From Trust To Hypothetical Thinking

We all know that trust is one of the most important aspects in our lives, yet it doesn’t mean everyone can handle it well, and sometimes some people are so bad on it that many problems in their lives are due to that. As far as I know, the maturity of thinking about trust can at least be categorized into following levels – from the most dysfunctional to the most effective and efficient, even though it’s clearly oversimplified and it’s entirely possible that there are even lower and higher levels than those listed below:

Level 1

Some people either always completely trust everything or always completely distrust everything without even assessing what that thing is, and we know that’s it’s so unrealistic and overgeneralized that only very immature people won’t see past that. Fortunately, such naive people are extremely rare, and they won’t remain that uneducated for long.

For instance, some people do deeply believe that they can only trust themselves and everyone else is always completely untrustworthy while they know next to nothing about any of the others. Needless to say, their lives will be in deep struggles when everyone is so connected to each other and the demands of a person becomes so complex in the modern world that it’s incredibly hard to be totally self-sufficient forever.

For those who choose to always completely trust everything, they’ll soon fathom the truth that something really can’t be trusted at all, and either they’ll ascend to Level 2, or go to the other extreme – always completely distrust everything, which will cause their lives to be even more miserable. Anyway, they’ll soon see past the false dilemma between trusting everything and distrusting everything, thus it’s very improbable that they won’t ever ascend to Level 2 in their lives.

Level 2

Some people are better in that, they know that not everything can be trusted but there are still something trustworthy. However, they still either completely trust something or completely distrust something, and they’ll quickly judge whether something is trustworthy or not, so it’s still a rather black and white thinking that doesn’t work well in reality, and this inflexibility, albeit not uncommon at all, will soon hit such people so hard that they’ll have to relearn what trust really is sooner or later.

For instance, those deeply suffering from confirmation bias without even knowing will likely just use the first impression from someone to decide whether that person can be completely trusted or is completely untrustworthy, and will never reevaluate the decision until the reality teaches those people a tough lesson. Of course, judging someone using the first impression alone is judgmental to the extreme, and the negative consequences are so obvious that it’s even hard for those people themselves to look the other way.

For the things they completely trust, quite some of them will turn out to be untrustworthy, so those people will turn from completely trusting them to completely distrusting them, and if there are more and more such things, those people will distrust more and more things in their lives, therefore the whole trend will induce them to descend to Level 1 – always completely distrusting everything. On the bright side, because it’s even harder to remain on Level 1 than ascending from Level 2 to Level 3, when those people ascend back to Level 2 after descending to Level 1, they’ll be forced to let go of the false dilemma between complete trust and complete mistrust towards something, and hence ascend to Level 3.

Level 3

Some people realize that trust isn’t either all or nothing, but rather a continuous spectrum, so instead of just thinking whether something is trustworthy or not, they’ll also think about how much it can be trusted, so it’ll take them some time to be familiar with something before evaluating how much it can be trusted. Still, it’s a static thinking that misses the key that how much something can be trusted can change over time under certain conditions(unless such signs are so obvious that it’s impossible for such people to miss them), so they’ll be eventually caught completely off guard, even when there were already so many warning signs that they completely missed(because they never have the habit to actively seek for such signs to begin with), and they’d have long decreased the amount of trust if they noticed those signs.

For instance, let’s say an employee has worked in a company for a year, and the track record of that employee suggests that, while that employee isn’t trustworthy enough to take the most crucial and difficult tasks, that employee is trustworthy enough to take some other important tasks that are still somewhat challenging but nowhere as difficult. However, because that employee mentally suffers deeply from suddenly becoming single without knowing what’s going on, that employee can no longer function as effectively and efficiently as before, so some of the latest important tasks, which is very similar than those done well by that employee, suddenly failed badly, even though that employee didn’t even try to hide the personal suffering in the company.

As the boss decided that that employee is that trustworthy solely based on the performance of that employee over the last year, without even trying to periodically check for any abnormalities from that employee, that boss missed many obvious signs from that personal suffering and assigned those tasks to that employee anyway, hence causing the totally unexpected failure from that employee. While it’s clear that that employee is also at fault and responsible for not actively informing the boss about the personal suffering and its impact of future performance, the point remains that assuming that the trustworthiness of something is a constant to be found can be very dangerous, so unless those people at this level still didn’t grasp the utter horror of even lower levels, they should figure out the problem of not dynamically adjusting the amount of trust of something over time, and thus ascend to Level 4.

