Trust might not be the first word that comes to mind when creating a Business Model. Although it should, especially in Emerging Markets such as Latin America.
The idea of building businesses around trust is certainly not new, but it has taken more and more value in the fast-changing environment in which we live and work today.
There are many reasons why trust is becoming a core value for businesses and institutions alike. One of them is the expenditure of our public sphere, with the constant growth of the Internet and Social Media it seems like transparency is no longer an option, but a requirement.
Many companies have seen their numbers sink despite having a proven and profitable business model, all because their credibility went down, so the people stopped trusting them which eventually led to economic impact.
But, what is trust?
For this particular piece, trust should be understood as the “ability to believe in whether someone is fair, honest or reliable.” This basically would mean to believe that someone won't act opportunistically or take advantage of her/his position to affect other people's interests.
We would agree that ultimately, all companies should embrace this as one of their core ideas, as it even seems like an ethical commitment to provide value without affecting other people. But the fact is that trust does not end there, on the contrary, it just starts.
Building upon trust does not only mean having this sort of ethical commitment to your consumers and employees, it’s also a claim of competence, which means that you will do your best to deliver on the promise you are making.
Imagine how that level of commitment to your value proposition would affect the performance of your teams.
That’s why trust can be a powerful thing to build around for every business, but it becomes even more important when we talk about Emerging Markets.
Why is trust important to building businesses in emerging markets?
As we have seen Trust is important for every company, no matter its location, to embrace and foster Trust as a priority in their everyday business. But when you build for an emerging market it definitely should be at your top one.
Let’s take Latin America as an example (for obvious reasons), to understand the impact the lack of trust could have both in personal relationships and businesses according to research published by the Inter- American Development Bank (IDB).
The following chart compares the behavior of trust levels in Latin America and the world between 1981 and 2020.
As you can see in the graph, the overall trust in Latin America’s countries dropped from 36% in the period between 1981-1985 to around 26% in 2020, a trend that differs from the rest of the world’s.
An important view here is: The world has also seen a drop in Trusts levels during the period analyzed in the report, but it seems like in recent years this downward trend has slightly reversed, except for Latam.
But, what does this have to do with Company Building? You would ask.
It results that when interpersonal trust is low, so it is towards the private sector. Which in Emerging Markets can be attributed to a generalized lack of infrastructure, a high level of informality, and inequality.
As the graph shows, it’s not only interpersonal trust that’s low in Latin America, if we go down to Private Businesses we can see the mistrust in this category is almost the same as it is for Governments which you could intuit, is a very negative sign.
And the negative impact does not even end there, as you can probably assume by this time already, the lack of trust in the region also affects other areas related to businesses and people such as productivity or level of income.
Now, after all this data. Do you still think it’s a coincidence that countries with a higher level of trust, achieve better results both in productivity and income?
We are going to leave you with that reflection before we move on to the part where we put our hands on and share with you some ideas on how we build companies upon trust, and some tools so you can start doing the same.
How do we build from Trust?
At Polymath Ventures, we build and scale human-centered companies to empower the middle-class of Latin America. We do it by following a proven process and methodology that has helped us to develop more than 100 business concepts during our 9 years of existence.
So according to our experience, these are 5 things that you can do to constantly build and scale your business with a focus on trust.
- Start with why:
This one seems like the obvious one, and we are sure you have heard it everywhere. But it’s still important to remind the power of purpose.
In terms of Trust, this is a powerful tool to demonstrate that you have a clear idea of the change your company wants to make in the world, which is already a great way to connect with your consumers, collaborators, and even investors.
Clearly define your why, communicate it and make it part of your everyday operations. We are sure it will not only increase Trust, but it will also enhance commitment and improve your relationship with every stakeholder.
- Put humans at the center:
If you read before about what we do, this won't come as a surprise.
Putting humans at the center of every process of company building makes sense because it helps you build something that a real person actually needs.
But apart from that, if you base your strategy on continuously understanding what these real people are experiencing, the result will most likely be that they will trust more in your business, as you are not only solving a problem for them but also constantly asking about their perception and ideas.
- Deeply understand needs and behaviors:
This point is highly associated with the last one, although it’s worth it to make an emphasis here.
Building around a human-centered approach doesn’t only mean that you constantly talk to users and ask for their feedback. It goes waaay beyond that.
In our experience, in order for you or your team to really understand what a problem is about, you should do more than only ask, you would probably have to go and live the experience yourself which implies a deep level of research and interaction with the real users.
And remember: Users don’t usually know what they want, but they do know what they are going through, so go on and live it with them, rather than just hearing it.
As it would seem obvious, this kind of commitment and closeness will certainly increase the Trust they put in you to help them make their lives easier.
- Create a 10x better solution:
We live and breathe for this. Real disruption only comes from exponential solutions. How does this relate to trust?
This is something that we would like you to answer yourself. Do your trust levels increase or decrease when someone solves a problem for you?
Let’s imagine you have been working on a project for 2 weeks and haven't been able to finish it, then one of your peers comes and helps you figure it out in only a couple of hours.
Would you go back and ask for his help again if you encounter a similar problem?
We bet your answer was yes, and that is Trust exactly.
- Measure and iterate:
Here comes the last one, but certainly not the least important.
As your company or product grows and develops, a great way to maintain trust within key stakeholders is to keep improving, which leads us to one of our favorite verbs: Iterate.
When people start noticing that you are all in for constant improvement they will increase their Trust in your intentions which, you guess, will positively impact both your growth and retention rates.
To wrap up, here’s a quote from Warren Buffet on the importance of trust.
Trust is like the air we breathe – when it’s present, nobody really notices; when it’s absent, everybody notices.” Warren Buffett