It Takes Two to Tango: The importance of the plus sign.

At the heart of PwC’s?The New Equation?strategy is the phrase “building trust + delivering sustained outcomes”. At first glance you could be forgiven for thinking that the phrase contains two key elements, but in fact there are three:?trust;?sustained outcomes; and a plus sign linking them both together. This blog post is about the importance of understanding that link.

The plus sign is so important because?it underscores how?the concepts of “trust” and “sustained outcomes” are bound together and are inseparable from each other.?Narrowly focused and short-term outcomes in recent years have created a trust problem. At the same time, trust is a vital factor in achieving sustained outcomes. Our ability to understand — and ultimately overcome — this paradox is essential for the world’s future success and prosperity.

In our book?Ten Years to Midnight, my co-authors and I looked in depth at the worries people across the globe have about the future: rising inequality; the disruptive impact of climate and technology; growing societal and political polarization; our inability to address the impact of demography; and the erosion of trust in institutions. Every one of these worries derives from a set of real-world, observable outcomes. Disparity in wealth is growing between people, regions, and generations. Technology has created a winner-takes-all economy, social media algorithms have increased anxiety and enhanced polarization in our society — through disinformation and an echo chamber effect that amplifies our prejudices. Many are facing a precarious retirement with scant resources to support them in their old age, while young people from around the world face an uncertain economic future. Increasing political tribalism is making it harder and harder to reach consensus on the important problems we need to address collectively.

These problems matter to ordinary people, and the inability or unwillingness of governments, institutions, and leaders to tackle them has led to a widespread decline in trust. When we wrote?Ten Years to Midnight, we looked at data from the Edelman Trust Barometer, which examines the percentage of the population who feel that the system is working for them. In the last year, according to Edelman, trust in society’s leaders has continued to decline — and 56% of those surveyed believe business leaders are deliberately trying to mislead.

Source: Edelman Trust Barometer 2021, edelman.com/trust/

We can find real-world illustrations of these trends in virtually every industry and geography, but today I will focus on the energy sector in Europe. These examples jump off the page of my morning newspaper at the moment.

Energy suppliers are not generally perceived as heroes by the public, and trust in them tends to be in short supply. Consumers struggle to reconcile their own daily struggles with perceptions of massive corporate energy profits. Accusations of “greenwashing” have not helped. A 2019 investigation by consumer group?Which??uncovered cases where energy marketed as “green” was actually purchased on the wholesale market. As always, the detail beyond the headlines is more nuanced, and there are honest actors among the bad apples, but the seeds of mistrust have already been sown.

The energy policies of various governments have not helped. In many countries, there has been a race to dismantle national power systems before replacing them with viable alternatives. In Germany, the hasty decimation of their nuclear energy capabilities, following the 2011 Fukushima disaster, has had the unintended consequence of increasing their energy dependency on Russia, with all the logistical and political complexity that entails. In the UK, the government has succeeded in reducing emissions, but their chosen approach has also led to a particular reliance on natural gas. This may have seemed sensible enough at a certain point in time, but as a sustained outcome, it falls far short. Today, with North Sea supplies dwindling, and a woefully inadequate gas storage capacity, the UK’s gas reserves can barely cover five days’ winter usage, and alternative energy sources are nowhere near ready to pick up the slack.

This is all coming to a head. Across Europe, surging wholesale energy costs are sending shockwaves through an already precarious system, with price rises of more than 250% since January. Some energy suppliers are passing these costs directly on to the consumer. Others — prohibited from doing so by government policy — are suffering painful losses, or even going out of business. This situation is hitting European consumers very hard just when they are looking towards the coldest months of the year. Some of Europe’s poorest have genuine concerns if they will be able to heat their homes this winter.

Whether energy suppliers and governments have planned for it or not, trust will be a critical factor as they attempt to navigate the current crisis. They will need to explain to angry and worried citizens that there are complex underlying causes for these price rises, and that it’s not just profiteering. If they are to avoid more serious consequences this winter, governments and energy providers will need to ensure consumers stay calm, understand it’s a temporary situation, and make sensible decisions about heating and energy consumption. With trust in short supply, this task will be extraordinarily challenging.

