Can you have Too Much Trust?
September, 2010 by Robert Porter Lynch Copyright 2010
A report in Sloan Management Review (Summer, 2010) disturbed me. Entitled: “Too Much Trust is Death to Innovation,” the European authors stated too much trust stifles innovation, and too little trust disables innovation. After reading the report, I realized the authors “studied” trust, but had never really experienced the trust factor first hand. My experience with innovation alliances in the last 20 years indicates that an abundance of the right kind of trust never hurts innovation, but there are two important caveats:
First: High Trust Does Not Equal High Innovation
Reaping the fruits of collaborative innovation is like farming – while flowers need fertile soil to grow, we would never draw the conclusion that fertile soil is all that’s needed to produce a prosperous garden. Naturally, gardens also need sun, water, and highly competent gardeners. So too with innovation – Trust is the fertile ground, but collaborative innovation is a discipline requiring competent players and high standards of performance.
Second: High trust can manifest as either “harmony” (like Friendship) or “synergy”(we call this “Creationship”).
The researchers who found that too much trust created complacency were trapped in a key fallibility about trust – that all high levels of trust are the same (they’re not). Harmonious trust is blissful, sometimes even complacent, but not necessarily innovative; Synergistic trust is energetic, filled with tension, constantly pushing the edges of possibility.
Synergistic trust exists in an environment of co-creation where the partners interact in a perpetual state of enlightened dissatisfaction. Conflict is absent in harmonious trust, yet very evident in synergistic trust, where ideas are being challenged daily. The conflict of ideas is used only to spur the mind to higher orders of thinking, while the challengers judiciously honor each other’s intellects.
The greater the tension between differentials in thinking,
the greater the potential for explosive innovation.
For example, in our study of how the Greeks created the first age of innovation, several “essential ingredients” were necessary to create the phenomenal explosion of innovation from such as small city as Athens (population: only 30-40,000). Some of the elements of that innovation formula included: pushing the limits of possibility, an endless pursuit of perfection, willingness to discover, dedication to honoring others, and a continuous stream of insightful questions. Socrates epitomized the method of constantly asking questions which drove thinking into root cause, and exploration of greater possibilities. Like all great champions, to keep synergistic trust alive, the leader must live in a perpetual state of enlightened dissatisfaction if the quest for ever-evolving excellence is to be achieved.
How Nissan Revived by Shifting to Synergistic Trust
In a recent example, Nissan Motors in 2000 was headed for bankruptcy. It had debt of $20 billion, was losing money, and only three of its 48 models were generating a profit. Carlos Goshen was sent in from Renault to protect its investment in Nissan. Goshen was viewed as an outsider by the media and parts of Nissan. He promised to resign if the company did not reach profitability by the end of the year. Goshen’s plan called for maintaining its collaborative relationships with its supply chain, which made 80% of the vehicle, but shaking up the cozy relationships with suppliers, which had based their entire business philosophy on harmonious trust. Nissan was the victim of complacency, which showed up as poor product planning, drab styling, and unimaginative design, which were partly the responsibility of the suppliers who did not aspire to compete on a world-class basis.
Goshen shook up the supply base, opening it up to world class suppliers, as long as they were innovative, collaborative, and trustworthy. He wanted synergistic trust!
A similar relationship existed with Nissan’s dealerships, half of which were owned and staffed by Nissan managers, not independent entrepreneurs. The cozy, almost familial, harmonious relationship between the manufacturer and dealers exhibited the Japanese value of “wa” which means “harmony” (which is considered one of the highest values in Japanese culture). This harmony prevented the organization from tackling some of Nissan’s most pressing problems, namely their cars were stale, and out of tune with what customers wanted.
Harmonious trust, while laudable in a friendship, has a serious flaw when used in a partnership, alliance, merger, or cross-functional team in a highly competitive business environment. That flaw is the lack of urgency to execute quickly, flawlessly, and creatively. The veneer of harmony had glossed over serious flaws in Nissan’s business strategy, and also built a culture of continuous planning to make changes, but no willpower to put the changes into place. After years of attempting to get everyone’s buy-in, the financial and market position of Nissan had eroded to the crisis point. This was exacerbated by prior senior executive regimes that had built a hierarchical structure that isolated cross-functional interaction (an internal alliance), and slowed flow of valuable information from the field and from the shop floor to senior management.
The result: Since 2000, new models that have taken the marketplace by storm. And profitability was achieved within 12 months, and the company is now debt-free.
While harmonious trust is wonderful in relatively static, stable environments, such as one’s family and friendships, synergistic trust is a crucial element in dynamic, fast moving, rapidly changing competitive arenas, such as high technology and sports.
Innovation alliances have made enormous progress over the last twenty years. However, the statistics on alliance success can easily be misleading. While many alliances do fail (twenty years ago it was 80%, now it’s considered 50%), alliance professionals who use best-practice alliance architecture regularly produce 70-80% success rates. Clearly the disciplined application of professional standards to alliances has shifted the balance.
Further, what is considered a “success” or “failure” in innovation can be confounding. Eli Lilly, a company that has had enormous success in risky innovation alliances, distinguishes between the science and the relationship. A failed technology innovation may still embody a successful collaborative relationship, a factor that would instill confidence to proceed experimenting with another new technology, despite past failures on the science front.
Robert Porter Lynch Copyright 2010