continues our review of Stephen M. R. Covey’s book The Speed of Trust. I strongly encourage you to buy the book, read it a few times, and implement his counsel.
Stephen M. R. Covey illustrates what he calls “The Economics of Trust”. He clearly demonstrates how trust impacts the speed and cost to organizations. He dispels the myth that trust is a nice-to-have, but non-essential element in business. He helps you quantify the impact, negative or positive, trust levies on you.
A Simple Formula
He writes “Here’s a simple formula that will enable you to take trust from an intangible and unquantifiable variable to an indispensable factor that is both tangible and quantifiable. The formula is based on this critical insight: Trust always affects two outcomes speed and cost. When trust goes down, speed will also go down and costs will go up.”
Trust = Speed h Cost
When trust goes up, speed will also go up and costs will go down
h Trust = h Speed i Cost
Trust Taxes & Trust Dividends
Use this formula to factor whether you pay a trust tax or dividend.
You pay a trust tax each time someone discounts what you say because they do not trust you, or when you discount what someone says because you don’t trust them. When trust goes down, so does speed and costs go up. Your pay a tax for the mistrust.
You receive a trust dividend when people act faster because they trust you. I’ve seen many situations where staff performed faster, better, and more because they trusted someone or the cause they worked to expand. Business deals proceed faster when both sides trust each other. Trust truly pays a financial dividend in speed and cost.
Trust: the Hidden Variable
Covey presents that trust is hidden variable in business. He modifies the traditional business formula: SxE=R (Strategy times execution equals results). He adds trust as a component of the formula: (SxE)T=R ([Strategy times execution] times trust equals results)
Please buy and study Covey’s book.
Friday we review how character & competence affect trust
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