The 10 Laws of Trust | Joel Peterson

About Joel Peterson

Joel Peterson is Chairman of JetBlue and a consulting Professor at the Stanford Graduate School of Business. Together along with David Kaplan he authored The 10 Laws of Trust, a business leadership book about building high-trust organizations. Mr. Peterson is the former managing partner of Trammel Crow, one of the top leading real estate developers in the nation. He is also the Chairman of Peterson Partners, an investment form which is started back in 1995.

Interview Transcript:

Alan
Welcome back. I’m here today with Joe Peterson. He is the author of the book “The 10 Laws of Trust”. Joe, welcome to today’s show.

Joel Peterson
Nice to be there.

Alan
Joe, this is not your, your your your first venture in life. He did many, many, many things before including started a venture firm back in the early 90s. And that’s what achieved for the listening audience. So bring us up to speed of your background and how you got to where you are today? And then we’ll jump into the book.

Joel Peterson
I actually started my very first venture when I was 11 years old. I grew vegetables and delivered them around the neighborhood. I actually had my little brother, pull an American Flyer wagon around and deliver these vegetables. And that was my very first venture. And then I worked throughout high school, and then ultimately went to Harvard Business School was hired by Trammell Crowe was there for about 18 years, became the national managing partner at Trammell Crow company, and then started my own venture and growth growth capital firm in the mid 90s.

Alan
So what what inspired you to step out of your position where you were managing a national firm, and to sad, I just want to do something on my own.

Joel Peterson
Well, I love helping entrepreneurs. To me, it’s really fun to work with small businesses, I really realized that’s what I’d been doing in the real estate business was helping developers develop projects, which are really small businesses. And so I ended up buying a couple of companies and helping them through problem times, turnarounds, growth, etc. And so we started buying companies investing in entrepreneurs. And about that time, I started teaching at Stanford Business School. And so I drifted into teaching more and more entrepreneurial classes, until finally that became my life.

Alan
Yeah, it’s Stanford, you also have a focus on leadership, helping those young entrepreneurs establish good leadership skills, their did, do you have guest lecturers coming in? Or how do you how do you run that program?

Joel Peterson
So we’ve had a couple of courses we do. One is called Leadership perspectives where we don’t just bring in new entrepreneurs, we bring in lots of experience very experienced, we have had four star generals come in and speak to the students. We had Steve Ballmer come in Ariana Huffington who’s quite an entrepreneur in her own right. And so we have a lot of these very accomplished leaders come in and speak to students, although they, they really don’t speak as much as just expose themselves to questions from students, the students really run the class and ask the questions. And so it’s a great class.

Alan
So you’re releasing this book, the 10 laws of trust? Yeah. What was the genesis behind him coming up with the title for getting this book the lives of others?

Joel Peterson
Well, I had actually given a talk at LinkedIn. And they invited me to become what they call an influencer. And so I started writing articles. And somebody at American Management Association, spotted these articles and said, we’d really like you to write a book. And we’d like you to write a book about trust. So I started to assemble some of the articles that I’d written at LinkedIn and other ideas and just develop this book, at their request.

Alan
Now, when we’re when we’re looking at the laws of trust, but what is the first law?

Joel Peterson
Integrity. And I think it’s very tough to build a high trust organization, without the leadership having integrity. And there’s really two kinds of integrity. One is people do what they say they’ll do, there’s not a gap between what they say and what they do. And the second kind is not compartmentalizing your life, it’s very tough to have integrity at work if you don’t have integrity in your personal life. So I think then people are smart, they figure that out. And so if you want to build a high trust organization, it starts with the leaders having integrity.

Alan
You know, this is this book is just not coming from an academic standpoint. But you You filled leadership roles and seen the need for integrity within organizations you serve on several boards. Can you give me some examples of where having that integrity is really helped to establish some key decisions?

Joel Peterson
You know, where it helps the most is in times of stress, you know, when things are going well, things are going well, people feel like they’re smart and good looking. And everything’s happening as you’d like. It’s when the gale winds start to blow. And you have to work with suppliers, customers, creditors, shareholders, and really do the things that it takes to make a business work at that point in time. It’s the trust that people have in you that allow you to get through the tough times. So I’ve seen that in turnarounds several times.

