The Trust Product, Part I: A Business System for Trust Value Management
The Historical Nature of Business System Evolution
Throughout the history of modern business, organizations have continually faced challenges that, while long-standing, were often invisible or underappreciated until a formalized system emerged to address them. These were problems that, although impactful, were either accepted as unavoidable or simply not recognized as solvable. Today, we face a similarly invisible yet critical challenge: trust friction. Trust has long been treated as an intangible byproduct of business success - a passive outcome that emerged naturally from delivering quality products, maintaining ethical standards, or upholding strong reputations. Trust, however, is much more than this. In the modern trust economy, market trust is both measurable and actionable, and failing to manage it introduces significant operational inefficiencies and value erosion.
Trust Product introduces a strategic approach to eliminating trust friction through a trust value management framework. This business system asserts that trust is a critical and material operational asset that can be intentionally manufactured and delivered to market for value advantage. The Trust Product framework provides a structured solution, allowing businesses to recognize trust as a measurable and manageable asset. In an ecosystem where trustworthiness increasingly predicts market success, the maturation of the trust economy is shifting organizations to proactive trust management, making systematic trust governance essential to avoid friction in sales cycles, partnerships, and investor confidence, and a necessity for businesses seeking to thrive.
An Exploration of Common Business Systems
The history of business systems is a story of solving unseen or poorly understood business problems. In the 20th century, businesses accepted operational inefficiencies as an inevitable part of the production process. Prior to creation of business systems that addressed such problems, businesses assumed that such business inefficiencies, defects, or failures were inevitable, caused by human error or production variances. It wasn’t until the introduction of business systems like Total Quality Management (TQM), Lean, and Business Scorecard that companies began to systematically address these problems, transforming inefficiencies into opportunities for competitive advantage.
Today, trust plays a similarly invisible role in business operations. While trust is often assumed to exist as long as a company performs well, trust friction - the inefficiencies that arise when trust is left unmanaged - has quietly eroded value in much the same way that inconsistent quality or bloated processes once did. Trust friction can be found across every part of the business, whether in sales cycles that are unnecessarily long owing to market hesitation, or in contract reviews where partners seek additional layers of assurance. The Trust Product framework follows in the footsteps of prior transformative business systems, offering a structured solution to the inefficiencies caused by unmanaged trust. By identifying, measuring, and managing trust value as a core operational asset, businesses can systematically reduce trust friction, creating more efficient operations, higher quality products and services, better customer relationships, and improved investor outcomes.
Quality Management Systems
In the early days of industrialized production, quality was an elusive concept. Despite advancements in manufacturing, businesses struggled to ensure consistent output across their production lines. Customers, while reliant on these products, were often dissatisfied with the variability in reliability. The issue was not that businesses did not care about quality - it was that there was no formalized system in place to manage it effectively. Quality was seen as something that would happen if the processes were followed correctly, but it was not systematically measured or controlled.
The introduction of Total Quality Management (TQM) and later ISO standards marked a turning point in how businesses approached quality. TQM, championed by companies like Toyota, introduced the idea that quality should not be left to chance but should be an integral part of every stage of production. By formalizing continuous improvement and operational control, these frameworks provided businesses with the tools to systematically manage quality, ensuring that each product met a consistent standard. ISO standards further reinforced this by introducing international benchmarks that held companies accountable to measurable criteria. Before these frameworks, the business world operated in a state where quality problems were accepted as inevitable. It wasn’t until TQM and ISO standards became widespread that businesses began to realize that quality could be transformed into a competitive advantage, building trust with customers and creating operational excellence. The success of companies like Toyota demonstrated that addressing invisible problems - like inconsistent quality - could lead to outsized returns, both in customer loyalty and market share.
Agile Methodologies
In the realm of software development and product management, the limitations of traditional, rigid development cycles became painfully evident as market needs began to change more rapidly. The once-dominant waterfall methodology - marked by long, inflexible development cycles - resulted in products that were often misaligned with customer expectations by the time they reached the market. Development teams were locked into a predetermined course, with little room for iteration, leading to products that frequently missed the mark.
