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Damian Low & Darragh Rea, Edelman : Unlocking The Power of Trust

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Damian Low & Darragh Rea, Edelman : Unlocking The Power of Trust at DMX Dublin 2019

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Damian Low & Darragh Rea, Edelman : Unlocking The Power of Trust

  1. 1. Edelman Trust Management DMX Dublin 2019 D A M I A N L O W • E D E L M A N I N T E L L I G E N C E
  2. 2. We believe that trust is the ultimate currency in the relationship that all institutions—companies, governments, NGOs and media —build with their stakeholders. It defines an organization’s license to operate, lead and succeed. Trust is the foundation that allows an organization to take responsible risk, and, if it makes mistakes, to rebound from them. For a business, especially, lasting trust is the strongest insurance against competitive disruption, the antidote to consumer indifference, and the best path to continued growth. Without trust, credibility is lost – putting a business or organization at risk. Our Belief 2
  3. 3. 3 We’ve been studying trust for nearly two decades. Over this past year, we broke new ground. We invested heavily in scientific R&D, working with world-class partners to make the magic of trust actionable for businesses and organizations. Our Breakthrough We asked: •  What is trust? •  What is trust made of? •  How does it manifest? •  Does trust have cultural contexts? •  How is it connected to expectations and risk?
  4. 4. Our process to augment the science of trust. Review of 18 years of Trust Barometer data, where we’ve asked over 2 million respondents about trust over 23 million times 4 Meta-analysis of 150+ peer-reviewed academic articles and 80+ models on trust in partnership with world renowned academics Interviews with 50+ business leaders Trust analysis of 145 companies through online study of 90k+ members of the general population in 2 countries 1M articles and 80k employee reviews analyzed Analysis of relationship between trust and stock price for 80 companies in 9 sectors Validated construct of our proprietary framework through online survey in 3 countries and advanced statistical analysis
  5. 5. And today, we have answers.
  6. 6. Trust is very complex – but we unearthed four dimensions critical to defining its core 6 Ability Integrity Dependability Purpose A believes B has the skills, competencies, and resources to have influence in some domain (competence, capabilities, expertise) A believes B adheres to a set of principles that A finds acceptable (fairness, transparency, credibility, honesty) A believes B consistently adheres to a set of principles that A finds acceptable (reliability, dependability) A believes B wants to do good for A (loyalty, caring, non- opportunistic) Good at what they do Is honest Keeps its promises Works hard to have a positive impact on society
  7. 7. 6 Key Insights 7 Trust has an impact on: 1. Consumer buying and advocacy 2. Employee engagement 3. Regulatory scrutiny 4. Institutional investment and investor opportunity 6. Resilience in the face of crisis or risk 5. Stock performance
  8. 8. 01 6 in 10 would be among the first to buy the products or services of companies they trust as soon as they come out… …and 6 in 10 would actively defend a company they trust if criticized. Consumers: Trust leads consumers to buy, recommend and advocate 3 in 4 actively recommend a business they trust. Source: 2018 Edelman Trust Management Validation study. Q17.When thinking about [COMPANY], how likely would you be to do the following? Please use a scale of one to seven, where 1 means “I would be very unlikely to do this” and 7 means “I would be very likely to do this”. Top 3 summary, likely to do this, for positive behaviors. Bottom 3 summary, not likely to do this, for negative behaviors. Q2: Please indicate how much you trust [COMPANY] to do what is right. For each one, please use a 9-point scale where 1 means that you “do not trust it at all” and 9 means that you “trust it a great deal.” Questions asked to those aware of each companies. 20 companies. 5 sectors. High trusting: top 3 at Q2. Low trusting: Bottom 4 at Q2. General Population 18+. N=6,000+ respondents. 3 countries: UK, US, China.
