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1
Roger BoltonRBC Strategic Consulting
Council of Communication ManagementLas VegasApril 28, 2011
BUILDING AND MANAGING PUBLIC
TRUST IN BUSINESS Corporate Character, Shared Belief and Trust
2
I am going to read you a list of institutions. For each one,
please tell me how much you trust that institution to do
what is right. Let’s start with business. On a 9-point scale where one means that you
“do not trust them at all” and nine means that you
“trust them a great deal,” how much do you trust
business to do what is right?
Edelman Trust Barometer1 2 3 4 5 6 7 8 9Not at all A great deal
3
4
Arthur W. Page
AT&T PR VP, ’27 – ’46
Corporate officer
Member of board
Adviser to Presidents
5
ARTHUR W. PAGE SOCIETY
MEMBERS:
Chief Communications Officers
CEOs Global Public Relations Firms
Academics
Founded 1983
6
ARTHUR W. PAGE SOCIETY
MISSION:
To strengthen the management policy role of the corporate public relations officer by providing a continuous learning forum and by emphasizing the highest professional standards.
7
ARTHUR W. PAGE SOCIETY
MISSION:
To strengthen the management policy role of the corporate public relations officer by providing a continuous learning forum and by emphasizing the highest professional standards.
8
Tell the truth. Prove it with action. Listen to the customer. Manage for tomorrow. Realize a company’s true
character is expressed by its people.
Conduct public relations as if the whole company depends on it.
Remain calm, patient and good-humored.
The Page Principles
ARTHUR W. PAGE SOCIETY
9
“All business in a democratic society begins with public permission and exists by public approval.”
- Arthur W. Page
“All business in a democratic society begins with public permission and exists by public approval.”
- Arthur W. Page
10
PAGE THOUGHT LEADERSHIP
The Authentic Enterprise
The Trust Report
Coming in 2011:
• Values-based culture• New media• New model
11
WHY TRUST?
12 12
The Dynamics of Public Trust in Business – Emerging Opportunities for
Leaders
13
WHY TRUST MATTERS
The Dynamics Of Public Trust In Business – Emerging Opportunities
For Leaders
14
WHY TRUST MATTERS
“Trust always affects two measurable outcomes – speed and cost. When trust goes down, speed goes down and cost goes up. When trust goes up, speed goes up and cost goes down.”
Stephen M.R. Covey,In Chief Executive, June 1, 2007
15
WHY TRUST MATTERS
“To make the McLane deal, I had a single meeting with … Wal-Mart’s CFO, and we then shook hands. ... Twenty-nine days later Wal-Mart had its money. We did no ‘due diligence.’ We knew everything would be exactly as Wal-Mart said it would be – and it was.”
Warren Buffett,Berkshire Hathaway 2003 Annual Report
Chairman’s Letter
16
Public trust in business is the level of vulnerability the public is willing to assume with regard to business.
16
Public Trust in Business
WHY TRUST MATTERS
“The Dynamics Of Public Trust In Business – Emerging Opportunities For Leaders”
17
An UNwillingness to accept
vulnerability leads to regulation.
Post Sarbanes-Oxley: Annual U.S. cost of regulatory compliance
estimated to be $1.1 trillion – nearly 8% of GDP.
17
WHY TRUST MATTERS
“The Business Case for Trust,” Chief Executive 226 (June 2007)
1818
WHY TRUST MATTERS
Edelman Trust Barometer 2009
19
PUBLIC TRUST IN BUSINESS
The Dynamics Of Public Trust In Business – Emerging Opportunities
For Leaders
20
1890 – Sherman Act 1970 – OSHA, EPA
1897 – ICC 1972 – CPSC
1906 – FDA 2002 – SOX
1914 – Clayton Act 2010 – Dodd-Frank
1934 – SEC, FCC
PUBLIC TRUST IN BUSINESS
A century of regulation
21
Emerging “social contract”
1889 – Carnegie – “Gospel of Wealth”
1931 – Berle and Dodd – Harvard Business Review
1960 – Packard – “A contribution to society”
1970 – Friedman – “Profits”
1984 – Freeman – Stakeholder theory
2011 – Porter – Shared value
PUBLIC TRUST IN BUSINESS
22
Emerging “social contract”
Quality products and services at reasonable prices
Steady employment in a healthy and safe environment
Support for community institutions
PUBLIC TRUST IN BUSINESS
23
1980s – Shareholder value:
Leveraged buyouts, re-engineering, outsourcing, layoffs, short-termism, executive compensation
1987 – Gekko – “Greed is good.”
