Trust and the enterprise

Trust is the core of the enterprise in action. So why do so many businesses and other organisations seem to go out of their way to destroy that trust? And what can we as enterprise-architects do to make it work better?

This came up in a tweet yesterday from the Open Group Brazil’s Isabela Abreu, pointing a recent HBR article, ‘The Deepest Deficit: Trust‘:

It’s not surprising that business leaders are held in such low esteem when each and every day, it seems, brings a new corporate scandal. However, these transgressions and their impact on public perception illustrate not merely a crisis of business leadership, but something much more profound. For if Joe Public loses faith in the leadership and legitimacy more generally of our political and economic institutions, we are in deep trouble — our whole system and way of life at risk. Democratic capitalism relies upon trust in order to function, unlike authoritarian systems which substitute fear for trust. The positive challenge, then, is to re-establish the social conditions for trust and to redefine leadership in this new world.

To me that makes a lot of sense, so I sent out a re-tweet of Isabela’s post, with an addendum about the EA perspective:

• Bebela239: RT @HarvardBiz: The Deepest Deficit: Trust http://s.hbr.org/pkfWEe >trust is key in #entarch #economics – if trust is lost, so is the enterprise

To which Australian enterprise-architect Mike Aikins replied:

• AussiMike: @tetradian hmm…not clear to me why entarch is any different from the human condition..we rely on trust to interconnect..

Which, of course, is entirely true:

• tetradian: @AussiMike “not clear to me why entarch is any different from the human condition” – it isn’t. that’s the whole point. 🙂 // (…or, we need to ask why biz so often thinks it is different from ‘the human condition’… 😐 )

From an enterprise-architecture perspective – with proper distinctions between ‘organisation’ and ‘enterprise’ – the functioning of the organisation’s overall business-model should run in a virtuous-cycle something like this:

Everything starts from trust – or from reputation, which in effect is secondhand trust. Each transit through the business-model should reaffirm-trust, building and maintaining that virtuous-cycle.

Yet this assumes an ‘outside-in’ perspective, where the organisation understands its subordinate relationship to the broader-scope enterprise. The danger is that in a conventional self-centric or ‘inside-out’ perspective – “What do we have that we can sell? Who can we sell it to? How can we sell it? How do we make money?” – only a subset of this cycle may be visible: and that subset doesn’t include awareness of the centrality of trust. Instead, like the schoolroom bully, it ignores the need for trust, and thinks that a crude demand for attention is an adequate substitute for real respect. Oops…

One of the problems here is that there are three distinct choice-points with the ‘Completions’ phase of the cycle: completion of the task, completion for self, and completion for the overall enterprise. A loop-back is possible at each of those choice-points – but they return to different places in the market-cycle:

In a production environment, we’re likely to want to go back straightaway to the next task as soon as the current task is complete. And much of the time, that’s fine – but not every time, otherwise we end up producing and producing for no actual purpose other than production itself.

In a business environment, there’s huge pressure to go straightaway back to the start of the next sale as soon as we’ve been paid for this one (‘completion for self’). Churning our way as fast as possible through the sales-cycle – grab the attention, do the sale, get paid – is what brings in the best short-term profit: there’s no doubt about that at all. And much of the time, that’s fine too – but not every time. The keyword there is short-term, because it doesn’t work in the long-term – in fact, on its own, this kind of tactic is often what’s known as a kurtosis-risk, in which the losses incurred when the risk eventuates in the longer-term will exceed the total of all the previous shorter-term gains. As a model for ‘the business of the business’, this could best be described as ‘pass the parcel’, where the parcel consists of a Russian-roulette time-bomb that will explode without apparent warning – a profitable game for the protected players on the stock-exchange, perhaps, but not for anyone else… Spinning through the quick-profit short-cut on the market cycle is a lot more risky than most business-folks seem to acknowledge…

(It’s true that it’s a risk that can often be mitigated to manageable levels as long as we do remember to take time-out every now and then – and often enough – to reset the timer on that time-bomb. That’s the point of what we’re exploring here. If no-one can be bothered… well, there’d be not be much reason to complain when the whole thing goes ‘boom’, would there? 🙂 )

To make the business-model work as a whole, it must be constructed ‘outside-in’ – starting from the shared-enterprise, not from the perspective of the organisation alone. And it must connect with the whole of the market-cycle. To do that, the complete business-model must ensure that it establishes and verifies ‘completion for the enterprise’: not just ‘customer-satisfaction’ and the like for the organisation’s immediate business-partners, but satisfaction for the non-clients further out in the shared-enterprise, and, wherever possible, satisfaction for the organisation’s ‘anti-clients‘ too.

Trust is the key to the enterprise. Without trust, the enterprise dies – or, at the very least, the organisation’s place within that enterprise will die. Hence trust is kind of an important concern in an enterprise-architecture… 🙂

So as enterprise-architects, what can we do about this? One practical suggestion is to apply the market-cycle to the modelling of every type of transaction and process – including IT-only transactions:

• Before we start in this business-process, how do we establish trust, and reputation?
• How do we establish and maintain relationships based on real mutual respect?
• How do we establish conversations that enable genuine attention? (Note that shouting louder than anyone else – as in classic advertising and ‘marketing’ – can sort-of garner others’ attention, but in a way that usually prevents true conversation…)
• How do we establish and enact the transaction and exchange? (That part is usually well-understood in current enterprise-architectures, process-models and the like, but it often needs review in relation to everything else in the market-cycle.)
• How do we identify and verify completion and closure for the transaction itself? (Ditto, and ditto re need for architectural review.)
• How do we identify and verify completion and closure from the organisation’s perspective? For example, how do we ensure that we get paid, that compliance with all legal and regulatory responsibilities is assured, and so on? (This part is usually addressed in current architectures, but often in a very disjointed way – domain by domain – and also not integrated across the organisation or even with the related transactions.)
• How do we identify and verify completion and closure from the perspective of the overall shared-enterprise? (Seemingly rarely addressed at all – especially in relation to automated transactions.)
• How do we ensure that everything within this transit through the market-cycle will maintain and enhance the organisation’s reputation and trust within the shared-enterprise, and of the shared-enterprise as a whole?

And yes, this kind of enquiry is likely to be, uh, political… but as enterprise-architects, that’s an inescapable part of our professional responsibilities towards the organisation and the broader shared-enterprise. Sorry, but there ain’t no way to sidestep that and still do the job properly… 🙂

One of the most serious sources of ‘political’ problems here is that at present, far too often, systems and structures are built upon an assumption that ‘win/lose’ is the only game in town – or, worse, the assumption that the only way I can ‘win’ is by making you lose. In reality, there are only two choices: either everyone wins from each transaction, throughout the overall shared-enterprise; or, in the longer term, everyone loses. ‘Win/lose’ is actually an illusory form of lose/lose, in which the short-term gains for one player mask an overall longer-term loss for all – in other words, another form of kurtosis risk. ‘Win/lose’ may seem to be the norm at present, but it’s bad news for everyone…

So in every architectural assessment, watch for any point where trust is uncertain, or is at risk of being lost. In each architectural design, look for options that can maintain, protect and enhance trust, and keep the market-cycle building, in a virtuous-circle.

Simple, really. Though rarely easy, of course… 🙂

Comments, anyone?