  9. 9. 02 …versus half who would be ashamed if they, or someone they know, worked for a company they distrust. 7 in 10 are proud to work or know people who work for companies they trust…Employees: Trust drives employer brand Source: 2018 Edelman Trust Management Validation study. Q17.When thinking about [COMPANY], how likely would you be to do the following? Please use a scale of one to seven, where 1 means “I would be very unlikely to do this” and 7 means “I would be very likely to do this”. Top 3 summary, likely to do this, for positive behavior. Bottom 3 summary, not likely to do this, for negative behavior. Q2: Please indicate how much you trust [COMPANY] to do what is right. For each one, please use a 9-point scale where 1 means that you “do not trust it at all” and 9 means that you “trust it a great deal.” Questions asked to those aware of each companies. 20 companies. 5 sectors. High trusting top 3 at Q2. Low trusting: Bottom 4 at Q2. General Population 18+ n=6,000+ respondents. 3 countries: UK, US, China.
  10. 10. 03 Only 1 in 5 would lobby for more regulations for companies they trust versus 2 in 5 for distrusted businesses. Trust lowers the demand for regulatory scrutiny. Regulators: Trusted companies have a greater license to operate Source: 2018 Edelman Trust Management Validation study. Q17.When thinking about [COMPANY], how likely would you be to do the following? Please use a scale of one to seven, where 1 means “I would be very unlikely to do this” and 7 means “I would be very likely to do this”. ‘’Lobby for them to have greater regulation’’. Top 3 summary, likely to do this, for negative behaviors. Bottom 3 summary, unlikely to do this, for positive behaviors. Q2: Please indicate how much you trust [COMPANY] to do what is right. For each one, please use a 9-point scale where 1 means that you “do not trust it at all” and 9 means that you “trust it a great deal.” Questions asked to those aware of each companies. 20 companies. 5 sectors. High trusting: top 3 at Q2. Low trusting: bottom 4 at Q2. General Population 18+. N=6,000+ respondents. 3 countries: UK, US, China.
  11. 11. 04Investors: Trusted companies are more likely to receive institutional investment Source: 2018 Edelman Institutional Investor Trust Survey. Q4: How important are each of the following when considering a company to invest in (or to recommend doing so)? For each one, please indicate how important it is using a 9-point scale where 1 means “not at all important” and 9 means “most important”. - Top 2 Summary. 18 statements. 500 chief investment officers, portfolio managers, and buy-side analysts in five countries (U.S., Canada, UK, Germany and Japan), representing firms that collectively manage over $4.5 trillion in assets. …compared to 17 other factors, including financial valuation, an engaged Board of Directors, ability to meet financial guidance, or reputation, to name a few. When considering what drives investment decisions, investors say “my trust in the company” is the single most important factor…
  12. 12. 05 Over a one year period, trusted companies' stocks outperform their sector indexes by more than 5%... ... this represents an average of $9.4B extra market cap per trusted company. The market: Trusted companies outperform the stock market Source: 2017 Edelman Trust Management survey and Yahoo! Finance. US-based companies listed on US exchanges and part of the S&P 500. The stock price index is the straight average value of the stock of 32 trusted companies (Edelman Net Trust Score = 45+, top quartile of database gathered between November to December 2017); relative to January 2, 2018 until October 18, 2018. The sector index represents average value of the index relative to January 2, 2018 and is weighted by the number of companies in that sector. See appendix for full list of companies included. Trust-related market cap is the additional 5% return of trusted companies over the sectors times the current market cap (stock price times shares outstanding)
  13. 13. High trust companies outperform their sector Stock performance of 31 high trust U.S. companies compared to a weighted sector average. Jan 2018 – Dec 2018 13 85 90 95 100 105 110 115 120 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Value of $100 Invested January 2018 Stock Price Index - Trusted companies average Sector Index Source: 2017 Edelman Trust Management survey and Yahoo! Finance. Data represents US-based companies listed on US exchanges and part of the S&P 500. The stock price index represent the straight average value of the stock of 32 trusted companies (Edelman Net Trust Score = 45+, top quartile of database gathered between November to December 2017); relative to January 2, 2018. The sector index represents average value of the index relative to January 2, 2018 and is weighted by the number of companies in that sector. See appendix for full list of companies included. Trust-related market cap is the additional 5% return of trusted companies over the sectors times the current market cap (stock price times shares outstanding) 97.5 93 High trust companies outperformed their sector index by an average of 5% January 2018 – December 2018. 97.5 93
  14. 14. 06 On average, in the case of adverse events, trusted companies lose 4.7 percentage points less than distrusted companies. In the case of adverse events or crisis, the value of the stock of trusted companies is less affected than distrusted companies. Resilience against risk: Trusted companies are more resilient in the face of crisis Source: 2018 Workplace Analytics analysis. 51 adverse events for 31 companies (November 20, 2017 – July 19, 2018). See Appendix for details. Expected stock price calculated using Fama French 3-factor model aggregate. 2017 – 2018 Edelman Trust Management study. Q2: Please indicate how much you trust [COMPANY} to do what is right. Please use a 9-point scale where 1 means that you “do not trust it at all” and 9 means that you “trust it a great deal.” 9-point scale; ENTS calculated from NET: top 3 minus bottom 4. Trusted companies. (ENTS = 45+) top quartile of the Edelman Trust database. Distrusted companies (ENTS=15-) lower quartile of the Edelman Trust database. US. General population 18+.
