The Trust Paradox … We live in a world of uncertainty, complexity and relentless change … with huge challenges but also incredible opportunities … How do we rebuild trust in the future?
January 17, 2024
Davos 2024. Trust was on the lips of every participant.
Three years of increasing division, heightened hostility and a surge in conflicts have created a challenging global landscape. Humanity is grappling with a converging multitude of crisis and change, the need to reinvigorate economies, respond to the threat of climate change, and ensure AI is used as a force for good.
Trust comes in many forms. Trust in authority – from global institutions to governments, scientists and technologists, businesses and brands. Trust in each other. Ultimately we trust in people. Do we accept them? Do we believe them? Do we follow them? Are they authentic? Are they worthy? Are they right?
The World Economic Forum’s theme was in particular focused on our trust in the future.
“After an era that lifted a billion people out of poverty and improved living standards everywhere, the anxiety about losing control over what lies ahead is pushing people towards embracing extreme ideologies and the leaders who champion them.”
Rebuilding trust in our future is paramount. We can only trust in the future, if we trust in people. In institutions. And from an economic perspective, in business.
The Trust Paradox
Rapid innovation offers the promise of a new era of prosperity, but instead risks exacerbating trust issues, leading to further societal instability and political polarisation.
This is the paradox explored in the 2024 Edelman Trust Barometer.
“In a year where half the global population can vote in new leaders, the acceptance of innovation is essential to the success of our society. While people agree that scientists are essential to the acceptance of innovation, many are concerned that politics has too much influence on science. This perception is contributing to the decline of trust in the institutions responsible for steering us through change and towards a more prosperous future.”
Only one third of consumers trust most of the brands they buy or use, according to an Edelman special report.
According to the survey of 16,000 people in eight countries, 81% of consumers see brand trust is a deal breaker or a deciding factor when they consider a purchase. Trust is becoming more important because of growing concerns about the fast pace of innovation and automation, the use of personal data in tracking and targeting, and the impact of products and productions on society and the environment.
“Trust has always played an important role in brand purchase” says Richard Edelman, CEO of Edelman. “But consumers now have much larger expectations of brands, and their trust is predicated on how well a brand can pass through the three gates of trust – product, customer experience and impact on society.”
When brands build trust, consumers reward them. Consumers who trust a brand are more than twice as likely to be the first to buy the brand’s new products, to stay loyal in the face of new competition, to recommend it, and defend it when things go wrong. Also, a brand trusted because of its broader role in society, is almost twice as likely to gain such support, than if it’s trust is due to product aspects only.
Despite all of this evidence, brands are increasingly untrusted.
Most consumers believe that a brand has a responsibility to get involved in at least one social issue that does not directly impact its business, yet few see brands doing so. Indeed, most people think brands are using social good as a marketing tool, “trustwashing” if you like. This exasperates their loss of trust.
However people’s trust in governments and other institutions is far less than in business, meaning that whilst many are unsure, they do see business as a better platform for addressing social and environmental issues than politicians and their agencies. Interestingly, people believe they have more influence on business than governments and can persuade them to take these issues more seriously.
“It’s time for brands to take the next giant step,” says Edelman. “They must accept the responsibility consumers have given them to effect change and welcome greater accountability and measurement of their impact.”
Building trust with authenticity
We engage more emotionally, human and empathetic, than every before. In fact people trust each other more than any business, they influence and are loyal to each other.
25 years ago, Ray Davis arrived in the small Oregon town of Roseburg, where nothing much changed for the lumberjacks of the huge surrounding forests. His task was to transform the sleepy old South Umpqua State Bank with its 40 employees before it died.
Initially people poked fun at his insistence that employees, or colleagues as he called them, answer the phone with a cheery “Welcome to the World’s Greatest Bank.” However, over time, it became true. The bank was transformed, firstly by learning from other great customer service businesses, not banks. Banks become community hubs, interiors were opened up and modernised, products and language humanised. They served coffee, played music, and showcased great local businesses. Staff smiled, and customers loved it. Nowadays, Umpqua Bank, with over $25 billion assets and 350 branches across America, is one of the best banks.
However, Davis, now enjoying his retirement, or in “cruise” mode, as Umpqua calls it for customers who wanted to slow down and enjoy life, has a warning about change. “When we arrived in Roseburg, change was exciting, people loved progress. Today change is different, it has become relentless and dominated by technology. It scares the hell out of a lot of people” he warns. As change accelerates, and technology dominates, many people lose faith in progress. The bond of trust can be lost.