The rise of Agile methodologies was a response to this inefficiency. As a business system, Agile introduced iterative development, fostering cross-functional collaboration and embedding customer feedback directly into the development process. This new approach allowed companies to remain responsive to market changes, drastically reducing the time between product iterations and ensuring closer alignment with customer needs. As Agile cross-pollinated with DevOps (and later DevSecOps), this iterative process extended into operations and security, enabling faster, more reliable, and secure product cycles. For years, companies operated under the assumption that long, rigid product development cycles were just the nature of the business. But once Agile frameworks emerged, businesses began to see that speed and flexibility could be operationalized, leading to innovations that were not only faster to market but also more closely aligned with customer expectations. By reducing the time-to-market and improving the quality of each iteration, companies like Spotify and Netflix revolutionized their industries, demonstrating the power of a system that directly addressed previously unacknowledged problems in development.
Lean Practices
In traditional manufacturing environments, inefficiency was a pervasive but largely ignored issue. Factories were rife with waste - whether in terms of material, time, or labor - yet these inefficiencies were often seen as an unavoidable part of doing business. Companies recognized the problem but lacked a structured method to address it, resulting in bloated production processes that reduced profitability and responsiveness to market demands.
The introduction of Lean manufacturing, particularly as pioneered by Toyota in the mid-20th century, provided a solution to these long-standing issues. Lean methodologies emphasized the elimination of waste and non-value-adding activities, introducing a culture of continuous improvement across production processes. Over time, Lean was adapted beyond manufacturing to broader business contexts, from supply chain management to service industries, where inefficiency had similarly been seen as inevitable. Before Lean, businesses accepted waste as an inherent part of the production process. Lean shifted this paradigm, showing that by systematically removing inefficiencies, companies could reduce costs, improve customer satisfaction, and enhance profitability. The impact of Lean was profound, enabling businesses to respond more quickly to market changes while maintaining higher levels of operational efficiency. Lean, as a business system, transformed processes to focus on value generation, a shift that created more agile, customer-focused organizations.
Customer Success
In subscription-based businesses, particularly within the SaaS industry, customer retention has long been a challenge. For years, businesses relied on post-sale efforts that were reactive rather than proactive, waiting for customers to raise issues before addressing them. This reactive approach contributed to high churn rates as dissatisfied customers left for competitors who better anticipated their needs. The absence of a structured post-sale engagement framework meant that businesses were leaving significant value on the table, with reduced customer lifetime value and diminishing returns on acquisition efforts.
The emergence of Customer Success as a business system addressed these problems by creating a proactive framework for managing customer relationships after the sale. Rather than waiting for issues to arise, Customer Success teams work to ensure that customers achieve their desired outcomes, increasing satisfaction and retention. Companies like Salesforce and HubSpot turned this practice into a core business function, recognizing that the real value of a customer was not in the initial sale but in the long-term relationship. Prior to the introduction of Customer Success, recurring revenue businesses struggled with high churn rates and lacked the ability to maximize customer lifetime value. By systematizing post-sale engagement, Customer Success transformed retention into a strategic priority, helping businesses not only retain customers but also increase their overall value through upsells and renewals. This shift demonstrated that proactive engagement, like quality and efficiency before it, could be operationalized to generate consistent and measurable results.
Marketing Performance Management
For many years, marketing was often viewed as an unquantifiable and somewhat speculative business function. Traditional marketing efforts were disconnected from measurable outcomes, making it difficult for businesses to tie their marketing spend directly to revenue generation or ROI. Marketing departments were often seen as cost centers, with little accountability for performance, leading to a disconnect between marketing efforts and overall business strategy.
