Episode 59: Joel Peterson – The 10 Laws of Trust

Episode 59: Joel Peterson – The 10 Laws of Trust

Can trust make us better leaders? Can we learn to trust better? Yes to both, says Joel Peterson, chairman of JetBlue and author of The 10 Laws of Trust: Building the Bonds that Make a Business Great. According to Joel, trust is the cornerstone of all business, and certain guidelines can help us both build trust and trust others more effectively. Discover how to build trust strategically in new relationships, the three conditions that trust requires, and why the best leaders are the most trusting ones.


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Website: www.10LawsOfTrust.com
Book: The 10 Laws of Trust: Building the Bonds that Make a Business Great
Bio: Joel Peterson is the Chairman of JetBlue Airways and the Founding Partner of Peterson Partners, a Salt Lake City-based investment management firm. Joel is on the faculty at the Graduate School of Business at Stanford University and has been since 1992, teaching courses in real estate investment, entrepreneurship, and leadership. Joel formerly served as Chief Executive Officer of Trammell Crow Company, then the world’s largest private commercial real estate development firm. Joel earned an MBA from Harvard Business School and received his Bachelor’s degree from Brigham Young University. He is the author of “The 10 Laws of Trust: Building the Bonds That Make a Business Great.”


Peter: Welcome to the Bregman Leadership Podcast. I’m Peter Bregman, your host and CEO of Bregman Partners. This podcast is part of my mission to help you get massive traction on the things that matter most.

Joel Peterson is here with us today, he’s the chairman of JetBlue and a consulting professor at Stanford Graduate School of Business. He’s written a book, the 10 Laws of Trust: Building the Bonds That Make a Business Great. It’s a book that I really loved and I’m excited to have you on the podcast today, Joel. Welcome to the Bregman Leadership Podcast.

Joel: Thank you. I’m delighted to be with you, Peter.

Peter: Joel, the first question I have for you is why write a book? You’re a chairman of JetBlue, you’re probably a pretty busy guy. What drove you? What motivated you to write a book and why this one?

Joel: I’ve taught about 4,000 students over the last quarter century at Stanford Business School and I wrote articles on LinkedIn mostly just for my students. They started to get picked up by others. Finally, somebody at AMA read several that I had written on the Power of Trust and they approached me and said, “This is really a pretty relevant topic in today’s world. Would you mind writing a book?” I’d never thought of writing a book, but I do think trust is more powerful than power. I was delighted to put some things down on paper.

Peter: You talked in the book about lacking the paranoia gene, and I thought that was very interesting. I think that while there are some others that are probably with you, there are a lot who aren’t.

The idea that trust is a learnable competency, that if you were born with the paranoia gene, still, you can actually learn to trust. I found that really interesting, because I think that trust is one of the harder to learn competencies, if you really even call it a competency, which you do. It’s one of the harder competencies to develop, because it’s so emotional, it’s so elemental to who we are. Can you talk a little bit about the learnability of trust?

Joel: Yeah, and I think with the way you described it as being emotional, is the way a lot of people think about it that it’s this feeling we have. We sense that we can trust people. While I don’t think it’s a mistake to trust our intuition, I actually think it’s quite limiting and takes away some of the power of trust. Trust is the competency that you can develop. You can learn to have smart trust. There are rules, there are guidelines. You can build enterprises that are high trust businesses, but you have to pay attention to the guardrails.

You go through the guardrails, you’re going to destroy trust. It’s built up slowly, a conversation at a time, and act at a time, and it can be destroyed very quickly. I think you have to have a kind of rigor around trust. I think most people think it’s just a feeling that I’ve got, and it’s not at all.

Peter: You speak about this in the book, this idea of ancestral, or generational, or cultural mistrust, that in effect, many of us grow up with stories or advice from parents, from grandparents, from experiences that we’ve seen our ancestors go through that suggest that trust might be a little dangerous.

Joel: Yeah. If you don’t trust, you’ll never be betrayed, and we all know that. We can inherit this weariness, but we won’t get as much done. Most of the really great things that happen in life come through collaboration, through cooperation, through trusting other people. We trust all day long, really. We may admit it, but we’re empowered by trusting in a smart way. If we’re not smart about it, the odds are we’ll be betrayed and live to regret it.

