"nothing is as fast as the speed of trust": interview with Stephen M.R. Covey
We may live in a hyper-networked digital age, says Stephen M.R. Covey. But the secret to swift, efficient business transactions is something distinctly old fashioned: trust.
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
Ask around among business executives about ways to streamline operations, and they'll likely bring up automation, outsourcing, or perhaps business process reviews. But few, if any,will mention "trust building." Stephen M.R. Covey would like to change that. Covey, author of the 2006 breakthrough book The Speed of Trust, has been out on the lecture circuit for the past couple of years talking about the often-overlooked power of trust. Without exception, says Covey, doing business is faster (and cheaper) when the parties trust one another.
If you consider the time and cost of, say, post-9/11 airport security or post-Enron Sarbanes-Oxley compliance, you'll immediately see Covey's point. But he argues that it's equally true of routine business transactions. If trust levels are low, he contends, people end up verifying, validating, checking, fact finding, and questioning— all of which takes time and costs money. By contrast, he says, "when trust goes up in the relationship …, speed goes up. Everything can happen faster. Cost comes down."
A Harvard M.B.A., Covey is the co-founder and CEO of the training and consulting firm CoveyLink Worldwide. Along with speaking to audiences around the world on trust, leadership, ethics, and high performance, he consults to Fortune 500 companies as well as with small and mid-sized private sector and public sector organizations. As a consultant, he draws on his experiences as president and CEO of the Covey Leadership Center, where he personally oversaw the strategy that made a business best seller out of The 7 Habits of Highly Effective People, a book written by his father, Dr. Stephen R. Covey. Under the younger Covey's stewardship, the Covey Leadership Center became the largest leadership development company in the world. The company was valued at only $2.4 million when Covey was named CEO; within three years, he grew shareholder value to $160 million in a merger he orchestrated with Franklin Quest to form FranklinCovey.
A few weeks before he was due to deliver the keynote address at the Warehousing Education and Research Council's annual conference, Covey spoke with DC VELOCITY Group Editorial Director Mitch Mac Donald about trust and why trust building is particularly important to today's supply chain managers.
Q: When you take the stage as the keynote speaker at next month's annual conference of the Warehousing Education and Research Council (WERC), what message do you plan to deliver?
A: The core message will be the premise of my book, The Speed of Trust. The whole idea will be to take this topic—trust—which is often seen as a soft, nice-to-have social virtue, and show how trust is a hard-edged economic business driver. Trust always affects speed and cost, and you can measure speed and cost.
The second key idea—and one that's particularly likely to resonate with the executives attending the WERC conference— is the importance of establishing and building relationships of trust in today's economy, where technology and globalization are changing everything. The upsurge in border crossings and the use of multiple technologies have put a greater premium on the need for trust than ever before. Logistics, by default, requires partnering, collaboration, interdependence, and teaming. Those things drive or die based upon the presence or absence of trust.
The third part of my message will be that you can do something about this. You can actually get good at creating trust and establishing it and growing it and extending it and even, where needed, restoring it. You can turn trust into a strength as well as a competence. It's not something you either lament that you don't have or just feel grateful that you do. Instead, you make it a competency. It's something you can learn and get good at.
Simply put, trust is the critical competency of leadership needed today in this network-centric economy.
Q: So how do you go about building trust in the supply chain?
A: First of all, you can't just say "we've got to build trust" and leave it at that. Trust has to become a core part of who you are as a person, as a leader, and as a company, and of the way that you operate. It's really a process that works from the inside out, beginning with yourself and extending on out from there. You have to ask yourself and your team: Do we give others a sense that they can trust us, our team, our process? Once you're satisfied that you've reached that level of trustworthiness, you are now truly positioned to build and sustain trust in external partnering relationships at a different kind of level. You can't skip that and go straight to the external partner; it works far better when it's from the inside out. You are modeling this. Your own team sees it. They build that trust inside as well. That helps them sustain it as you go down the line and get into these broader supply chains.
