Upon securing series A funding, most startups/scale-ups find themselves obligated to establish a non-executive board, as outlined in the terms stipulated in the investors’ sheet. Soon after, they find themselves dealing with unforeseen and challenging situations, such as a performance deviation, a competitor launching a superior product, or a conflict with a key team member. All topics to be discussed within the boardroom.
For every CEO, a nagging question persists: Can I entrust my board in navigating this? When is the right time to share, how will they respond and what actions will they take upon learning about the situation?
As the Dutch proverb wisely states: Trust arrives slowly, on foot, yet departs swiftly, riding on horseback. This illustrates the journey of cultivating trust, a process that takes time and nurturing, yet it can be shattered in the blink of an eye from a single interaction.
Ventures often do not have the time needed to build a trust foundation with their board before plunging into the wild waters of the scale-up phase. And it is in this phase that trust is the most vulnerable.
In my quest for some guidance, I came across the concept of the “trust equation”. The framework was introduced to me by Rajiv Ball, a trusted colleague, fellow alumnus of McKinsey and partner at THNK. The trust equation was first presented in the book “The Trusted Advisor” in 2000, written by Harvard professors Maister, Green, and Galford. Drawing from extensive research, the authors proposed an equation that describes the key components of trust between a CEO and another professional- be it an advisor, a salesperson, or, indeed, a board member.
At first glance, I thought: A framework on a topic as intricate, multifaceted, and personal as trust – how mechanistic! But bear with me, it is surprisingly insightful.
The professors’ equation unfolds as follows: Credibility plus reliability plus intimacy divided by self-orientation equals trust:
- Credibility pertains to shared perspectives. Does the individual in front of us have the required knowledge and experience to offer informed viewpoint
- Reliability concerns actions. Does the individual keep promises, deliver results, and maintain transparency about their endeavors?
- Intimacy refers to a sense safety and security. Do we feel comfortable sharing sensitive or confidential matters with this person?
- Self-orientation refers to a person’s focus. Do they have my best interests at heart or are they primarily self-serving?
Increasing the value of the factors in the numerator – credibility, reliability, and intimacy – increases the trust level. Conversely, increasing the amount of the denominator―self-orientation―decreases the trust level.
Stay tuned! In our next article, we will delve deeper into the trust-equation, and how this works for boards as well as CEO’s.
Cheers, Menno
PS: Also to actualise this aspiration and complete our offering, next to the board program, we have recently launched the Board Matching service.
Author Bio
About Menno van Dijk
With a background at McKinsey for over 22 years, Menno has a deep understanding of strategy, innovation and growth in media, high tech and energy. After his time as a consultant, Menno started THNK school for creative leadership, and founded ScaleUpNation:
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