The crisis the world is suffering through now is a failure of leadership. The leaders of the world are in Davos. If the world is watching what happens here this week, it will be to hear solutions and see responsibility and accountability. I’d say that’s not off to a great start, at least on the latter.
This morning, I started my Davos week with talk of trust. The Edelman Trust Barometer presentation revealed plummeting trust in financial, government, and journalistic institutions: 62% of adults in 20 countries trust companies less than they did a year ago. Trust in government is even lower.
Nonetheless, the first trend I spot here: the rise of government. News reports have been saying that this will be a dialed-down Davos, but I don’t see that; it’s the same Davos with the same pastries and parties. The change I do sense is less of a presence and apparent swagger from business and more from government. “Power has shifted from Wall Street to Pennsylvania Avenue,” said a speaker the Edelman event.
The other obvious trend is America to the woodshed. “America is the new Europe,” Richard Edelman said. In a decade of the survey, they have never seen such a precipitous drop in trust in one category: American business, falling from 58% to 38% in a year, now stands equivalent to France and Germany and under the UK. The least-trusted industries in the U.S.: no surprise — automotive and banking.
In most markets, trust in business remains higher than trust in government, “which is not a good thing for either,” Edelman says. Asked who can fix the economy and prices, government is now clearly the preferred leader, the survey says. The percent who agree that government should impose “stricter regulations and greater control over business across all industry sectors:” 61% in the U.S. up to 84% in France (65% worldwide). The percent who trust business less: 62% worldwide, ranging from 77% in the U.S. down to 49% in India.
The survey reveals a new world spit: optimists in China (where trust in business rose from 54% to 71% in a year), Brazil, India, Indonesia, pessimists in the US, Europe. “The United States picture is really bleak. I can’t put a better face on it,” Edelman said.
Edelman advised companies to make change and not wait for regulation, to recognize mutual social responsibility, and to show “shared sacrifice…. This is not the French Revolution yet but it is certainly not the roaring 2000s,” he said.
His advice on communication: “It can no longer be Moses from the mountaintop.” You have to inform your employees and enable them to blog, for they’ll talk anyway. Communication moves from messaging to informing the conversation, he said. If one can trust companies — only 29% do. Government is worse; only 27% trust what they say.
Lionel Barber, editor of the Financial Times, began the session saying that trust is an issue for the press as well. Edelman found that trust in business magazines and analysts fell from 57% to 44% and from 56% to 47% respectively. Trust in TV news is down from 49% to 36% and in newspaper coverage from 47% to 34%. Stop on that: Two thirds of people don’t trust newspaper articles.
After all this talk about trust, though, breakfast ended up serving spin. An executive of AIG split a very long hair, drawing a distinction between distrust over morals and distrust over competence and he argued that our issue now is the latter. An executive at another company said trust fell from a record high to a record low and he wondered whether business had simply oversold itself. Then there was much discussion of a new concept (or new buzzphrase): “private sector diplomacy.” Isn’t that a fancy way to say PR?
Later: A video of Richard Edelman after the session on trust:
: Crossposted at the Harvard Business Review, where I hope another discussion blooms.
My photos from the breakfast are up here: http://www.flickr.com/photos/scobleizer please feel free to use any of them. My video of Edelman will be up shortly at http://www.kyte.tv/scobleizer
Jeff,
Thanks for the interesting summary. Tell the AIG guy to get a clue. It’s all about morals. Competence is not the issue. We know that AIG and other companies were very competent at exploiting the lack of regulatory oversight to create complex financial instruments to generate near-term profits. We know they were very competent at ignoring warnings of long-term risk in order to maximize short-term gains. What they lacked was a moral compass that would have told them to stop what they were doing before it blew up.
This is the flaw in the now-discredited philosophy that markets will regulate themselves. Left unregulated, markets will seek to maximize profits at all costs. Morality does not factor into this equation. That’s why we need regulation. Few companies, especially in the financial sector, will allow morality to impact earnings. They assign morality to the department of corporate social responsibility. a cost center closely tied to PR and marketing.
Kind regards,
Evan
i totally agree, most people dont even trust their governments take the case of the US bailouts. that was what sealed the fate for public in my view. They gained the trust of the public, said trust us, we know what we are doing, we would safe guard the system, dont worry we have all the knowledge, but could have been given such liberty to billions of dollars in tax money with out any form of monitory system in place to evaluate how the money is spent. The result over 350billion has been pumped into the financial sector and now we dont even know how the money was spent. With some of the same banks now in crisis. A real pity in my view. The only way trust can be built is at the grass root level and that’s where the blogsphere comes in, cos we trust what our friends tell us more than some corporate ceo who takes a private jet to congress to seek some funds to safe guard his failing company.. really sad in my view
the last meeting of the old paradigm ..
they haven’t a clue …
do not pay any attention to them ..
none … go build a useful world, all davos is bankrupt, emperors with no clothes
just to add, only we can make a change in the system and bring the trust back to the system, cos right now, i dont think anybody really wants to believe anything company ceo’s or government official really say till they see results.
regards
@elnatobi
Interesting numbers….
Every journalist is asking a question “How will we get out of this mess we made?” expecting an answer that will make sense. People look for a silver bullet. People want to be told everything will be alright and that is why they ask questions.
This crisis is unprecedented in its nature, scale and impact. And as deep as it cut, it clearly revealed the mentality (and subsequent behavioral) gap between the developed West and the developing and growing East (India, China) and regions such as Latin America (Brazil).