External relationships are becoming increasingly vital today. It has always been important, but today, it's even more so because of the way work is being done and this whole network-centric approach. It requires a far greater degree of real partnering and collaboration. You cannot partner without trust. You can't really collaborate without trust. You might cooperate or you might coordinate if there is no trust, but real collaboration and partnering requires a level of trust and understanding that will extend to everything else once you have established that. It's important that we build relationships of trust so that we can repeat actions again and again and again, faster and faster, as opposed to delivering the result this time, but doing it in a way that is diminishing the trust. Otherwise, the next time we go to deliver, it becomes a little bit harder. It takes us a little bit longer because the trust has gone down from our prior actions. So, it is really a whole new approach—one that requires us to acknowledge that building trust is a priority and not just an afterthought.
Q: Now as trust relates to speed, are you saying it is simply easier to execute business decisions swiftly and repeat steps when you're dealing with a partner you trust?
A: Absolutely. When trust goes down in any relationship, on a team, in a company, or in a supply chain, speed will also go down. Everything will take longer to do and cost will go up. Everything will cost you more to do because you have to verify, validate, check, fact find, and so on. You are wondering. You are questioning. All of which takes time and costs money. I call that a low-trust tax.
By contrast, when trust goes up in the relationship, on a team, in a company, or in a supply chain, speed goes up. Everything can happen faster. Cost comes down. Everything costs you less. That is the high-trust dividend. It is really that simple and that predictable. Those are the economics of trust.
We have often thought just the opposite—that trust takes a lot of time to build and slows down the process. I am here to say that once you understand what trust is and how it is established, you can grow far faster than you might think possible. Second, once you have established the trust, nothing is as fast as the speed of trust. You can operate and move at an incredible speed that you can't come close to approximating when the trust has gone down. That is what I mean by the speed of trust. It truly is an economic force.
Q: When you put it that way, it makes a lot of sense. Still, isn't trust something that has to be earned and cultivated over time?
A: I acknowledge that it can take time. You can't artificially force it or mandate it because it's something that people have to give because they choose to give or because it has been earned. What I have learned in all of my work with organizations, leaders, and industries, though, is that you can prioritize the creation of trust. You make it an explicit objective as job one. If we can build a relationship of trust, everything will be better for all of us. Everything will happen faster and will cost us less, and it will create greater value.
In other words, there is no hidden reason for why we are doing this. We want to build relationships with trust not just because it's the right thing to do, but also because it's the economic thing to do. So you become explicit about it. You say things like, establishing a relationship of trust is so vital for all the reasons we discussed. You need to know something about me and about us. If we make you a commitment, you can count on us to deliver on the commitment or else we won't make it. You can be assured that if we say we're going to do something, we're going to do it. When you do that, you take some risks because you raise the ante, but you also accelerate the establishment of trust. People now know what to look for. When they see it, they recognize it. You are held a little bit more accountable, but you also accelerate the creation of trust.
Part of the process is helping people understand what behaviors help build trust. We have identified 13 behaviors that are common to high-trust people, hightrust leaders, and high-trust supply chains. People should behave and act in certain ways. They avoid the opposite behaviors, or the counterfeits. For example, one of the behaviors is to talk straight. The opposite is to lie. That obviously destroys trust. The counterfeit looks like the real deal, but it is really not. This is when people spin, posture, position. They technically tell the truth, but they leave the wrong impression. On paper it might look like they are being real, but they are not. Everyone kind of senses it and knows it and that diminishes the trust. Other behaviors that build trust include creating transparency as opposed to obscuring or covering. If you make a mistake, you right the wrong as opposed to denying the wrong or worse, covering it up. Keeping commitments as opposed to breaking the commitment or to counterfeit, which is when people over-promise and then under-deliver. These are just a few of the 13 behaviors. When people become aware of them and focus on them, when they get deliberate and explicit about it, you actually can build trust far faster than you might think possible. You can build it fast, and once you have established it, everything moves at an exceptional speed.
