Magazine Summer 2010 Research Feature

Why Too Much Trust Is Death to Innovation

When companies collaborate, low trust is detrimental to innovation. But so is very high trust. The optimal level, yielding maximum impact, lies in between.

Francis Bidault and Alessio Castello Reading Time: 17 min 

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Image courtesy of Flickr user Easa Shamih (eEko) | P.h.o.t.o.g.r.a.p.h.y.

The Smart microcar, invented by the tumultuous partnership between Daimler-Benz and Swatch, seems to be finally reaping the benefits of its provocative design as more consumers order this compact automobile. By contrast, the minivan codeveloped by Peugeot and Fiat (initially sold as the Peugeot 806 and the Fiat Ulysse) was the result of a harmonious relationship but never garnered much attention. It was just another minivan.

These outcomes contradict common sense as well as a large body of academic literature. The general assumption, after all, is that success grows out of good relationships — based on a common vision, cultural proximity, a sense of fairness and equity and, eventually, mutual trust — while poor cooperation and lack of trust lead to disaster. Yet examples abound of high-trust partnerships that fail to innovate and of turbulent ones that succeed. Admittedly, many factors influence the level of creativity and innovativeness of partnerships, and trust is only one of them. But it is deemed to be a central one.1

The Leading Question

Can very high trust between innovation project partners be too much of a good thing?

Findings
  • Some kinds of conflict between collaborators can be good for innovation performance.
  • While personality conflicts hinder innovation, conflicting opinions about tasks can spur new solutions.  
  • Trusting partners are more likely to commit the resources needed to implement jointly developed ideas.

Is trust in fact overrated? Is it sometimes an actual hindrance to innovation? Can we think in terms of an optimal level of trust — not too little and not too much?

Trust as a Critical Ingredient One party trusts another not only when he perceives honesty and an absence of opportunism but also when expecting that the other’s attitudes and capabilities will turn out as promised.2 For example, we need to trust that the plumbers repairing our bathroom will not overcharge us and that they have the required competencies — knowledge, acumen, equipment and supplies — to get the job done well and on time.

Trust is, above all, an interpersonal phenomenon. It occurs (or fails to occur) between individuals.

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About the Authors

Francis Bidault is a professor of management at the European School of Management and Technology in Berlin, Germany. Alessio Castello is adjunct professor of management at the Institut d’Administration des Entreprises, l’Université de Nice, in Nice, France.

References

1. J.H. Dyer and N.W. Hatch, “Using Supplier Networks to Learn Faster,” MIT Sloan Management Review 45, no. 3 (spring 2004): 57-63; R. Gulati, “Does Familiarity Breed Trust? The Implications of Repeated Ties for Contractual Choice in Alliance,” Academy of Management Journal 38, no. 1 (1995): 85-112; and J. Hagedoorn and G. Duysters, “External Sources of Innovative Capabilities: The Preference for Strategic Alliances or Mergers and Acquisitions,” Journal of Management Studies 39, no. 2 (2002): 167-188.

2. F.D. Schoorman, R.C. Mayer and J.H. Davis, “An Integrative Model of Organizational Trust: Past, Present and Future,” Academy of Management Review 32, no. 2 (2007): 344-354.

3. A. Ariño, J. de la Torre and P.S. Ring, “Relational Quality: Managing Trust in Corporate Alliances,” California Management Review 44, no. 1 (2001): 109-131.

4. H.W. Chesbrough, “Open Innovation: The New Imperative for Creating and Profiting from Technology” (Boston: Harvard Business School Press, 2003).

5. M.J. Kelly, J.-L. Schaan and H. Joncas, “Managing Alliance Relationships: Key Challenges in the Early Stages of Collaboration,” R&D Management 32, no. 1 (2002): 11-22.

6. D. Littler, F. Leverick and D. Wilson, “Collaboration in New Technology-Based Product Markets,” International Journal of Technology Management 15, no. 1/2 (1998): 139-159.

7. K. Heimeriks, “Alliance Capability, Collaboration Quality and Alliance Performance: An Integrated Framework,” working paper 02.05, Eindhoven Centre for Innovation Studies, Eindhoven University of Technology, Netherlands, 2002; and T.E. Stuart, “Interorganizational Alliances and the Performance of Firms: A Study of Growth and Innovation Rates in a High-Technology Industry,” Strategic Management Journal 21, no. 8 (August 2000): 791–811.

8. Ariño et al., “Relational Quality.”

9. A.G. Robinson and S. Stern, “Corporate Creativity: How Innovation and Improvement Actually Happen” (San Francisco: Berrett-Koehler, 1997).

