Chris: We are extremely fortunate to interview a man who is extremely well-respected in the business community. We had the great pleasure to introduce and interview his father. We are interviewing Stephen M.R. Covey, the former CEO of Covey Leadership Center, which, under his tenure, became the largest executive development firm in the world.
As CEO of the Covey Leadership Center, Stephen grew revenues over 100 percent, from $55 million to $112 million, and he increased the profits of that company by 12 times during that time. The company, when he took over, was valued at $2.4 million, and within three years, he had grown shareholder value to $160 million, in a merger that he orchestrated with then Franklin Quest to form Franklin Covey.
Stephen M.R. Covey was personally responsible for the strategy that propelled his father's book, Dr. Stephen R. Covey's: The 7 Habits of Highly Effective People, to the number one, best-selling business book of the 20th century, according to CEO magazine. He has now recently co-founded his own consultancy, CoveyLink, and is recognized as leading authority in creating high-trust, high-performance organizations.
He's in the process right now, writing a new book entitled Business at the Speed of Trust, which will be published in 2006. Stephen, it is such an honor and a pleasure to have you with us tonight.
Stephen: Well, thank you very much, Chris. I'm absolutely delighted to be here.
Chris: We would like to begin with the theme that we have for "The Passions of Real Life Legends," and ask you how it was that you personally discovered your passions, the things that are most important to you in your life? How did that happen?
Stephen: I really discovered these twice, and the second time, knew it even better than the first time. The first time, I had spent a few years doing a variety of different professional work assignments. I'd been a real estate developer with a great real estate development company. I'd done a little bit of investment banking.
I enjoyed these activities, and I enjoyed the excitement and the deal making and the like from them, but I still sensed that there was much more that I could be doing, that would fit my personality even better. I remember my father, when he was trying to convince me to join with him after he had launched Covey Leadership Center.
I had just finished my MBA, and I was considering returning back into real estate development. My father posed to me a great little statement that kind of struck me and got me thinking. He said, "Stephen, that's great if you want to do real estate. Nothing wrong with that. It's exciting, it's fun; you're good at it. But do you want to spend your life building buildings or building souls?"
It struck me that – nothing wrong with building buildings, it's exciting work – but the chance to impact people and to really help people create and develop their own potential and to manifest this in their lives was very appealing, and so I said, "You know what? I want to focus on building souls and building people, and organizations in which they reside."
I made that move then and really ran with that for many, many years, and helped build Covey Leadership Center into, as you mentioned, the largest leadership development company in the world. After the merger with Franklin Quest to form Franklin Covey, I stayed for quite a while and stayed on with the new company, but then over time, decided I wanted to do some new things.
So I launched out on a number of different entrepreneurial ventures. Again, all of them were very exciting and interesting, very stimulating intellectually, but I recognized, after having experienced the work that I'd been doing with Covey Leadership Center for so many years, that something was missing.
This time I knew it because I'd experienced it before. What was missing for me was that I needed to have all of my needs met, and the need that was missing was I wanted the work that I was doing to matter, to make a difference – not just to make money and not just to have fun, and not just to develop my talents.
All of those things were very important to me, but I also wanted to make a difference in people's lives. So it's learning through living, that I've come around to understand and really follow and run with what I consider to be my passions.
Chris: You talk a lot about the speed of trust. Can you explain, a little bit more in detail, what you mean by that?
Stephen: Well, here's an illustration. Recently, Warren Buffett, who's the CEO of Berkshire Hathaway, well-known; he always writes a management letter every year with his annual report and his management letters are studied widely in business schools and elsewhere in the country and around the world.
A year ago, in his management letter, he talked about the big acquisition that his company, Berkshire Hathaway, did of a $23 billion company that they bought from Wal-Mart. This company was McLane Distribution Company, $23 billion in revenue. Now, Berkshire Hathaway is public, Wal-Mart is public, so these are two public companies.
They have all the requirements of the public marketplace; all the scrutiny, et cetera. But to make this deal happen, it took place in a total of a two-hour meeting, and then 29 days later, Wal-Mart had their money from Berkshire Hathaway for a $23 billion transaction. It did no due diligence, and Warren Buffett said, "I trusted Wal-Mart, I trusted the people I worked with. I knew everything would be in exactly the order that they said it would be, and it was." He said, "We did no due diligence," and in 29 days they did this deal.