The introduction of marketing performance management (MPM) business systems changed this dynamic by turning marketing into a data-driven function. These systems provided businesses with the ability to track performance metrics, enabling clearer alignment between marketing activities and business outcomes. With the introduction of tools that measured campaign effectiveness, customer acquisition costs, and overall marketing ROI, marketing could finally be held accountable for its contribution to revenue generation and strategic success. Before these systems, marketing was often a black box - businesses invested heavily but were unable to quantify the impact. The advent of MPM tools allowed businesses to optimize their marketing spend, ensuring that every dollar contributed to measurable growth. This shift enabled marketing’s accountability while aligning it more closely with revenue-driving activities, fundamentally altering the way marketing was perceived and integrated into business strategy.
Business Scorecard
Before structured performance measurement frameworks became widespread, businesses found it difficult to align day-to-day activities with long-term strategic objectives. Relying solely on traditional financial metrics often led to misaligned priorities and missed opportunities. The Business Scorecard business system addressed this issue by offering a comprehensive program that integrates both financial and non-financial metrics to provide a balanced view of organizational performance.
The Business Scorecard tracks performance across four key areas: financial, customer, internal processes, and learning and growth. By directly linking these metrics to strategic goals, organizations can ensure that all departments work towards the same objectives. Prior to the introduction of the Business Scorecard, the disconnect between operational activities and strategic outcomes resulted in inefficiencies and fragmented efforts. This framework allowed businesses to systematically manage performance, enabling data-driven decision-making and ensuring alignment between all functions and the organization’s overall strategic direction.
Each of the six business systems outlined in this section systematically addresses inefficiencies once accepted as inherent limitations. By operationalizing previously abstract concepts, these systems enabled businesses to create value, gain competitive advantage, and drive continuous improvement. While these frameworks addressed critical challenges, they left trust - an essential element of all business interactions - underdeveloped and unmanaged. The next section addresses this gap by exploring the urgent need to define and operationalize trust with the same rigor applied to other key business systems.
The Trust Problem: The Invisible Friction of Unmanaged Trust
As we’ve seen, business systems like TQM, Agile, Lean, Customer Success, Business Scorecard, and MPM emerged as structured solutions to problems that had long gone unaddressed. Each of these frameworks introduced a methodology to solve inefficiencies that had been considered insurmountable or, at best, the inevitable cost of doing business. In each case, early adopters of these systems were able to create measurable improvements that gave them a lasting competitive edge. They moved beyond intuition and hope, operationalizing quality, speed, efficiency, and customer retention in ways that delivered quantifiable value. Yet, despite these advances, another invisible problem has persisted in the business world: trust friction. Like the inefficiencies addressed by previous systems, trust is something that businesses have historically assumed would take care of itself. This assumption has led to a significant lapse: while businesses have made strides in managing quality, speed, and customer success, they have left trust unacknowledged and unmanaged.
The result is a kind of operational drag that slows down decision-making, lengthens sales cycles, and increases risk to value - what can be referred to as trust friction. Trust friction is the drag created when businesses fail to proactively manage trust, much in the same way companies once failed to manage quality or efficiency. It manifests invisibly across departments, from sales and marketing to product development and customer service, subtly eroding value and creating barriers to enablement and success. Just as previous business systems were designed to solve inefficiencies that had become too costly to ignore, the Trust Product addresses the inefficiencies caused by unmanaged trust.
The Invisible Problem: Low Trust as Friction
While trust has often remained invisible in business operations, its absence leaves behind unmistakable traces of inefficiency, hesitation, and erosion of value. One of the most apparent manifestations of trust friction occurs in the sales cycle. In industries such as B2B SaaS, where trust plays a pivotal role in purchasing decisions and equity valuation, buyers often hesitate to close deals when they perceive even a hint of risk or uncertainty. This hesitation extends a sales cycle unnecessarily, adding weeks - or even months - of back-and-forth as the buyer seeks further assurances. Without a system in place to actively cultivate and manage trust, businesses often scramble to provide additional evidence of trustworthiness, losing momentum and ultimately revenue. The friction caused by the absence of trust compounds with every delay, slowing down the entire business pipeline.