10. F. Bidault and M. Schweinberg, “Fiat and Peugeot’s Sevelnord Venture (A),” IMD case no. 3-0644 (Lausanne, Switzerland: IMD, 1996).

11. M.-H. Chen, Y.-C. Chang and S.-C. Hung, “Social Capital and Creativity in R&D Project Teams,” R&D Management 38, no. 1 (2008): 21-34; and D. De Clercq, N. Thongpapanl and D. Dimov, “The Role of Conflict and Social Capital in Cross-Functional Collaboration” (paper presented at the Fourth Workshop on Trust Within and Between Organizations, Amsterdam, Netherlands, October 2007).

12. A.C. Amason, “Distinguishing the Effects of Functional and Dysfunctional Conflict on Strategic Decision Making: Resolving a Paradox for Top Management Teams,” Academy of Management Journal 39, no. 1 (1996): 123-148; and K.A. Jehn and E.A. Mannix, “The Dynamic Nature of Conflict: A Longitudinal Study of Intragroup Conflict and Group Performance,” Academy of Management Journal 44, no. 2 (2001): 238-251.

13. P. Dussauge, B. Garrette and A. Dumont, “The Matra-Renault Espace Alliance and the European Minivan Market,” HEC Paris case study no. 397-025-1 (Paris: HEC Paris, 1997).

14. G. Le Cardinal, J.-F. Guyonnet, B. Pouzoullic and J. Rigby, “Intervention Methodology for Complex Problems: The FAcT-Mirror Method,” European Journal of Operational Research 132, no. 3 (2001): 694-702.

Acknowledgments

The authors wish to express their gratitude to the Peter-Curtius Stiftung (Peter Curtius Foundation) for its generous support of the research project reported in this article.

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Comments (4)
Robert Porter Lynch
Nissan shifted from a disastrous harmonious trust to synergistic trust and produced remarkable results. 

In 2000 Nissan was headed for bankruptcy. It had debt of $20 billion, was losing money, and only three of its 48 models were generating a profit. Carlos Goshen was sent in from Renault to protect its investment in Nissan. Goshen was viewed as an outsider by the media and parts of Nissan. He promised to resign if the company did not reach profitability by the end of the year. 

Goshen’s plan called for maintaining its collaborative relationships with its supply chain, which made 80% of the vehicle, but shaking up the cozy relationships with suppliers, which had based their entire business philosophy on harmonious trust. Nissan was the victim of complacency, which showed up as poor product planning, drab styling, and unimaginative design, which were partly the responsibility of the suppliers who did not aspire to compete on a world-class basis.

Goshen shook up the supply base, opening it up to world class suppliers, as long as they were innovative, collaborative, and trustworthy. He wanted synergistic trust! 

A similar relationship existed with Nissan’s dealerships, half of which were owned and staffed by Nissan managers, not independent entrepreneurs. The cozy, almost familial, harmonious relationship between the manufacturer and dealers exhibited the Japanese value of “wa” which means “harmony,” which is considered one of the highest values in Japanese culture. This harmony prevented the organization from tackling some of Nissan’s most pressing problems, namely their cars were stale, and out of tune with what customers wanted.

Harmonious trust, while laudable in a friendship, has a serious flaw when used in a partnership, alliance, merger, or cross-functional team in a highly competitive business environment. That flaw is the lack of urgency to execute quickly, flawlessly, and creatively. The veneer of harmony had glossed over serious flaws in Nissan’s business strategy, and also built a culture of continuous planning to make changes, but no willpower to put the changes into place. After years of attempting to get everyone’s buy-in, the financial and market position of Nissan had eroded to the crisis point. This was exacerbated by prior senior executive regimes that had built a hierarchical structure that isolated cross-functional interaction (an internal alliance), and slowed flow of valuable information from the field and from the shop floor to senior management. 

The result: Since 2000, new models that have taken the marketplace by storm. And profitability was achieved within 12 months, and the company is now debt-free.
Jeff Lindsay
Sweet spot - or data artifact? Click on "view exhibit" and look at the data set. If the last data point (trust = 14) is removed, the conclusions might be quite different. There might not be a valid basis to claim that a sweet spot exists. Further testing would be a good idea to support such a counter-intuitive claim. But if high trust is the result of apathy, then I guess it makes sense that apathetic teams wouldn't create.
robertlynch
Does too much trust deter innovation? 

Our experience with innovation alliances in the last 20 years indicates that an abundance of the right kind of trust never hurts innovation, but with an important caveat: 
High Trust Does Not Equal High Innovation

Reaping the fruits of collaborative innovation is like farming – while flowers need fertile soil to grow, we would never draw the conclusion that fertile soil is all that’s needed to produce a prosperous garden. Naturally, gardens also need sun, water, and highly competent gardeners.  So with innovation – Trust is the fertile ground, but collaborative innovation is a discipline requiring competent players and high standards of performance.