Peter: I think that’s at the heart of it. The challenge of trust is the fear of betrayal. I think if any of us live and work in an organization, or just live in life, we’re going to be betrayed. That’s the nature of reality that at some point in our lives we’ll be betrayed in some way.

Joel: Yup.

Peter: How do we buffer our confidence in the context of probable betrayal at some point to continue to take that risk to trust?

Joel: Yeah. I think that’s a great question and it’s, I think, what keeps people from taking full advantage of the power of trust, I think there are a couple of things to remember. One is that you should grant trust slowly. You should trust people in small matters, and then you need to make them accountable.

Sometimes people think, “If you trust me, I don’t need to be accountable. If you’re making me report in, then you don’t really trust me.” Point of fact, accountability, reporting in, actually increases trust between people. It allows you to set up this contract and I think you build on that, so you trust in small ways, they become broader ways and then pretty soon you’ve measured somebody. That old thing that Reagan used to say about trust, but verify.

Peter: I was about to bring that up. I was about to put that up.

Joel:What’s that?

Peter: I was about to bring that up, because I remember him saying that actually, and I remember the press around it. I also remember being a little suspect of it, like trust but verify sounds like don’t trust.

Joel: Yeah. I remember Trammel Crow used to say that we owed it to our accountants to do audits, that it wasn’t fair to them not to do audits. Number one; it made it so that they could be proud of their work. They can do a great job. Number two; it kept them from any temptation of not fulfilling their obligations. I think they go hand in hand.

Peter: Let me push you on this a little bit. I agree with you, by the way, that we should verify and that we owe it to ourselves and our auditors and accountants. I’m trying to reconcile these two things that I trust and I’m going to inspect what you’re doing and make sure that I can trust. I think that’s right, but I get stuck a little bit in what seems like a contradiction.

Joel: Yeah. I think a lot of people do, but I think if you think about what we’re doing together in this mutual trust covenant that we’ve got, is we’re building trust together, and it’s a process. You’re going to give me your word on things, I’m going to check up on how things are going. I’m going to remove obstacles for you. We’re going to talk about it, and you will build trust with me overtime in that. The same thing goes the other way. We’re going to check in with each other, and trust builds when you do that.

Peter: We shouldn’t be bashful then of saying, “Look, we’re beginning this relationship, and I want to trust you and I do trust you and yet we need to build that trust. I’m going to inspecting and checking, and overtime as we build our trust bank account in effect and that we see that we could trust each other, then I’m going to have to do that a little less.”

Joel: Yeah, for sure. Yup.

Peter: Because what’s interesting is that a single betrayal … I think about people who talk about a pyramid scheme, that Bernie Madoff, and suddenly every broker, every hedge fund manager … Everyone is suspect, because mostly what people said is nobody saw it coming. Elie Wiesel’s foundation was with Bernie Madoff. When there’s one betrayal of trust by one person in one place, it suddenly raises the level of mistrust across a nation in some ways.

Joel: Yeah. I think that’s what you see with regulations now. There’s so much … With Sarbanes-Oxley and Dodd Frank, these are the scar tissue of people violating trust. You end up with a bureaucracy with a set of regulations that it may reduce the chances for that, but it also makes everybody a little bit more cautious and weary.

Peter: Joel, you talked about three conditions for trust: “If you want to build trust, build it on the foundation of these three things; character, competence, and authority.” Can you talk about each briefly? Also, I’m curious, how we can assess each to know with confidence that we’re making the right call.

Joel: Yes. Character is just that thing that we learned at our mother’s knee, about somebody who has integrity, who does what they say they’ll do. They’ve got your back. That’s an important, but insufficient element of trust. It’s necessary that they have character, but somebody could had high character, your mother for example, and not be able to deliver on what you’re requiring. For example, fly a 747 to London. You shouldn’t trust her to do that, unless she’s a qualified pilot. It’s not just-

Peter: She’s someone you might trust, but you wouldn’t trust her to do everything.

