Over the summer McKinsey published their top 10 trends for the next year or so in Harvard Business Review in July 2009 http://tinyurl.com/l2ooj3. This post discusses the trend related to declining levels of consumer and public trust in business.
Trust in business running out – an accelerating trend
Trust shapes every relationship. It is the foundation of commerce. Eroding trust levels raises the cost of doing business. McKinsey points out that trust increases transaction costs, lower brand values, greater difficulty attracting customers and retaining talent. Internally, McKinsey points out the corrosive effects of a low trust environment on governance and compliance issues.
McKinsey’s recommendation is to do what they can to regain the trust of stakeholders and to move to more effectively manage relationship with them.
Trust is an information-based issue
The McKinsey piece described trust largely in terms of corporate governance and managing multiple stakeholders. The leads executives about business and trust and they will respond with transparency.
IT supports transparency through information-based initiatives like corporate performance reporting and increasingly the use of web based portals. While transparency is important it tells you have has happened, reporting the absence of trust rather than the tools and techniques that build trust moving forward. This is where IT plays an important role in addressing this trend.
Information is an essential element in building or destroying trust. Trust is build through the congruence of information and expectations. Trust builds when what you think will happen actually do. That requires bringing information together with process, product and service definitions. The information required to build trust extends across several dimensions:
- What you tell customers as they use your information to set their expectations. Take a fresh look at the information and signals you give customers from marketing through support. Then ask do we deliver to those expectations all the time.
- What others say about you as customers increasingly access peer information and recommendations via social media sites. As a senior exec at eBay told me once, do you know how many negative reviews it takes to drop your eBay sales by 10% — one.
- What your people are able to say to the customer – after all trust is based on demonstrating that you know whom you are dealing with. What information is available to front line works across ALL channels to know the customer and create the connection needed to re-enforce trust.
- What you tell your people about themselves – if they don’t trust you, then how can they build trust with the customer. This goes beyond rewarding the right kind of behavior to helping people build trust by feeling trust from the company.
These are some of the points associated with trust building. IT’s ability to deliver this information consistently means that trust, information and processes require IT to support trust across the enterprise.
Executives who see trust as just a matter of transparency across stakeholder groups will see limited results.
However, executives who recognize that trust exists in the connection of information, expectation, delivery and consistency know that a failure in business trust represents an opportunity for new sources of competitive advantage and growth.