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February 9, 2012
The Conundrum of Democracy
I have been on tour, presenting the results of the 2012 Edelman Trust Barometer to groups in London, Davos, Toronto, New York City, Washington DC, and Chicago. As you recall from my post last week, the key finding of the 2012 study is the massive decline in trust in government. In fact, in all but one of the countries we survey, government leaders are less trusted than their business counterparts to tell the truth. At Davos, Rick Levin, president of Yale University, said that he was interested in the “superior trust in government in countries that are not democratic.” He attributed this in part to the strong economic performance in China, Singapore and the UAE. But, he added, the governments in these nations “have set out a long-term plan and have been successful in implementation.”
In Chicago, Steve Schmidt, vice chairman of Edelman, said that “politics in a democracy is about assigning blame. Business is vulnerable to charges by the incumbent party, which is trying to shift responsibility for slow job creation or unfair income distribution on to the private sector. Meanwhile the opposition party is pushing a narrative of the other guys’ incompetence which lowers trust in every institution. You have to overcome the gravitational pull of distrust.”
Schmidt noted that government confronted by low ratings in opinion polls is likely to act in an unexpected, highly politicized fashion, as was the case when Chancellor Merkel made the decision to ban nuclear energy in Germany by 2020 in the wake of the Fukushima disaster, though the country is at low risk of earthquake and no risk of tsunami.
The central question for business intent on recovering diminished trust, which has tended to move in sync for business and government, is whether to wait for government to regain its bearings or to press forward on its own and lead on such issues as sustainable agriculture and hydraulic fracturing for shale gas. My contention is that it is a higher risk for business to stand aside; instead, it must grasp the opportunity to educate the public on its rationale for policy change and the benefits that will accrue to stakeholders, not just shareholders.
Professor Dan Diermeier of Northwestern University offered a fascinating insight at our lunch in Chicago, suggesting that business is already implementing “alternative regulatory mechanisms” that go beyond what government is mandating. “What Walmart is doing in sustainability is solving a governance gap. It is requiring that its suppliers do more than the minimum on packaging and carbon footprint if they want to continue to sell through this channel.”
“The expectation of business has risen over the past decade,” he added. “Business must do sustainability, animal rights, and consumer protection. You must be able to tell a societal value creation story as part of shareholder value creation.” Diermeier cited the creation of local agricultural suppliers, through financing, education and long-term purchase deals by Pepsico.
This can go beyond corporate reputation management into brand building, according to Steve Silk, CEO of F&F Foods, who has managed products as diverse as Jello and Hebrew National. “When we said that Hebrew National answered to a higher authority, we were telling the consumer that we were beyond the USDA regulation,” he noted. “But we had to make sure that we had identified a willing consumer segment, in much the same way Ben Cohen and Unilever have with Ben & Jerry’s ice cream.”
The conundrum of democracy, vulnerable to both swings and stasis, can be managed by a self-confident business community that understands its role to be the full circle of consumer benefit, employee mobilization, shareholder value, and community participation.
Posted by Edelman at February 9, 2012 7:53 PM |
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Comments
It is the aim of good government to stimulate production, of bad government to encourage consumption.” — Jean Baptiste Say
Based on the preceding quote, aside from one-off “special causes”, trade surpluses, especially in manufacturing, should equate to superior trust in government over an extended period.
Adversarial competition, which may have merits in economic arenas, is lethal to the public policy making process. When partisans are interested in proving themselves right, than getting things right, the atmosphere is not conducive to continual improvement. Citizens can’t expect results to exceed the sum of the parts, when the interaction of the parts is not synergistic.
Posted by: Hugh J. Campbell Jr. CPA at February 9, 2012 10:45 PM
Hi Richard: I just watched your 2012 Edelman Trust Barometer talk from the Social Media Club in Chicago with David Armano. Very good discussion. Almost half way through you referred to smart brands catalyzing. 1) Is this the same idea as going viral or is it more in-depth than that? Is there anything further I could read on the subject? http://www.scoop.it/t/always-in-beta had a TED Talks with Seth Godin on creating tribes which came up when I Googled the concept of “smart brand catalyzing” Following your presentation, now I know I’m dating myself by using Google as a reliable search. Being an avid blogger; 2) What are your thoughts on the recent report from MarketingProf’s and the Dartmouth study regarding the movement from Blogging to Social Media. http://www.marketingprofs.com/charts/2012/6993/inc-500-social-media-use-facebook-linkedin-up-blogging-down 3) Do you think there will be a greater use of forums stemming form this change and funnelling twitter feeds as a possible driver for this? Appreciate your comments. Regards, Ross
Posted by: Ross McCutcheon at February 10, 2012 4:13 PM
I doubt there is lots of trust in "business", especially big nor is there much trust is government. I think you are very naïve about self-regulation: yes some companies are understanding they have to change the way they operate but many don't. We'll see how the soda makers will react to the fight against obesity that will impact directly all the beverage with sugar. Wait for the type of defense the tobacco industry developed... I'd be curious to know where you stand on shale oil and fracking...
Posted by: philippe at February 28, 2012 12:23 PM