Level 4

At this point, some people finally understand that trust is actually dynamic rather than static, so dynamic thinking is needed when thinking about trust, meaning that instead of just using past experience and track record to judge how trustworthy something is right now, they’ll also consistently look for both positive and negative signs at the present moment, therefore they can take these present factors of changes of trustworthiness into account as well. Although it’s already pragmatic enough to think about trust this way and not many has already reached this level, the problem is that it’s just reactive rather than proactive, so while they can quickly adjust the amount of trust towards something after those factors of changes have already manifested, they’re still just passively reacting to these signs instead of actively trying to figure out the essence behind those factors.

Let’s say there’s another employee who was prolific and reliable at the start slowly became less and less effective and efficient, and eventually dysfunctional altogether due to prolonged covert workplace bullying hidden from the boss. So the boss, noticing this trend without knowing the root cause behind this issue, could only try to ask that employee about the lengthened performance drop, while gradually assigning less and less challenging and important tasks to that employee, with the benefits given to that employee being smaller and smaller, and had to unwillingly fire that employee at the end, because the boss failed to know the truth that way.

Although it’s hard to blame the boss for not knowing what’s really going on with that employee when that employee didn’t even try to report anything, it still shows the issues of just passively reacting to the changes of the amount of trustworthiness, as it could’ve been become more rather than less trustworthy if the underlying conditions of changes were revealed. If the boss tried to proactively investigate what makes the employee appear to be less and less trustworthy besides just asking that employee personally, the boss might have discovered the workplace bullying in secret and kept an originally competent and loyal employee, rather than having to reluctantly fire that employee and possibly repeating the history in the future unknowingly.

Level 5

This is where proactive thinking comes in, but people of this level are hard to find as it’s hard to keep being on this level, and the paradox is that they don’t consciously emphasize trust anymore, because to them hypothetical thinking is much more flexible and responsive when it comes to constantly reassess the essence of the ever changing conditions behind the factors that increases and decreases the amount of trustworthiness towards something. So instead of thinking about how much something can be trusted at any moment, they think about on what probability that how something will behave under what conditions, and the essence behind the when and why of such correlations and causation hold, so once those underlying conditions change, those people can immediately adjust and correct their hypotheses while reconsidering whether and which previously established contingencies need to be executed(or swiftly come up with a backup plan that didn’t exist beforehand), and when they’ll be executed to what extents.

For example, an employee formerly working for a rival company has demonstrated extraordinary competence and willingness to take the most challenging and important tasks in the current company without asking anything extra in return, and that employee can get them done all exceptionally well, so the current boss happily give that employee more and more privilege and recognition within the company, and thus that employee can ascend incredibly quickly there, regardless of the fact that that employee was frequently badmouthing the previous employer, which is the rival company.

But as what that employee has shown is far too good to be true and the badmouthing of the rival company from that employee doesn’t match what the boss knows about that company, the boss can’t stop to suspect that that employee, which worked for a rival company, is just acting and up to something even bigger, so on one hand the boss appeared to have complete trust over that employee by giving that employee sole discretion over a new and large project that demands access to valuable company secrets to lower the guard of that employee, but on the other hand privately asked a trustworthy security expert in the current company to silently monitor the activities in that project from that employee behind the scenes. It turns out that that employee being suspected is actually an industrial espionage still working for that rival company, and is assigned to elusively install an undetectable backdoor deep inside the new project using internal software systems that can access the most confidential and sensitive algorithms and data of the current company, so the rival company can later invisibly hack into that backdoor to steal those crucial information while keeping a low profile, and the frequent badmouthing from that employee about that rival company is just a cover-up.

Hypothetical Thinking

While it’s clear that it’d be overkill and exhausting to use hypothetical thinking over trivial matters as well, when it comes to the key moments of determining the trustworthiness of something vital, hypothetical thinking can still come into handy. Also, do note that thinking about trust and hypothetical thinking don’t have to be mutually exclusive, and in fact they can work well together, even though such unison will never be easy nor cheap.

Although there are many factors affecting the trustworthiness of someone, usually the most subjective and unclear one is motivation, which can be broken into at least these following 5 basic building blocks:

1. What does that someone need to get right now?
2. What does that someone need to avoid right now?
3. What does that someone want to get right now?
4. What does that someone want to avoid right now?
5. What is the emotional statuses of that someone right now?