The experiment cited in the article demonstrates a key fallibility in most people’s understanding of trust – that all high levels of trust are the same (they’re not). 

High trust can manifest as either “harmony” or “synergy.”  The former is blissful, sometimes even complacent, but not necessarily innovative; the latter is energetic, filled with tension, constantly pushing the edges of possibility. Synergistic trust exists in an environment of co-creation where the partners live in a perpetual state of enlightened dissatisfaction. Conflict is absent in harmonious trust, but very evident in synergistic trust, where ideas are being challenged daily. But the challengers honor each other’s intellects, and the conflict of ideas is used only to spur the mind to higher orders of thinking. 

The greater the tension between differentials in thinking,
the greater the potential for explosive innovation.

For example, in our study of how the Greeks created the first age of innovation, several “essential ingredients” were necessary to create the phenomenal explosion of innovation from such as small city as Athens (population: 30-40,000). Some of the elements of that innovation formula included: pushing the limits of possibility, an endless pursuit of perfection, willingness to discover, dedication to honoring others, and a continuous stream of insightful questions. 

Innovation alliances have made enormous progress over the last twenty years. However, the statistics on alliance success can easily be misleading. While many alliances do fail (twenty years ago it was 80%, now it’s considered 50%), alliance professionals who use best-practice alliance architecture regularly produce 70-80% success rates. Clearly, the disciplined application of professional standards to alliances has shifted the balance.

Further, what is considered a “success” or “failure” in innovation can be confusing. Eli Lilly, a company that has had enormous success in risky innovation alliances, distinguishes between the science and the alliance relationship. A failed technology innovation may still embody a successful alliance relationship, a factor that would instill confidence to proceed experimenting with another new technology with that partner, despite past failures on the science front.

As a last insight:
The mating of two trusting turkeys
An eagle doth not make

Robert Porter Lynch
Chairman Emeritus, Association of Strategic Alliance Professionals
Charles H. Green
I'm not sure the article lives up to the headline.

I want to be careful how I phrase this, because the research is obviously carefully done by serious people, it's a valid and interesting hypothesis, and if true, a matter of some practical interest.  But, as I said, I think the case is far from proven.

If I read this carefully, it all hinges on a partial component of one aspect of trust.  The aspect is trusting-ness (as opposed to trustworthiness).  The component is empathy.

The critical paragraph seems to me to be this:

"Trust is a combination of integrity, reliability and mutual caring... mutual caring, or the extent to which one partner empathizes with the other, may result in excessive accommodations. Under such circumstances, a team member would prefer to please his partner than to openly question the partner’s ideas, decisions and actions."

First of all, I'm not aware of any single  agreed-upon definition of trust. It's harder than obscenity to define. Second, the authors have apparently defined 'trust' without trying to distinguish between trusting, being trusted, or the proper use of 'trust,' which is the result of the former two. 

And while that's not an unreasonable definition, it's hardly the only one.  My own Trust Equation is explicitly about trustworthiness, and names four factors: credibility, reliability, intimacy, and self-orientation.  I explicitly refer to empathy as a capability of one for being trustworthy, but not empathy in the sense the authors suggest.

They seem to equate empathy with a dissolving of the boundaries between individuals.  Some psychologists use the term "differentiation" to describe the ability to empathize with another while precisely NOT losing the sense of one's own identity.  

In common terms, I'd say one who empathizes to the point of preferring to please his partner rather than openly question ideas is not empathizing, but capitulating. A preference to lose one's own identity for the sake of approval of another indicates a serious lack of strength and personal identity, as well as a lack of interpersonal skills.

A simple view of Goleman's Emotional Intelligence work suggests that what's critical is the ability to see one's own emotions and the emotions of others, and to work consciously on each.  What the authors are characterizing as empathy is the inability to maintain the difference between one's own emotions and those of another, and the absence of skills to manage either.

I would suggest this is not trust.  A person who behaves in this way is not going to gain anyone's trust--instead, they'll be known as suck-ups without principles and integrity. 

Full circle to innovation: a person who really has solid skills in trusting, and who is truly trustworthy, is skilled in the arts of empathy and in knowing their own points of view.  It's precisely those kinds of people who will draw out differences, secure in the notion that they've got the skills to handle the kinds of differences that lead to productive interactions. 

At the very least, I think the headline far outruns the paper itself; and speaking personally, the conclusion doesn't make sense to me.