Q: So you're saying that being open and honest is more than a matter of simple decency; it also has economic benefits, correct?
A: Exactly. There is a convergence between the right thing to do and the economic thing to do. At one level, as you are suggesting, they are common sense. They are human values. They are values that cross cultures. They are principles and they are basic. So at that level you say, well this is not so revolutionary. But maybe what is revolutionary is the recognition, the awareness that, in fact, it is not just the right thing to do, it's the economic thing to do because it increases speed and decreases cost.
If it were so easy, we would all be doing it. And the fact that it's fundamental doesn't make it easy. We are all about trying to make these behaviors common. Whereas I would argue in most corporations, in most corporate cultures, in most supply chains even, the prevailing culture is counterfeit behavior. People are blaming instead of taking responsibility. They are covering up a little bit, and they are spinning instead of talking straight. They are operating with hidden agendas instead of being transparent.
Q: Do you have any closing thoughts you'd like to share?
A: Let me add that I'm not advocating blind trust, where you just go out and trust anybody and everybody because that doesn't work. That is not smart. That's being gullible and people will get burnt. At the same time, I'm certainly not advocating taking it to the opposite extreme and not trusting anybody. Neither extreme is sustainable in the long run without huge economic consequences.
Instead, I am advocating a third alternative—what I call "smart trust." You have an inclination and a desire to trust, but you are also smart about it. You bring your analytical skills to bear to assess the particular situation, the risk involved, and the credibility of the people involved. In some cases, you may trust conditionally because the risk is very high and you're just learning the players involved. In other cases, you're going to trust far more abundantly because you've already built that relationship. You've established it. You go faster.
The notion of "smart trust" is captured nicely in the expression "trust and verify." The sequencing is important. The sequencing is trust as your starting place. Then you add to that verification. Too often, we go with the opposite sequence, where we say verify, then—and only then—trust. There's a danger in that approach. Even though it might look like it's safer because it's important to verify, when that is our starting place, we tend to view the world with suspicious lenses and people tend to reciprocate. When we distrust to begin with, they tend to distrust back. We can get into a vicious downward cycle of distrust and suspicion. I'm not saying to lose the analysis. I'm just saying suspend it for a moment. Begin with the propensity to trust. Then, with that in place, add to that your analysis of the situation. That will make you a better judge of when and how to trust.
The former CEO of Johnson & Johnson, Jim Burke, has said, "I have found that by trusting people until they prove themselves unworthy of that trust, a lot more happens." This is all about judgment. When you recognize the economics of trust, you're more inclined to build trust, establish trust, grow trust. You're also more inclined to learn how and when to extend trust in the supply chain. What an edge that is.
Shippers today are praising an 11th-hour contract agreement that has averted the threat of a strike by dockworkers at East and Gulf coast ports that could have frozen container imports and exports as soon as January 16.
The agreement came late last night between the International Longshoremen’s Association (ILA) representing some 45,000 workers and the United States Maritime Alliance (USMX) that includes the operators of port facilities up and down the coast.
Details of the new agreement on those issues have not yet been made public, but in the meantime, retailers and manufacturers are heaving sighs of relief that trade flows will continue.
“Providing certainty with a new contract and avoiding further disruptions is paramount to ensure retail goods arrive in a timely manner for consumers. The agreement will also pave the way for much-needed modernization efforts, which are essential for future growth at these ports and the overall resiliency of our nation’s supply chain,” Gold said.
The next step in the process is for both sides to ratify the tentative agreement, so negotiators have agreed to keep those details private in the meantime, according to identical statements released by the ILA and the USMX. In their joint statement, the groups called the six-year deal a “win-win,” saying: “This agreement protects current ILA jobs and establishes a framework for implementing technologies that will create more jobs while modernizing East and Gulf coasts ports – making them safer and more efficient, and creating the capacity they need to keep our supply chains strong. This is a win-win agreement that creates ILA jobs, supports American consumers and businesses, and keeps the American economy the key hub of the global marketplace.”