Other factors, like whether that someone has the experience, knowledge, information, resources and technique to get something done, while still absolutely necessary to determine the trustworthiness of that someone over that something, are usually much more tangible and visible to the others, so if one can reliably comprehend the basic building blocks constituting the motivation of someone, the other factors should also be of little challenge. As long as one can keep in touch with the factors constituting the trustworthiness of someone, that someone will unlikely to suddenly change from very trustworthy to very untrustworthy without being noticed beforehand, so it’s generally hard to back-stab those with hypothetical thinking as their second nature, at least not with them unprepared.

When using hypothetical thinking, one doesn’t just come up with a single hypothesis and call it a day, but should instead explore at least several ones that are reasonably likely to warrant further verification, and act on the currently most probable one, with contingencies designated to handle cases when that hypothesis is proven to be wrong, until it’s proven to be wrong and act on another hypothesis. Do note that besides having to actively and consistently look for signs both supporting and negating the hypotheses, while a hypothesis can be the most probable one right now, after some time with some changes, another hypothesis can become the most probable one later, and sometimes one even needs to generate new hypotheses on the fly, so the whole hypothetical thinking is a constantly dynamic process, and there should be as few unsupported assumptions as possible at any moment.

Of course, it’s impossible to be even near perfect, so no matter how experienced, knowledgeable and skillful in practicing hypothetical thinking in real lives, there will always be times where one will be caught completely off guard, so hypothetical thinking isn’t about trying to eliminate uncertainty and the concept of trust altogether, but rather minimize the amount of uncertainty and reliance of trust while accepting that uncertainty is a nature of lives and trust that one can deal with most of the remaining uncertainty most of the time. Because of that, those practicing hypothetical thinking should also be ready to be completely caught off guard, and that means they’ll have to be able to be very flexible, spontaneous and versatile at any time, even though one will have to take very complicated and convoluted paths to get there.

Combining everything, those with hypothetical thinking in mind first observe and test someone for a while, then act on a hypothesis based on the initial track record of that someone collected during that period, and those people will continue to look for signs that indicate both the increase and decrease the trustworthiness of that someone. If the hypothesis suggests that some such positive or negative signs will manifest and they mostly do, then the hypothesis is somehow verified and should be kept, otherwise it’s shown to be less and less accurate and should be tweaked somehow, and when there are enough such significant mismatches, the hypothesis will be proven to be dead wrong so those people will have to act on a new hypothesis, and the whole cycle will repeat again and again.

Why Outsourcing Core Business Functions Can Be Dangerous

Outsourcing business functions is nothing new in the business world, and is actually a very common and well-established practice, although whether it’s a wise decision depends on the concrete circumstances.

On the other hand, outsourcing core business functions is generally quite dangerous, because you can end up falling into a rather disadvantageous scenario, as demonstrated in the following example.

Situation

A company has its headquarter in a very well-developed city(so its various expenditures will be much higher), and 3 branches in 3 different other much, much less developed cities(so their various expenditures will be much lower) all being very far away from the headquarter, where each branch runs a core business function outsourced by the headquarter:

Branch A runs most of the back end for the core business of the whole company

Branch B runs the 24 hour call center and most of the customer support services for the whole company

Branch C runs most of the software testing and sales activities for the whole company

Of course, each branch is also responsible for expanding the markets in their respective cities, and they’re allowed to take a large portion of the profits from those markets by running their own business, in order to motivate and reward them for more effective and efficient market expansion(they’ll also take a small portion of the profits from the core business of the headquarter so the branch will still have the incentive to keep the core business running).

Back to the headquarter, it runs most of the front end for the core business of the whole company(and takes a large portion of profits from the core business), and is responsible for finding new customers and maintaining existing ones, even though the headquarter will also take a small portion of the profits from the business owned by its branches.

This seems to be a decent setup that can significantly lower long-term expenditures and raise overall profits, but actually there’s a big problem: The headquarter will likely have less and less control over its branches, which will be more and more powerful due to its own businesses growing over time.

Problem

So, if you were the head of a branch, and you can frequently pretend to obey the headquarter while actually ignoring its orders, will you focus primarily on the core business of the headquarter, or the business owned by the branch?

