When I started to manage Windows systems, it was important to understand the definition of ‘transitive trust’. For those not familiar with the technical term, here is the ‘classic’ definition:

Transitive trust is a two-way relationship automatically created between parent and child domains in a Microsoft Active Directory forest. When a new domain is created, it shares resources with its parent domain by default, enabling an authenticated user to access resources in both the child and parent.

But this dry definition misses the real point. A transitive trust relationship (of any kind) is a relationship where you trust some ‘third-party’ because someone that you do trust also trusts that same ‘third-party’. This definition is also rather dry. But let’s look at an example. My customers (hopefully) trust me. And if they trust me enough, then they also trust my choices concerning other groups that help me to deliver my services to them. In short, they transitively trust my provider network because they trust me.

That all sounds fine. But what happens if your suppliers break your trust? Should your customers stop trusting you? Recently, this very situation occurred between Capital One, their customers, and some third-party technology providers (like Amazon and their AWS platform).

Trust: Hard to Earn – Easy to Lose

Unfortunately, the Amazon AWS technology platform was compromised. So Capital One should legitimately stop trusting Amazon (and its AWS platform). This should remain true until Amazon verifiably addresses the fundamental causes of this disastrous breach. But what should Capital One’s customers do? [Note: I must disclose that I am a Capital One customer. Therefore, I may be one of their disgruntled customers.]

Most people will blame Capital One. Some will blame them for a lack of technical competence. And that is reasonable as Capital One is reaping financial benefits from their customers and from their supplier network. Many other people will blame the hacker(s). It’s hard not to fume when you realize that base individuals are willing to take advantage of you solely for their own benefit. Unfortunately, only a few people will realize that the problem is far more vexing.

Fundamentally, Capital One trusted a third-party to deliver services that are intrinsic to their core business. Specifically, Capital One offered a trust relationship to their customers. And their customers accepted that offer. Then Capital One chose to use an external platform simply to cut corners and/or deliver features that they were unable to deliver on their own. And apparently that third-party was less capable than Capital One assumed.

Regaining Trust

When a friend or colleague breaks your trust, you are wounded. And in addition to this emotional response, you probably take stock of continuing that relationship. You undoubtedly perform and internal risk/reward calculation. And then you add the emotional element about whether this person would act in a more trustworthy fashion in the future. If our relationship with companies was less intimate, then most people would simply jettison their failed provider. But since we build relationships on a more personal footing, most people will want to give their friend (or their friendly neighborhood Bailey Building & Loan) the benefit of the doubt.

So what should Capital One do? First, they must accept responsibility for their error in judgment. Second, they must pay for the damages that they have caused. [Note: Behind the scenes, they must bring the hammer to their supplier.] Third, they must rigorously assess what really led to these problems. And fourth, they must take positive (and irreversible) steps to resolve the root cause of this matter.

Of course, the last piece is the hardest. Oftentimes, the root cause is difficult to sort out given all of the silt that was stirred upon in the delta when the hurricane passed through. Some people will blame the Capital One culture. And there is merit to this charge. After all, the company did trust others to protect the assets of their customers. As a bank, the fundamental job is to protect customer assets. And only when that is done, should the bank owners use the entrusted funds in order to generate a shared profit for their owners (i.e., shareholders) and their customers.

Trust – But Verify

In the height of the Cold War, President Ronald Reagan exhorted the nation to trust – but then to verify the claims of a long-standing adversary. In the case of Capital One, we should do the very same thing. We should trust them to act in their own selfish interests because the achievement of our interests will be the only way that they can achieve their own interests.

That means that we must be part of a robust and two-way dialog with Capital One and their leadership. Will Capital One be big enough to do this? That’s hard to say. But if they don’t, they will never be able to buy back our trust.

Finally, we have to be bold enough to seek verification. As President Reagan said, “You can’t just say ‘trust me’. Trust must be earned.”