UB Insider #21: How a Little Trust in the Office Can Bring Big Returns
About this episode:
In this episode of UB Insider, Lisa Christensen speaks to Joel Peterson. Peterson is chairman of JetBlue, a 24-year Stanford University business professor, and co-founder of one of Salt Lake City’s first investment firms, Peterson Partners. The Utah native has also now written a book, the 10 Laws of Trust, about how trust—or lack thereof—can make or break a company, and how those same lessons could be applied to what is commonly thought to be the least trustworthy field around: politics. Subscribe to our podcast or download this episode on iTunes and Stitcher.
Lisa Christensen: Hello and welcome to UB Insider. I’m Lisa Christensen, online editor at Utah Business magazine. Joel Peterson is the chairman of JetBlue and a 24-year Stanford Business School professor who was recently named as chairman of the board of overseers at the Hoover Institute at Stanford. For all his national accomplishments and recognition, Joel has local roots including graduating from Brigham Young University and founding one of Salt Lake City’s first investment firms, Peterson Partners. Thanks for coming down today.
Joel Peterson: Nice to be here with you, Lisa.
Lisa Christensen: So Joel, tell me how you got from BYU to JetBlue.
Joel Peterson: It’s a long story and I’m not sure you want all of it. But I ended up going to Harvard Business School right out of BYU. My first job was with Trammell Crow Company which is a large real estate development firm. I spent time in Texas, California and France of all places. And then I started a new career at about age 45, and moved here to Utah and we started investing in companies.
One of the companies that we looked at was JetBlue before we even had planes. And so I went to JetBlue basically to help them develop terminal five at JFK and after six or seven years I became its chairman.
Lisa Christensen: And what does that entail?
Joel Peterson: So chairman of the board is not an executive officer. You don’t run the business, but basically you oversee. You represent shareholders. You oversee the strategy and the finance and to some degree the culture, key hires, picking the CEO of the business, so it’s like any board. The chairman basically runs the board meetings, runs the executive committee meetings and is responsible overall for shareholder interests.
Lisa Christensen: You’re also chairman of the board of overseers at the Hoover Institution at Stanford. Tell me about your role there and how does that differ from your experience teaching at Stanford.
Joel Peterson: Well it’s completely different from teaching at Stanford. The Hoover Institution is a policy think tank. It has a number of scholars, Nobel Prize winners. George Schulz, former secretary of state Condi Rice, is there. So there’s a bunch of very famous, capable people. And the overseers are really kind of the board of investors. These are the people that contribute money and kind of oversee the institution.
So that’s quite different from teaching MBA students at the business school. I’ve taught for 24 years. I’ve had about 4,000 MBA students go through my classes there and I’ve taught real estate courses, leadership courses, entrepreneurship courses.
Lisa Christensen: And you also live the business world in your second career as you called it, with your investments. You’ve invested in several local businesses – Vivint, Packsize, HireVue, InMoment, Franklin Covey and also lots of national and international businesses who choose Utah for a significant portion of their workforce like JetBlue. Why is it important to you to keep investing in local companies?
Joel Peterson: Well Utah has got a great business climate. There’s a lot going for it here. It has reasonable taxes, it’s business friendly. It’s very creative. It’s got some great universities. It’s highly entrepreneurial. So Utah is a great source.
We invest all over the world, and I would say about a third of our deals, of our investments are in Utah. So a lot of business comes out of Utah. We were one of the earlier firms here. We started here about 20 years ago and we’ve invested in venture deals and what we call growth capital deals. I don’t think we’ve done any real estate here. We do most of our real estate in other places.
Lisa Christensen: How has the business climate changed in the last 20 years since you’ve been doing this?
Joel Peterson: Here in Utah?
Lisa Christensen: Yes.
Joel Peterson: It’s more and more sophisticated. Utah has always had a great professional group of people whether it’s lawyers, accountants, doctors, dentists, it’s a highly educated population. But it’s more and more sophisticated. It’s actually dealing more with the world. It’s got more outside investors. A lot of people are looking at Utah from all over the world now. So there’s a great workforce. Hardworking, highly educated workforce.
Lisa Christensen: You recently wrote a book, The 10 Laws of Trust, which focuses on, as the name suggests, trust. And the benefits that come from having it, and the costs that you have in the workforce when it’s broken. What prompted you to write this book?
Joel Peterson: I had written several articles about trust that I’d published on LinkedIn and I was contacted by the American Management Association. Who, I don’t know how they figured that a book on trust needed to be done, but they basically said, you know, this seems like it’s a real issue, would you write a book on it? I’d never thought really, of writing a book, but they said it could be fairly short and could draw on my articles. And so I thought, well the articles are at least a rough draft and then I just went from there.
I think it’s an important topic and I think building high trust organizations can be done, but you have to be quite intentional about it. And so I wanted to share with people what I’d learned about building high trust organizations.
