One of the areas of business that interests me has always been risk. Where this stems from I am unsure but given that investment is about risk management it is rather central to business (banks and the City take note – you clearly missed Business Basics 101). Chatting to a friend of mine recently I was reminded of some work she did years ago on bounded rationality and trust/risk. Unfortunately for academia, but fortunate for her perhaps, she has gone on to have a successful career running her own business but the conversation got me thinking again.
Let’s try a Gedankenexperiment and see where a world with reliable trust would leave us. Well first there would be less need for security checks, there would be no need for security alarms, there would be less need for lawyers......let’s stop there. Clearly we can get bogged down defining crime and trust and social contracts and moral codes. Perhaps looking at the things that brought this to my mind may help simplify this blog.
Two things relating to trust and enforcement jump to mind. The cost of enforcement of incomplete contracts is a cost to business which is ultimately passed on to consumers. A local company has adopted an ingenious system in its cafeteria (thanks Jo for the example). The biggest problem in these types of establishments is the queue, often bottlenecking around the checkout. What this organisation has done is move the checkout to the exit. You buy a set price meal and extras and report what you had on the way out – they trust you. As a consumer you benefit from shorter queues, the company risks the odd individual not paying. If the system is abused we will go back to longer queues. So far so good but what evidence is there we can be trusted? Unfortunately it is not so good at times.
Consider you local supermarket. A particular hobbyhorse of mine is the misuse of parking, so much so my daughter now points out examples to me. What possesses someone who is not disabled or does not have children with them to park in those designated spaces? Laziness clearly but let’s thing that though. “I am happy to see a disabled person walk a longer distance as long as I can walk a shorter one” – how can that be a thought someone is happy to hold? The same is evident at college where we see students park on the double yellow lines (we have no clamp) as it is closer and, I have to add, we see drives with orange badges parked precariously around our towns and coastal resorts. What draws all of these together? I believe these are individuals that are weighing the relationship between risk and reward. In all of these cases parking restrictions are not enforced and so the motivation to comply rest solely on punishment – in other words these individuals requires a more oppressive regime. That’s shocking.
The Tate Gallery St Ives currently has a fun exhibit by Martin Creed. The artist has filled one of the spaces half full of balloons cleverly removing half the air from space. You can interact with this exhibit. As you walk along the top gallery you read signs instructing you how to behave, mostly no running and no climbing, as you walk down the stairs you are passed a card saying the same, as you are given an armband (a skinny one for counting not floatation) and allowed to enter the message is repeated again. And what happens? Well every ten minutes or so a security guard bellows the order to stop running. Children have to be accompanied by adults so our burley guard is not a pseudo-nursery nurse. This is the first and only time I have seen a guard at St Ives. So it seems that either the middle class, and in fairness that is who I was queuing with, have limited literacy or an inability to respect simple rules designed to protect themselves, others and a work of art. It was, in fairness, as chaotic as any setting I have been in. The point – that the difficulties of relying on trust are not associated with some lower (rioting?) class. The Tate is ‘losing’ hundreds a week by having to employ a guard to protect the gallery from its own visitors (in fairness I am sure the guard is happy to be employed and was very polite).
This probably all sounds as if I am suggesting we cannot trust, in truth that is not the case. What I feel we lack in society is trust. I feel we teach children to be untrustworthy by not trusting them and this feeds through to society. We also glorify the untrustworthy if they can ‘get away with it’ – unfortunately that takes us into a debate on greed and excess that is beyond this blog. In my own practice I rely on trust as I find ‘policing’ my team an inefficient use of resources, interfering as it does in a Heisenberg like way with process. Does it always work? Well I find the biggest hurdle not lack of effort but the occasional reliance on formality by staff. In other words although I adopt a trust based approach sometimes I come across people who fall back on procedure for their own advantage but in time we come to a more efficient and effective understanding. Similar process applies to students. One comes to mind, a very accomplished surfer. He had a habit of missing class. In the end I explained to him that if he simply told me he was surfing that was his business, I would not help him catch up but at the same time I would not give him grief – it was his responsibility. Some days he went surfing, but he never lied to me about it. Now he holds a very responsible management position and behaves in a very professional way, as I believe he did by telling me he was off surfing.
Do the same theories work in life? Well based on the fact I have had one ex steal from me you’d think I either had an enormous sample to draw from such that these would seem like lightning strikes (600,000:1) or I now mistrust everyone I meet. Truth is neither is true. What would be the point in me going to the expense of wearing rubber shoes just because lightning had hit me before? I am reminded of Tsutomu Yamaguchi who managed to survive both Hiroshima and Nagasaki and still lives in Nagasaki. It’s not about odds and maths, it’s not about contingency. Life is too costly without trust; we waste too much on contracts and precautions. Let’s work on re-building trust for trusts sake. How about starting by putting the checkout at the exit to the school canteen?