In most mergers of this size, we're talking several months, if not six, eight, ten, twelve months to close a deal like this, with armies and teams of accountants, CPAs, attorneys, et cetera, that come in and do all kinds of due diligence to verify, to validate, and it takes a lot of cost and it takes a lot of time.
But the idea of the speed of trust is literally, it's both speed in terms of actual time that you can do things in, but it's also speed as a metaphor, to mean benefits, results, dividends that are abundant; and the fruits of high trust and the speed of which you're able to move, and the benefits that are produced.
In this case, a deal was done in 29 days, start to finish, out of a two-hour meeting, because there was high trust in the relationship between the CEOs of these companies, and the fact that they would not do anything wrong to the other. In the long run, that would not be sustained by such high-profile individuals and companies. What an amazing ability to move, and speed.
The amount of time and energy that's wasted and spent in these other agendas is extraordinary, and it's characteristic of low trust, whereas high trust is the opposite. Things are open, they're on the table, there's no hidden agenda. It's transparent, and you're able to move with extraordinary speed. So it applies the big boys and gals, and it also applies to basic, day-to-day relationships.
Chris: As we mentioned earlier, the title of this interview series is "The Passions of Real Life Legends," and in your father's newest book, The 8th Habit, he talks about these four intelligences, which are key to an individual finding their own unique voice, or expressing their own unique, personal significance. Those are body, mind, heart and spirit.
I know that trust is wrapped up in these somehow, so could you share with us what is the role that trust plays in allowing an individual to find and express their own unique voice, or to say it in different words, to live their own personal destiny?
Stephen: Great question. I think there are two key things that trust impacts profoundly here, as it relates to our own uniqueness and our own missions and destinies. The first is this: that we live today in an interdependent, inner-connected world. I'm not just talking about being wired and the fact that it's a wired world and we're all connected that way. We are, but everything affects everything else.
It's an ecosystem, and it's very interdependent, and there's very little that's truly isolated. It's a global economy, and changes that are taking place in India affect things in the United States and vice versa, and all over the world. In this interdependent world, it puts a premium on working with people, with multiple stakeholders, and these relationships with other people and with multiple stakeholders…
By stakeholders, I mean those that have a stake in your success and what you're doing, what you're all about. So these are customers, investors, suppliers, shareholders, employees, reports, influencers, people you work with, people you want to influence. Relationships are at the heart of interdependence.
Trust is truly the key, the glue, that makes relationships work, for the reasons we've been discussing. It increases speed and decreases cost time and again. Relationships are at the heart of this interdependent world that we're living in, and that's just the reality – that we are living in this world.
So in most cases, people, as they are looking to live out and express their own unique voice, it generally is not only isolated to them. It might be through them that they want to impact, affect, work with, influence other people, in some way and fashion in their life, and the key to that interdependence is relationships. The key to relationships is trust, and building relationships at the speed of trust, and carrying them out that way.
Chris: How does one go about building high-trust relationships? How do you go about being able to take advantage of that trust dividend, rather than having to pay the tax that comes with low trust?
Stephen: You're exactly right. Once you make the case, people get the case. Do you know why they get it? Because they experience it, they have it in their own lives. Carl Rogers said, "That which is most personal is most general," so all of us have experienced relationships of low trust and relationships of high trust. All of us know that, so it applies across the board, generally, to people.
We get it. Once we frame it this way, then we say, "I get it. Help me now improve it." The process of building trust is an interesting one, but it begins really, with yourself, with what I call self trust, and with your own credibility, your own trustworthiness. If you think about it, it's hard to establish trust with others if you can't trust yourself. Trustworthiness is really the foundation upon which then, relationships or trust is built.
I call this self trust, building individual credibility. Basically, there are two dimensions to how trust works and how this individual credibility works. These dimensions are these: first, there's character, second, there's competence. Both are vital to building trust with others. Both are vital to building self trust.
Chris: I want to go back to what you touched on briefly, for a moment, this idea of character. Competency seems to grow, both from one's individual talents and from one's training. Character seems to be rooted much more deeply in our upbringing, in many different factors.
You've touched on this idea that trust within families is just as important as trust is in the work environment, but I wonder if you could explore what is the role that family plays in this ability to have the kind of character that creates high-trust relationships, and in particular, I wonder if you could really make it personal, and share with our listeners what it was like to grow up in the Covey family, and how that contributed or not, to your own ability to understand and be able to build these high-trust relationships.
