Knowledge Work and Trust - The Key
Relationship in Relationship Management

(download zipped Word 6.0 version)

Rick Dove, Paradigm Shift International, www.parshift.com,

We're going to explore the nature of trust in company-to-company relationships – principally because the lack of sufficient trust is the primary barrier to outsourcing knowledge work, but also because trust is at the core of all relationship formation and effectiveness, a strategic concern as the business environment speeds up.
   The analysis we did of barriers to outsourcing knowledge work (essay #57) was from the customer's perspective, rather than the supplier's; but the impediments are not one-sided. Many of the customer-perceived reasons are self-fulfilling prophesies. Insufficient trust, the biggest barrier, is a prime example.
   As we will see, trust develops between two parties because they understand each other fairly deeply. The trust issue that inhibits outsourcing as a consideration generally stems from a superficial and one-sided point-of-view, rather than real knowledge.
   Outsourcing the creation of intellectual property (IP) is where the barrier issues become the sharpest. A discovery workshop we conducted at an IP development organization highlighted the supplier perspective on the issues. IP-Dev, as we'll call them here, had been focused on government contract work, and wanted to move into the commercial sector. They would like to be your company's outsourced R&D arm.
   They have fundamental strengths in the sciences, and in applying science effectively to the problems and opportunities of product and process design. They are deeply experienced in practical manufacturing, and not lost in a world of inapplicable theory. They have deep talent that you don't have. They understand things about your work that you don't understand. They live to apply their knowledge and talent to your problems and opportunities in ways you would consider effective and innovative. But they find you very difficult to deal with.

Cultivating trust should be a
conscious relationship development strategy.



I'm not painting them as being unequivocally great. It's just that they, like some others such as Sandia National Laboratories, have specialty niche areas of great depth that you could never justify, nor attract, as full time employees – you just don't have enough really interesting problems to keep this kind of talent engaged.
   In seeking commercial R&D work, IP-Dev found their biggest impediments to center on issues of intellectual property: ownership, needs for protection, and methods for protection. They were in the business of applying fundamental principles of science to the solution of specific product and process problems. Too often would-be customers wanted to prohibit them from solving related problems for others as a condition for a working relationship.
   IP-Dev saw these barriers as technology-based issues. In reality, they are the trust issue all over again, in thin disguise. Workshop participants brought in from outside the organization were quick to point this out, and suggested that the commercial market strategy focus on earning a market image and positioning of unparalleled trust. Something no other such organization had yet taken, and yet it was the core issue for IP outsourcing.
   The creation and maintenance of trust-based relationships is heralded by many as a new and necessary strategy for combining cooperation and competition in today's business environment. In reality, trust-based relationship are the only kinds of working relationships there are. Always have been, always will be.
   Without some basis of trust there is no engagement. Trust is not a new concept, but rather one with a new importance that now requires more explicit knowledge and more attention to management skills.
   What is trust all about, anyway? Research referenced in the accompanying figure suggests that there are three types of trust: calculus-based, knowledge-based, and identification-based; and that they develop sequentially, one building on the other.
   Herein lies the nub of the problem. Outsourcing IP development prudently requires a stage three trust relationship, yet the outsourcer can't get there without traveling through stages one and two, which takes time, perhaps a year or few. And it happens between people more so than between companies. Meaning that trust cultivated at a single point may be lost with turnover or reorganization.
   In the end, the degree of real trust between two parties is directly related to how well they know each other. That it typically takes years to build stage three trust is not based on immutable law, only on the typical serendipitous way things have been done. Nor does it mean that cultivating a relationship that will eventually lead to IP outsourcing needs to be a loss leader – other less sensitive knowledge work can be done in the interim.

Developing Stage Three Relationships

A response ability analysis (essay #56) of the dynamic issues bares the nature of the problem and provides guidance for a solution. Though both parties in a knowledge work outsource relationship stand to gain, and therefor bear independent responsibility for developing sufficient trust in the relationship, we'll look only at a sampling of the supplier side here.


