An Introduction to Trust Engineering
The idea of trust might conjure up wooly, intangible ideas in the minds of many. Indeed, whether someone is ‘trustworthy’ is often a matter of subjective experience and opinion.
But what if there was a way to codify trust, to break it down and measure it. And ultimately, to identify ways to proactvely build it in our supplier relationships?
What if we could reverse engineer the science behind trust?
“A contract is not simply an exchange of promises, but a framework within which the parties can cooperate to mutual advantage, and this requires a substantial degree of trust.”
Ian R. Macneil – Contracts: Exchange, Transactions, and Relations (1980)
What is the Trust Quotient (TQ)?
If you go by the dictionary definition, then trust is the ‘firm belief in the reliability, truth, or ability of someone or something’.
Indeed, as Peter Drucker famously said, ‘what gets measured, gets managed’. So consider if the following ring true to you:
Procurement leaders often do very well in focusing on tangibles such as price, compliance and contract performance factors, but overlook the hidden variable that determines long-term success or failure: trust.
Traditional contracts by their very nature assume mistrust, which drives cost, slows innovation, and fosters adversarial relationships.
What if we could engineer trust into procurement design, rather than leaving it to chance?
The ‘Trust Quotient’ (TQ) was developed by author and consultant Charles Green. In essence, it is a simple formula:
Credibility x Reliability x Intimacy, all divided by Self-Orientation (Interest).
By this definition, TQ is a way of turning something trust into something you can actually measure and manage.
Trust is a hidden blind spot in procurement
Wooly and intangible as it may seem, low-trust is the world’s most expensive tax.
Case in point: high-trust societies have GDP per capita up to 5x higher than low-trust ones (World Bank & OECD research), crime rates that are orders of magnitude lower than their low-trust neighbours and lower litigation costs (up to 40% according to a McKinsey study).
Trust can scale up. Francis Fukuyama (Trust: The Social Virtues and the Creation of Prosperity) argues at length that it is the trust in our institutions that forges economic prosperity (at the time of writing a sobering thought). Robert Putnam shows in Bowling Alone that social capital (networks, ties and connections) directly lead to both trust and prosperity.
RICS & T&T studies have found that 70%+ of FM/Construction contracts fail to deliver promised outcomes. Why? adversarial relationships and lack of trust.
How many of your supplier relationships are bogged down in suspicion, micromanagement, risk-shifting or accusations of price gouging?
The absence of trust, it has been proven categorically, leads to higher transaction costs (per Ronald Coase, Oliver Williamson). This means litigation, cost of contracting and cost of supervision. Facilities and property are especially vulnerable to this (compliance failures, spec drift, missed SLAs). Anyone with any degree of experience managing facilities suppliers knows that small problems can snowball into avalaches overnight in the absence of trust.
Delays typically extend original schedules by more than 71%.
RICS, Time and money: Counting the cost of conflict in the construction industry (2020)
Trust (Reverse) Engineering
At 8Fusion, Trust Engineering is the concept we came up with to deliberately design procurement systems and contracts to measure, align, and reinforce trust.
It borrows directly from Green’s Trust Equation (TQ) and feeds into the 5S Performance Procurement methodology.
If we can focus on taking action which helps build the four fundamentals of TQ, it can have an outsized effect on value leakage and overall contract success.
Credibility: do they know their stuff? We can measure credibility through technical qualifications, case studies, references, innovation track record and (more than anything else) recommendations from respected colleagues. Procurement levers include: evaluation weighting, supplier discovery, benchmarking.
Reliability: do they deliver? We measure it OTIF delivery metrics, MTPF scores, SLA adherence, reactive-to-PPM ratios and ultimately consistency over time. Procurement levers include KPI frameworks, data visibility, past performance reviews. Share data, share dashboards. Let suppliers know what you think of them, often, and why.
Intimacy: can they be open with us? No one believes a supplier who says they can do anything. Encouragement to share problems early, collaborate on solutions and share resolutions with stakeholders is liberating to both parties. Governance forums and open-book pricing mechanisms can be useful here.
Self-orientation: are they focused on mutual success? The only factor we want less of. Traditional contracts create agency problems, opportunism and moral hazard. Shifting the commercial model along the sliding scale towards performance-based contracting can support gain-sharing, long-term value creation, innovation and risk-sharing, where both parties have skin in the game. Relationships begin win/win, where no one can benefit at the expense of the other.
Conclusion
Just as with societies and economies, high-trust supplier relationships mean:
Lower transaction costs (fewer disputes, less re-tendering).
Higher resilience (suppliers volunteer solutions in crises).
Greater innovation
With Trust Engineering, procurement leaders can systematically decode and embed trust into their supplier ecosystem.
The result: stronger partnerships, measurable savings, and a competitive edge.
Practical ways to embed TQ into procurement:
Output, and possibly even outcome-based KPIs (clarity reduces ambiguity).
Incentive alignment (partial bonus/penalty payment tied to outcomes, not hours).
Joint innovation pilots (test intimacy and collaboration). Foster a culture of entrepreneurship!
Transparent dashboards and CLM tools (reduce oversight burden).
Trust by design, not hope.