Needless to say, you’ll choose to work on the latter most of the time, and will only work on the former when it delays too much, because you can take a large portion of the profits from the latter but only a small portion of those from the former, and not working on the latter will mainly hurt your branch while not working on the former will mainly hurt the headquarter.

As time passes, the branches will become more and more independent from the headquarter, because they’ll rely on more and more on their own business and less and less on the core business of the headquarter, whereas the headquarter will become harder and harder to control the branches, because its situation will become more and more dire while those of those branches will become better and better.

By the time the business owned by those branches become mature enough for those branches to totally ignore the core business of the headquarter, it’s when the headquarter will be forced to submit into those branches, because the headquarter still needs those branches to keep its core business running, and now it’s already too late to try to take back control from those branches or migrate those outsourced core business functions from those branches to somewhere else(or just taking them back and let the headquarter run all those functions itself).

Normally, the headquarter should be the one controlling its branches but not the other way around, however the control can indeed be reversed if the headquarter does outsource its core business function into its branches, so how to prevent that from happening in the first place?

Solution

The simplest solution is, of course, never outsourcing core business functions to begin with, but sometimes it has to be done to keep the expenditures low enough by utilizing resources in less developed cities, therefore some other ways have to be found to somehow even out the odds.

In the short term, when a branch’s just established, the headquarter should find the most trustworthy ones to run its branches in the first place, and they have to be almost absolutely trustworthy for a long time(whether it’s because they’ve such high integrity or the headquarter has their key weaknesses on its hands), to ensure that they won’t betray the headquarter so easily even when their self-interests will be more and more inclined to do so.

In the medium term, when a branch becomes able to take care of itself, a system should be implemented to mitigate the potential conflicts of interests among the headquarters and its branches, like when a branch starts to ignore the core business function outsourced from the headquarter, the branch should take a larger and larger portion of the profits from the core business of the headquarter and smaller and smaller portion of those from the business owned by that branch, and when it’s more important to expand the market assigned by that branch, the opposite adjustment should be made accordingly, so the branch will be more rewarded for focusing on what it should focus on at any moment.

In the long term, when a branch starts to intend to become independent, the core business function outsourced to it should also be outsourced to a new branch that is far from being able to stand on its own feet, so the headquarter won’t have to totally rely on the former branch(albeit the whole mitigation process can take years), probably even at the hefty cost of having to open a new branch, which would be also responsible for opening yet another market.

Of course, even these measures won’t last forever, because eventually the headquarter can have so many branches(even when some of them will be sub-branches of other branches) that it won’t be able to control anymore, but at least the risk of outsourcing core business function won’t be as unmanageable as before, and nearly no company can last forever anyway.

Evaluation

So far it’s all about outsourcing core business functions from the headquarter to its branches, but how about outsourcing them to foreign and popular companies(with excellent reputation) specialized in such functions? It really depends on the functions and the companies planning to have them outsourced, like outsourcing a crucial database to companies running database centers is already quite different from outsourcing a 24 hour call center to respective companies, because different functions have different risks associated to them, and their respective companies can have different reasons to go against your best interests.

For instance, while outsourcing a crucial database to a normally good company is usually wise, that company can also be interested by powerful and resourceful hackers(due to its high popularity and excellent reputation), so that company can be more prone to be targeted by sophisticated attacks, therefore although that company should also have quite a good defense against such attacks, once an attack succeeded, the database being outsourced can become totally compromised.

Whereas outsourcing a core business function to an unknown company in a foreign country can have some other risks, like asking one such company to write the cross-platform front-end of a mobile app for you, and you can end up being effectively blackmailed by that company, perhaps the app will be stable at the beginning of production but have more and more bugs later on(so you’ll have to pay more and more money to ask it to fix the bugs), and perhaps you can even end up having to give it a hefty sum so you can take back the codebase of that front-end and fix all those artificially created bugs yourself(of course you’ll also have to hire some new employees to do that).

On the other hand, just because outsourcing a core business function can be dangerous, it doesn’t mean one should never do so, because sometimes the resource and technical requirements for running that function can be much higher than what a company possesses in the foreseeable future, and this restriction alone shouldn’t always mean a company shouldn’t even have a try on such function, it’s just that outsourcing a core business function, no matter how big and strong a company is, should be a very serious(and perhaps irreversible) decision that can never be taken lightly.