Alan
I’m visiting here today with Joel Peterson. He’s authored the book the 10 laws of trust, Joe, I need to take a quick break. And we’ll be right back after this messages and we’re gonna go through the other nine.

Alan
Welcome back, I’ve been visiting here today with Joel Peterson. He is the author of the book The 10 laws of trust, and in the first law, we covered integrity. But the second is invest in respect for others. And what does that mean?

Joel Peterson
Well, it’s very hard to build a high trust organization, unless you’re showing respect for everybody top to bottom. People watch what leaders do. And if they’re not respectful, from the receptionist, to the executive, vice presidents, people pick up on that. And they wonder, well, what is the saying behind my back when I’m not there. And I think if even if people don’t show respect to suppliers, customers, whatever people pick up on it, and it’s very hard to build a high trust organization without showing that respect.

Alan
So when, when when we’re using the the attribute of investing in respect, that usually starts from the top down?

Joel Peterson
Yes, although wherever you are in the organization, you can so respect, you can show respect to all of your teammates. And people who don’t do that actually can build little pockets of disrespect and mistrust. organizations become quite political, without respect. So I think if you’re at the leader in the leadership role in the organization, it’s absolutely imperative. But actually, even if you’re buried down in the organization, I think people are smart. They’ll they’ll know if you’re not showing respect to teammates.

Alan
How do you how do you monitor that you’re moving in that right direction. And there is a if the leader of the organization senses that there’s a lot of undermining and you know, things around the watercooler? What’s the best management technique to kind of dissipate that type of attitude?

Joel Peterson
Well, I think people follow what the folks at the top are doing. So I think if you’re respectful, people will tend to be that way. But if you’re seeing somebody who isn’t showing respect, I think you have to pull them aside. There’s certain things that are just no no’s. If people aren’t, if people violate racial or ethnic or other kinds of things, then I think, yep, pull them aside and do that. But I think even if people are, you know, sometimes people use language, or they’ll explode in a group that you pull them aside, you talk to him and say, you know, that doesn’t, that’s not acceptable around here.

Alan
So the second, the third area is that of empowering others. How important is that?

Joel Peterson
It’s vital. I mean, I think if you don’t empower people, you’re not going to build high trust among them and you and usually, what that means is you have to do it slowly, you give people a little bit of responsibility, you’ve made sure that you talk about it, and you give them more responsibility. But I think the idea is you want to empower the organization, as far out as you can, as deep into the organization, as you can. I’m on a board with Stanley McChrystal, who was the four star general in charge of special forces. And he said that he would empower the soldiers until it hurt as far down in the organization as he could until it hurt. And I think that’s really the way to think about it is, you know, figure out how to give people as much authority and power as you can.

Alan
And then how do you if that leads into the next next topic of measuring the fourth? Was that measuring what you achieved? How do you empower in that measure back?

Joel Peterson
Some people feel that they’re in, in conflict, you know, if you’re empowering somebody, or you’re not trusting them, if you’re going out and measuring? Well, my view is, if you aren’t measuring, you really aren’t fully empowering them. People who don’t know what is being measured, do not feel empowered, they do not feel trusted. So if you give somebody an assignment, and you don’t let them know, what are the metrics, what are the measures, then they’ve not really fully been empowered? So I think high trust organizations tend to be very clear about what’s what they’re being accounted for, for what’s being accounted.

Alan
At the time of persons being empowered, and accountability or metrics you find from a management style, that it’s often better to let the person being empowered come up with the accountability or the measurable or do you do tell them this is what I need you to do?

Joel Peterson
I think it’s always best if you can sort of joint venture they say coming to agreement on what are the measures, but I think you have to have a clear view. I think the leaders job is to figure out what success is you’re trying to figure out which peak or be climbing? What? How will we know when we’ve won? So the job is to figure out what is winning? And then I think you can we work with people in the organization say, What’s the best route to the summit? How do we best do this? Because you’ll find that people know, in the organization down the organization, they know more than you do as the leader. So you want to joint venture those metrics with them. But you have to have a pretty clear idea of what summit you’re climbing.

