Why winning customer trust is key to startup success: Philipp Kristian, author of 'The Trust Economy’
From barter to blockchain, ‘trust’ is a key component of value exchange. The author of The Trust Economy offers insights on how entrepreneurs can use trust to scale their innovations.
Philipp Kristian Diekhoner is a German entrepreneur and innovation consultant based in Singapore. His debut book is The Trust Economy: Building Strong Networks and Realising Exponential Value in the Digital Age (see my book review).
The book offers six steps for startups to design trust. In the digital economy, trust is a two-way street. The first three steps are proactively executed by the startup: perception, temptation, and connection. The next three steps are executed by the customers but must be facilitated by the startup: validation, attachment, and affiliation.
Philipp joins us in this interview on myths and trends about trust, frameworks for customer connect, trust in scale-stage startups, and broader movements towards a trust economy. Here is an edited excerpt of the interview:
YourStory: What are the top three emerging trends that will transform online trust?
Philipp Kristian: I think, firstly, an almost blind and default trust in technology is a trend that presents opportunities and issues alike. We vigorously trust in sleek user interfaces, and rarely ask what lies beneath.
Secondly, and contrastingly, increasing awareness of the value of our personal data will make us more inquisitive and cautious, and require companies to be more transparent.
Thirdly, distributed ledgers will likely power much of the increased traceability and transparency – but only if we stop blindly handing over our data to the big tech companies.
YS: What are the most common myths and misconceptions that entrepreneurs have about the role of trust?
PK: People think trust is fluffy – and who can blame them, when most dictionaries lack even a simple and adequate definition of trust? My book sets this straight by defining trust as a condition for any and all value to be created, and in direct correlation with value itself.
The more we trust something, the more we value it. The less we value, the less we trust. Showing entrepreneurs that they are quintessentially in the business of trust changes their outlook. The beauty of organising management to maximise trust rather than quarterly returns is that trust cannot be pursued exclusively with a short-term mindset.
Trust forces businesses to assume both a short- and long-term view, which is ultimately better for their bottom line. It therefore makes a better tool for maximising value harvested from a business than pure numbers, because those tempt us to chase for the next quarter or funding round.
YS: What is your current field of research and practice in innovation?
PK: My biggest focus is using innovation to create a smarter world with better propositions. Trust plays a key role in that, because trust is a condition for business value. I specialise in identifying trust gaps in the proposition and operations of corporates and startups alike, and coming up with solutions to patch them and realise more value for the business.
YS: How was your book received? What were some of the unusual responses and reactions you got?
PK: Unexpectedly, the book positioned me squarely inside the blockchain hype, due to the obvious connection of trust technology and the trust economy I describe. I intended my book to be big picture, with blockchain as one interesting development in how we are transforming who and what we trust.
What I was surprised by is just how many speaking invites I received on the topic of blockchain and trust. People who have read the book and know me personally generally say it reflects a lot of the knowledge I’ve absorbed over the years. I made a clear effort to back up all my argumentation with material fact – that way, the book can be a rich resource for innovation practitioners, because innovation requires trust to succeed.
Overall, I think people quickly realise that the book is about innovation, society, and the nature of how humanity creates and exchanges value. It expresses much of what I practise every day, and meshes it with relevant theory. It’s a practitioner’s book and yet the idea is that it has a philosophical component too, which is appropriate since trust concerns every one of us so deeply and personally.
YS: What are some recent examples of trust mechanisms and startup platforms you have come across?
PK: I honestly think we are still emerging from a valley of distrust in business, and that means we probably need to give ourselves a few more years before genuine trust-driven companies emerge. In my advisory work, I see to it that this trust-driven transformation happens faster for the companies I work with.
In fact, my partner and I are developing a 12-week programme to identify and close trust gaps, which works for companies big and small and immediately realises tonnes of future value for the business.
YS: How does your model of building trust integrate with existing frameworks for customer acquisition, marketing, and so on?
PK: If you were to overlay Nir Eyal’s “hooked” cycle for how to build habit-forming products, you would see clear alignment between the two. Instead of reinventing the wheel, the trust framework offers a big-picture master perspective that ties other related frameworks together. I have not made the effort to integrate these explicitly, but the connections are obvious soon as you take a look at the model.
YS: What are the typical challenges entrepreneurs face in scaling up customer trust as they grow their company?
PK: After growing to 100-150 employees, informal organisational structures fail, which means entrepreneurs move towards either chaos or corporate bureaucracy as they grow. Clever organisational design can create self-contained (high autonomy, high alignment) groups of employees not exceeding 100 people, which essentially self-govern whilst remaining aligned to the overall company direction.
Objectives and Key Results (OKR) help operationalise that, for instance, but this requires deliberate organisational design in the way the company is structured for growth. This is where I see the future of all large organisations moving towards.
YS: What kinds of tools/technologies are there for companies to get a ‘dashboard’ view of trust?
PK: I’ve created a trust scorecard in my advisory work, and this is one of many tools I use to “audit” the level of trust in a company. From here, it’s important to define a trust strategy, which amounts to enhancing areas in which a lot of trust is generated in the company, and fixing those in which the most trust is compromised.
YS: How should innovators strike that delicate balance between ‘stick to your vision’ and ‘adapt to a changed world’?
PK: A vision needs to be very fundamental, so that its execution (usually also expressed in the mission) can flex as it responds to changes from the outside. We tend to trust founders and CEOs with a genuine vision more than their peers, so it pays to really think about the why behind your bottom line.
YS: What are the top three success factors for government and industry to work together and build better trust infrastructure?
PK:
- There’s too little of it yet.
- These are currently being defined; e.g., for blockchain at an international level.
- Embracing open source. Trust also involves relinquishing some degree of control, and focusing on reciprocity. Corporates and governments get uneasy about this, because they guard status quo and have a lot to lose. It’s a slow mindset shift.
YS: What is your parting message to startups and aspiring entrepreneurs in our audience?
PK: Read the book! It’s designed to take you about half a day to get through; I promise it will change your outlook on work and life. Contact me if you want to share your experiences.
YS: What is your next book going to be about?
PK: How large companies can take deep technology beyond the proof-of-concept stage. This helps them avoid missing out on the massive innovation that happens in startup ecosystems globally.