Joel: Exactly. You trust her to have your back. You trust her never to do anything that violated your best interest, but you wouldn’t trust her to achieve certain things. We trust a lot of people to deliver results. The person we trust also has to have competence. That’s measured in lots of ways; we reference check, we watch them, they may have licenses or whatever. We pay attention to competence.

Even those two aren’t enough. For example, if I asked you … Let’s say you’re a competent tax attorney and I tell you that I’m trust you that I won’t have to pay taxes next year. You don’t have the authority to change the law law. You had high character, you’re competent, but you don’t have authority. You’re not empowered to deliver on that promise around that hope of mind. I shouldn’t trust where you don’t have the authority to deliver. I look at it as all three of those conditions are preconditions for granting full trust to somebody.

Peter: What’s interesting too is that we might be the cause of the lack of one of those. For example, you may have character and you may have competence, but if I don’t trust you, I may not give you the authority. In which case, it’s a cycle, and you will end up not being trustworthy, because you won’t have the authority to get stuff done. It’s my mistrust that’s preventing you from having that authority. Have you seen those cases?

Joel: Yeah. I think that happens a lot of times in organizations where people are given assignments, they have competence to achieve those assignments, but they get the rug pulled out from under them. They’re not really given the authority to deliver. They’re not really measured sometimes. If you disconnect authority, measures, competence, you get people behaving in strange ways. Things become quite political when you divide these things up.

Peter: Yeah. Actually, it occurs to me also. I think these three conditions are really very formative, that I’ve seen people who have character, I think; who have authority, I know, but who have competence to do some of what they are mandated to do, not all of it. When they fail in one piece of it, then it’s very easy to write them off for all pieces of it, that in effect, that we have to be really clear about the boundaries of each of these. In some ways, character is maybe boundaryless, but competence and authority certainly have boundaries.

Joel: For sure. Yeah, nobody has boundless competence or authority, and so you can violate trust if people are expecting you to deliver. Fundamentally, trust is delivering on promises. Your own personal brand is your promise. What do people expect in dealing with you? That’s your brand, and people learn to trust that brand. If you’re unable to deliver on that promise, then it damages trust and your brand.

Peter: There’s this great salesperson who once asked me this question, “How do you build trust?” This was probably 20 years ago. I said, “You build a relationship. You meet them. You think of them and then you send them an article that made you think of them and you begin to build trust that way.” He said, “You’re missing a step.” He said, “The first thing you should do before you send them that article is you call them or you send them a note and tell them you’re going to send an article, and then you send the article. What you’re doing is building a track record of trust by creating expectations that you can then fulfill.”

That in effect, if you’re just sending the article, that’s nice, and that’s connecting, but it’s not creating trust. Creating trust is telling him you’re going to send him an article and then sending him the article.

Joel:That’s a great point.

Peter: I know people who do the opposite, who overpromise from really great places in their heart. They want to fulfill the promise, but they’re overpromising. I had this happen to me recently. Someone sent me an e-mail saying, “I got your e-mail, I’m going to get back to you tomorrow,” and they didn’t get back to me tomorrow. They created an opportunity to break trust, and that works both ways.

Joel: Yup. Whenever I think about running a company or coaching a leader, I always thing that you break down where it is you’re trying to go into projects. There’s a series of projects that get you to the summit that you’re trying to achieve. Those projects have champions, they have budgets, they have deliverables, and they have timeframes. I think if you manage those in a high trust manner, then these champions deliver on time, on budget, and they deliver what they said they’re going to deliver. That builds trust.

If you do that over and over in an organization, not only do you achieve a lot of summits, but you build a lot of trust between team members who are blade on the cliffs together as they’re summiting.

Peter: When you say if you manage these in a high trust manner, what’s a high trust manner to manage those in?

Joel: Firstly, I think with the leader having integrity. What that means is the leader delivers on his or her promise, but it quickly becomes a matter of respect, and respect is shown in a lot of different ways. People have a sense of whether or not they’re respected. That usually means they’re lessons too.

We sense that we’re respected when somebody really captures what it is we’re saying, then I think it moves quickly to communication. I believe communication is the best way to develop trust. People who build high trust organizations tend to communicate before, during, and after events and they communicate bad news as well as good news.