Alan
Okay, so now I get the tough question here. Oftentimes, you know, in the management meeting, questions get asked you say this is the measurable is a metric that I want you to come back with what happens when a person falls short, you know, is there do you? Do you do outline repercussions up front? Or is it like you go back to the drawing board? Say, what, what went wrong? Or how do we get back on track?

Joel Peterson
Well, I think one of the things you realize is failure is a preamble to success. And if you have that notion, that really, you don’t have to succeed at everything, we sit down, and we talk about anytime that things don’t go well, we sit down and talk about it, we alter course, we figure out if we’re measuring the right things, and we move forward. If you fail, because of lack of effort, that’s actually a much more serious problem than a lack of results. And if you feel if you fail out of a character flaw, you actually have violated a principle of integrity, then that’s probably a failure, where you end up no longer trusting?

Alan
Now that the fifth law is that creating a common dream.

Joel Peterson
People don’t do well trusting if they don’t know where the what the goal is. And a lot of companies will actually create these mission statements or whatever that are kind of interchangeable. There really aren’t a common dream. They just sound good. People want to frame them and put them on the wall. Really, if you develop a common dream together, that inspires people, it gets back to this old idea. People want to be a member of a winning team, or a respected member of a winning team doing something meaningful. If you can develop a mission around that. You will have people that are that you can’t stop.

Alan
I love the way you put dream versus vision. So often, that isn’t real common vision. But but the common dream really gives a greater visual that that you don’t try to make something happen that is not really currently there.

Joel Peterson
Yeah, well, Peterson partners we talk about our mission is to help entrepreneurs achieve their dreams. Entrepreneurs have dreams, they think big, they they want to change the world, they want to do something that hasn’t been done before. So we view our role as capital providers, as people who provide help to them is to help them achieve their dreams. And that that becomes our dream.

Alan
When you’re when you’re working with companies and you Peterson partners has been in place since for 25 years, 91 or so?

Joel Peterson
Officially organized in about 95. But I was buying companies starting in the mid 80s.

Alan
And so right now when when companies come to you, what stage are they coming and seeking your help?

Joel Peterson
Do you don’t they come in all kinds of stages, sometimes turnarounds not so much. Sometimes they’re on a rapid growth, trajectory and need help. Sometimes they’re at fairly early stages. So we have several different kinds of places that we can intervene at that at the venture level, at the growth capital level. I haven’t helped with real estate companies now real estate projects back into that world.

Alan
When when an individual comes to you. And they’re saying, Joe, I have a dream to create the next billion dollar company, there has to be a process that you go through to say, is this an individual that I want to work with?

Joel Peterson
Yeah, well, you’ve picked a you pick a really important that the person is the most important screen. When you’re looking at an entrepreneur and it’s early on, most businesses change. You know, most business plans morph and dramatically by the time they get this. So really the what you’re underwriting is the individual. But also I think your underwriting the idea, what is the product or service that they’re providing? What is the market? What is the competitive response? Who else is there? So you want to you want to be able to value that, evaluate that. And then you want to look at what is the kind of the arrangement you can make? Can you really add value to what it is they’re doing? Are they capable of really adding the value that needs to be added? So you have to make an arrangement that makes sense.

Alan
Law Number six is keeping everybody informed. Is that tough to do?

Joel Peterson
It’s tough, but it’s a lot tougher not to do it. If you want to build high trust people become mistrustful if they read about what’s going on in the company, in the newspaper, or if they hear about it at the watercooler. So my view is if you want to build a high trust organization, you have to communicate lavishly, that means before, during and after events and it means bad news, as well as good news. And if you do that have that kind of transparency and approachability and open door, people tend to trust. And that tends to make things go a lot better.

Alan
What’s the best mechanism to do that? I may they may be the mechanism may change from a small company to a very large multi city company.

Joel Peterson
Well, the best is face to face with human beings. You know if you can do that you can’t. We’re at JetBlue. We have 20,000 employees. So we can’t really do that. But we have our executives go out and they do what they call pocket sessions, where they’ll meet with small groups. Every EVP is assigned to an airport, and they meet with those folks. But I actually think there’s social media today. There are we send out for example, I actually started doing this at Trammell Crow company writing out a bi weekly partner letter, a JetBlue, we do a weekly letter to all crew members, every crew member, so they’re updated on what’s going on in the company. But I think, meetings, right, you can do podcasts. So just many, many tools today, but don’t under communicate. If you want high trust, make sure you’re open and transparent.

