How (30 page)

TRUST

Understanding that the conditions of the world have changed in such a dramatic,
and specific
, way that trust has become the currency of the age, more powerful than ever, is perhaps the most crucial HOW of our connected world. Every day, the newly horizontal structure of business puts us into relationships less rigidly defined by hierarchical structures. These relationships, to be productive and Wave-producing, require us to focus more intently than ever before on what fills the spaces between us.

Trust powers a new TRIP, down a new path, a path that is more reliable, more generative, and more able to help you achieve long-term, sustained success than the dodgy dance of the past. Increasingly, those who engender and extend trust, who become actively transparent, who maintain their integrity in the face of countervailing forces, and who fill the Gaps and synapses around them with trust will see that trust returned to them, propelling their new TRIP toward progress.

CHAPTER
9

Reputation, Reputation, Reputation

Reputation, reputation, reputation!
O, I have lost my reputation!
I have lost the immortal part of myself,
and what remains is bestial.
My reputation, Iago, my reputation!

—William Shakespeare, Othello, II, iii

O
n a traffic-free walking street in the Belgian city of Antwerp, a man pulls his long black coat more tightly around him to keep out the cold chill of the winter wind that blasts off the cobble-stone street like a wave cracking against the rocks. As the wind gusts again, he quickly grabs his black hat to steady it on his head, and ducks into the doorway of a large building. Entering a long highceilinged room, he loosens his coat to free his long graying beard as he walks swiftly past the two dozen or so plain wooden tables that line the high-windowed wall. “I must hurry,” he thinks to himself, “or I will not be home by sundown.”

It is Friday, and for observant Jews, the Sabbath begins at dusk.

At a table near the back, he greets another man, dressed in a white shirt and black vest, and quickly takes a seat across the others. The hubbub of others, sitting at other tables, engaging in quiet conversation, fills the room.

The wife?
Der kinder
? They keep the small talk to a minimum as they begin an animated discussion conducted in a mix of Yiddish and English. They both know it is getting late. The vested man opens a thin black leather pouch and produces a small paper envelope no bigger than a postcard. Slipping off his coat, the visitor opens the envelope and extracts the folded piece of white tissue paper. He carefully unfolds it on the table, and then reaches into his pocket to get his ever-present loupe. Squinting through the small magnifying glass, he examines the envelope’s precious contents: diamonds, one of the world’s most valuable commodities.

The conversation continues unbroken as the visitor picks through the dozen stones, each worth more than $20,000, wholesale. With an expert eye that comes from a lifetime of training, he chooses eight. The vested man names a price. The visitor considers it for a moment, determines it fair, and then hands the vested man a small, handwritten piece of paper with an address on it. The vested man places six of the precious stones into an envelope with the address and puts both envelopes back in his pouch. The two remaining stones he twists into a tissue and hands to the buyer, who puts them in his pocket. To seal the deal, the men look each other in the eye, shake hands, and exchange the traditional final words of a deal between diamond traders,
mazel und brucha
, luck and blessing. With the stones in his pocket and the instruction given, the buyer bundles up and heads home for Sabbath supper.

On the next Monday, the seller will ship the six stones in the envelope to the address provided. The two diamonds in the buyer’s pocket will go to a dealer in another city, and the seller will be paid. A $240,000 deal is transacted on a handshake and
mazel
, the pledge that money and goods will be delivered as promised. The only piece of paper exchanged between them: a handwritten address.

For centuries, stretching back into ancient times before the advent of regulated markets, whole economies organized and governed themselves based on trust and reputation. Personal affiliation, whether familial or with a foundation in the same religious or social group, formed the backbone of enterprise. Within these closed and semiclosed circles, word of misbehavior spread quickly. Those who cheated or betrayed a trust ran the very real risk of being permanently ostracized from their families, faith, and communities, their reputations—and thus their ability to transact business—destroyed. Though we tend to think of these sorts of business communities as feudal in nature, or existing today only where conditions of poverty or deprivation necessitate them, in fact this form of self-regulation exists to this day in the diamond trade, one of the richest economic markets known to man.

Over the centuries, Sephardic Jews, who after the Spanish Inquisition spread throughout Europe, where they were barred from most forms of economic activity save for moneylending, came to dominate the diamond trade. Diamonds had three things going for them that made them attractive to a transient community: They were highly valuable, universally desired, and easily hidden and transported on your person. Anywhere Jews were forced to move, they could take fortunes in diamonds with them and easily set up shop. Eventually, the “diamantaires” found their way to Antwerp, where they were welcome. Except for the relatively recent expansion to centers in London, Tel Aviv, and New York City, Antwerp has remained the diamond center of the world for 500 years.

Since diamond trade has always existed outside the bounds of traditional business, trust and reputation governed what contracts and law would not. From its inception, all deals were verbal and binding, sealed with a handshake and a proclamation of “
Mazel!
” Countless fortunes’ worth of diamonds routinely exchanged hands on nothing more.

Diamonds today trade largely as they did in the fourteenth century. Your word is still as good as a legal contract and signals that the agreed-upon price for the agreed-upon stones is final and cannot be altered. While diamond cutters may rely on computers and lasers to help them shape the stones, the trade itself depends on each dealer’s reputation and honesty, not on information technology and modern business practices. Dealers store diamonds in each other’s safes, entrusting packages of glittering rocks without a contract, inventory, or appraisal, and ship stones to dealers who may simply order a number of carats at a certain grade, buying them sight unseen.

