Trust in the Age of Uncertainty

President Xi Jinping is certainly giving China’s greatest philosopher reason to be rolling in his grave. For Confucius, trust was core to life: “Abandon weapons first, then food but never abandon trust.” But as global news sources have reported, to the current President of the People’s Republic, trust might not be needed when you have weapons, police and laws and regulations to be promulgated to suit whatever is required to make your people compliant. Paradoxically, China is the most trusted nation as judged by its ‘citizens’ (Edelman Trust Barometer 2020). But could the Chinese people not say what their government wanted to hear? 

Who needs trust? Do governments, companies, institutions still need trust in the 21st century?

Trust in governments has been tested like never before during the global pandemic. Most leaders cloaked their lockdowns, advice, conditions on scientific evidence with the myriad of specialist advisors seemingly at odds at times over what was the truth or valid when it came to protect the health of citizens. Who should or could be trusted? Is it safe for parents to send their children back to school? Should we trust the proffered odds that they are unlikely to fall ill or infect their grandparents as a result? Should we trust politicians desperate to avert economic depression to hustle back to the office to keep the landlords, barbers, restaurants, gyms et al viable whilst the threat of catching Covid19 remains so real?

People across all the world’s leading rich economies have turned more sceptical about their governments’ handling of the coronavirus pandemic with confidence slumping the most in Britain. In May, in the Group of Seven nations as a whole, 48% of respondents approved of how authorities had handled the pandemic, down from 50% in April and 54% in March, the survey published by polling firm Kantar showed.  Britain saw the biggest drop - a sharp fall of 18 points from April to 51% - while in the United States, Canada, Germany, France and Italy, the declines ranged between two and six points. Japan was the only country to show an increase.

And it seems some tech companies have squandered the trust users had in them with advertisers pulling out left, right and centre due to the inability/inaction of Facebook and Twitter to control fake sources, trolling, political hacking and manipulation of content that is putting their users/consumers off.  Over half of tech experts themselves predict that technology will weaken democracy (Pew Research, Feb 2020).

Blind faith or calculated courage?

A good definition of trust is where the actions, the character or the intentions of another cannot be confirmed but we take a leap of faith and back them anyway. Trust is risky and requires an interplay of intuition, experience and courage. To some degree, we are doing this daily without too much angst. Airbnb, Tinder and Uber are testimony of putting our faith in enhanced profiles, filtered pics and getting into cars with strangers. User rating systems and feedback help but they too require trust.

Psychologists say that we develop our instinct to trust or to be wary from an early age depending upon how we were parented. If we could trust our mothers (mainly) to provide consistent and loving care, then we tend to be open and trusting with others we hardly know. For those who as children had to develop a shrewdness to judge whether or not today their mother or father could be trusted (moods swings, absence or worse, abuse) they are more wary of people and make others jump through many hoops to prove their trustworthiness before letting them in.

Whilst trust in institutions (e.g. banks, religion, the media) and governments have diminished the expectation for leadership has shifted to business leaders who are expected to address broader societal issues such as sustainability, diversity and inclusion and environmental protection.  Companies no longer pay lip service to Corporate Social Responsibility with many now making it core to strategy, purpose and profit. The reason is that employees, partners, supply chains as well as consumers insist on it. Without trust that the business is doing the right thing, share values can tank.

Lack of trust can threaten a company’s ability to grow, according to half of the CEOs surveyed in 2016. Two years later, Harvard Business Review reported senior executives worried that trust was declining with the culprits being: cybersecurity, exploits leading to the misuse of corporate or personal data; scandals and the intentional release of misleading or inaccurate information.

Trust: so fundamental to teams and subsequent business value

As an investor, we are trained to assess a business value and potential on a myriad of metrics and analysis. But when all is said and done, despite how rosy those might appear I am loathed to put my money into anything where I can’t trust the people; especially the CEO. How can you be sure you can trust people? In business, I have come to value the very simple model purported by ex-Bain Consultant and author, Patrick Lencioni. In his book, Five Dysfunctions of a Team, which is a great story of a woman coming in as CEO to a tech company in real trouble due to a leadership team at complete odds, highly dysfunctional.

The model the story conveys is that without the foundation of Trust you can’t really have conflict. And conflict is not only necessary in business. But absolutely key to get to the truth. Without conflict and everyone airing their views you can’t have any commitment to what needs to get done. Without commitment and clarity people aren’t accountable. Then, finally, you need a team to all share in the same goals and not just be focused on their own turf. Hence, so they have a vested and shared interest in everyone succeeding.

The way I build trust is to get to know people…their story and background and points of view on everything from societal issues, culture, fairness even curiosity. Of course, this means I have to open myself up as well. It only works both ways. As a result, I not only have confidence in who I invest but I am passionate about helping them and their teams succeed.  So, like any healthy family a good investment means trusting and caring about the people and our success. It is painful at times and there is always conflict, but we get there and resolve most issues because of a solid foundation of trust.