Alan
By Numbers number seven is to embrace respectful conflict, respectful conflict. That’s kind of an oxymoron, I guess.

Joel Peterson
Not really, you know, people, a lot of people are afraid of conflict, and they plow around it, they avoid it. Trust goes down when needed. Because people have conflict. Anytime you get humans together, they’re gonna have different points of view. So you may have a very quiet organization that appears respectful, but it’s quiet like a hospital’s quiet, there’s disease everywhere their pockets of of disease. So really what you want is just open discussion, which can abrupt into conflict as long as it stays respectful. And as long as people then get behind the decision once it’s made, you actually want to fanned the flames of disagreement so that you get the best decisions. You want the idea that the best idea wins. Great high trust companies have this principle that the best idea wins. And that means there’ll be some conflict.

Alan
You know, recently JetBlue is in the news where they had some challenges there and delayed flights and I guess he stepped in and replace our year the replacement for Needleman.

Joel Peterson
No, David Neeleman was the was the founder and the CEO and a phenomenal leader. And he was the leader of the company for about 10 years. And it was just time to make a jet wasn’t really because we had, a lot of people think that because we stranded customers at JFK, that was the reason for him moving on, it was really that we were at a size and a stage where we needed to move to the next CEO. So we’ve had seat three CEOs at JetBlue. And they’ve all been phenomenal, and are phenomenal human beings. But there’s a different stage companies go through stages. And so I stepped in as chairman, after David.

Alan
How many people do you move a day at JetBlue?

Joel Peterson
A day, we do about 38 million a year. So I’ll let you do the math. It’s a lot.

Alan
And I thought, you know how many times in that 38 million is there’s going to be that delayed flight or, you know, just something is bound to go wrong. But I think that respectful conflict and having well trained organization really makes lots of sets in order to stay on track.

Joel Peterson
Yeah, we think we’ve built a brand around respect, around caring for customers, David’s phrase was bring humanity back to air travel, you know, which is a wonderful phrase. If you think about it, how tough and travelled is stressful, you know, people are always under the gun, and they don’t like the delays, and they don’t like the things that can happen. But if you have a crew that is really respectful of the customer, and wants the and is respectful of each other, you can actually build a brand around something that is, in many cases seen as a commodity, you know, an undifferentiated product, we’ve tried to differentiate and say we’re really a brand that the JetBlue experience is different from the experience on other carriers.

Alan
Downlod number eight is showing humility.

Joel Peterson
Yeah, so I think if you if you’ve ever been around a leader who is right about everything, you don’t trust them. And I think a lot of people are afraid to show their errors or fraud, afraid to show that they’re vulnerable or don’t have all the strengths necessary, actually people who learn to rely on others and to build teams, and who understand that companies are run by teams. Today. Any company of any scale is run by a team of people. And that requires a certain vulnerability and humility with the leader of the company. So I think you build high trust. That’s not to say that all leaders do this, but high trust organizations tend to be led by leaders who have humility.

Alan
Would you agree that that the sign of humility easy has people usually quicker to embrace that type of leader

Joel Peterson
Yeah, they are they because they trust them. And those kinds of types of leaders tend to listen, they tend to seek others opinions, they tend to weigh things more carefully. And therefore we feel like we can rely on them.

Alan
But number nine is strive for a win win negotiations.

Joel Peterson
Yeah, so when so negotiations are really just conversations, and we’re all the time engaged in negotiating, there’s always a give get in things. So if you can figure out how to help the other party win, they will often help you also win. And so if you can build an organization that is built around this idea of everybody winning rather than one person, throwing a temper tantrum and getting what they want, that will actually destroy trust. So building, an organization that is built on winwin kinds of models of negotiation tend to build high trust.

Alan
But number 10, is to proceed with care, restoring trust.