Traditionally, the only entry to this close-knit world came through relationships and reputation, but even the diamond trade has not been immune to the forces of globalization. In recent years, the Antwerp marketplace—where about 90 percent of the world’s uncut diamonds and half of its polished diamonds are sold each year—adapted to a large influx of South Asian diamantaires from the Gujarat region of India.
¹
Although marriage and faith (mostly Jain, an ancient ascetic practice) bind the majority of these newcomers, the Indians have been quick to assimilate. Many have learned Yiddish and Hebrew, they close deals with the traditional “
mazel
,” and they routinely serve kosher food at social gatherings.

Two tightly knit groups—as different in custom, culture, and practice as one could imagine—deal in billions of dollars’ worth of small, easily transported items each year, stones that to the naked eye almost all look the same. Their real currency, however, is trust and trust’s sustaining by-product: reputation.

Think how great your advantage would be if you could close every deal with a handshake. While your competitors and their lawyers spend six weeks papering every deal to protect against every possible infraction, you could be moving ahead with the initiative. In Japan, a highly developed and regulated modern economy, business still recognizes the inability to foresee every eventuality, so the system still embraces the agreement between partners to treat each other honorably, and the business moves forward. Like the diamantaires, the Japanese have a business culture that reflects the traditions of their social culture, one of close community connections, long-term familial value, and the importance of personal responsibility to the group, within a modern reality.

REPUTATION IN A WIRED WORLD

Reputation is another of those soft things, like trust, that everyone wants but few think about how to get. For much of our history, the importance of reputation was largely self-evident. When most people lived in smaller, semiclosed communities, the proximity and familiarity of other people placed social pressure upon us to conduct ourselves within prevailing norms. As we moved from towns to cities and our day-to-day communities expanded in size, we maintained many of the closed community structures that kept behavior in check. The great European and American cities of the eighteenth, nineteenth, and early twentieth centuries stayed organized in neighborhood structures that mimicked the small town and village traditions of feudal times. Multigenerational households were common, and families often stayed rooted in the same general locality for generations. People transacted most of their business on a local level, with known and trusted suppliers. Large businesses benefited from the slow pace of the world and were able to form trusting relationships over time upon which large enterprises could grow.

The last part of the twentieth century saw remarkable changes to the underlying structures of how we live. Increasing affluence, ease of transportation, expanding multinational business practices, and the transformation of economies from manufacturing/agricultural to information /service exerted tremendous pressure on the nuclear cohesion of communities. Families spread out. Neighborhoods whose character had been consistent for 100 years saw influxes of new people, new customs, and new wealth. Ironically, the increased connectivity made possible by advances in communications technologies allowed people to be further apart. Though your new job took you 2,000 miles from the town your family had lived in for three generations, you could still “reach out and touch someone” relatively cheaply.

These transformations broke the bonds of familiarity and tradition that placed high value on reputation. In a new city, or a new job, you could reinvent yourself. Identity became more fluid, opening up new opportunities for change and growth, but also removing some of the external pressures of conformity. More was possible, and so more was possible. Until about 20 years ago, for instance, it remained relatively difficult to thoroughly check someone’s background and reputation. Until then, information was more controllable and, to some degree, avoidable. You could often elude that dark spot in your past with a change of locality and make a fresh start.

All that has changed. The world of business is faster, more spread out, more transient, and more fluid than ever before. Information flows. Yet, paradoxically, the overwhelming capacity of technology to connect us and transmit information to us instantly and cheaply binds us together as never before. It creates conditions of interdependence as high as if not higher than when locality bound us in commonality. In some sense, the whole world is now local (or
glocal
, as the current meme goes, both global and local at the same time). What does this mean for individuals and companies? From a reputation standpoint, what is old is new again. Reputation—how others think of you—is now more critical to your ability to build long-term sustained success than ever before.

Reputation is the sum total of your HOWS: What you stand for, what you can be trusted to do, your track record of accomplishment, the esteem you have earned, and how you have been experienced by others. In a transparent world, reputation leads. It enters the room before you do, and remains after you go, either enhanced or tarnished. It records your past, but also creates expectations for the future.

In a fractured world, reputation is also continuity. When people went to work for a company at an early age and had a reasonable expectation that they would continue to work for that company until they retired, public reputation, while valuable for promotion and advancement, was not as critical to career. The embrace of the company and the tradition of employment continuity sheltered individuals from the need to constantly represent themselves to the outside forces of the business world. Being able to say “I’m an IBM man” provided a lifetime of reputational capital. That is no longer the case. External structures, like a company, no longer provide personal continuity; only your reputation can. The average worker entering the job force now will work for an average of 10.5 companies over the course of a career.
²
As more and more members of the workforce become dedicated to knowledge-based work, it takes less to redefine your career. The specific industry or area of specialty is less important. Therefore, when employers evaluate new hires, they rely less on industry-specific job skills and more on personal characteristics and reputation to judge a person’s potential. Your reputation and your Rolodex—the network of contacts and supporters—become a far more integral part of your personal package than they ever were before. Both are built over time by your HOWS.