The events of 2016 have underscored just how volatile, complex and ambiguous the world is today. Drawing on insights that we have collected around the world from thousands of interviews and engagements with stakeholders and consumers, we take a look at the global shifts that will continue to shape the world for leadership organizations in 2017.
A Polarized World
History now confirms that we live in a fractured world with people polarized in their views on many issues and in the trajectory of their lives. From the election of Donald Trump in the United States to Brexit, to a range of corporate and political crises across Africa, Asia and Latin America, there are many examples where populations are divided on important issues and outcomes.
Differences abound within and between countries on some of the world’s most important issues: approximately half of the world believes that future generations will have a higher quality of life than we do today, while an equal number disagree; about half of people across the world believe climate change is a very serious issue, while the other half does not; and half of the world has trust in their national government, while the other half does not. Priorities also differ across the world. For example, people in the Global North believe that the most important problems facing the world today are terrorism and the environment, in comparison to people in the Global South where economic problems and unemployment are considered to be the most important problems.
Rising expectations of companies to address societal issues and a concern for future generations make it much more difficult to navigate the challenges we face. Collaborative action is needed to tackle these world problems in order to find workable solutions, but first this requires deeper listening and a commitment to better understand expectations of a range of stakeholders and audiences. Examples of organizations trying to more deeply understand stakeholders include the International Council on Mining and Minerals, a leadership association for the extractive industry that engages its stakeholders systematically in quantitative and qualitative ways, and Standard Chartered, the global bank, which has been working hard to understand the hopes and concerns of consumers in emerging markets.
Concern about future generations
Low Levels of Trust
Ongoing cynicism toward government, the media and business means that many institutions are facing a pernicious trust deficit. For global companies, trust has become an increasingly scarce commodity, making it a priority to manage trust as a strategic risk to business.
Using a framework that deconstructs the concept of trust, to better understand what fuels it, can help organizations to prepare and organize in order to build trust in their companies and protect themselves. Our point of view is that deep thick trust, rather than more transactional thin trust, is built on three interconnected components: Competency (what you do); Integrity (how you do it); and Benevolence (why you do it) – most companies focus on one of these pillars or sometimes two, but rarely have a balanced approach to all three.
Consequently, companies must meaningfully engage with their stakeholders to create the preconditions they need for societal and financial success in the long term. Further, it is critical that companies work to build alliances, partnerships and collaborations with the most trusted institutions in society, especially scientific/academic institutions and NGOs.
More and more companies recognize the importance of building trust with their stakeholders and society. An example is 3M, which took a robust approach to deeply understand stakeholder views on what are the most material issues facing the company, so that the company can ensure it is responding to these expectations and ultimately building trust.
Another case study in trust building comes from ABInBev, the global brewer, which made a commitment to engage with stakeholders at scale on the sometimes challenging issue of responsible drinking, as a way to deepen relations with NGOs, industry peers, academics and governments.
Low trust in global companies
Transparency Remains Key
Transparency is a critical way of building trust according to stakeholders, and brands being open and honest are significant drivers of trust for consumers. How companies share information matters just as much as what they share.
There is a growing interest from stakeholders and consumers in knowing how things work in the supply chains of global companies and there is a demand for knowledge. They want to know how food gets delivered to their table, how the clothes they buy are manufactured and how technology services are being delivered, both because trust levels are so low but also because of a growing curiosity in how things are brought to market.
In today’s wired world, failing to disclose is considered to be more of a risk than being transparent. Stakeholders strongly favor dialogue and collaboration, so transparency creates more benefits to companies than risks. Transparency should be integrated into the business because it is ultimately a means to engage with consumers and stakeholders, as well as to drive action and help solve issues.
Many companies talk about being transparent and M&S is an organization that has been highly proactive in the area of transparency, beginning with a structured engagement with their stakeholders to understand expectations.
SC Johnson provides another example of a company seeing transparency as a strategic imperative as it continues to transform industry efforts when it comes to ingredient transparency. Its recent commitments to fragrance disclosure were in part in response to consumer needs and expectations from a trusted company.
Transparency as a key driver of trust
Rise of the Aspirationals
Ethical consumerism is at unprecedented levels but people are increasingly feeling that individuals cannot act alone on addressing issues – they are expressing a growing need for collective action. Citizens are celebrating their collective sense of power by becoming more engaged and active consumers, and are making life choices that strengthen society and minimize environmental impact in order to create a better future.
Representing 40 percent of the global adult population, a new consumer segment – the Aspirationals – are connecting the right thing to do with the cool thing to do, creating new possibilities for brands, business and the society we share.
This sense of optimism includes a belief in their power to influence corporate behavior, with nearly eight in ten saying, “As a consumer, I can make a difference in how a company behaves.” Balancing their belief in capitalism and trust in institutions with a desire for reforms, Aspirationals see brands as important levers of positive change.
The Aspirationals represent a significant growth opportunity for a range of industries, from food to auto, to tech, to apparel and consumer goods. This segment is especially interested in authenticity, wellbeing, design, sustainability and social purpose.
Aspirational consumers combine a desire to be ethical and sustainable with a love of style, design and shopping
A Thirst for Purpose
There is a growing business case for, and a concomitant commitment to Purpose across the private sector. A clearly articulated Purpose – a perfect blend of how the company makes a positive impact on the world through its products, services and operations – is increasingly recognized as a way to deepen relations and build trust with stakeholders and consumers. The degree to which brands are embracing purpose is growing and revolutionizing what a company can and should stand for.
There is a large consumer market for companies that have a Purpose and recent research with Sustainable Brands shows that consumers are looking for companies to have a more enlightened Purpose beyond making money.
While some people recognize that there are purposeful global companies in the marketplace, a majority believe that they are few and far between and many are unable or unwilling to name one. This leaves us with a significant imbalance in the supply and demand of purposeful companies.
An example of a global company engaging stakeholders around their Purpose is Unilever. Unilever’s purpose is to make sustainable living commonplace. In order to accelerate this, the company engaged stakeholders and experts across the world to understand how Unilever can drive sustainable living more proactively, in line with its Purpose.
Purpose leadership gap
Keeping these five mega trends in mind – a polarized world, low trust, expectations for transparency, the rise of the Aspirationals and a thirst for purpose – provides leadership organizations with the context that they need to navigate these uncertain times. Understanding these deep undercurrents helps companies, NGOs, governments and multilateral organizations respond more effectively to these societal shifts, thereby increasing their ability to build trust, deepen relationships and be successful in the long term.