Trust is an emergent property of effective networks

It seems that markets, our dominant form of economic transactions, are not really designed to optimize trust. As Charles Green states:

The reason is simple: trust is not a market transaction, it’s a human transaction. People don’t work by supply and demand, they work by karmic reciprocity. In markets, if I trust you, I’m a sucker and you take advantage of me. In relationships, if I trust you, you trust me, and we get along. We live up or down to others expectations of us.

We currently organize around Tribal models, plus Institutions, plus Markets. In the 21st century, Networks are becoming the next dominant organizing model, as explained by David Ronfeldt in this diagram.

As the Network organizational model comes to dominance, I think we will see a return to trust as a lubricant of social and economic exchanges. Trust is an emergent property of effective networks.

If trust is a sign of healthy networks then, as Charles Green says, we are teaching the wrong things at school and at work.

Our public education and culture is loaded with the free-market versions of trust. We teach, “If you’re not careful they will screw you.” We passcode-protect everything. We are taught to suspect the worst of everyone, be wary of every open bottle of soda, watch out for ingredients on any bottle.

Then in business school, we are taught that if customers don’t trust you, you need to convince them you are trustworthy – partly by insisting on our trustworthiness.  You can’t protest enough for that to work: in fact, guess the Two Most Trust-Destroying Words You Can Say.

I have noted that there is significant difference between cooperation and collaboration, with the former often overlooked in the workplace. Collaboration works well when the rules (like markets) are clear, and we know who we are working with (suppliers, partners, customers). However, in networks, someone may be our supplier one day and our customer the next. Cooperation is a better behavioural norm because it strengthens the entire network, not just an individual node. Cooperation is also a major factor in personal knowledge management, for we each need to share and trust, as our part of the social business (learning) contract.

In the network era, trust will become much more important, and it is not something that, once lost, we may be able to regain in a world where the network remembers everything, for a very long time. It truly is becoming a global village, for better and for worse. Trust should be taught, discussed, promoted, and practised; in schools and in business.

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4 Responses to “Trust is an emergent property of effective networks”

  1. Gordon Rae

    I don’t agree with Charles Green’s account of trust in markets. It doesn’t fit what businesses do, and it doesn’t fit what economists write about. Trust is not about ethics; it’s about relying on other people to deliver outcomes. And more than anything else, it’s about distributing the social cost of delivering reliable outcomes.

    One of the most common things in markets is that people will happily a higher price for a better quality product. Apple makes seriously high margins on iPhones, not because they have better ethics than their competitors (if only!) but because they have consistently high build quality and their products are a pleasure to use. When I say I trust Apple, I’m saying that I can rely on all the things people have said about their iPhones to be true about my iPhone.

    Another very common occurrence is that businesses will extend credit to regular customers, but strangers pay cash up front. Customers seldom cry “sucker!” and refuse to pay, because a credit account is a valuable thing to have. Strangers pay cash because we trust the currency. No need to do a background check on everyone who buys from me, as long as I can recognise a fake twenty, and rely on my neighbours to spread the word if someone’s in town speading fake twenties.

    One of the great things about markets is they allow us to do deals with strangers, and be quits at the end of the transaction. As for the good karma, that’s something we can pay forward; we don’t have to pay it back.

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  2. Jessica

    Great Post! Thanks a lot for sharing this valuable information. I agree that building up of trust amongst co workers and also with clients helps to get more business and profit in a business. Cooperation amongst co workers also helps in networking in a business. Thus, trust, cooperation, and respect are the main ingredients for a successful business.

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