Contract negotiations offer another example of trust friction. When trust is not actively managed, businesses face protracted legal processes where every clause must be meticulously scrutinized, and additional layers of oversight are added to mitigate perceived risks. The inability to prove trust slows the pace of agreement, driving up costs and delaying the time to value. In organizations that fail to intentionally manufacture trust, such diligence motions become burdened by distrust, leading to lower lifetime value and inefficient partnerships. Internally, employee trust in leadership directly affects engagement, productivity, and retention. When trust is low, employees become hesitant to fully commit to their work, second-guessing decisions made by leadership, and withholding their best efforts. This erosion of internal trust leads to inefficiencies across the board, from decision-making to collaboration, as teams lose cohesion and morale. Trust friction, in this sense, permeates the organization’s culture and slows its operational flow.
At a portfolio and investor level, trust friction manifests in equity discounting and reduced confidence from investors. Companies that fail to proactively manage trust are perceived as higher risk, which impacts their valuation. Investors, much like customers, assess trustworthiness when determining the long-term viability of a business. When trust is poorly managed, investors apply discounts to equity, factoring in the increased risks associated with diminished trustworthiness, including poor governance, compliance failures, and weakened overall resilience. This effect is particularly pronounced when businesses cannot demonstrate alignment in their ability to defend equity value through effective trust management - what we call value defense. Without mechanisms to systematically build and maintain trust, companies risk being perceived as fragile or volatile, leading to reduced investor confidence and lower market valuations.
Similarly, trust buyers, who serve as relationship and deal gatekeepers in many industries, play a role analogous to that of the quality control manager in TQM systems. Just as TQM formalized the responsibility for maintaining quality standards, trust buyers are responsible for evaluating the trustworthiness of potential partners, suppliers, or service providers. These individuals hold significant influence over purchasing decisions and can introduce friction when trust levels are inadequate. In businesses that fail to manage trust effectively, trust buyers will impose additional scrutiny, lengthening decision cycles and potentially reducing the scope of engagement.
Lastly, portfolio-level trust management serves as a strategic lever for investors with multiple companies. Unlike a bottom-up approach, where each company must independently realize the value of trust, portfolio-level management enables a unified trust product strategy across the entire portfolio. This approach brings key advantages. First, manufacturing trust products early increases the likelihood of successful exits. Companies that reduce trust friction can more easily access high-value markets (such as enterprise and government sectors) where trust is a prerequisite. This opens doors that might otherwise remain closed due to perceived risks or gaps. Second, it protects the investor’s overall position. Setting trust product standards across portfolio companies aligns trust as a core value proposition, reducing variability in trust strategies. This ensures that CEOs do not need to individually implement these practices, streamlining governance and enhancing market competitiveness. Lastly, trust product management minimizes equity discounting at exit. Investors benefit from fewer last-minute due diligence surprises and higher valuations as early trust practices address common sources of discounting. Consistent trust oversight across the portfolio leads to higher exit multiples and returns.
The Trust Economy: Why Managing Trust is No Longer Optional
The world of business is undergoing a fundamental shift: trust has become a key determinant of success or failure, giving rise to what can be described as the trust economy. The trust economy is characterized by the fact that customers, employees, investors, and regulators now expect businesses to actively manage trust as they would any other core asset. It is no longer sufficient to assume that trust will emerge naturally from good behavior or a strong brand reputation; instead, businesses must cultivate, measure, and protect trust with the same rigor that they apply to product development, financial management, or customer service.
The trust economy is driven by a variety of factors, most notably the increased transparency brought about by technology and the heightened expectations of trust stakeholders. In a world where information is more accessible than ever before, customers and investors can quickly gather details about a company’s operations, leadership, and practices. This ease of access means that any missteps, breaches, or failures are rapidly exposed, leading to immediate consequences for trust. In this environment, a single negative event can reverberate across markets, damaging not only the company’s reputation but also its ability to operate efficiently. Companies that fail to actively manage trust leave themselves vulnerable to these rapid shifts in perception, resulting in lost business, diminished brand loyalty, and reduced shareholder value.