Stephen: I think that it's a great question, because there's no question that in our homes and our families, trust, for most people, we first learn about it there. We start with a basic, implicit understanding of it, and we extend trust rather easily, usually as young children.
In fact, right now, I have a two-year old, and I have an 18-year old. You talk about the two extremes – right in my own home. My two-year old, she trusts me implicitly, almost. If I ask her to jump into my arms, she will jump into my arms and I will catch her. We start learning trust at that age, and we learn it and understand it.
With my 18-year old, I'm trying to teach him that he needs to earn our trust to gain privileges. So if he's going to go out at night and there's a curfew, I expect him back at the curfew time, and if something holds him up, he needs to call. There's no question that we learn this trust in our homes, as well as in society, but our homes are probably our first experience with this, as we learn about it.
As I grew up, I was very blessed and fortunate to grow up in a home where both my father and my mother were great models of this, and both teaching us integrity and teaching us the idea of making a difference and making a contribution in life, but also the way that they interacted with us, actually, really did build trust.
I'll give a brief example. A popular story, for those that have read my father's book, The 7 Habits of Highly Effective People, is the story of "Green and Clean" in there, which some of you who have read the book will remember. It's the story of my father training me; I was a young child at this time, about seven years old, how to take care of the yard, and how to make sure that the yard was green and clean.
That was my job. I could do it however I wanted, but my father recommended I might turn on the sprinklers because that would help, but he said, "If you want to use buckets and just bucket the lawn, you can do that too," but that probably wasn't very smart. He taught me the idea was – you achieve results. The result here is I want a green yard, and clean. It was up to me on how to do it, but he gave me some good ideas on how to do it.
At the time, I was rather young. My father uses this story to talk about how he was teaching stewardship delegation and he was delegating to me results, and the responsibility to take care of that. And that is true. It was stewardship delegation. My father's also talked about this in terms of being a win-win agreement, that he was teaching me that if I did this, here was my win, and here was his win, and it was a win-win agreement.
Do you know what, Chris? What I remember, because I was just seven years old, was that I felt trusted. I felt an extension of trust from my father to me, to take care of this yard. I was too young to care about money at the time. That didn't motivate me. What motivated me was I didn't want to let my father down.
I wanted to come through. I wanted to show I was capable and responsible of doing what he felt like I was doing. What he was giving me was this responsibility to take care of something. I felt trust. That motivated me. He extended it to me, and it inspired me and built in me a sense of responsibility and stewardship and integrity that has stayed with me throughout my life and now I'm trying to pass it on to my children.
I think we clearly learn this in the home, both the character dimension of trust, but also how to extend trust, how to expand trust, and how to be a good model of this trust. The modeling is so important. Example is the greatest way to influence another person, and then the relationship on top of that, and then finally teaching.
I think teaching is third. I think example comes first, then relationship, then teaching, because example is seen, relationship is felt, teaching is heard. People tend not to hear until they see and feel, and that's what happened with me is that I saw and I felt in my home. Then, that enabled me to hear, because of what I was seeing and feeling.
Chris: One of the things that I'm hearing is that the process of building trust is a process that takes place over time, with increasing levels of trusting involved at each stage. So, as we see that an individual or an organization is increasingly trustworthy, both in terms of character and competence, then we feel more confident to extend greater trust. So, it's a process that takes time, it sounds like?
Stephen: It is a process of taking time and of going through this and getting to know people better and their strength better, and the task, and trying to match this up. There's the whole mind set that you go into business and into life with, and that is, 'Can I trust other people or not, and do I want to trust other people or not?'
People want to be trusted. It brings out the best in them. It's an extraordinary form of motivation. When people don't feel trusted, when they don't feel like their boss trusts them, and then it actually is a de-motivator and is discouraging. Then they are more apt to leave and go somewhere else, and do other things.
It doesn't bring out the best in them at all. It doesn't bring out their passion and their talents and creativity. It's very important to have a desire and intent to try to seek the trust of other people. You just don't want to get ahead of yourself with extending too much trust beyond their competence or their character.
If you have the mindset of: business is better by releasing people and their talents and capabilities, than if we don't. I remember Robert Galvin, Jr., the CEO of Motorola, who took over from his father. He did a great job and he said he was asked this question: "People ask me how I'd had the interest and the zeal to hang in there and do what I've done. I say, 'Because my father treated me with very stern discipline. He trusted me. I'm stuck. I've got to see the trust through. He trusted me. I trust other people, and they do the job.'"
