From the Euro debt crisis to unrest in the Middle East, raging unemployment around the globe and the Occupy movement, it’s no secret that the world is facing some stiff challenges these days.
And yet, government and businesses, the very institutions that have traditionally been looked to for leadership in times of uncertainty, are experiencing their own crisis of sorts—a crisis of trust.
Edelman’s recently-released 2012 Trust Barometer, our 12th annual look at global trust and credibility, underscores just how far these institutions have fallen out of favor with the public. Not only is the government the least trusted institution (trailing business, media and NGOs), nearly one half of survey respondents do not believe government regulates businesses enough.
Even more telling: The most credible spokesperson after an academic and technical expert is now a “person like me” followed by the employee. CEOs are now second to last.
So the burning question today is: How can businesses and their leaders regain the public’s trust?
To begin, many of the actions that stakeholders want most from government — “more consumer protection” and “regulation ensuring responsible corporate behavior” — are tasks that businesses can handle on their own.
But, just executing on these reactive items will not be enough. Rather than merely exercising their “license to operate,” as they have done for years, leading brands and organizations must move beyond the “don’t be evil” mentality. As Richard Edelman explains: “It makes good business sense for business to broaden its definition of leadership. They must now earn their ‘license to lead.’ It cannot be seen as acting solely in self interest, but rather executing on the fundamentals of profit and societal good.” In other words: profit needs to be joined with Purpose.
Not simply CSR, cause marketing or altruism, a company’s Purpose goes further; it’s a strategy for profit and growth based on improving people’s lives.
To further illustrate this this shift from profits to profits + Purpose: the 2012 Trust Barometer finds that, out of the 16 factors shaping trust, those factors that will build future trust are centered around a company’s purpose (see the graphic below).
Note how profit-driven operational attributes, like “innovators of new products” and “delivers consistent financial returns,” that are responsible for current trust levels actually fell to the bottom of the rankings. In their place: societal factors like “listening to customer needs,” “treating employees well” and “placing customers ahead of profits.” These factors — the human element – are considered more important to building future trust than those that deliver on operational imperatives.
Consumers couldn’t be sending a clearer message to companies: by putting your company’s Purpose, or values, in action through a variety of engagements ranging from materiality and CSR to cause branding and ngo support, companies can build sustainable competitive advantage that will unite and motivate all the people you touch, from skeptical consumers to reticent employees.
How does this look in the real world? Standout examples include IBM’s Smarter Planet initiative and Levi’s (disclosure: Edelman client), which built their core purpose of environmental sustainability into their entire product lifecyle. From where they source their cotton to their clothing care tags that aim to divert billions of unwanted garments from landfills to Goodwill, Levi’s is perfect example of a company that has integrated its Purpose journey in a truly impactful way.
Another pace-setter is Starbucks (disclosure: Edelman client). With their three-tiered approach — planet (sourcing fair trade coffee and environmental stewardship), people (policies they have for their baristas), community (their various social engagements) — the company demonstrates that purpose and profits can and do go hand-in-hand. Add CEO Howard Shultz’s non-coffee commitments to creating jobs and fighting political dysfunction in Washington, and it’s no wonder Shultz was selected as Fortune’s 2011 Businessperson of the Year.
Unilever CEO Paul Polman (disclosure: Edelman client) recently questioned whether capitalism had reached its expiration date.
So, how do we build future trust? By starting now, with Purpose.
Carol Cone is Edelman’s Global Chair of Business + Social Purpose.