  Response Ability Analysis – Supplier Perspective

Trust Development and Maintenance (a sample)

Proactive Issues
  • Creation of stage 2 and 3 trust.
  • Creation of a client culture and value profile.
  • Creation of a trust-development strategy.
  • Improvement of shared knowledge - stage 2.
  • Improvement of shared values - stage 3.
  • Migration to a stage 3 relationship.
  • Modification of acceptable IP ownership/protection.
Reactive Issues
  • Correction of cultural interface mismatch.
  • Correction of distrust caused by an event.
  • Variation among client corporate cultures.
  • Variation among client personnel cultures.
  • Expansion of resources on an established relationship.
  • Reconfiguration of culture after merger/acquisition.
  • Reconfiguration of interface after turnover or reorganization.

Cultivating trust should be a conscious relationship development strategy – with managed objectives, performance metrics, and progression monitoring. If trust must first be developed, then that is the first job at hand, not the securing (if you are the a supplier) or the outsourcing (if you are the customer) of a sensitive IP development contract.
   Find other less sensitive project work to begin a relationship. Use this work to enter into collaborative problem-solving activities which expose the values held by all parties and mold those behind the developing relationship.
   Note that lots of stage two information exchange and time does not produce stage three, it only enables it. Stage three is marked by a collaborative relationship and respect, whereas stage two is simply enough knowledge about the other party to make their behavior predictable.
   Stage three emerges when demonstrations of identification and best-interest occur. The wise supplier will recognize and hasten these opportunities. By the time stage three emerges the IP ownership and protection issues become tractable – both parties respect and trust each other enough to examine the situation and develop an innovative response, rather than stone-wall a demand for standard knee-jerk procedures.
   Culture plays a very central role in trust development and maintenance, and should be used as both a tool for hastening and maintaining trust, and as a filter for determining the likely outcome of a relationship pursuit. Culture is all about beliefs and values, precisely what a stage three trust relationship is all about.
   Some corporate culture combinations are incompatible with a stage three trust relationship. An IP outsource would do well to identify and describe compatible cultures as the targets of opportunity in their mission statement, or at least in its supporting detail. One of the first objectives in a new relationship should be to profile the client culture to determine both its compatibility and the personnel that will be assigned to relationship management.
   Personal cultures of individuals involved in relationship interfaces play at least an equally determining role as corporate cultures. Personal culture does not disappear behind the corporate culture, but rather expands the values and beliefs that must be accommodated in a stage three relationship.
   As an organization, an IP supplier is many-headed, and can choose and change relationship managers as compatibility dictates. This says a lot for how agile the account management practices and structures must be.
   The nature of IP development talent is highly technical, and generally the antithesis of the social awareness required to understand the precarious nature of trust, let alone the need to cultivate a stage three relationship. This may explain why no company as yet has seized this pre-emptive market position.

1999 RKDove - Attributed Copies Permitted
Essay #058 - Originally Published 10/99 @ www.parshift.com


Would you like to offer some thoughts or add to the dialog? Your sending of a comment automatically grants us permission to edit and post at our discretion. Send your comment to
========= Reply =========================
From: bello@us.ibm.com (Steve Bello), Date: Fri, 15 Oct 1999
Your advice to formally manage trust is very good, but difficult to execute. Trust can be lost with one "bad" or missundstood behavior. Our brains are constructed to seek out the threat and remember it forever. This implies that the initial encounter is extemely important: not in developing trust, but in not destroying trust. A rule of thumb that I have used in management situations is that one trust destroying interaction takes 1 year of consistent, positive interactions to correct. A conservative approach to early relationships is usually a key to implementing a trust strategy.

========= Reply =========================
From:
(Rick Dove), Date: Fri, 15 Oct 1999
I like your rule of thumb, Steve. A key point I tried to make is that trust is necessary to some degree in all would-be relationships, and some relationships require more than others - and consequently take more time to develop. I don't share your feelings, however, that managing the development of trust is inherently difficult, though I recognize that it may well be impossible in certain situations and difficult in some others -- it does take two willing parties for this dance.

Given two willing parties, and knowing that trust development is dependent upon working exposure and familiarity, one can shorten the time by increasing the meaningful-exposure activities. For instance, working collaboratively rather than independently with an occasional brief-out is one way to accomplish this.