Any time that people spin … We’re used to various people in authority spinning the news to us that we come mistrustful as a society. In contrast, if you just say, “Look. I’m going to tell it how it is. Tell you how it is all the time. I’m not hiding things. I’m not spinning things.” People may not like it all the time, but you build trust.

Peter: You talked, Joel, about love in the book, and I really love the idea of the love motivator of trust. Can you talk about that a little bit?

Joel: Yeah. I basically layout that there are five primary motivators that you can cram pretty much everything we do into one of these. We can either be forced to do something at the point of a gun or a BNF. We can do something out of fear. These are extraordinarily powerful motivators in the short run. You can do things out of a hope for a reward, which is a very common one. We do things that we hope we’ll be paid in some way for it. We can do it out of a sense of duty.

It’s a sense of obligation we have to others, to our ancestors, to tradition, to whatever matters and is sacred in life, or we can do it out of love, where there’s a real mutual interest. We would sacrifice anything for, probably, family members, our children. The closer you can get to these reciprocal trust that exist between partners and family members, the higher the bonds of trust that allow you to achieve, and to innovate, and collaborate, and move quickly, and be flexible.

It’s really the most powerful of all the motivators and it’s the most enduring. It’s probably the most fragile. It can be betrayed, but it’s more powerful than the gun. The gun will only work as long as the gun is present. You lay the gun down and people do something else. Whereas love, just endures.

Peter: I was thinking about this, because I think one of the reasons why it can be so easily betrayed is because, in love, we tend not to verify in the same way, that there’s an understanding and a commitment. If it’s not held with love, if it’s not held with respect, and clarity, and competence, then I think it’s very easy to feel betrayed.

Joel: Yeah. It’s probably wasn’t a real trust. It wasn’t a deep trust in the beginning if it can be that easily betrayed. That’s one of the reasons that I said, “There’s 10 laws. I think if people will follow these laws and see them as guardrails and not breach them, that they can maintain, they can build and maintain high trust.” It takes a certain level of discipline to do it. Trust doesn’t happen. It requires an intentionality.

Peter: These are the laws that ultimately, if followed, will bring us to that level of love trust.

Joel: That’s what I think. I think within an organization, an insightful leader who’s committed to building high trust can actually bring an organization to dealing on the basis of love and trust. It happens rarely. It happens in degrees. Some very high trust organizations are able to operate that way for long periods of time. It’s a lot of work and it requires a lot of a leader.

Peter: This is my question to you, and I’m asking it to you, Joel, as a practitioner, not just as an academic and a writer, but as someone who lives and breathes this in your organizations. Most of these rules are not controversial; invest and respect, empower others, measure what you want to achieve, embrace respectful conflict. Most of us would read this list and say, “This is right. These are right.” What makes them so hard to follow through on?

Joel: We’re humans. We’re shortsighted. We solve for what’s right in front of us. We’re busy. It takes time. You want to create a common dream? It’s not you just you sitting down at your typewriter and typing something up that sounds good. It really means the ugly work of sitting down with lots of people over a period of time and hashing it out, and listening, and listening without an agenda. We become impatient. It’s hard to be humble. To show vulnerability, to show humility.

You tend to trust people who are vulnerable, who are humble, who you know listens well. You trust them if all other things [inaudible 00:20:58]. Who likes being humble? It takes some discipline.

I think a lot of these things really require something of us that is not natural, which is why I say it’s intentional. It’s something you have to decide that your brand is worth building a conversation at a time, an action at a time, a project at a time, a deliverable at a time, and you’re going to hold yourself to that standard, and you’re going to hold others to that standard if you want to build a high trust organization.

Most of us get lazy, we do shortcuts, we get frustrated, we move on by it and we blow the doors off of trust, and they’re hard to rebuild once you’ve betrayed.

Peter: To me, as I read this book, I want to say that it’s more than just a theoretical and practical writeup of what you’ve seen work in organizations. There’s something personal to this too, and I’m curious, Joel, as to … When I said what you led you to write the book. Certainly, you were teaching these things and AMA said, “Hey, why don’t you make a book about it?”

