Managing Credibility Currency

November 23, 2008

Credibility Currency

Recently, my wife and I were talking about some of the friendships we where we once lived. Through one of those friendships, I got involved in a business transaction with someone because of the credibility of a friend who introduced us. Well, that transaction turned out to be a dud and a loss of money. Something bothered me, that I couldn’t put my finger on. Under normal circumstances, I would have done more due diligence before opening my wallet.

I had an “aha”, “I should of had a V8” moment. That moment you see something so clearly you whack yourself on the forehead, wondering how you missed it. I let my guard down. I attributed the credibility my friend to the person he introduced me to and expected the same level of credibility to be present. This is a mistake that we all make at least once or twice in our lives.

It made me realized that we are all investment managers and investors of a valuable, intangible capital called credibility currency, whose value is based on a level of trust and integrity. We increase the value of our credibility currency over time, when we invest time, energy, resources, goodwill and respect with others.

We can also decrease the value of our credibility currency when we don’t demonstrate integrity and trust. It depreciates when our actions show that we don’t value others in their time, talents, and resources.

We all have credibility currency. We all trade in it and on it regularly, whether we are aware of it or not. The market value of our personal credibility currency is directly proportionate to the level of integrity and character we have developed in the open market.

A lot of business is done through referrals and recommendations. Many times the person who is receiving a referral or recommendation is provided access into a potential business or personal relationship based on the credibility currency market value of someone else.

In the areas of business building and networking, we act as asset managers and investors of credibility currency. As asset managers, we can appreciate or depreciate the market value of the someone else’s credibility currency. As investors, we have to decide whether a person in whom we are investing our credibility currency with will appreciate or depreciate it.

Fund Managers vs. Day Traders

When we receive a referral or reference, we are put in the position of investment managers. Depending on our mindset and investment motives, we can behave as fund managers or day traders. Let’s look at the differences.

Fund managers typically have long-term views for returns. In business building and networking, fund managers benefit only when what has been invested with them has appreciated in value. In the case of business referrals and recommendations, it’s maintaining the same level of trust and integrity that has been entrusted with them by the individual who invested or “loaned” their credibility currency that allowed the fund manager to enter into a potential relationship.

In protecting the value of the credibility currency invested with them, fund managers increase the market value of the credibility currency invested with them. They also increase the value of their personal credibility currency, which can lead to new business opportunities in the future. This approach to credibility currency management leads to a more stable, personal relationship market value with steady returns and long-term growth.

Day traders have a different attitude. Most day traders are interested in immediate, short-term personal returns. They are looking for the next big opportunity to cash in so that they can move on to the next opportunity. In the world of business building and networking, day traders are looking for leads and referrals that will benefit them personally and are not necessarily interested in building long term relationships.

Day traders are willing to “borrow” and sometimes depend upon the credibility currency of others to obtain personal returns. Where real money is involved, investors have to disclose the risk of loss if their investment fails. This is disclosed in the investment prospectus. In the case of business networking, a day trader can depreciate someone else’s credibility currency without disclosure because a “prospectus” that discloses risk is not required. They may make money on the transaction but if the person with whom they are doing business with has a negative experience, it’s the person who made the referral who looses suffers a dip in their credibility currency market value, not the day trader.

We are all investors. We invest in building credibility and value in our service, product, and reputation. In the business world, it could include building the value in your brand. When we give someone a referral or recommendation, we are investing the sum total of our credibility currency market value with that individual. Do we consider that when we give someone a referral or recommendation? Has someone demonstrated that they can be trusted with the market value that you have built in your credibility currency?

Small Towns and Business Groups

I grew up in a small town along the Mississippi Gulf Coast called Moss Point. In small towns, your reputation on many occasions precedes you. People will do business with you, or not, based on your reputation, your name, the market value of your credibility currency.

My Father was in the home construction business. He know pretty much everyone related to the industry. I worked with him in the summers or on weekends to make a little extra money. I learned who the best electricians, plumbers, roofers, and concrete finishers were. I knew who to work with, or not, at lumberyards and hardware stores because of their reputation.

I discovered my Father’s credibility currency market value was very high because people knew when he gave you his word; it was as good as done. He also increased the market value of his credibility currency because he was willing to invest and give of his time, talent and resources to help others. I remember people who would wait for him to be available to build their homes or perform upgrades, remodels and repairs.

My Father was also a wise credibility currency investor. He realized the importance of protecting the market value of his credibility currency. He would not give references or recommendations unless he knew the market value of someone else’s credibility currency. He also would make or not make recommendations based on the market value of someone else’s credibility currency.

I also discovered that credibility currency is transferable. My Father died from Alzheimer’s in 1993 and the value of his credibility currency transferred to his children.

We always had Chrysler automobiles while growing up. My Father purchased them from the same dealership, Graft’s Chrysler, next to the Sonics drive-inn, on Main Street, old Highway 63. Many years after my Father died, one of my brothers needed to purchase an automobile. He went go Graft’s Chrysler. When the salesperson heard his last name, he was asked if he knew or was related to my Father. He said, “yes” because that was his Father.

My brother found an automobile. He didn’t want to finance the car and didn’t have the full amount for it at the time. He told the salesman that if he could hold the car (remember this is a small town), he would give the salesman a deposit and bring back the balance within a couple of weeks. The salesman told him that if my brothers word was half as good as my Fathers, he would let him take the car that day and trust him to deliver on his promise for the balance. My brother left with the car, on a promise and the market value of my Father’s credibility currency. He preserved the value of my Fathers credibility currency, along with increasing his own.

Business building leads and networking groups are much like small towns. Everyone knows everyone. You know who are fund managers and who are day traders. Whenever someone new “moves into town”, we extend a friendly hand and observe the “newcomers” to decide what kind of community member they will be.

As members of leads groups, chambers of commerce, community groups, churches, organizations, and our personal relationships, we have to ask ourselves a few questions.

  • Am I a fund manager or day trader of credibility currency?
    • Do my actions appreciate or depreciate the market value of credibility currency that has been invested with me through a lead, referral or recommendation?
    • Am I looking out for the well being of my “investors” or not?
  • Am I being a wise credibility currency investor?
    • Am I performing my “due diligence” before investing or loaning the market value of my credibility currency with someone else?
    • Is the risk worth the return to invest my credibility currency without having a “prospectus” on the person I am referring or recommending?
_Aaron T. Hyde, is the owner of BrewedFresh Media, a web hosting and content management service.