I share your concern with getting off on the wrong foot - this happens even under the best of circumstances, some times. I don't champion the fast rush, nor the insincere manipulative fake, only the recognition that trust must be developed before certain relationships can flourish, and proactive measures to aid this course can be effective.

========= Reply =========================
From: gsinc@gen-strategies.com (W.M. Jaworski), Date: Sat, 16 Oct 1999
"... the lack of sufficient trust is the primary barrier to outsourcing knowledge work ...." [Rick Dove]
Here are a few trust-development questions and comments to an imaginary 'outsourcee'.
(1) Do I have to know as much as you, to 'trust sufficiently' that you know?
(2) How could I assess the volume and complexity of your 'real' knowledge?
(3) What 'acid test' should I use to assess portability (plug-compatibility) of your knowledge?

Modeling of "outsourcing knowledge work" as a process with three stages:
(a) knowledge exploration,
(b) knowledge recovery and enhancement and
(c) knowledge exchange, could serve as a vehicle to build trust by common understanding.

Please visit http://www.gen-strategies.com/papers/Agile/Agility_Process to see how this writer developed a trust in the Agility Paradigm. The method is labor intensive but trustworthy by creating models and templates for reuse in 'outsourcing work'.
Regards, W.M. Jaworski

========= Reply =========================
From: Neville.Bews/SAEagle/SouthAfrica/Zurich@gateway.saeagle.co.za   (Neville Bews)
Date: Mon, 18 Oct 1999
Rick,   I read your article "Knowledge Work and Trust - The Key Relationship in Relationship Management" with great interest. I recently wrote an article "Employer-employee trust - towards a comprehensive model" also using the work of Lewicki & Bunker (amongst others). The writing style is academic as it is aimed at an academic audience and you may find it somewhat dry. Nevertheless, if you are interested just let me know the format you would like it sent in and I will be only too pleased forward a copy. Best wishes, Neville Bews

========= Reply =========================
From: Rick Dove
, Date: Mon, 18 Oct 1999
Neville - We corresponded a little over a year ago about a study you were doing on Trust. You sent me chapter number 2, at that time. As I started to work on the essay which deals with trust among companies and outsourced knowledge workers - I wanted to quote from your chapter 2 material and reference you appropriately. A message I sent to you about this went unanswered and I figured you had moved on elsewhere. As a result, I contacted Dr. Lewicki directly (Lewicki.1@osu.edu) and he was very generous in sending a number of pertinent papers on trust and the trust model he has worked on.

I am currently writing a book to be pulished by John Wiley in mid-2000 or so, tentatively called "Building the Response Able Enterprise: The Language, Structure, and Culture of Agility". Please tell me how to reference your Chapter 2 material, what organization you are a part of, and how I might get a hold of the other chapters.

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From: jteck@pica.army.mil ( Jaxon Teck), Date: Wed, 27 Oct 1999
Good essay on TRUST. Actionable.

========= Reply =========================
From Sfox397219@cs.com   (Sheila R. Fox ), Date Sat, 20 May 2000
I am a student at John Brown University getting my Masters in Leadership and Ethics. My paper has to do with my job. I work at Youthbridge Inc. in Fayetteville, Ar., which is an organization that works with troubled youth from the ages of 8 - 18. What I have found since I started working there is that there is no positive feedback in the organization. I would like to see a change to more fusion leadership. Where I work they are always trying to put out fires. If there could be more feedback and a change it would be a better place to work. Thank you for your articles. I enjoyed them immensely. If you could give me any more information on how I could draft a proposal along this line I would very much appreciate it. Sheila R. Fox .

========= Reply =========================
From (Rick Dove), Date Tue, 23 May 2000
Thanks for your comments, Sheila. Sorry, but I don't have more information for you; other than to suggest that your wishes are unlikely to bear fruit if management doesn't feel the same sense of problem as you do. You might find some help in how to approach your proposal in the Guest Speaker column at:

  http//www.parshift.com/Speakers/Speak016.htm

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