The breakthrough hints at broader supply chain trends, which will focus on the tension between operational efficiency and workforce job protection, not just at ports but across other sectors as well, according to a statement from Judah Levine, head of research at Freightos, a freight booking and payment platform. Port automation was the major sticking point leading up to this agreement, as the USMX pushed for technologies to make ports more efficient, while the ILA opposed automation or semi-automation that could threaten jobs.
"This is a six-year détente in the tech-versus-labor tug-of-war at U.S. ports," Levine said. “Automation remains a lightning rod—and likely one we’ll see in other industries—but this deal suggests a cautious path forward."
Editor's note: This story was revised on January 9 to include additional input from the ILA, USMX, and Freightos.
Logistics industry growth slowed in December due to a seasonal wind-down of inventory and following one of the busiest holiday shopping seasons on record, according to the latest Logistics Managers’ Index (LMI) report, released this week.
The monthly LMI was 57.3 in December, down more than a percentage point from November’s reading of 58.4. Despite the slowdown, economic activity across the industry continued to expand, as an LMI reading above 50 indicates growth and a reading below 50 indicates contraction.
The LMI researchers said the monthly conditions were largely due to seasonal drawdowns in inventory levels—and the associated costs of holding them—at the retail level. The LMI’s Inventory Levels index registered 50, falling from 56.1 in November. That reduction also affected warehousing capacity, which slowed but remained in expansion mode: The LMI’s warehousing capacity index fell 7 points to a reading of 61.6.
December’s results reflect a continued trend toward more typical industry growth patterns following recent years of volatility—and they point to a successful peak holiday season as well.
“Retailers were clearly correct in their bet to stock [up] on goods ahead of the holiday season,” the LMI researchers wrote in their monthly report. “Holiday sales from November until Christmas Eve were up 3.8% year-over-year according to Mastercard. This was largely driven by a 6.7% increase in e-commerce sales, although in-person spending was up 2.9% as well.”
And those results came during a compressed peak shopping cycle.
“The increase in spending came despite the shorter holiday season due to the late Thanksgiving,” the researchers also wrote, citing National Retail Federation (NRF) estimates that U.S. shoppers spent just short of a trillion dollars in November and December, making it the busiest holiday season of all time.
The LMI is a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
The overall national industrial real estate vacancy rate edged higher in the fourth quarter, although it still remains well below pre-pandemic levels, according to an analysis by Cushman & Wakefield.
Vacancy rates shrunk during the pandemic to historically low levels as e-commerce sales—and demand for warehouse space—boomed in response to massive numbers of people working and living from home. That frantic pace is now cooling off but real estate demand remains elevated from a long-term perspective.
“We've witnessed an uptick among firms looking to lease larger buildings to support their omnichannel fulfillment strategies and maintain inventory for their e-commerce, wholesale, and retail stock. This trend is not just about space, but about efficiency and customer satisfaction,” Jason Tolliver, President, Logistics & Industrial Services, said in a release. “Meanwhile, we're also seeing a flurry of activity to support forward-deployed stock models, a strategy that keeps products closer to the market they serve and where customers order them, promising quicker deliveries and happier customers.“
The latest figures show that industrial vacancy is likely nearing its peak for this cooling cycle in the coming quarters, Cushman & Wakefield analysts said.
Compared to the third quarter, the vacancy rate climbed 20 basis points to 6.7%, but that level was still 30 basis points below the 10-year, pre-pandemic average. Likewise, overall net absorption in the fourth quarter—a term for the amount of newly developed property leased by clients—measured 36.8 million square feet, up from the 33.3 million square feet recorded in the third quarter, but down 20% on a year-over-year basis.