Lisa Christensen: Well what benefits does having a high level of trust have for an organization?
Joel Peterson: Well there are a lot of them. One is that high trust organizations aren’t afraid to fail, which means that they will innovate. They’ll try things. They’ll pilot things. They rely on each other. Collaboration is high. Low trust organizations tend to be politicized. The strongest, most powerful person wins. Whereas high trust organizations, the best idea wins. Plus they’re a lot more fun.
You know, if you’ve ever worked in an organization that is highly political, that is low trust, it’s just no fun. You go to work every day and you learn at the water cooler what’s going on. Nobody tells you anything and it’s just kind of a miserable place to work. So if you want to attract great people and keep them, build a high trust organization because people will like being there. They like coming to work. They like trusting those that they’re working with.
Lisa Christensen: So it sounds like the difference, one of the big differences between a high trust and a low trust organization is that a high trust organization focuses on ideas, and the low trust organizations focuses on people. Is that correct?
Joel Peterson: Well, I would say that it focuses more on power, more on control. Low trust organizations tend to be political and power driven and control driven. They tend to maintain what is. People get power positions that they hold on to. Whereas high trust organizations, people tend to bring in new people, new ideas, they’re more flexible as they’re trying new things.
Clayton Christensen, the Harvard Business School professor talks a lot about disrupting. They’re more willing to disrupt their own organization. The trust levels are high. So I do think they focus on people, but maybe in a different way.
Lisa Christensen: You also write about low trust organizations and a couple of fairly big headlines in the last several years: Bernie Madoff, Hewlett Packard, which, if anyone’s forgotten was caught essentially spying on their employees. So how can you, like, is there anything to be done for those organizations? Obviously it’s a really damaging structure to have.
Joel Peterson: Well it’s very tough to rebuild trust. Once trust is broken, it’s kind of fragile. It’s very powerful when you’ve got it, but you build it up a layer at a time, a molecule at a time, a transaction at a time, a conversation at a time. So it builds slowly and can be destroyed quickly. But if it’s in place and it’s working with people who are collaborating and trusting one another, it’s highly flexible. It’s very powerful. Things work well.
If trust has been broken, it usually means there needs to be a change in leadership. You need to get new people in there and you have to start building. And you have to start building by showing integrity, by communicating, by setting clear objectives, by measuring things, by celebrating success, by all the things that are talked about in the 10 Laws of Trust. You have to start doing. And you can rebuild trust, but it’s hard. And in some cases you’re better off moving to new people.
Lisa Christensen: So if rebuilding trust in an organization is difficult, you also write about rebuilding trust in politics which sounds impossible for a lot of people.
Joel Peterson: Yeah. Particularly in this election cycle.
Lisa Christensen: Yeah. Exactly. How did our trust in politics become so eroded, and what, if anything can be done to fix it?
Joel Peterson: So that’s a great question and I’m not sure anyone knows quite how to fix it. But it really does feel like we’ve become more politicized, more driven apart. People have learned to triangulate, to build these alliances between small groups, special interest groups, pitting one person against another. Politician’s job it seems to me today is to maintain power, to get reelected. And that’s quite unlike, I think, what we think of in terms of the founding of the country where we had statesmen and people put the country first. And so I think until we get leaders who are really focused on that, it’s going to be hard to rebuild trust.
Lisa Christensen: That sounds like it would take an entire change in the structure and culture of politics.
Joel Peterson: It may. It may take a new generation of leaders who really are sensitized to that. The millennials tend to be a generation that are not particularly wedded to a political party. So they may actually be more likely to choose ideas than people and listen better. They’re quite welcoming of others. So it may be that it will take a whole new generation.
Lisa Christensen: Well like you said with organizations, new people.
Joel Peterson: Yeah. New people are often necessary.
Lisa Christensen: Is there anything else that you would like to address about your book or about your work?
Joel Peterson: You know, I’ve had a wonderful career. I started out in real estate and I ended up teaching young MBA students. I mentioned, I’ve taught about 4,000 MBA students at Stanford. I’ve been able to invest in real estate and venture capital and in growth capital all over the world. And I think it’s very interesting to get involved in new businesses. I will say that if you want to build an enduring enterprise, I think the only way to do it is to build high trust. Building high trust allows you to attract and keep great people. And so, to me, that’s one of the reasons I was willing to do this book is just to try to help people think about that.
Lisa Christensen: Well, thank you so much Joel for coming in today. Joel’s book 10 Laws of Trust is out now. You can find out more about it at 10lawsoftrust.com or buy it on Amazon, Barnes & Noble and other major retailers. Thanks also to Mike Sasich for recording help today as well as Chris Sasich. Drop us a line at firstname.lastname@example.org or on our Facebook, Twitter or Instagram pages. And be sure to subscribe to our podcast or catch up on old episodes on our iTunes or Stitcher pages.