Robert Phillips The 2015 Anthony Howitt Lecture – Who Can You Trust?

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Robert was speaking at the 2015 Anthony Howitt Lecture at City Hall, London.

Many thanks for inviting me to talk about trust.

You shouldn’t trust me, of course. I used to work in PR. Many people – PRs, politicians, estate agents – have never been trusted and live with a permanent trust deficit. This exposes the false belief that trust itself is in permanent decline. Trust in politicians or estate agents or PR people is not in decline. It is forever low.

Public Relations has been part of the trust problem. It is not part of the solution.

* * *

 “We act with integrity. We maintain the highest ethical standards and transparency in our work and in our dealings with customers, partners, stakeholders and fellow employees. We keep our commitments. We are honest, fair and trustworthy”.

This is the values statement of which company?

Thomas Cook is guilty of what some would call an Epic Failure.

An. Epic. F***ing. Failure.

Commentators have described recent events at Thomas Cook as a PR disaster. This is true. But what we see is not just a failure in communications. It is a substantive failure. A failure in behaviour. A failure in meeting the moral and ethical standards which citizens should demand from modern corporations.

How can anyone trust Thomas Cook when they behave like this? When they fail to do the right thing?

I have spent a decade researching, thinking and writing about trust. I contributed to the Edelman Trust Barometer for six years, always troubled by its slightly clunky “trust is up, trust is down” measurements.

I‘m now more convinced than ever that trust scores are mostly irrelevant; that trust in major institutions, not just individual companies, are in permanent flux; and, as a result of this, there can be no return to “old” trust – trust as we think we once knew it.

The crisis of trust is in fact a crisis of leadership: a failure to rise to the challenges of the world as it is now; and, frequently, a failure to make the right judgments and do the right thing.

To find a better way, we must challenge prevailing business orthodoxy.

We can only be more trusted if we improve our thinking and behaviour.

I would happily retire the t-word from the English language for a while, allowing time to reflect on what it really means to be trusted or trustworthy.  The word has been used and abused to the point of exhaustion.

In research conducted on the Annual Reports of FTSE 100 companies for this conference, it turns out that, over the last decade, the “trust” word was mentioned just 38 times in 2005, but has climbed steadily since – appearing on 317 occasions in 2014.

One thing is certain – trust is an outcome. It is not a message. This is where so many leaders immediately fail. They think that by speaking endless words of trust (or, in Ed Miliband’s case, carving those words in stone) somehow we will trust them. We won’t.

This is Tom Fletcher. I appreciate that he looks like a car salesman in this picture but in fact he is currently ending a tour of duty as Her Majesty’s Ambassador to Lebanon.

Tom draws striking parallels between the world of diplomacy and the worlds of PR and trust.

“Diplomacy has detached itself from public debate through meaningless platitudes; much of its form (summits, communiqués) was designed in 1815 for an age of monarchies and great states; and it has been slow to adjust to the next wave of disruption. Let’s be honest, post Snowden, Assange et al, we are now less trusted than we were…”

 “We need to embrace a more activist, insurgent, citizen-style of diplomacy if we are to survive”

Tom Fletcher blogs as The Naked Diplomat. This is how the Foreign and Commonwealth Office – the establishment – works in the new normal. It is more activist, insurgent and citizen-centric.

Contrast Tom’s thoughts with what we see in business today. Most business leaders still think not in terms of insurgency or activism but instead impose hierarchies and attempt to command and control. They organise themselves through the corporate equivalent of summits and communiqués – and spew the meaningless platitudes to which Tom refers.

Management, as Professor John Kotter points out, should not be confused with leadership. Yet we are trapped within a managerial culture that appears permanently risk-averse, terrified of litigation and dominated by lawyers and Public Relations people. This is probably how Thomas Cook ended up where it did – thinking it could spin its way out of trouble, manage the message, and avoid saying it was sorry.

In becoming so scared of doing the wrong thing, we have lost sight of how to do the right thing. Judgement – a key facet of leadership – has gone awry. The trustworthy organisation needs to add an ethical dimension to what is legal. Compliance alone is not enough.

Saying sorry remains one of the fundamentals of trustworthiness between colleagues and customers, just as it is between friends.

Just ask Nick. The Liberal Democrat leader was demonised by the electorate for his u-turn on tuition fees and for fudging his apology – too little, too late. His lesson is salutary.