Breaking the contract
PUBLIC TRUST IN BUSINESS
24
WorldCom Enron HealthSouth
TYCO HP MSO UnitedHealth
– Ebbers– Lay, Skilling & Fastow
– Richard Scrushy– Dennis Kozlowski– Patricia Dunn– Martha Stewart– Bill McGuire
Breaking the contract
PUBLIC TRUST IN BUSINESS
25
2008 – Aggressive pursuit of high-risk financial instruments.
“Trust no one.”-- The Wall Street Journal, September 2008
Breaking the contract
PUBLIC TRUST IN BUSINESS
26
Goldman Sachs
BP
HP
Toyota
Breaking the contract
PUBLIC TRUST IN BUSINESS
27
He’s back!
2828
1976
1990
1996
2002
2007
0
20
40
60
80
100
% Very High/ High
PUBLIC TRUST IN BUSINESS
U.S. Trust in Business ExecutivesHow do you rate the honesty and ethics of people in this field? Source: USA Today/Gallup
2929
U.S. Trust in Institutions How much do you trust each institution to do what’s right? Source: Edelman Trust Barometer
20
30
40
50
60
70
Business
PUBLIC TRUST IN BUSINESS
3030
U.S. Trust in Institutions How much do you trust each institution to do what’s right? Source: Edelman Trust Barometer
20
30
40
50
60
70
Gov't
Business
PUBLIC TRUST IN BUSINESS
3131
U.S. Trust in Institutions How much do you trust each institution to do what’s right? Source: Edelman Trust Barometer
20
30
40
50
60
70
Media
Gov't
Business
PUBLIC TRUST IN BUSINESS
3232
U.S. Trust in Institutions How much do you trust each institution to do what’s right? Source: Edelman Trust Barometer
20
30
40
50
60
70
Media
Gov't
Business
NGOs
PUBLIC TRUST IN BUSINESS
33
DRIVERS OF CHANGE
Arthur W. Page Society White Paper:
“The Authentic Enterprise”
34
DRIVERS OF CHANGE
Stakeholder Empowerment
Globalization
DigitalNetwork
Revolution
35
GLOBALIZATIONInternational Corporation
Multinational Corporation
Globally Integrated Enterprise
36
GLOBALIZATION
The “Flat World” is reshaping the corporation.
Shifting from hierarchical, monolithic, multinational …
… to horizontal, networked and globally integrated.
Operations are componentized, virtualized and distributed over an ecosystem of business relationships.
37
THE DIGITAL NETWORK REVOLUTION
Web 2.0
38
THE DIGITAL NETWORK REVOLUTION
Rapid and massive changes in the way people:
Access information
Communicate
Make connections
Build communities
39
STAKEHOLDER EMPOWERMENT
Common interests
Share information
Expertise
Mobilize
Highly influential new stakeholders
40
STAKEHOLDER EMPOWERMENT
COMPANY
EMPLOYEES
ACADEMICCOMMUNITY
GOVERNMENT MEDIA
INVESTORS CUSTOMERS
LOCALCOMMUNITY
NGOs
41
STAKEHOLDER EMPOWERMENT
COMPANY
EMPLOYEES
ACADEMICCOMMUNITY
GOVERNMENT MEDIA
INVESTORS CUSTOMERS
LOCALCOMMUNITY
NGOs
42
DRIVERS OF CHANGE
Stakeholder Empowerment
Globalization
DigitalNetwork
Revolution
43
DRIVERS OF CHANGE
Implications for enterprises:
Threats … Influential new stakeholders Demands for transparency Less control over messaging, segmentation Risks to brand and reputation Regulatory activism
44
DRIVERS OF CHANGE
Implications for enterprises:
And opportunities … To reach stakeholders To advance policy interests To build brand To enhance reputation
45
THE AUTHENTIC ENTERPRISE
Arthur W. Page Society White Paper
46
THE AUTHENTIC ENTERPRISE
In this dynamic and radically open environment, a company must answer:
What business are we in? What markets do we serve? What differentiates us? What do we value? What will endure?
