Get used to post-truth business in 2017

Post-truth was 2016's word of the year. After a 2016 dominated by post-truth politics, we should get used to post-truth business in 2017

The publishers of the renowned Oxford Dictionary, Oxford University Press chose "post-truth" as its word of the year along with the Society for the German Language (GfdS). The phenomenon has become a subject of intense debate well beyond the confines of the English language. It has also made me stop and think.

First of all, what is actually meant by post-truth? Post-truth refers to the phenomenon of emotional appeal playing a more important role in the shaping of private and public opinion than demonstrable fact. In 2016 alone the use of the phrase increased by 2000 per cent, more specifically in the context of two significant political events: the Brexit referendum and Donald Trump's victory in the US Presidential elections.

The emotions awoken by the arguments are stronger than the facts on which the arguments are based

Biased media coverage, distorted arguments, massaged figures – post-truth society has many faces. The difficulty is that it works. We have never had so many fact checks, politicians' statements have never before been subject to such meticulous deciphering, all of which has had little or no effect on voter behavior: Those emotions awoken by arguments being put forward, prove to be much stronger than the facts upon which they are based.

The economy will not be spared…

Anyone who believes that this phenomenon is restricted to politics is mistaken. It also affects the economy. The Vinci Group went through this painful process only last November. A faked press release concerning alleged financial scandal and dismissal of the Head of Finance as a consequence thereof resulted in a fall in share value of 19 per cent. The official denial was too late to prevent the loss of 7 billion euro. That said, this particularly bizarre example is hardly unusual: In the same month, the faked reporting of a takeover by Chinese investors put the US company Fitbit into a tailspin. Radical environmental activists put out a fake press release in 2013 questioning the viability of a coal mine owned by the Australian Whitehaven Coal Group thus causing the company's share value on the stock exchange to nose dive.

In short, the political events of 2016 have their equivalent in the world of financial information, with effects that are both large-scale and dramatic.

Appearance is more powerful than fact

From my perspective this isn't a new phenomenon, even if what happened to Vinci is symptomatic of some dysfunctionality or, more simply, an example of fraud; what we are witnessing here is the culmination of a long-standing process, one which has prepared the ground for post truth reality. How many business leaders since the nineties have had to face this question? In the minds of customers and partners, perceived company reputation and image is either on a par with, or more important than the true facts of the company's situation? Despite the availability of facts and figures, the financial markets are increasingly prone to rumor–driven reaction. Appearance defeats reality.

The increasing importance of brand leadership within corporate strategy is not just down to chance. Interbrand's renowned list of the most important brands has confirmed this fact: A brand has its own aura, which is not reflected by the economic success of the company, rather by its ability to awake a sense of need in the customer. Up until 2000, Coca-Cola was the world's most valuable brand; in the meantime however, it has long since been upstaged by Apple and Google. Just one more indication of the significance of new technologies in our world and our perception of the same.

Find your Gemba

Should we be concerned about the fact that the world is increasingly ambiguous and determined not by facts but by emotions? This is certainly the case if abuse or malicious intent is likely to occur.

Our institutions – politics, the economy, and the media all need to check and confirm the validity of the information used to shape public debate. They have to be aware of the danger that can be caused by manipulation and must create an efficient means of sanctioning such a development.

However this will not change that fact that the incomprehensible and the emotional are increasingly gaining credence particularly within the business community. Companies are faced by the constant challenge of merging the material with the immaterial, that is to say, what they do with what they represent, so that both aspects are viewed as part of one whole.

The idea of concentrating solely on the leadership of a brand, which is completely separate from the rest of the company on the basis that perception has become more important than reality, is tempting. But it can lead to disaster as in 2000 when enormous investments were made based on promises, which had no grounding in objective facts.

On the contrary: It is more important than ever before to locate companies according to their skills and coordinates in the real world (and not just that which is perceived to be real). This is the only means of creating added value in the long term and of supporting the brand. The Japanese concept "Gemba" is extremely helpful in explaining how this can work. Gemba literally means "the real place". In business it is used to refer to the place where corporate value is created. A fully-functioning company knows where its Gemba is and nurtures it accordingly, for it is the center of every company's entrepreneurial sense of balance.

In this post-truth world, this reality anchor is indispensable. From Siemens to Rolex, to Chateau Margaux to Ferrari it is the quality of the products and related services, which make the difference in the long term.

In that sense this represents good news for Europe with its powerful, industrial and cultural heritage. Let us be optimistic, bring 2016 to a close and get back to normal by removing the "post" from post-truth.