No-one wants to be Nick Clegg.

We learned from Tom Fletcher what the world of trust looks like through the prism of Edward Snowden and Julian Assange.

Edward Snowden, whether you think he is hero or villain, symbolises the new normal.

This is a long, long way from the world of Edward Bernays – the man with the fine moustache, pictured on the left.

Modern Public Relations – according to popular legend – was the brainchild of Bernays, who was Sigmund Freud’s nephew. He created PR as a means of control over the masses, whose judgment he did not trust.

Bernays’ legacy is one reason why PR is no longer fit for purpose and is not the answer to the trust problem. No-one is in control any longer. Anyone who thinks they are – and can impose, rather than negotiate, trusted relationships – is living in the wrong century.

To further understand this – and to answer the question “who can we trust?” – we have to understand the mega-trend of individual empowerment. This is the axiomatic power shift from state to citizen; employer to employee; corporation to citizen-consumer.  It is fuelled and accelerated by technology, costless communications and the rise of networks. It is why old institutions – from the BBC to the Labour Party to the medical profession – struggle to be as trusted as they once were. The result is chaos.

Trusted leaders will embrace this chaos.

The new world is complex, too – these networks are inter-dependent. We may trust others within our own networks but will not trust those who think they can impose external control. Complexity adds to the chaos.

Trusted leaders understand this complexity.

Two years ago, I attended a session of the European Roundtable, talking trust with 44 of the 50 CEOs of the largest companies in Europe. At the end of my talk – titled “you are no longer in control” – there was silence. One of the CEOs then spoke.

“What you do not understand”, he said, “is that people like me pay people like you to keep us in control”.

Before I could answer, another CEO jumped in:

“You can pay Robert as much as you like, but the truth is we are no longer in control. The game is up”.

* * *

CSR is often used to flaunt a company’s values. One global brand, in the wake of the Rana Plaza tragedy in Dhaka, Bangladesh, asked me not what they should be doing to help the families of the victims, but instead how I could help them better showcase their CSR credentials in the region, effectively to distract from the issue at hand. All this while the bodies of over 100 garment workers still smouldered.

CSR is not the answer to greater trust.

A FTSE 100 CEO famously used to open his Board Meetings with one simple question: “who do we fuck today?”

A bank CEO once asked me to help him understand what it would take to be “a good and trusted” bank. He was, he admitted, “institutionally blind on an industrial scale”. After several weeks work, I arrived at a number of conclusions. I went to see him with a schedule of principles and behaviours. None of them were rocket science.

The first principle was transparency. The CEO agreed with transparency. I suggested he abolish free banking, given that it is not free – someone always pays – and therefore not transparent. We cannot do that, he countered, because we make too much money from it.

The second principle was “proportionality”. He agreed with proportionality, too, so I suggested abandoning the crazy bonus’ that have bedevilled the banking industry for years. “We cannot do that”, he said, “flight of talent and all that”.

And so it went on.

“Mutuality” was dismissed because he was not prepared to consider wider share ownership for all employees. Yet here was a man who frequently cited the John Lewis Partnership as his model organisation.

In the end, we agreed on ten principles and failed to agree on implementing a single behaviour. He asked me to work with him anyway. I politely declined.

The point is this: if we are to be more trusted, we have to recognise that we are no longer in control; that we have to do the right thing; and that there is no point in adopting principles if you cannot adopt the behaviours.

It has to be about what we do, not what we say.

The management guru Charles Handy shares a wonderful statistic. 80% of employees within a company are not engaged – and do not care. He adds: 25% of employees would actively sabotage the company for which they work.

The revolution is happening in the workplace. Driven by technology, social networks and the culture of activism this engenders, old corporate hierarchies and elites are being flattened. Everyone knows everything and can connect with anyone. Whistle blowers, social media campaigns and citizen journalists will get you. The days of controlling the media are receding fast. Resistance is increasingly futile. In a world where ‘people see what you see’, no-one can impose the future.

But most corporations keep their heads firmly in the sand.  Maybe they think they can ignore the paradigm shift – or that it will just go away. Maybe they are just too bewildered by it all. But some are looking to change, in-tune with these revolutionary times.

The successful, more trusted organisations of the future will be open, empathetic and relational. And given that, in an interconnected world, all of us are smarter than any one of us, those organisations that embrace these traits and beliefs will be more resilient, adaptive and creative. They will attract the most – and keep the best.

