THE BLOG
12/20/2008 05:12 am ET Updated May 25, 2011

Trust: It's Just More Efficient

Trust allows a team to move fast and make more money. It's a simple but true fact so often neglected inside companies. It comes down to two simple issues that are an advantage in a culture of trust and a huge liability in a culture of politics and mistrust:

1) How long it takes to make a decision and

2) The quality of the decision.

Consider annual (or in the case of a startup often quarterly) financial planning. It's classic. Jim executive asks for a 20% increase in headcount even though he knows he only needs 15% but he's planning a) to negotiate hard with the finance department so he ends up with 15%, or b) position himself as a hero when he reluctantly agrees to "manage" with 15% although it will (sigh!) be hard on his team, or c) any number of other politically motivated behaviors. I've seen this game too many times as an executive of large companies.

But consider, in contrast, the management team that operates on trust as a basic principle in financial planning. The dynamic is quite different. Sally executive makes a case for the 15% increase that is really needed. She explains the background but also listens carefully to the other execs needs so she can be part of the total decision on how to allocate dollars for the next period. Her peers know that if she says she needs 15% then it is 15% and if she can only get 10% then the scope is going to have to change. Everyone sees all the budgets and goals -- total transparency. There's no negotiation -- just open discussion on the requirements of the business. There's no false heroics, again because of the transparency.

And as a result, the decision takes less time and is a higher quality decision for the business.

Running FirstRain, which is a young, growing company we make hundreds of decisions a day. We won't get them all right but we need to get the majority right, and to make them in little to no time.

In a nutshell, trust allows a team to identify problems without baggage. My COO, YY Lee, and I have worked together twice before. We've fought battles together, watched each other's backs and developed a deep trust that no matter what's happening the other's intentions are good and for our common goal -- the success of the company. As is usual with any aggressive technology development plan, stuff happens, features slip, experiments fail. I trust that I am always getting the straight scoop -- no baggage, no positioning. It's incredibly efficient.

How to tap into this simple advantage for your company? It takes two critical elements:

1) To be trustworthy and demand trustworthy behavior of everyone in the company. That means as CEO you must deal in the truth and not tolerate politics, ever. Zero tolerance.

2) Time together. No escaping this one. Time.