Being real, authentic and transparent
In her book Who Can You Trust? Rachel Botsman asks “If you can’t trust those in charge, who can you trust? From government to business, banks to media, trust in institutions is at an all-time low.” However, she argues that technology can enable trust in new forms, and that our main problem is a mismatch, saying “institutional trust was not designed for the digital age.”
Originally trust was built locally between people, in local communities. Then as cities and business grew, we deferred to institutions as curators of trust – governments and corporations – trusting them to act on our behalf. Trust went from people, to being built around hierarchies. Today, trust is built in networks, and flows between people enabled by technology. For a business there are three layers of trust:
- Trust in the organisation: the reputation of the business and brand, particularly in terms of ethics and responsibilities, openness and transparency.
- Trust in the concept: the relevance to customers, authentic and reliable, a positive way to solve a problem, and delivers on every promise.
- Trust in the people: the respect for people who lead the business, and deliver the concept, who are real and authentic, empathetic and caring.
Authenticity is closely associated with provenance, which is now a source of transparency for many manufacturers utilising the potential of IOT sensors and blockchain certification. Cult Beauty uses a transparency app to help users of its cosmetics to understand the sources of all products, from oils to colourings. Canada’s Bridgehead Coffee was one of the first to set benchmarks for other in fairtrade and organic certification. Fishpeople can tell you the which boat caught your fish and when. Tiffany & Co. can do the same with diamonds.
Whilst all of these matter, the most important is that people trust people. For most customers, they see two faces of the organisation – the leader who typically appears as the company spokesperson in times of challenge, and the everyday frontline employees who sell and serve customers in stores, on phones, or one to one.
As Botsman says “Most businesses that we interact with are built around money, and money only goes so far. Money is the currency of transactions. Trust is the currency of interactions.”
Trusted leaders
Another clue might lie in the new Brand Guardianship Index 2024 produced by Brand Finance. This takes a numeric perspective on the impact which leaders have made to their organisations over time. Not just financially, although this is one useful metric as a proxy for customer and employee engagement, but through a host of other ESG and related metrics too.
Huateng “Pony” Ma, CEO of Tencent, recognised as world’s leading CEO – or at least “brand guardian”, in the report – for his guardianship of WeChat brand. “His leadership, marked by a steadfast commitment to innovation, user engagement, and trust, has not only propelled Tencent to remarkable heights in the technology sector but has also set a gold standard for CEOs worldwide.”
Under Ma’s leadership, WeChat has become the world’s strongest brand, as measured in the Brand Finance Global 500 Index of brands. Ma has led WeChat to build exceptional brand strength, underpinned by its essential, familiar, and trusted status in China, its dominant market.
People trust people
Satya Nadella, Microsoft’s CEO, provides a model for business engagement with society when he gave his views on corporate responsibility, the pressing need for human oversight of artificial intelligence systems and a succinct description of how Microsoft has earned its social license to operate in many countries around the world.
Nadella says every company is now a technology company and that brings with it a range of responsibilities, particularly in areas such as the ethics of AI, which he seeks to proactively take a lead in. “Technology is going to be so pervasive in our lives, and across all industries, that we’d better have one core currency around it which is trust. Without trust, we are not going to have a long-term business” he said at a recent Envision event.
Indeed, Microsoft has positioned itself as the world’s “good tech” company, whilst Facebook and Alphabet are often seen by regulators and politicians as “bad tech”, given their reluctance to address issues like privacy and fake news.
Leadership of trust, and trust in leaders, drives everything else.
We know that any form of change sparks fear in the human psyche. If not addressed early, proactively and directly, fear of job losses due to automation or globalisation can quickly take hold. In times of crisis, a leader brings urgency and compassion, but if there is not also direction and hope, then people lose confidence, and courage in their own actions.
Employees trust leaders who do what they expect them to do.
This requires an openness of leaders, so that people know what to expect. It means engaging people in the future direction, being honest about the need and implications of change, asking for ideas, and equally challenge, being visible and accessible, and being human.
Externally, there was a time when business leaders would never say anything controversial, when businesses were agnostic to the debates of society. Today, as people trust business more than politicians to show them a way forwards, they seek business leaders to take a stand, to have a point of view.
This can be controversial, a viewpoint means that not everybody will agree, that some of your customers might feel alienated or even reject you. Apple is a strong advocate of diversity and human rights; Starbucks challenged the state on their actions against migrants. Leaders need to step up, to express their view, to fight what they believe is right.
In this way, brands develop a more authentic personality, business adopts a more meaningful role in society, and you gain the respect – and trust – of people.
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