It’s clear that if we don’t focus on sustained outcomes — the outcomes that matter to people — we will lose the public’s trust. However,?it’s equally important to look in the reverse direction and understand why trust is essential to sustained outcomes. There are two key factors to consider here:

1. Long-term change is virtually impossible without the buy-in (or at least understanding) of the individuals involved.

Societies, governments, and systems only sustain over the long-term when they have the consent of the majority of people involved. Achieving a sustained outcome today requires the impacted parties’ acceptance, buy-in, or at the very least understanding of the outcome. If they are opposed, the outcome won’t stick. With overall levels of trust so low today, it is becoming harder and harder for organizations to achieve any outcome of significance or scale. The larger or more complex the outcome the organization is trying to achieve, the greater the risk of failure. Large projects risk losing support along their change journey as stakeholders find themselves in unfamiliar territory. If individuals have no trust in the organization or the direction of travel, if they see their own interests in conflict with the change, they will resist and not commit to a new way of working. The initiative will then stall, leaving the organization stuck in the middle of a change process. This is the worst of all outcomes, where the organization is no longer doing well what it did before, and neither is it realizing the benefits of the new outcomes. An organization stuck in the middle does nothing well.

2. Delivering a sustained outcome often requires systemic change. For interconnected systems to change successfully, there needs to be enough trust and understanding to arrive at a common vision.

We can see this point clearly when we look at the example of the food industry and its response to climate change. Think about your weekly grocery shopping basket. If we are to achieve the international goal for managing global warming within thirty years or less, everything in your basket needs to have net zero carbon emissions. That means net zero at the point of sale, net zero when you use the items, and net zero in the way every item is packaged, transported, and disposed of. Let us consider for a minute all the players that must align their processes to make this change happen. Every farmer has equipment, land, livestock, seed, storage, labor and processes built on our present model of agriculture, sometimes financed through debt. Others have invested in delivery from the farm, food processing, packaging, water and energy supply, distribution, channels, restaurants, hotels and much more. This is a whole complex set of interdependent parts that need to be changed simultaneously if we are to address the climate impact of agriculture and food waste. The livelihoods and fates of millions of people rest on this system in its present form. Changing it quickly and well will require a massive investment in creating and sustaining trust throughout the change process. That trust needs to extend across the political divide and across nations.

Once we understand the chicken-and-egg nature of the relationship between trust and sustained outcomes, we can appreciate the link between the two. Let’s take another, very contemporary, example. Governments around the world are making huge efforts to persuade their citizens to get vaccinated against COVID-19. They have good, and noble reasons for doing so. Vaccination is a game changer. There is ample scientific data that individuals vaccinated with WHO-approved vaccines have less chance of catching the disease and benefit from significantly better outcomes in the case that they are infected. Furthermore, vaccination has a cumulative effect, whereby the net positive impact of vaccination for the population as a whole greatly improves as the percentage of vaccinated citizens increases.

There are many logistical and economic reasons why poorer countries struggle to vaccinate their citizens. But many rich, developed nations with well-educated populations and plentiful vaccine supplies are coming up against significant resistance, suspicion, and vaccine hesitancy. In the United States, at the time of writing this article,?less than 60%?of the population was fully vaccinated. Here, we see an acute example where mistrust poses a barrier to achieving a sustained outcome.

“Coronavirus (COVID-19) Vaccinations”. Published online at OurWorldData.org. Retrieved from:?https://ourworldindata.org/covid-vaccinations

What has led to this lack of trust? While the causes are complex and manifold, we don’t have to pull too hard on the thread to find examples in recent memory where companies have put profits before people, and where the state has failed to protect its citizens. The aggressive marketing of highly addictive prescription opioid pain-relieving drugs in the US throughout the 1990s led to millions suffering from substance use disorders, and more that 47,000 deaths from opioid overdoses in 2017 alone. People remember these outcomes. And this is by no means a problem confined to the United States. It almost goes without saying that the COVID virus doesn’t respect national boundaries — and defeating the pandemic successfully requires us to effect systemic change, which will mean thinking and acting beyond national boundaries.

So, now we have taken to heart the importance of the link between trust and sustained outcomes, what should our conclusions be?

First, we must understand that?we cannot treat trust and sustained outcomes as separate things?— they are inherently intertwined. When we fully grasp that, it is often the case that we realize the problem we’re looking to solve is actually much, much harder than we first thought. But it’s at that same moment that we have truly understood what it takes to solve the problem — and that focus offers a path to salvation.

This leads us to our next conclusion:?solving the world’s most important problems forces us to confront stark realities and difficult choices.?We cannot afford to avoid the real issues. It is easy to muddy the waters and confuse the issue with half-truths. It’s easy to get lost in short term personal gain or politically expedient acts. It’s easy to shift the focus on to small unimportant details. But ultimately, none of these behaviors will solve the urgent problems we all face. It will take courage, and it will take real leadership to get us there.

For more information on The New Equation, please see PwC’s website:?https://www.pwc.com/gx/en/the-new-equation/the-new-equation-strategy.html