The author Margaret Heffernan describes this crisply: the bigger prize lies in collaboration, not competition.

Here is a business leader who speaks trust but fails to earn it.

During my research, I heard Vincent de Rivaz, CEO of EDF Energy, give a truly dreadful speech on trust – full of those “meaningless platitudes” that we heard about from Tom Fletcher. It was in the middle of the 2013/14 winter when debate raged about “heating or eating”. The Big Six energy companies were in the eye of the storm.

The chances are that Vincent didn’t even write his own material. Instead, he churned out the usual banalities about the importance of EDF trusting the customer and the customer trusting EDF.  He did not even seem to believe his own script.

What can we learn from this?

Let’s return the first myth of trust. Trust is NOT a message. It is an outcome. It is deeply behavioural. However many times Vincent used the t-word, I don’t think anyone actually believed him.

The second myth is that somehow there is a silver bullet, or a magic wand, that can restore broken trust. There isn’t. In a chaotic, complex world, there is no single action that can restore, build or maintain trust. Trust is now forever fragile.

Trust has to be hard-fought, hard-earned, and hard-won everyday.

Because of fragility, we can better understand the third myth: that there can be a return to “old” trust. We have to come to terms with the world as it is now and the cliché that change is never going to be this slow again.

Finally, in my experience, there is an inversely proportional relationship: trust often spoken is trust rarely earned.

Vincent, take note.

* * *

I would like to focus (now) on two critical questions.

First, what does trusted leadership look like in this “new normal”?

And, second, how do we better understand the important distinction between trust and trustworthiness?

We need a new model of Public Leadership.

Public Leadership respects the mega-trends we have been discussing. It is activist, co-produced, citizen-centric and society-first. It places purpose, not profit, at the heart of organisations. It asks bigger questions about the nature of society and the importance of common good, as defined by Aristotle and Aquinas.

The more trusted organisation of the future looks more like a social movement than a traditional hierarchy. Just as diplomats need to think like insurgents, so CEOs need to think and behave like social activists, not command-and-control managers in boardroom bunkers.

Better decisions are made by wise crowds of real people – not by pale, male and stale elites. Wise crowds of real people tend to better understand what the common good really looks like.

Public Leadership is citizen-centric and society-first. It is based on the principle of “doing the right thing” – recognising that it is possible to reconcile profit and planet and to understand the difference between profit optimisation and profit maximisation.

I am not calling for the downfall of capitalism but I am arguing that there can be a more imaginative way. Profit optimization speaks to the long-term interests of citizens and society and to the common good. Profit maximisation, as we saw from the hideous excesses of the financial services sector in the run-up to 2008, often speaks instead to the business culture of “who do we fuck today?”

* * *

An obsession with measurement and endless league tables is another dangerous by-product of mistaking management for leadership.

In understanding ”who can we trust?” we need to focus on accountability, not measurement. In so doing, we need to take a more radical approach to honesty and transparency.

The Public Leadership model is measured through Public Value, rooted in the common good. Every organisation will have its unique version – its own manifesto – because Public Value is better co-produced with wise crowds of employees, customers and stakeholders. This ensures its accountability to the many, not the few – the 99 per cent. A bank that thinks in terms of Public Value outcomes, for example, quickly addresses the challenge of being “socially useless”.

Public Value thinking determines better frameworks for ethical and trusted decision making.

Some major corporations are slowly but surely answering the question: “who can we trust?”

There are the usual poster children – Patagonia in the United States and other “B Corps”; John Lewis Partnership in the UK; and Unilever – with its Sustainable Living Plan and its celebrity CEO Paul Polman – almost everywhere. Polman, bravely, recently entered the divestment debate on fossil fuels and has challenged the orthodoxy of reporting only on short-term returns.

There are other global examples. HCL Technologies in India co-produces its business strategies with employees, just as Agora Drinks in the US co-creates its flavours with customers. Porto Alegre – Brazil’s second largest state – has enjoyed participatory budgeting for many years – and the Tata corporation must wonder why CSR ever became separated from the fundamentals of better business behaviour. The workers’ councils of Spain’s co-operative Mondragon demonstrate the John Lewis Partnership model writ large.

John Lewis’ Patrick Lewis has said: “the real heart of business is purpose … which is more than making money or creating financial value”.