Trust is the first sign. Everything else stems from it. Decreased spending, change of buying and saving habits, etc.
There is no answer how we can address this crisis. We have to tighten our belts and embrace for a rough ride with no clear vision ahead of us and only our values, aspirations and intuition to guide us.
Jeff,
Thanks for the video and your insights here from DAVOS. “You have to inform your employees and enable them to blog, for they’ll talk anyway. Communication moves from messaging to informing the conversation”… Agreed.
A lot of companies are blogging, using twitter, facebook, etc without the company blessing… which i think is a good trend.
Conversation is the new currency. Being “transparent” needs to move past a buzzword and become part of business culture… In due time it shall happen. It needs to be 4 years ago, but I understand corp slow to embrace/engage mentality… flawed as it might be.
Trust is earned, not a given. Time for Businesses and Corps to look in the mirror and admit they are ugly in many ways. Admitting your shortcomings (lack of accountability, transparency and trust) is the first step toward improvement and increased trust. The second step is talking to us… we already know they are ugly. Let’s pull together and lift the trust factor.
Cheers!
Rodney Rumford
Rodney says: “Conversation is the new currency.”
Care to explain your buzz phrase? You can’t trade conversation. Openness is now important to rebuild trust yes. But its not a currency.
Any trending data on trust of Web content? Blogs? Microblogs? Does Davos go there?
I totally agree with the statement that the important thing for companies to do is to encourage their employees to have a voice and participate, rather than just the CEO or CHQ team.
In fact, we are seeing a big shift from top-down, heirarchal communications to a more side-to-side, trust based communication system. And the best thing folks in comms and marketing can do is enable that shift.
So were all those people who bought cheap mortgages idiots who got them from companies they didn’t trust? Presumably not. In that I case I can see what the AIG guy is trying to say.
He’s still spinning for his life by the sound of it, but, you know.
Richard Edelman? The man whose career is based upon putting lipstick on pigs? The man whose firm created fake blogs and astroturf groups for Walmart?
Notice that whenever a big firm is caught doing something illegal there is a settlement which involves some payment of a fine, but never any admission of wrong doing. The fine, of course, comes out of the pockets of the shareholders, not the managers who perpetrated it.
The public, rightly, has little trust of the leaders of big institutions since they see them act with impunity. At least in Japan disgraced leaders quit and then don’t go on to make a career being a pundit on TV.
We lack the sense of shame in this country.
Thanks Jeff for taking the time to post such an insightful piece.
It’s a whole new ball game now that the public is not totally dependent on the main stream media to obtain their information and formulate opinion right?
Business and government had almost complete control over the MSM propaganda machines in the past. If one had an opposing viewpoint it was easily debased and ridiculed with ad-hominem attacks like: Oh that’s crazy talk, no one feels or thinks that way” Our leaders were in complete control. Hammering away their messages and their views and their perspective to promote their personal gains regardless of the social or moral consequences.
The MSM got to decide what was important to promote and what should be suppressed
However now with the social networking no matter how “out their” your opinions or viewpoints might be you can find a group that shares your opinion and it’s hey maybe I’m not that crazy after all..
Talk radio and TV are out with the next generation entering the workforce. Individuals can focus and promote via viral networking whatever interest they so desire. People have been empowered.
There’s a panic brewing over this loss of control as I see it.
Based on the initial reports out of Davos it appears that no one really wants to clean up their act and be morally responsible. They are more interested in regaining control of the new media instead, the blogosphere. Rebuild a new propaganda machine and stay the course even with a broken moral compass
Problem is our leaders are in denial. Everyone can see that we are off course. It’s the moral compass that is broken and they want to redraw the maps instead
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In PR we trust
i hear ya on the failure but i think its more a failure of Who’s Wearing The Emperor’s New Clothes – if so many people believe in something how can it be wrong mixed with our addiction to fear, belonging and top down management by fear as a systemic problem that we keep on repeating since before recorded time – living in denial that our fearless leaders are protecting us and must deserve our trust even when they can’t be trusted – but maybe we the people have only been pretending we are zombies and going along to get along even though we knew it was wrong and with the advent of social communications, social media and social sculptures we can take back the future from those who say they are protecting us when in actuality they are only protecting themselves – and maybe one day our beloved worshiped leaders of the world will decide they need another war because that is their trade is in war and they/we need another distraction from their manufactured chaos and call a war and we the people won’t show up – food for thought
i leave you with this quotation from Thomas Jefferson
“ We are to guard against ourselves; not against ourselves as we are, but as we may be; for who can imagine what we may become under circumstances not now imaginable – Thomas Jefferson to Jedidiah Morse 1822 ”
more quotes from Jefferson here on where we are today
http://emperorsnewclothesproductions.com/jefferson
- geo geller
Jeff said: “The crisis the world is suffering through now is a failure of leadership.” Well, if you mean some government leaders and some business leaders have made stupid/greedy/immoral choices, I agree. But if you mean we need somebody to “lead” us out of this mess, I disagree, particularly if it involves massive spending bills that only re-distribute wealth to cronies.
“The Edelman Trust Barometer” – can it be trusted?
“In most markets, trust in business remains higher than trust in government, ‘which is not a good thing for either,’ Edelman says.” Why? I have more faith in a businessman to run his company right than I do the government to “fix” everything.
Include me out.
101 PR crisis management applied to governance. Please tell me there’s more to that.
Thanks Jeff. Excellent report. We all have worked to do with each and every interaction, each and every opportunity to accept a accountability. Speaking of which, what was the name of the mysterious AIG “guy”? I’d like to know.
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