47
The enterprise must be grounded in a sure sense of what defines and differentiates it (mission and values).
And those definitions must dictate consistent behavior and actions.
THE AUTHENTIC ENTERPRISE
48
au·then·tic, adj. Conforming to fact and therefore worthy of
trust, reliance, or belief: an authentic account by an eyewitness.
- American Heritage Dictionary
THE AUTHENTIC ENTERPRISE
49
THE THREE CORE DYNAMICS
The Dynamics Of Public Trust In Business – Emerging Opportunities
For Leaders
50
Trust Safeguards– Legal compliance mechanisms
Balance of Power
– Risks and opportunities are shared
Mutuality – Based upon shared values or interests
The Three Core Dynamics
DEFINING TRUST
51
CORPORATE CHARACTER
The Dynamics Of Public Trust In Business – Emerging Opportunities
For Leaders
5252
CORPORATE CHARACTER
MISSION Align business interest with the public
interest in a meaningful way. Focus on the core contribution that the firm
makes to society. Strategy and operations are designed to
fulfill the mission.
5353
CORPORATE CHARACTER
VALUES Build a values-based culture that aligns
with mission and strategy. Ensure that values are adhered to
consistently across the enterprise.
54
ALIGN BUSINESS INTEREST WITH THE PUBLIC INTEREST
The Dynamics Of Public Trust In Business – Emerging Opportunities
For Leaders
55
IBM – A Smarter Planet
ALIGN BUSINESS/PUBLIC INTEREST
56
GE Imagination
ALIGN BUSINESS/PUBLIC INTEREST
57
PepsiCo – Performance with Purpose
ALIGN BUSINESS/PUBLIC INTEREST
58
ALIGN BUSINESS/PUBLIC INTEREST
Business Model Matters
How you make your money is
as important as what you make.
59
THE VALUE OF VALUES
The Dynamics Of Public Trust In Business – Emerging Opportunities
For Leaders
6060
THE VALUE OF VALUES
Our Credo
We believe our first responsibility is to the doctors, nurses and patients,
to mothers and fathers and all others who use our products and services.
In meeting their needs everything we do must be of high quality.
61
THE VALUE OF VALUES
“While consistent growth is the output of this financial model, the fuel that drives it -- the
energy behind it -- is our culture … how we behave.”
-- Jack Welch, GE Annual Report 1996
62
THE VALUE OF VALUES
“I came to see, in my time at IBM, that culture isn’t one aspect of the game – it is the game.”
-- Lou Gerstner, Who Says Elephants Can’t Dance?
63
Top down Bottom up Formal Informal Part of the vernacular
THE VALUE OF VALUES
64
STAKEHOLDER RELATIONSHIPS
The Dynamics Of Public Trust In Business – Emerging Opportunities
For Leaders
65
STAKEHOLDER RELATIONSHIPS
Coca-Cola
Activists targeted Coke’s India operations
Allegation: pollution and water scarcity
66
STAKEHOLDER RELATIONSHIPS
Pledge to replace the water it uses
$20 million to help conserve seven of the world's most important freshwater river basins
Coca-Cola Partnership:
World Wildlife Fund
67
How do you build relationships with disparate stakeholders?
Be transparent Listen Look for common ground Be willing to change
STAKEHOLDER RELATIONSHIPS
68
SHARED VALUE AND SHARED BELIEF
The Authenticity Effect
69
“Diminished trust in business is causing political leaders to set policies that sap economic growth….
“The purpose of the corporation must be redefined around shared value.”
