The GATE Trust System

A GATE White Paper by Dave Kinchlea, President and CEO

What is the “old-boys-club” exactly? Many people misunderstand that to be the same group of people (typically men but today that is more happenstance than conspiracy) always helping each other first and foremost and virtually never allowing others to join. It appears to be that, and in a few cases undoubtedly it is, however that explanation does little to help the real understanding of the “old-boys-club”, of why and how they exist because, of course, there isn't really a club, it isn't real at all in fact and there are many, many such 'clubs' that generally have nothing to do with each other.

It is true that some of these 'clubs' created some very ugly relationships producing some very ugly things. One imagines such a club for the giants of Big Tobacco where it is possible to find like-minded folks who instinctively understood how to sell a deadly, addictive substance. However immoral such people were/are or however ugly the results on humanity their business has wrought, it is hard to deny their success in business. A success built on trust.

Clearly our ugly drug pusher example shows that there is nothing inherently good about trust – that is, being trustworthy does not in any way imply that one is nice, decent, humane, fair, open, or any number of other of the things that are the good part of humanity. It simply means that one keeps their word and that they fairly represent themselves and their business dealings. Trust is essential for success in business.

Now, the truth about business, a truth that many people would rather not speak and other people will adamantly deny and still others simply believe it to be natural and right (their right!), but the truth about business is that many people are always attempting to game the system to their advantage. The best evidence of this is just how complicated most legal documents are – EULAs, contracts, SOWs, even emails seem to come with incredibly long, hard to read (like anybody does) disclaimers. Why do all these exist? There can only be one reason, because if they didn't exist, unscrupulous people will take advantage of their absence.

Trust and the Human Race

How bad is the problem, really? Just how trustworthy are we as a race? Not very as it turns out. A version of the classic “Trust Game” goes something like this: A person is given a sum of money and told that they are to share the sum with a second person (or entity) but the second person has no way of knowing what the original sum was and the first person is told that the second person will never know what the original sum was. The first person must inform the second person of the total sum and give them their “half”. There are various ways to tweak the game: changing the original sum (more or less $), adjusting the characteristics of the second person (stranger, friend, family, ethnic group, religious group, gender etc), adjusting the methodology of communication (email, telephone, letter, etc) but every study always comes up with the same conclusion – the less the chance of getting caught in a lie, the greater the chance that the first person will cheat and the greater amount they will cheat about.

In a recent study where the variable was the choice of communication, email or hand written letter, it was found (somewhat ironically) that email produced the most dishonest behaviour as, it was pondered, people felt a disassociation between themselves and the second person with email, that they are more anonymous in email than in a written letter (ironic because, of course, the exact opposite is the true). In any case, the salient point wasn't the irony involved, it was that fully 90% of the people studied lied within email and well over 2/3^rds of people lied within the hand-written note – 90%! No matter the exact accuracy of that figure, it certainly does suggest that the majority of us need a motivation to be honest.

There are plenty of studies that back up this basic tenet of the human condition; if we believe that we will not get caught, the vast majority of human-kind (of us!) will be dishonest to selfishly improve our own lot. This is the reality of life and is therefore the reality of business – it is why there are billion-dollar frauds perpetrated upon provably intelligent people; it is why millions of people in the USA in 2009 are losing homes they knew themselves they had no business trying to own; it is why the captains of finance rig the system in very dangerous ways to hide the truth of their activities (a truth we may never know but it appears likely that these so-called-captains have gambled with the world's economy to the tune of perhaps 10 times the value of that economy). False trust for the masses, real trust for the perpetrators.

Sad as it sounds, without the fear of exposure, virtually every one of us will do something dishonest to improve the situation for ourselves, The examples above are just the a few of the biggest and recent lies, but there is nothing new about the behaviour and it is trivially easy to find historical rather than topical references.

The psychology of this is interesting, for while virtually all of us are dishonest, we all value honesty and search for people we can trust. We are hard-wired to enjoy honest interactions just as we seemed to be hard-wired to be selfish. The prisoners dilemma sits before us all, if we all cooperate in open, honest relationships, we all on-balance do well (better, in fact, than if we work alone) but if you cheat the system, and not get caught, you can do better than others at their expense – and if you are really good at being bad, you can do A LOT better than others; there is a strong motivation to be dishonest.

Thus, to return to the question, why do 'old-boys-clubs' or networks exist? – It is very difficult to earn and maintain trust amongst a large group and, by the way, within a larger group it is far more likely to find some “good” people who will be trusted to do the right thing and report on bad behaviour. Thus it is difficult to join such an old-boys-club because it is difficult and perhaps risky to trust new people.

The problem with this approach is that it breeds dishonesty and greed. Because nefarious people must have other people to trust, they are likely to look for other nefarious people to work with and once found, they are likely to jealously guard that network from intrusion. In theory this same approach works for good, honest people however the tendency for those folks is to be inclusive and falsely place their trust in others.

Having spent the last decade helping to create a multi-billion dollar corporation from what I'll call its puberty phase – trying desperately to move into the adulthood of Big Business from the adolescent behaviour of a small firm with big ideas – I've learned a lot about people, about business, and about how the two interact. Business is today as it has always been – it is about the people and relationships that are formed, the building of trust between two or more parties that allows for the free-flowing of mutually beneficial ideas. Where such trust exists then ideas can freely flow between the parties, and where free-flowing ideas exist, new and innovative ideas are formed and that is how business succeeds.

TRUST... it is all about trust. How much do I believe this person, this company, this corporation, this expert, this entrepreneur) will live up to their word? Are they representing themselves fairly? Will they perform the tasks they say they will? Will deadlines get met? Will the policies and procedures be followed? Will everybody get paid? Will the audits take place?