I don’t think one writes a book like this unless there’s some deeper connection in effect. The trust itself is something that comes from a deep connection, and I’m wondering what your experience has been around trust and whether there are challenges that you’ve had to overcome that have helped you to get to this place where you understand trust at a deeper level.

Joel:Yeah. I’ve had the experience of betrayal and the experience of building super high trust relationships. It was in the family … Incredible relationships with my kids, and I’ve built these over the … And they’ve mattered a lot and so I’ve worked really hard at it.

I remember in college I had a professor one time. We’ve talked a lot about how to build great marriage. I remember asking him one time, “How did you come to so many insights about building that kind of a relationship?” He said, “Because I had a really tough marriage and I had to really work at it.”

That seemed counterintuitive when he first said it, but now I really realized, I’ve had to deal with a couple of betrayals that had been painful, and I’ve had to think through, “Why did I make the mistake of trusting somebody who shouldn’t have been trusted? How do I overcome that betrayal? Do I trust again?” It’s been a personal struggle that has given me insights, which is I think how we learned most of the really important lessons in life.

Peter: That marriage story is so interesting, because it speaks to the fact that what we’re afraid of is betrayal, but the truth is that in some ways to build a capacity to trust, you’re almost saying requires betrayal on a certain level that then you can understand the value of that trust, and we would all like to not have to learn it this way, but that the only way to really ground yourself in this kind of trust is actually by risking it, and by being betrayed, and by committing to it and working at the rules, your 10 laws and the down and dirty work of taking the time to listen, to empathize, to feel, to be in a relationship in a way that then builds longer, lasting, deeper trust.

Joel: I think that’s well said and, unfortunately, quite true. I do think we can get better at the catching small betrayals, because most small betrayals are misunderstandings. People have not been clear about things, and so they feel betrayed and then they create defensive behaviors, or they hide things or whatever. I learned overtime to be completely transparent. As soon as I find something that I’m worried, maybe a betrayal, I confront … People ask them about it. We talk about it. We sort it out. I don’t let it get to the point that it becomes a full-fledged betrayal, which is very difficult to correct, and fix, and in many cases, not worth it.

Peter:What about trusting in the world in effect? You hear people say the universe is a friendly place, or Einstein, I think, said, “You have to make this decision as to whether you’re going to choose to believe that you live in a world that you can trust or that you can’t trust. I’ve butchered it. He said it with different words.

I wonder … You can’t really verify … If we’re talking about trust and God, or trust and the mandate of your organization, or trust in the universe. What happens when you can’t do that kind of verifying, when you can’t know for sure if something, if someone, if the world is trustworthy, and yet it feels so important to so many people to live in a world that they trust. Do you have any advice around that?

Joel: Yeah. I think if you understand that laws of human nature and the laws of economics and how the world works, there’s a certain predictability … I think it was Norman Cousins that said wisdom is the ability to predict the future. It’s the ability to see around corners, to see behind horizons.

It may not be a friendly place, it may be a harsh place, these may be harsh laws and harsh realities, but you can learn to trust them because you understand them.

I think if it is this ultimate question about the nature of men, good or evil, I think people have both capacities. I think the more that you develop trusting relationships, the more trustworthy people become, the happier they become, the more productive they become. I think you create virtuous cycles in this. I think those same people can become weary and can be mistreated and learn to be mistrustful. I think things grind to a halt when that happens. I think the universe provides us with both and it’s up to us to determine what we want our brand to be.

Peter: We’re here with Joel Peterson, his book is The 10 Laws of Trust: Building the Bonds That Make a Business Great. I really enjoyed the book and I’ve really enjoyed this conversation. Joel, thank you so much for being on the Bregman Leadership Podcast.

Joel:My pleasure, Peter. Great questions, and thank you for the discussion.

Peter: If you enjoyed this episode of the Bregman Leadership Podcast, please subscribe and leave a review on iTunes. For more information about the Bregman Leadership Intensive as well as access to my articles, videos, and podcasts, visit peterbregman.com.

Thank you to Clare Marshall for producing this episode, and to Brian Wood who created our music. Thanks for listening and stay tuned for the next great conversation.

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