Joel Peterson
Yeah, so if you trust, you’re actually going to risk betrayal. There’s no betrayal if you never trust. So high trust organization, trust organizations that are built around trust, tend to risk betrayal, which means you have to be careful. You have to be thoughtful, you have to recognize that there’s that downside. I remember Trammell Crowe telling me one time that we really owe it to our accountants to do audits. It’s not fair to them not to do an audit. And that’s not a sign of mistrust. It’s a sign of caution and care and thoughtfulness. So it’s a little bit back to that idea of measuring things. So that’s the idea.

Alan
Is there anything else in the book you want to do some final notes here?

Joel Peterson
Well, I think the last thing is, you know, since you are betrayed, occasionally, you have to learn what to do with betrayal. And I think that’s one of the tough problems in life when you feel betrayed. People tend not to do very well with that, I think the number one rule for for when you’ve been betrayed, is to forgive, to kind of move on. And the way that you know you’ve forgiven is that you’re thinking about the future, you’re no longer reliving it. And that takes time. And you recognize that if you’ve been betrayed, it will take some time. But that that’s ultimately where you want to where you want to get.

Alan
I’ve been visiting here today with with Joel Peterson. He’s the chairman and CEO of JetBlue. And we’ve been talking about his new book, the 10 laws of trust. We’ll be right back after these messages.

Alan
Welcome back, I’m here today with Joe Peterson. And we’ve been talking about his book, The 10 laws of trust. Joe, in the final, in the final minutes that we have here, I want to I want to jump back to the common misconceptions about leadership one, and then I don’t want to go back to how do you balance life? There’s so many things going on and irons in the fire.

Joel Peterson
Yeah. Well, I think one of the common misconceptions is this whole idea of to the manor born, which means, you know, people feel like some folks are just natural leaders. They’re born to that they were brought into life as leaders. My view is that people can learn leadership, just like they can learn anything else. It with intentionality. With practice with principles, people can become better leaders. So I think that’s one big misconception that people have about leadership. In terms of balancing leadership, people talk a lot about work life balance, and millennials have this big challenge of how do I bounce they feel like there’s tension between work and life. And my view is that there’s harmony between the two and one should strive for work life harmony, where one supports the other. When I worked for Trammell Crowe, he used to say, work is more fun than fun. And I actually think work can be fun for the family. The family can be fun for work, I used to take my kids down to the office. And I set boundaries for what I would do. And I wouldn’t work on Sundays, for example, I remember early on in my career, Trammell Crowe called me at home and said, Would you come down to the office, I want to go over a deal with you. This is three weeks into the job. I thought, Gosh, this is very flattering to have the guy with founded the company with his name on the door, inviting me down as a young graduate to help him on a deal. And I remember saying towel, I’m sorry, but this is a boundary for me. I’ll be in first thing Monday morning, and I ended up becoming the managing partner the whole firm so it didn’t Having boundaries doesn’t hurt. So I think this idea of how do you harmonize rather than balance. Harmonizing work life, I think, is really the key.

Alan
And we all have 24 hours in a day, seven days a week. But you seem to keep yourself pretty busy with a lot of balls in the year multiple boards companies teaching school. How do you move through life and choosing, picking choosing what to be involved with? versus not? And by the way? I did, I left out the table seven kids, which is probably one of the most important is it 14 grandkids now

Joel Peterson
22, grandkids.

Alan
How do you balance that?

Joel Peterson
Well, one of the things you do is you recruit lots of people to help and be part of it. And you empower them. It’s a lot of the things that we talked about in these principles of trust, you build high trust organization, within the family and with your spouse, and you rely on others and you empower them. So I don’t, for example, I don’t worry about my schedule, my calendar, I don’t, I have somebody else who totally manages that. And she can set whatever she wants to set up there. And I show up when she tells me that takes one thing off. And then I have a bunch of other rules. For example, on weekends, I write an email to all my kids. I don’t have to think about that. It’s just one of the check list items. So I have a lot of sort of heuristics that allow me to get through a lot of things.

Alan
Here when everything’s said Dan, what do you want to be known for?

Joel Peterson
Talking about Joe Peters? I’d like to be known as a good friend, a good partner, a good spouse, a good father, somebody who cared a lot about other people and made a difference in their lives.

Alan
It’s been an honor having you on today’s show.

Joel Peterson
Nice to be with you.

 

 

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