Furthermore, digital transformation has changed the nature of business relationships. Companies are more interconnected than ever before, with reliance on third-party vendors, cloud services, and global supply chains becoming the norm. This increased interdependence means that a breach of trust in one part of the chain can have cascading effects across the entire business ecosystem. In the trust economy, companies are not only responsible for their own trustworthiness but also for the trustworthiness of their partners and suppliers. Moreover, in the trust economy, trust buyers have gained significant influence. Trust buyers can be found in roles such as procurement officers, compliance managers, and risk assessors, and they play a crucial role in determining whether a business is a suitable partner, vendor, or service provider. Just as companies once needed to prove their commitment to quality to win contracts, they now need to demonstrate their trustworthiness to close deals. Businesses that fail to align with trust buyer expectations will increasingly find themselves excluded from key markets or unable to secure strategic partnerships.
Finally, governments and industry bodies are imposing stricter regulations on data privacy, cybersecurity, and ethical conduct. The rise of global statutes and frameworks reflects the growing expectation that companies must not only operate legally but also ethically, with a focus on protecting customer trust. Compliance alone, however, is no longer enough - companies must actively build trust into their operational DNA. Those that fail to do so face increased scrutiny, fines, and loss of competitive standing in their industries. In this new trust economy, trust is no longer an optional consideration or a byproduct of operational excellence. It is a core business function that demands systematic management. The Trust Product framework enables businesses to operate with trust at the forefront, providing a structured approach to measuring, managing, and defending trust. As the trust economy continues to evolve, those companies that proactively manage trust will thrive, while those that fail to adapt will find themselves at a distinct disadvantage in a marketplace where trust is the ultimate currency.
The Cost of Ignoring Trust: Value Destruction and Competitive Disadvantage
In the trust economy, the cost of ignoring trust is far more severe than many businesses realize. Companies that fail to manage trust systematically are not just missing an opportunity for differentiation: they are actively eroding their own value. Unmanaged trust leads to lost revenue, damaged reputations, higher customer churn, and reduced investor confidence. Businesses that don’t recognize trust as a strategic asset face increasingly visible consequences, turning the absence of proactive trust management into a significant competitive disadvantage. At the heart of this issue is trust’s critical role in value defense. While businesses may invest heavily in growth, innovation, or customer acquisition, many overlook that these efforts rest on a bedrock of trust. Without it, even cutting-edge products or services struggle to gain market traction. When trust erodes, companies are forced into a defensive posture, trying to repair reputational damage and restore stakeholder confidence - an expensive and time-consuming effort that leads to long-term value erosion.
The impact of unmanaged trust goes beyond operational inefficiencies or customer churn. Equity discounting is a significant consequence of failing to manage trust effectively. Investors, increasingly sensitive to trust-related risks, apply discounts to companies perceived as untrustworthy or vulnerable in governance, compliance, or security. These discounts reflect a higher risk profile and signal a lack of confidence in long-term viability. As a result, companies that ignore trust are penalized by the market with lower valuations and reduced access to capital compared to their more trustworthy peers. The cost of ignoring trust also shows up in competitive positioning. In industries where functionality and price have reached parity, trust has become a key differentiator. Trustworthy companies attract and retain customers more easily, command price premiums, and reduce reliance on discounting. In contrast, companies that neglect trust often resort to price cuts to compensate for lost trust, harming their margins and positioning themselves as low-cost providers. This creates a downward spiral where trust deficits drive value discounts, further eroding profitability and long-term value.
These challenges mark a systemic shift in how businesses must approach value generation and defense. Companies that fail to adopt structured trust management will be left behind, absorbing the costs of value destruction while competitors leverage trust as a strategic asset. The urgency is clear: without a Trust Product mindset, businesses will lose ground in a market where trustworthiness can be a critical differentiator. Ignoring trust leads to strategic failure that limits a company’s ability to defend and grow its value in a rapidly evolving marketplace. Unmanaged trust becomes a liability, undermining every aspect of the business. In contrast, companies that embrace the Trust Product as a core function position themselves to succeed in the trust economy, where trust is not only a protective measure but a driver of sustained competitive advantage.