Is Trustworthiness the Killer App of the Future?
PriceWaterhouseCooper recently released their 17th CEO survey. In a by-lined article in PWC’s Strategy + Business, the company’s chairman, Dennis Nally, predicts that trust will become increasingly critical to business success.
The world in which we live and work is being redefined by five global trends: technological advances, demographic changes, global economic shifts, urbanization, and resource scarcity and climate change. These trends have far-reaching and often interrelated effects on society. For example, the migration of spending power to emerging markets, along with explosive population growth in some countries, will result in a billion people being better off than they are now. The same developments, however, could exacerbate unemployment, social unrest, and resource shortages.
The impact of these trends is radically changing society’s expectations of business. And the extent to which a business behaves in line with these expectations determines how trustworthy it is perceived to be. Trust is pivotal because it is the basis of every human relationship, every transaction, and every market. Trustworthiness is the foundation of a business’s “license to operate” in any region or industry.
All of this is causing chief executives to think strategically about international business ethics—specifically, how trustworthy their companies need to be. To generate that trust, CEOs are not just interested in growth for their enterprises. They want to attain “good growth”: real, inclusive, responsible, and lasting growth. And they want their companies to contribute to good growth in every country where they operate.
Public trust in business probably isn’t at its lowest point ever, but that’s not saying much. When some of the best and brightest minds in the world are devoting themselves to gaming the system (think Michael Lewis’ book Flash Boys), people are quick to believe that business is focused only on maximizing profits and share price growth for top executives. As a result, companies perceived to be good citizens can attract customers and investors looking to do business with people who want to make things better. “More chief executives believe trust levels have improved during the last five years, at least within their own industry, than believe they have deteriorated. These perceptions are borne out by public opinion. Findings from the 2014 Edelman Trust Barometer, a survey of the general public in 27 countries conducted by the public relations firm, also show a steady rise in trust. Fifty-eight percent of respondents expressed their trust in business, compared with 50 percent in 2009.”
In this new, connected world, there’s so much more transparency than there was in the Gilded Age of the 1890s. It’s no longer likely that a company can operate in shadowy ways without attracting attention. Today’s most successful companies–and tomorrow’s survivors–will be those who take into consideration the expectations of society as well as stockholders.
A socially relevant purpose that is defined, communicated, and embedded throughout the organization will provide employees with the context they need. And symbiotic collaboration with government can drive good growth at a national level.
CEOs who follow this agenda will create trustworthy organizations that enjoy far-reaching benefits. Their business will grow in a way that is fully engaged with society, now and into the future. Increased organizational resilience and improved performance will flow from engaged employees, loyal customers, and better relationships with business partners and regulators. Overcoming stakeholder skepticism will not only improve investor sentiment, but also create opportunities to lead the trust debate in the business’s industry and beyond.
A coming post will dive into more thoughts on purpose (click here for some excerpts from my upcoming book). But it’s great to see more leaders understanding that success can be shared and is sweeter when it is.