Home > Digitalizacija > Trust as unique business function

As I was reading articles written by my colleague, where she tries to explain how development of technology is bringing changes in today’s business transforming it into digital landscape, where companies, in order to adjust to it, need to redefine their existing business structures, especially sales and marketing in order to embrace advantages technology brings them, but still incorporate human factor, especially in area she calls unique human quality (emotion). Everybody that knows me knows that I am not emotions guy, so by reading articles one question keeps coming back to me. What is business based on and how are humans influencing business core element. It can’t be only emotion.

Let’s say business started as human-only activity and through time incorporated other elements as money, transport elements, communication elements, technology, assets, …and so on. If business is activity where you create, develop, exchange values and is activity that is subject to limited playing field and as mentioned in my previous articles, should be goal oriented activity, which lead into activities which needs to be done, more than they should be done, my question started to turn around: “What is key element that needs to be present in order to make above mentioned work?”

If I look from sociological perspective in private relationship we are surrounded by family members, friends, people we know and we believe them to be on our side, so we run all our activities based on assumption that they are on our side and we don’t doubt about anything. At least in theory. If we are missing this in business, assumptions that everybody is on our side, what do we need to incorporate in order to make business transactions possible between humans.

After looking it from this perspective answer is quite obvious. Trust. If you want to do transactions with “outsider” you need to incorporate trust into transaction.

In the beginning, with transactions being man to man, this element was easy to establish and was maintain as part of transaction. And in those times it was mainly based on reputations and emotions. But with development of playing field where complexity of business was developed by adding more humans, more locations, different products, different business models, the element of trust, although still important, was hard to maintain as part of transaction. With development of business, people started to look for additional ways how to verify trustworthiness of their business partners and when “so called transaction costs”, which are in their nature trust originated cost, become significant part of business cost, new models based on sharing economy emerged and companies like Uber, Airbnb, Booking, Tinder emerged.

Technology has very simple trust model based on algorithms and probabilities. But we humans are more complicated and our attitude towards trust is good indicator about development of not only business, but probably of society as such.

Charles Green author of The Trusted Advisor is defining trust in formula: Trust is Credibility + Reliability + Familiarity + Sociability. Those elements were controlled and estimated by humans. At least until now.

With expansion of business interpersonal models disappear. We saw expansion of data, development of new communication models, transportation model, development of new business practices, especially targeted to verify non-direct information. Growth of lawyers, accountant, insurers…you see the model. But ultimately at the end of chain it was still human who verify and give trust.

With rise of artificial intelligence and machine learning, this area will change dramatically. But this is reality and it is up to humans to incorporate this reality into dual mode, that will lead into development and we should be able to work with it and not be afraid of it.

If we talk about changing role of humans in modern business organization, we can best describe it with example from sales transformation. Sales persons through history played a role of advisors to their clients because they had access to knowledge. In today’s world of Internet of Everything they are transforming into trusted advisor, not because they bring knowledge, but because they should bring value. And if we as humans will not work on bringing value (by using technology that is at our disposal – AI, machine learning, digital footprint, cloud computing, being just few of them) rather than act as keepers of working practices that are dying, we will become obsolete element of business and we will not act as element of trust anymore.

A friend of mine asked me how it is possible that government is putting money into companies that, after few months when money run out, are going into closure. I tried to put it simply saying that if company has a good business model and product and they only have financial structure problem, then this practice would make sense, but usually this is not why they do it, they are simply trying to buy social peace with subventions, but I could see that it wasn’t logical to him.

To make it even more simpler. In light of above mentioned situations of what to do in business either as individual or as organization, if it works we should do it, even if it means going outside the borders. Emotions of individual or group of individuals should not be the motive for action.

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Tomas Lah & J.B. Wood: Technology-as-a-Service Playbook
Making a consumer into the customer
Marco Iansiti, Karim R. Lakhani: Competing in The Age of AI; Strategy and Leadership When Algorithms and Networks Run the World
Caroline Carruthers, Peter Jackson: Data-driven business transformation; How to disrupt, innovate and stay ahead of the competition

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