November 2019

By Sandra Macleod, Group CEO

“I'm not upset that you lied to me, I'm upset that from now on I can't believe you.” Friedrich Nietzsche

As elections loom on both sides of the Atlantic, the democratically-elected governments in the US and UK are distrusted by some 70% of all adults, according to Echo Research's 2019 populism v capitalism study. Some 63% also distrust big business. In this new norm, many are on stand-by for their '15 minutes of Twitter pain'. Businesses are anticipating new, and possibly rear-view, regulation.

Against this background, there is cause for optimism as impactful leaders aim to engage more purposefully and proactively. We already see that small business are loved and trusted (by up to 74% in the US) and 'my employer' is generally trusted too (by 51%). What should organizations aim for?

Trust, distrust, mistrust, blind trust, appropriate trust, or reliance. Untangling these, we heard from our Trust Philosopher, Dr Brennan Jacoby, and the BBC’s Trust presenter, Matthew Gwyther. 

So first, from Dr Jacoby:  

We are not coming to trust in a vacuum. The late Australian philosopher, Annette Baier, rightly noted that we “inhabit a climate of trust as we inhabit an atmosphere and notice it as we notice air, only when it becomes scarce or polluted”. In fact, Baier’s metaphor lacks precision in one way: Where trust is concerned, we can begin to ‘cough’ at the mere suggestion of pollution. Today, we are not coming to this topic in a vacuum or without a history – and the same is true for our businesses and the markets in which they operate. This means that as we think about what trust and trustworthiness are and how they work, we must do so in the context of distrust, mistrust and hard consumer feelings like resentment. While the reality is not always so dark, framing trust and trustworthiness in this way prepares us to develop an understanding that is more robust and fit for purpose; it will help us better navigate the landscape in which we actually lead.  

What is trust?  Wise responses to matters of trust require that we reflect on what trust means – to us and our stakeholders. The majority of reporting on the topic glosses over trust itself, and instead focuses on a presumed ‘crisis of trust’ before moving quickly on to consider how to build trust.  Here are four key points from the philosophy of trust:  

1. Trust is distinct from mere reliance. Whatever trust is, it involves relying on another (individual, group, organisation or brand, etc.). However, it is possible to rely without trusting – consider the consumer who must select an energy provider but harbours scepticism about that industry and selects what they consider to be the best of a bad bunch. Because it is possible to rely without trusting, we should take care not to equate trust-like behaviour in the form of a consumer using a product as confirmation that trust is present. Instead, I would suggest that the distinguishing feature of trust is an optimistic acceptance of vulnerability. Extending the example, our energy consumer sees themselves to be vulnerable to energy providers and is sceptical and so does not trust. If they were to be vulnerable and yet accept their state with optimism about their chosen provider, it would be more appropriate to say trust is present. 

Implication: This distinction is important for how we interpret purported quantitative research on the state of trust. Further, where business is concerned, this distinction means that firms should refine their strategic aims – is it trust you are after or will reliance do? If it is trust you are after, then focus on shoring up trustworthiness, not just reliability – a distinction which is drawn out in the next point.  

2. Normative expectations make all the difference. Trust has a prima facie special relationship with expectation. When trust is present, expectations about the trusted party’s behaviour are also at play. But when it comes to repairing broken trust, greater precision is needed to map the relevant conceptual landscape accurately. In fact, trust involves two distinct types of expectation: 'predictive expectations' about what a person or organization will in fact do; and 'normative expectations' about what that party ought to do. While the prior can shore up reliability, the latter is salient where trustworthiness is concerned. To establish good reason for trusting another (i.e. being optimistic about being vulnerable to them) we don’t just want to know what they will reliably do; we want to know that they are ‘on the same page’ as us about what is good and right. The reason being that such normative coherence puts us at easy about counting on them in situations outside our control. In the aftermath of corporate scandal, it is common for those responsible to apologise with implicit reference to predictive expectations. They might say, ‘We are taking steps to ensure X never happens again’ – i.e. you can predict that X will no longer occur. However, such apologies are often met with cynicism because those hearing the apology have not yet had their moral sense of injustice assuaged and hard feelings remain. Instead, addressing normative expectations – that something wrong was done – will begin the necessary deep, moral work and lay the foundations on which trust can be rebuilt.   

Implication: Invest in understanding market norms and tread carefully when making promises.

3. Transparency is a necessary, but not sufficient, condition of corporate trustworthiness. When trust erodes, calls for increased transparency are common. However, the opening line from the Australian Institute of Company Directors’ account of the recent Australian Royal Commission into the Banking, Superannuation and Financial Services Industry betrays the limitations of such openness.  After a year of damning exposure, 76 recommendations and 24 referrals for further action in the forensic, nearly 1000-page final report by Commissioner Kenneth Hayne AC, there is one question that should be in the mind of all boards of directors: If our organisation was exposed to similar public scrutiny, how would our culture, governance and ethics fare?

Implication: Transparency means revealing the true inner workings of an organisation, either through scrutiny, voluntary information sharing or other means. The AICD’s opening line highlights how corporate revelation does not ensure the quality of that which transparency puts on display. Trust is, in fact, less about transparency, and more about establishing the corporate character worthy of stakeholder confidence – i.e. trustworthiness. 

4. Trust is not always best, and distrust (but not mistrust) can be constructive. Lastly, perceived loss of trust is regularly presented as a ‘crisis of trust’. But while loss of trust is bad for business in the short term, blind trust that has been untested is at best fragile and at worst enables abuses of power. Further, distrust that responds to perceived lack of trustworthiness can be appropriate and constructive to the extent that it can support character development in individuals and corporations. In contrast, while distrust and mistrust are often used interchangeably, mistrust is distrust run amok. Mistrust best captures the sceptical ‘animal spirits’ that overtake critical engagement with truth seeking after a scandal has been uncovered. In contrast, it is possible to distrust while being open to the possibility that a corporation could actually be trustworthy or, if not, improve. There is room for recovery when distrust is present.  

Implication: Mistrust is driven by hard feelings. This means you cannot assuage it by simply showing you are trustworthy. Instead, you must first assuage the hard feelings through moral relationship building – which addresses disappointed normative expectations, not just predictive ones. Then you will help the mistrusters remove the lenses through which they see you and be in a position where they might entertain evidence of your actual trustworthiness. 

With final words from Matthew Gwyther: Which of the following do you consider the most (or least) credible? Trust me I’m a doctor. Trust me I’m an architect. Trust me I’m an early years classroom assistant. Trust me I’m a firefighter. Trust me I’m a FTSE 100 chief executive. Trust me I’m the head of marketing in financial services company. Or Trust Me I’m a Journalist. 

If you think you have problems with your businesses, think what faces journalism in a world where Rudy Giuliani, lawyer to the president of the United States, can say with a straight face: “My truth is not your truth.” Where, if you don’t like the sound of the facts being reported to you, you just yell “FAKE NEWS’ at the top of your voice. 

“Humans are a post-truth species - power depends on creating and believing fictions. And humans prefer power to truth.” Yuval Noah Harari

 “A lie once told remains a lie but a lie told a thousand times becomes the truth.” Josef Goebbels  

Truth and trust are inextricably linked. The OED defines trust as: ‘confidence in or reliance on some quality or attribute of a person or thing. Or the truth of a statement.’ Clunky but it will have to do.  To get somebody to trust you is about doing as you say and saying as you do.  

 The simple things are always the hardest. Research and measurement are only part of the journey, but important first steps and benchmarks to progress.

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