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It’s wrong to tar all companies with the same brush, but we’ve learned the hard way that trust needs to be earned, says Mallen Baker
At the annual gathering in Davos this year, Indra Nooyi, the widely respected chief executive of PepsiCo, said there were “green shoots of recovery” in the public’s trust of business around the world.
People should put their trust in business, she argued – 90% of businesses were trusted, but the 10% that had led us into the global meltdown had to be isolated to protect the reputation of business as a whole.
“Businesses are already the only functioning entities around the world,” she told the Davos session. “If you don’t put your trust in business, who will you trust?”
I agree with the spirit of Nooyi’s contention that – when it comes to certain global problems – governments have proven themselves utterly incapable of action and businesses may turn out to be more effective in the long term.
But there is a good reason not to simply put your trust in business. And that’s because there are too many times where companies are rewarded by the market for following business models that are either inherently unsustainable, or at the very least have built-in perverse incentives to disregard the needs of sustainability.
The most impressive business leaders – including people like Indra Nooyi – are grappling with the problem. Progressive businesses are trying to find new business models where the best practices are actually rewarded by the market. Maybe they will find the way to do this. But until they do, it is historically evident that the majority of businesses will follow the incentives they have to achieve success and survival.
Food and drink companies, such as Nooyi’s, may now (and some will dispute this) be taking the crisis of obesity seriously, and looking at how they can take their customers with them on a programme of reducing harmful additives in people’s diets – principally salt and sugar.
But when the issue first started to emerge, the collective instincts of the industry was angry denial. Only when it became obvious that government interest was going to force them to take a degree of responsibility – regardless of who said what in the science of why people were getting fatter – did they begin to engage and try to find win-win solutions.
What that shows is that in a world where commercial incentives have been aligned with social outcomes, businesses can be fantastic, dynamic forces for positive change. That is not the same as saying that businesses can simply be trusted.
When the incentives are not so aligned, generally the majority of businesses will simply follow the incentives. Some will do so deliberately and cynically, others more in a state of denial. But they’ll do it.
Sights still set on responsibility
The fact that the “corporate social responsibility” movement still exists after 20 years of campaigning and practice shows that there are still arguments to win. If modern business had really become the progressive force for good in the world, CR would have withered away as a discipline as being largely unnecessary.
It remains necessary because for many business leaders around the world, its message is simply not on the radar, and indeed may be seen as highly counter-intuitive.
Indra Nooyi is right that people should lose their hostility to businesses founded on the certain belief that “they are all greedy and incompetent and out to rip us off”. In the same way the public should not dismiss all politicians as being useless and corrupt.
But trust is generally earned by individual leaders – and sometimes individual brands or companies. It is generally not afforded to entire groups or sections. And certainly not businesses, because knocking the more obvious business excesses represents such easy currency for aforementioned politicians seeking to build trust for themselves by creating an enemy that their audience will readily believe the worst of.
And, whatever Nooyi may suggest with her idea of “isolating the 10%”, the truth is that the business players that got us into the financial mess just happened to be those that were active in the relevant business sectors. They followed the incentives, the same as everyone else. So if there’s no difference in terms of character and intent, then it’s a game of chance as to whether the next scandal might strike a different sector next time.
Maybe we should trust businesses where their business model is clearly aligned with positive social outcomes. And then, will trust business leaders that have clearly and convincingly demonstrated their integrity and their intention to shift their business model in the direction of generating solutions not problems.
That is how it should be. Trust is earned, not granted by a system of automatic deference.
Mallen Baker is a contributing editor to Ethical Corporation and managing director of Daisy Wheel Interactive.business strategy Consumer trust reputation trust
May 2014, London, UK
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