Trust makes the world go round. As a business asset, rebuild it with competence, care and ‘a little bit of good each day’

By Bob McMullan & Sean Innis

Friday July 26, 2019

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The importance of trust was a focus of the recent ANU Crawford Leadership Forum. The forum brought together 200 thinkers and decision-makers from Australia and internationally to explore why trust was falling and what could be done about it.

WS Gilbert famously said that love makes the world go around. And while this may be true for us as individuals, for the community as a whole, it is trust rather than love that underpins the world we live in. History shows that without trust — between nations, in governments, in society’s institutions, and between each other — our common pursuit of prosperity and wellbeing becomes all that much harder.

The importance of trust was a focus of the recent Australian National University (ANU) Crawford Leadership Forum. The forum, which brought together 200 thinkers and decision makers from Australia and across the world, explored why trust was falling and what could be done about it.

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The backdrop for the forum was a startling decline in trust levels in Australia and across the world’s rich, mature democracies. The good news is that we still tend to trust each other and, interestingly, our immediate employer. Expertise also remains reasonably well trusted. This provides an important ray of hope. But the bad news is that trust in the systems and institutions designed to enhance our lives has fallen significantly. And for core institutions – government, business, and the media – distrust, rather than trust, dominates.

Signs exist that trust may now be plateauing – albeit at low levels. Experts also agree that degree of public scepticism is also important to the operation of any vibrant democracy. Even so, the general view emerging from discussion was that current levels of trust remain below healthy levels, and that as a society we face a significant trust deficit.

The need for sharp perspective

In examining the state of the global economy, ANU economist Warwick McKibbin cautioned us to distinguish between cyclical movements and structural trends. Diagnosing the wrong problem, we were reminded, would cause us to pursue the wrong economic solutions. This advice applies just as wisely to the question of trust. Understanding the cause is critical to finding the most appropriate solution.

The reality is that the issues behind low trust are complex and interwoven. Differing interpretations and nuances abound. Stepping back, two overarching impressions emerge. First, low trust is more likely to reflect structural shifts in how society is working rather than cyclical ones. And second, trust needs to be considered as a whole rather than as a sum of its parts. This is not to say that particular problems do not deserve special attention – trust in business for instance – but that dissociating this consideration from broader trust dynamics would be an error.

At the heart of the trust deficit lies a gap between our expectations and what society is delivering. Ken Henry, Chair of the National Australia Bank, put it clearly in relation to business — business is simply not meeting community expectations. But this notion also sat behind the comments of many other speakers, such as Kelly Magsamen from the Centre for American Progress, in discussing the state of the world, and Daryl Karp from the Museum of Australian Democracy, in discussing trust in Australian governments. An inevitable conclusion is, for trust to increase, the gap between expectations and delivery must close.

Community expectations of businesses’ ethics

Looking forward, perhaps the biggest question facing us is whether community expectations can actually be met – at least through the institutions and strategies we currently have in place. Put another way, does closing the trust deficit require changes in community expectations rather than changes in policies and institutions? Obviously, this is not an either/or proposition. But an honest conversation is needed on what can be delivered — something that is not always supplied in the heat of democratic contest or international relations.

Within the forum discussion were hints that the ability of existing institutions to fully meet community expectations is weaker than we generally like to admit. Reserve Bank Governor Philip Lowe pointed to the limited role interest rate cuts – the key tool at his disposal — could play in stimulating economic growth. Jean-Marie Guehenno, from the Centre for Humanitarian Dialogue, pointed to the inherent limitations of the United Nations in responding to rising nationalism. And James Shipton, Chair of the Australia Securities and Investments Commission, pointed to the natural limits of regulation in delivering better business behaviour.

Globalisation, technology, and generational lock-out

More generally, a theme emerged that much of what was happening was beyond the control of national and international governance. Thomas Lembomg, Chairperson of the Indonesia Investment Coordinating Board, spoke of a new normal involving a global economy living “life on the edge”. Many others reflected on the emergence of a great power struggle between China and the US that was beyond the power of even close allies to influence.

The reality of less control may also be affecting the way individuals feel and act. Jill Sheppard, from ANU, noted that many people believe elections make no difference to the national economy. Carol Austin, Director of HSBC Bank, pointed to an increasingly individualised society and a decline in collective purpose. Disempowered governments and a disbelieving electorate, if this is what we face, will be a difficult combination to manage.

Cleanly identifying the drivers behind these trends is not easy. The deeply entangled world delivered by globalisation, while delivering great benefits, is also creating some challenges for individual nations. Changing global power structures and behaviours is creating uncertainty and posing questions about the role of a weakened international order – in the words of Peter Varghese, former head of the Department of Foreign Affairs, “we are all a la carte internationalists now”.

Other dimensions are also important. Technology change, which has historically been a major driver of global wellbeing, is challenging traditional national and regulatory controls. The rise of social media has magnified voices that may have previously gone unheard and highlighted thoughts that previously may have been unsaid. This has changed the tempo, nature and inherent trustworthiness of public discourse. The truth is that all these factors, and more, are likely to be behind what we see.

While many of the drivers of falling trust are global, much of the concern is local.  Disparities in opportunities and outcomes have come to the fore – notably in the US but also, as noted by former government minister Jenny Macklin, in Australia. There is a growing fear that a cohort of Australians are missing out on the opportunities enjoyed by past generations, fuelling a potential intergenerational divide. And there is a wariness, even a weariness, about whether the ‘system’ is truly looking after the people.

Answering the call

Within the sense of challenge and concern are also signs that society is responding. It is clear, for example, that at least some in the business community are actively seeking to build lost trust. Megan Brownlow, Deputy Chair of Screen Australia and Media Federation Australia, framed trust as an important business asset, something to be valued and invested in. Brad Banducci, CEO of Woolworths Group, talked of an approach born of humility and a company mission focussed on what is achievable and believable — “a little bit of good each day”.

Other potential trust builders are also emerging. New technologies are enabling the provenance of materials and effort to be tracked through global supply chains – creating more accountability for environmental and humanitarian outcomes. New media models show some promise in underpinning the traditional role journalists play in informing the public and keeping power honest. And considerable focus is being brought to reforming the Australian Public Service to operate effectively in a 21st Century environment.

Competence, care, and ethics are the means to trustworthiness

While changes like these represent a start, more needs to be done. In the forum’s concluding session, Export Finance Australia CEO Swati Dave echoed James Shipton’s call for a focus on building “trustworthiness” through the exercise of competence, care, and ethics. Katherine Mansted, from the ANU, built on this, arguing for the development of clearer societal values as a driver of future policy and action.

Listening to discussion at the forum, it was hard not to conclude that we are in a key phase of global and national history. The decline in trust while important in itself, is a symptom of a deeper set of challenges facing Australia and the world.

Clare Walsh, deputy at the Department of Foreign Affairs and Trade, captured this neatly in a session on global institutions, asking whether 21st Century issues had outpaced 20th Century structures. This question applies reasonably to our own nation and structures as much as it does to world at large.

It is a question that we at the ANU Crawford Leadership Forum will continue to pursue.

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