So, the whole idea was, trust is a great form of motivation – of releasing talent, energy, passion – of releasing your own energy and passion by being trusted and also by extending trust to other people. You just want to make sure you do it with wisdom and understanding this idea of character and competence, and you've got to match them up. What's the competence needed to perform the task at hand?
Chris: I know you do a lot of work with organizations, and we've talked about the role that family plays. What's the relationship between families and work team environments? How does the trust or lack thereof that one grows up with, express itself in a work team environment? Or how does the trust or lack thereof, actually show up in this work team environment?
Stephen: You see it in work environments all over. In fact, again, the data is overwhelming that we actually have a crisis of trust in organizational life. This Watson Wyatt survey showed that only 39 percent of employees trusted their senior leaders. If you don't trust the people that are running your company…
I didn't have answers for everything, and I'm not giving myself as a great model of this. I struggled too, but I've learned creating transparency and confronting reality are two quick, easy ways that any of us can do to increase the trust in relationships and with our teams and organizations.
Chris: This has been such a pleasure, and I have to say, I could go on talking to you for a long time. We're coming close to the end of our time together. At Healthy, Wealthy, nWise, Stephen, we believe strongly in the power of intention to manifest outcomes. We would like to ask you what your biggest current project is, and what intention would you like us, here at Healthy, Wealthy, nWise, along with our readers, to hold for you?
Stephen: I'm excited about this work I'm doing on trust, and the biggest project is really this: that I'm building what I call a "trust practice." The whole idea is to focus on helping individuals and organizations build trust, create trust, grow trust with all stakeholders that they interact with, in order to improve business results and their own personal results in their lives.
Part of this includes a book that will be coming out on this that will probably be called Business at the Speed of Trust, or more broadly speaking, The Speed of Trust, because it's much more than just business, it's relationships and so much more, leadership at the speed of trust.
So this has excited me, and I'm taking on a topic that has been very much misunderstood and almost even maligned by some. For some, there are so many myths around trust. It's seen as soft, it's seen as slow, as nebulous. I saw something this week that said, "Can you teach trust?"
I want to emphatically answer: absolutely! Trust can be taught, it can be learned, it can be implemented, it can be grown, it can be measured, it can be applied in an organization, and it can and should be an explicit objective of every relationship, of every organization. What's happening is, it's there whether you're aware of it or not. Either you have trust or you don't.
If you have it, you'll get a dividend. It will pay results to you in countless ways. You'll see it in speed and cost. If trust is low, you're also paying a price; you're paying this tax that will be manifest in speed and cost, and that is happening whether you will believe it or buy it.
It's inevitable that low trust means low speed, high cost. It happens throughout, and so I'm trying to show how you can measure this. You can quantify this, and you can then do something about it. I'm making the case, and then I'm showing what you can do about it, both individually and within companies, to increase trust and to get the great fruits, the great dividends, and the great speed of trust within companies and also within relationships.
So that's my big objective, is building this trust practice, helping individuals and organizations practice trust and see the great dividends that come from doing it.
I think the final thought or idea I'd leave with our readers is simply this: that I predict that the ability to create, grow, extend and restore trust with all stakeholders will become the key leadership competency of the 21st century. And I mean that seriously – more than strategy, more than vision, more than all these different things.
The reason I say that – it's a pretty bold prediction to say it's going to be the key leadership competency, the ability to create, grow, extend and restore trust with all stakeholders – is we're in a knowledge worker economy, where relationships are the key. Low trust is everywhere in our society and our organizations, it's all around us.
There's an extraordinary high cost of this low trust, that we see manifest in both the speed and cost, and that trust affects everything else that we do. It affects our strategy, our execution, our innovation, our communication – every dimension in a company, in a relationship, is affected by trust, its presence or absence.
Therefore, as we increase the trust in our organizations and our relationships, we then experience this multiplicative effect, this multiplier that increases rather than taxes what we're doing. It increases the communication rather than taxes it. It increases our ability to execute rather than taxes, or discounts our ability to execute, and it affects every dimension, every aspect of this.
So it's an exciting thing to be a part of. There are so many things that we could immediately do to impact it, and I'm delighted to have this opportunity to talk with your listeners about this vital and business-critical topic.
Chris: It is vital. Stephen, thank you so much for being with us. It is a great honor and privilege to be able to spend this time with you. You have suggested to all of us that we can begin creating more trusting relationships right now.
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