Innovation Trust and Capitalism
This year’s Edelman Trust Barometer,[1] which was released earlier today in Davos, looks at trust and innovation. Edelman summarizes its findings in a paradox: “Rapid innovation offers the promise of a new era of prosperity, but instead risks exacerbating trust issues, leading to further societal instability and political polarization.”
Among the findings, Edelman notes that institutions are not trusted to introduce innovations to society. Business might be the most trusted institution, but business is still not fully trusted. Those who believe in capitalism should think about this.
Capitalism is built on innovation. The magic of capitalism is its potential to tap the creative potential of an entire society to create new products, services, and processes. If those who are innovating are not trusted to introduce them to society, what becomes of capitalism?
Among four recommendations for solving the paradox, Edelman advises CEOs to take a stand on emerging ethical concerns. Amen!
Over the past couple of years, companies in the U.S. have faced a growing backlash against stakeholder capitalism, corporate commitments to the principles of ESG, etc. Many have been advised to speak out less about these topics, and to only talk publicly about issues that are core to their business success. For what business is innovation not core to success?
The social responsibility of a business has never been solely to make a profit. In how it makes a profit, a business builds or erodes trust with the people who give it the license to operate. As the rate of innovation in areas such as artificial intelligence, green energy, and genetics accelerates, silence about ethical issues is no longer an option.