Trust Dividend

This is the second of the couple of steps back I took to catch up on Covey's economics of trust, as laid out in his The Speed of Trust (2006), pp. 13ff.

For Covey Trust=Speed-Cost. Coveys argues that increasing trust acts like a dividend. If decreasing trust acts like a tax by slowing business transactions down and making them cost more, then increasing trust speeds up transactions and decreases cost. And cost includes more than just pecuniary costs. If time=money, slower transactions are more expensive transactions.

Think about it. When people trust each other, they don't have to spend time worrying that the other person is who he or she says they are, they don't have to hire attorneys to go over absolutely everything (Nothing personal you attorneys out there--you provide a valuable service), they commission fewer studies, they make decisions faster, and things just work better. Better=Faster and Cheaper.

When people lost their trust in the real estate industry, look what happened. Everything CNN has been covering for the last 2 years.

My goal here is to bring out more skilled entrepreneurs. How am I doing? What do you think of this? Any comments?

Entrepreneurship is the life's blood of all my professional activities. It makes them go. It informs my connection strategy.

It makes Your Stop for Real Estate, my real estate referral business, go. See www.yourstopforrealestate.blogspot.com.

It powers my writing. Go to www.timswritingblog.blogspot.com for my ideas on writing and publishing and read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

It fuels my publishing enterprise, By and for Writersgo. See www.byandforwriters.blogspot.com where you can get a poem or a short story published.

Trust tax

Let me drop back a couple of steps and include an important Covey concept. The concept is that of a trust tax. You can find it under the section "The Economics of Trust" on p. 13ff.

Coveys argues that decreasing trust acts as though it were a tax. He sees trust as an equation that links it to the speed of transactions and the cost of transactions. What it means is that when trust is diminished, the speed of transactions diminishes and the cost of transactions increases.

What this means is, when we don't trust other people, it makes business harder. It costs more and it's slower. In real estate, the washing out of trust burst the bubble. During the bubble we trusted too much, when the bubble burst we didn't trust enough. As the bubble expanded, more people bought, and sellers got more money for their homes. As we reached the breaking point, the surface of the bubble got more and more brittle until the economic crisis of 2008 burst it. When the bubble broke, trust went away.

Did you lose your trust in things when the bubble burst? The Great Recession is acting like a big tax increase.

My goal here is to bring out more skilled entrepreneurs. How am I doing? What do you think of this? Any comments?

Entrepreneurship is the life's blood of all my professional activities. It makes them go. It informs my connection strategy.

It makes Your Stop for Real Estate, my real estate referral business, go. See www.yourstopforrealestate.blogspot.com.

It powers my writing. Go to www.timswritingblog.blogspot.com for my ideas on writing and publishing and read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

It fuels my publishing enterprise, By and for Writersgo. See www.byandforwriters.blogspot.com where you can get a poem or a short story published.

Covey on Building Trust Accounts

M.L. Covey, in The Speed of Trust (2006), on whom I've been drawing extensively lists six points about building trust accounts. They come from pp. 130-132:

1. "Each Trust Account is Unique. There is a great deal of difference in the account I have with my three-year-old daughter and the one I have with my nineteen-year-old son."

2. "All deposits and withdrawals are not created equal. Often the little things can be disproportionately large."

3. "What constitutes a 'deposit' to one person may not to another."

4. "Withdrawals are typically larger than deposits. As Warren Buffett has said, 'It takes twenty years to build a reputation and five minutes to ruin it."

5. "Sometimes the fastest way to build trust is to stop making withdrawals."

6. "Recognize that each relationship has two trust accounts. The way you perceive the amount of trust in a relationship and the way the other person perceives it may be different."

I would add here that a trust account is like a gas tank, in that if you don't continually fill up your tank, i.e. make deposits, your trust will become depleted.

My goal here is to bring out more skilled entrepreneurs. How am I doing? What do you think of this? Any comments?

Entrepreneurship is the life's blood of all my professional activities. It makes them go. It informs my connection strategy.

It makes Your Stop for Real Estate, my real estate referral business, go. See www.yourstopforrealestate.blogspot.com.

It powers my writing. Go to www.timswritingblog.blogspot.com for my ideas on writing and publishing and read my mystery for free at wwww.kearneymusicschoolmurders.blogspot.com or buy it from Amazon.com more cheaply than you can print it out.

It fuels my publishing enterprise, By and for Writersgo. See www.byandforwriters.blogspot.com where you can get a poem or a short story published.