Michael E. Porter and Mark R. Kramer, Creating Shared Value – Harvard Business Review
SHARED VALUE
ACTIONSpur decision-
makers to act on
that belief
CONFIDENCEIncrease confidence
that their actions
matter
ADVOCACY AT SCALEBuild constituency
with more audiences,
through the advocates’
networks
BELIEFEngage the decision-
maker by forging a
shared belief
SHARED BELIEF
CorporateCharacter
Values and Purpose
71
Not only develop channels of communication, but networks of relationships
Not only position, but define the corporation
Not only change perceptions, but change realities
ROLE OF THE CCO
“The Authentic Enterprise”
72
THE AETNA CASE
73
150-year history
“Rugged oak stability”
Integrity and fiscal prudence Innovation Corporate citizenship Fairness and benevolence
THE AETNA CASE
74
Aetna in the 80s
Stagnation Shareholder value
• Profitability• Death to Mother Aetna
Culture change efforts
THE AETNA CASE
75
Aetna in the 90s
Focus on growth
Strategic repositioning:• Health care
Major acquisition• Managed care expertise
THE AETNA CASE
76
“A head-on collision”
Best of both
AET – customized solutions, excellence, process, slow
USHC – off-the-shelf, lightening fast, anti-process, command and control
THE AETNA CASE
77
Culture wars…
Process vs. command and control
Off-the-shelf vs. customized
Brutal battles for domination
THE AETNA CASE
78
Customers and shareholders first
HMOs = preventive health care Strong form managed care
– Referrals– Pre-authorizations– Denials– “Mother, may I?”
THE AETNA CASE
79
Anti Managed Care Backlash
Physicians, patients rebelled Additional regulation Jay Leno and David Letterman “As Good As It Gets”
THE AETNA CASE
80
CAROL: They said it's not covered under my plan. And it's not necessary anyway. DR. BETTES: It's amazing these things weren't done. CAROL: F---ing HMO bastard pieces of s---. I'm sorry, forgive me. DR. BETTES: No. Actually, I think that's their technical name.
THE AETNA CASE
81
And it gets worse …
Trial lawyers -- class actions suits
More acquisitions
Integration issues
Market cap = -50%
THE AETNA CASE
82
Who’s angry? Doctors
Patients
Brokers
Customers
THE AETNA CASE
Legislators
Regulators
Trial lawyers
Shareholders
83
New CEO - A Doctor Setting a new strategic direction Striving for operational excellence Changing the culture
THE AETNA CASE
84
How we did it Mission Strategy Operations Brand Values Stakeholder relationships
THE AETNA CASE
85
THE AETNA CASE
Mission
86
Genetic testing Disparities in health care Care at the end of life Depression management
THE AETNA CASE
Aetna Chairman’s Initiatives
8787
Strategy
Cost-effective, high-quality health care
Information sharing with physicians
Consumer directed health plans
Chairman’s Initiatives
THE AETNA CASE
8888
New Brand Positioning
We provide information and helpful resources to help you make better-informed decisions for your health and financial well-being.
THE AETNA CASE
8989
Brand
“We Want You to Know” “Plan for Your Health” Aetna Navigator MedQuery
THE AETNA CASE
90
THE AETNA CASE
91
THE AETNA CASE
46
87
48
6570
79 7982 83
84
57 56
68 6974
78
2002 2003 2004 2005 2006 2007 2008 2009
Practice The Aetna Way (Values)
Proud to Work for Aetna
9292
Stakeholder relationships
Settle Class Action Lawsuit
Reform policies
Transparency on claims payments
Advisory Board
Foundation for Quality Care
THE AETNA CASE
93
The New York TimesMay 23, 2003
THE AETNA CASE
94
“The once notoriously stingy and fiercely unpopular company is now frequently cast as the country's most physician-friendly insurer.”
BusinessWeek, Jan. 4, 2006
By Jessi Hempel and Diane Brady
THE AETNA CASE
95
Key Takeaways
Re-evaluate core purpose (mission) Align strategy, ops, brand Build strong, values-based culture Engage stakeholders
THE AETNA CASE
96
CREATING TRUST
The Dynamics Of Public Trust In Business – Emerging Opportunities
For Leaders
97
“All business in a democratic society begins with public permission and exists by public approval.”
- Arthur W. Page
“All business in a democratic society begins with public permission and exists by public approval.”
- Arthur W. Page
98
How do you get “public permission” and “public approval?”
By being an authentic enterprise …
… that operates in the public interest – doing the right thing for all stakeholders –
... and does it consistently – up and down the entire organization.
CREATING TRUST
99
Join the dialogue at Page Turner, the Arthur W. Page Society blog:
http://www.awpagesociety.com/awp_blog/
100
Roger BoltonRBC Strategic Consulting
Council of Communication ManagementLas VegasApril 28, 2011
BUILDING AND MANAGING PUBLIC
TRUST IN BUSINESS Corporate Character, Shared Belief and Trust
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