How Smart Leaders Build Trust

Insights by Stanford Business, June 13, 2016

by Theodore Kinni

Joel Peterson could have written his first book on any number of topics. As treasurer, CFO, and then CEO of Trammell Crow Co., the world’s largest private real estate development firm, he helped craft countless deals. As the founder of Peterson Partners — a private equity group with $1 billion in investments — and JCP Capital, he has become a savvy judge of companies and entrepreneurs. And as chairman of the board of JetBlue and a director at dozens of other companies over the past 35 years, he is an expert on corporate management and governance.

Yet Peterson, the Robert L. Joss Consulting professor of Management at Stanford Graduate School of Business, chose to write about trust.

“I believe that trust is more powerful than power itself,” explains Peterson. “It supports innovation and flexibility, and it makes life more enjoyable and more productive. People who live in high-trust environments thrive.”

Peterson defines trust as a giving up of control, at some level, to another person. His book, The 10 Laws of Trust, which he wrote with David Kaplan, explores the mechanisms of trust creation in organizations. “You have to be intentional about building a high-trust environment. It doesn’t just happen,” he says. “It’s just like diet or exercise.”

Peterson provides three tests for deciding who to trust. The first is character. “We can’t trust a leader without integrity, who we can’t count on to do what he or she says,” he explains. Next is competence. You trust your mom, for example, but would you trust her to fly a 747 to London? The third, he says, is authority to deliver. There’s no point in trusting a pilot to fly to London if she doesn’t have permission to take off.

“It’s folly to trust anybody if all three aren’t present,” Peterson says. Read the rest here