Yet business is still haunted by the profiteering ghost of Milton Friedman – a ghost that we, as business leaders, have yet to lay to rest. Friedman and his disciples are the unspoken challengers of common good. Unless we come to terms with better profit, we may never come to terms with better trust.

But what about the distinction between trustworthiness and trust?

“The aim to have more trust is a stupid aim”, argued the moral philosopher Onoora O’Neill in 2013. “Intelligently placed and intelligently refused trust should be the proper aim”.

Trustworthiness – and therefore better judgement – matters more to Onoora than trust. Better judgement is based on a combination of competence, honesty and reliability.

O’Neill points out that no one would ever seek “more trust” from the likes of Bernie Madoff, nor would you trust a dear friend even to post a letter if you knew they were unreliable and had a history of forgetfulness.

Trustworthiness is personal. It is not the domain of corporations or CEOs. It is also reciprocal.

Reciprocal vulnerability makes accountability mutual. Reciprocal vulnerability means organisations are as exposed to their employees and customers as their employees and customers have traditionally been to them.

The more trusted organisation is therefore one that recognises this and creates safe spaces in which dissenting voices are welcomed; where challenging conversations can flourish; and where there may be no single correct answer.

The more trusted organisation is where, metaphorically, the leadership stands naked before those that it serves.

This process is already beginning in places we might least expect. Tax, once secretive, is now being openly debated within crowds. How do we build a fairer society if the bodies that move money don’t play by the rules of responsibility in both behaviour and advice? We need look no further than KPMG (disclosure: a client) who has recently begun an open and public debate on responsible tax and the common good – and created a safe space for a wide range of voices.

We have brought many dissenting opinions together, from global corporations to NGOs and activists – including Tax Research UK, Action Aid and Christian Aid. We have welcomed faith leaders and the CBI, HMRC, the Treasury and the Public Accounts Committee. Margaret Hodge – vociferous critic of the Big Four accounting firms and of many global corporates – has been transparently involved in the process.

No-one can learn if they do not listen. No-one can be trustworthy if they do not demonstrate reciprocal vulnerability.

Ultimately what we have created, deliberately, is a space KPMG cannot control – and it would be pointless if it tried to. Instead it is a space where everyone holds everyone else to account, however scary that may be.

This Jericho model is now being developed in other critical issue areas – from Divestment to the Living Wage; from Social Impact Investment to affordability and the housing crisis. These are all areas of historically low trust, great fragility and some antagonism. But trust can be better built by embracing vulnerability – and by being honest and transparent, together.

As part of the KPMG project, I was privileged to spend time with Dr Rowan Williams. I learned that trust and faith have the same root. We cannot have trust in business if we do not have faith in business – with both a small and a capital F. He, too, cited Aristotle and Aquinas. The cornerstone of faith is a belief in the common good. This demands ethical, principled behaviour and ethical, principled leadership.

Rowan returned to the matter of apology. “We’re all familiar with how we feel”, he remarked, “when someone says only ‘I am sorry that you feel like that’, rather than apologising outright”. We all know what he means. Sometimes, only a proper “sorry” will do.

You may wonder why I am concluding this talk with a photograph of Mandy Rice Davies?

One serial NED, when I asked about how their organisation approached ethics & values, remarked: “Oh? We have a sub-committee that deals with that”.

Business and politics are disfigured by too many “Mandy” Chairmen and CEOs. They trot out the usual, hollow words of trust. Or they hide behind sub-committees, lawyers or PR-men. To paraphrase Mandy: they would say that, wouldn’t they?

We need actions, not words.

The answer does not lie with crafting narratives, managing messages or meaningless platitudes.

To be more trusted:

  • We need to create shareholder value in responsible ways (not use bullshit CSR to cloak responsibility)
  • We need to think about profit optimisation, not profit maximisation
  • We need to think and act in terms of public value
  • We need to celebrate collaboration, not competition
  • We need new models of accountability and be prepared to stand naked
  • We need to say sorry when only a proper sorry will do.
  • Above all, we need actions, not words

Our future will be negotiated, not imposed. There is no longer an absolute right or wrong – just this permanent state of flux and chaos and a permanent – and challenging – fragility of trust.

Making the right decisions and doing the right thing have never been more important.

Just ask the bankers – or Thomas Cook.


You can find more information about the evening at CIMA and CGMA

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