What does trust mean in a digital economy where we no longer shake hands but instead leave anonymous comments? More than you might think. A conversation with Philipp Kristian Diekhöner, author of the book The Trust Economy.
OPEN: You talk about trust experiencing a renaissance in the economy. What exactly is changing? PHILIPP KRISTIAN DIEKHÖNER: In the last 20 years, the possibilities offered by technology have developed so rapidly that many people have assumed we are experiencing some sort of hyper-industrialization in which anonymity will increase. In actual fact, however, we are using digital media to integrate relationships more prominently in business life once again. The interesting thing about the platform economy is that trust can be accrued relatively easily around the world with very different individuals.
What does that mean in practical terms? All good business models function as intermediaries for trust. What we’re currently experiencing is, to put it simply, a process in which we are shifting our trust in offline intermediaries to online intermediaries. In doing so, we are digitalizing our trust. This also means that digital technology affords us the ability to scale trust processes much more effectively. That might all sound rather abstract just now, but the exciting thing is that it is bringing about a transformation in how we create value. Take platforms like Uber or eBay, for example: they act as brokers between two parties – driver and passenger, seller and buyer – and create trust through reciprocal rating systems. Trust is the central driver of value creation.
Aren’t we often somewhat too trusting? Technology can also mislead us and cause us to place our trust in strangers or new ideas. E-commerce is a classic example of this. Going back 30 years, very few people would have imagined shopping in a store that doesn’t actually exist. Today, almost everyone does it. The same also applies to dating. The exciting thing about this is that bridges of trust are often built on advance payments. To give an example: There’s an investment app that is marketed very nicely in Singapore, where I live. As it turns out, the guys behind it have absolutely no idea about how to build a portfolio or the things they’re investing in. We trust digital user interfaces and don’t think twice about whether the people behind them are putting a product on the market that people can actually trust. This is an extremely important topic.
Sounds risky. Right. You probably belong to the Baby Boomer generation – that means that your default is to mistrust everyone and everything, and you probably think that trust is something that has to be earned.
Not quite, but almost. Generations Y and Z, which I’m a part of, offer an advance of trust until they learn better. This chiefly comes down to the fact that technological platforms have brought truly exciting new dimensions to our lives. As a result, my generation is convinced that technology and user interfaces are reliable, at least most of the time. We assume that, in general, we can trust other people from the outset – a very romantic notion. And this happens even though we all live in the same offline world in which mistrust is institutionalized: from passport control to background checks when you apply for a new job, in the offline world, mistrust is always the default. Contracts take an eternity to conclude because mistrust is regarded as justified. We should seriously consider how we want to organize ourselves in the future to restore a framework to our offline society that would enable us to trust one another again without all this bureaucracy.
Companies build brands to earn trust and convert this into positive purchasing decisions. What would change for brands in your model? Previously, companies had total control and could define a brand completely – that’s no longer the case. Today, brands are dynamic and are defined by their users, who share their opinions and views online with others. The crucial difference between the previous situation and now is, therefore, that the social capital on which brands are based has become quantifiable. There’s data that shows who I interact with, the nature of this relationship, how we conduct transactions and maintain personal relationships. What hasn’t changed is the fact that brands can only gain and maintain a market advantage when people believe and trust in their uniqueness. A brand’s social capital, its personality, and its stand-out factor are ultimately what make it successful over the years.
What role does trust play in corporate culture? An intriguing question. All research to date has shown that trust is the most important characteristic of positive, successful corporate cultures. They magnetize people so they can reach a common goal. In most companies, however including most small and medium-sized enterprises, there is no such magnetization. Why not? We’ve made exceptional technological progress in recent years. Yet, many companies continue to act as though nothing has changed. My core thesis is that too many rules and too little trust leads to technology being used ineffectively and prevents us from pushing change forward as fast as we should. When we bring this back to the topic of culture, it means that the culture must change so that a company can be changed. But then why should the culture of a company change if its employees don’t trust that the new culture will, ultimately, be better? This is the topic that interests me: How can I magnetize a company? How can I ensure that every employee will believe and be convinced that the change they can bring about together will be worthwhile? We’re currently building a tool that will allow us to quantify and visualize trust dynamics in companies. The vision behind this product idea is for us to help companies to work together more effectively through a healthy dose of trust.
Mr. Diekhöner, thank you for your time.
➝ OPEN PEOPLE Philipp Kristian Diekhöner is Managing Partner of the strategic consultancy Denkfabrik Digital. He has been recognized as a St. Gallen Symposium Leader of Tomorrow, a World Economic Forum Global Shaper, and is a Fellow of the Kairos Society.
➝ OPEN READ Philipp Kristian Diekhöner’s book, The Trust Economy, is available in English, Chinese and German.