In step with those statistics, real estate developers slowed their plans to erect more buildings. New construction deliveries continued to decelerate for the second straight quarter. Just 85.3 million square feet of new industrial product was completed in the fourth quarter, down 8% quarter-over-quarter and 48% versus one year ago.
Likewise, only four geographic markets saw more than 20 million square feet of completions year-to-date, compared to 10 markets in 2023. Meanwhile, as construction starts remained tempered overall, the under-development pipeline has continued to thin out, dropping by 36% annually to its lowest level (290.5 million square feet) since the third quarter of 2018.
Despite the dip in demand last quarter, the market for industrial space remains relatively healthy, Cushman & Wakefield said.
“After a year of hesitancy, logistics is entering a new, sustained growth phase,” Tolliver said. “Corporate capital is being deployed to optimize supply chains, diversify networks, and minimize potential risks. What's particularly encouraging is the proactive approach of retailers, wholesalers, and 3PLs, who are not just reacting to the market, but shaping it. 2025 will be a year characterized by this bias for action.”
Under terms of the deal, Sick and Endress+Hauser will each hold 50% of a joint venture called "Endress+Hauser SICK GmbH+Co. KG," which will strengthen the development and production of analyzer and gas flow meter technologies. According to Sick, its gas flow meters make it possible to switch to low-emission and non-fossil energy sources, for example, and the process analyzers allow reliable monitoring of emissions.
As part of the partnership, the product solutions manufactured together will now be marketed by Endress+Hauser, allowing customers to use a broader product portfolio distributed from a single source via that company’s global sales centers.
Under terms of the contract between the two companies—which was signed in the summer of 2024— around 800 Sick employees located in 42 countries will transfer to Endress+Hauser, including workers in the global sales and service units of Sick’s “Cleaner Industries” division.
“This partnership is a perfect match,” Peter Selders, CEO of the Endress+Hauser Group, said in a release. “It creates new opportunities for growth and development, particularly in the sustainable transformation of the process industry. By joining forces, we offer added value to our customers. Our combined efforts will make us faster and ultimately more successful than if we acted alone. In this case, one and one equals more than two.”
According to Sick, the move means that its current customers will continue to find familiar Sick contacts available at Endress+Hauser for consulting, sales, and service of process automation solutions. The company says this approach allows it to focus on its core business of factory and logistics automation to meet global demand for automation and digitalization.
Sick says its core business has always been in factory and logistics automation, which accounts for more than 80% of sales, and this area remains unaffected by the new joint venture. In Sick’s view, automation is crucial for industrial companies to secure their productivity despite limited resources. And Sick’s sensor solutions are a critical part of industrial automation, which increases productivity through artificial intelligence and the digital networking of production and supply chains.
He replaces Loren Swakow, the company’s president for the past eight years, who built a reputation for providing innovative and high-performance material handling solutions, Noblelift North America said.
Pedriana had previously served as chief marketing officer at Big Joe Forklifts, where he led the development of products like the Joey series of access vehicles and their cobot pallet truck concept.
According to the company, Noblelift North America sells its material handling equipment in more than 100 countries, including a catalog of products such as electric pallet trucks, sit-down forklifts, rough terrain forklifts, narrow aisle forklifts, walkie-stackers, order pickers, electric pallet trucks, scissor lifts, tuggers/tow tractors, scrubbers, sweepers, automated guided vehicles (AGV’s), lift tables, and manual pallet jacks.
"As part of Noblelift’s focus on delivering exceptional customer experiences, we are excited to have Bill Pedriana join us in this pivotal leadership role," Wendy Mao, CEO at Noblelift Intelligent Equipment Co. Ltd., the China-based parent company of Noblelift North America, said in a release. “His passion for the industry, proven ability to execute innovative strategies, and dedication to customer satisfaction make him the perfect leader to guide Noblelift into our next phase of growth.”