  15. 15. •  How trusted are you? •  How much do each of your unique audiences and stakeholders trust you? •  How do you fare against your competition? •  How does your trust manifest across geographies? •  What are the levers that drive trust that you can make work for you? Trust applied to Trust is significant and ever-present, but you need to understand how it applies to your unique business or organization to impact it, dimensionalizing: 15 YOU
  16. 16. Turning Theory Into Action Darragh Rea, Senior Director @darraghjrea
  17. 17. Making Your Ability A Driver Of Trust Do what you do well – competence has the advantage of surprise in a cynical world
  18. 18. Making Your Integrity A Driver Of Trust Correct myths and misrepresentations – engage with the world in a non-defensive way
  19. 19. 20
  20. 20. Making Your Dependability A Driver Of Trust Be dedicated to delivering for your audience – if you want to claim their trust and loyalty
  21. 21. Making Your Purpose A Driver Of Trust Challenge the norm, and actively make things better
  22. 22. 23
  23. 23. Building Trust 1Understand what you are asking people to risk 2Act before you talk 3Tell your story with people, not at them 4Be a part of culture, not just an intruder
  24. 24. Challenge The New York Times journalistic integrity is under attack at a time when the value of quality journalism is not fully understood or appreciated.
  25. 25. The New York Times Mission We seek the truth and help people understand the world.
  26. 26. 1 Understand what you are asking people to risk 2 Act before you talk 3 Tell your story with people, not at them 4 Be a part of culture, not just an intruder Building Trust
  27. 27. Suppliers, customers, internal stakeholders Policy makers Media NGOs Consumers
  28. 28. Product Quality Innovation Transparency CitizenshipEthical business practices OUR PASSION Our people, processes and products - doing them in ways no one else can OUR WAY Sharing the values inherent in what we do - why would we think to do it any other way? OUR FAMILY The wider context of our family, our projects and plans - the world and where we sit in it DependabilityAbility Integrity Dependability Purpose
  29. 29. 1 Understand what you are asking people to risk 2 Act before you talk 3 Tell your story with people, not at them 4 Be a part of culture, not just an intruder Building Trust
  30. 30. B R E W D O G " "
  31. 31. " "
  32. 32. " " ACTION OTHER BEERS HAVE CUSTOMERS, BUT BREWDOG HAS FANS. IN 2010, THE COMPANY LEVERAGED THE INTENSITY OF ITS SUPPORTERS INTO A NEW FINANCING MODEL, RAISING CROWDFUNDED CAPITAL WITHOUT HAVING TO BEND ITSELF TO FINANCIAL TARGETS SET BY BANKS OR INVESTORS
  33. 33. 1 Understand what you are asking people to risk 2 Act before you talk 3 Tell your story with people, not at them 4 Be a part of culture, not just an intruder Building Trust
  34. 34. Focussing on what matters 41 Ability Integrity Dependability Purpose A believes B has the skills, competencies, and resources to have influence in some domain (competence, capabilities, expertise) A believes B adheres to a set of principles that A finds acceptable (fairness, transparency, credibility, honesty) A believes B consistently adheres to a set of principles that A finds acceptable (reliability, dependability) A believes B wants to do good for A (loyalty, caring, non- opportunistic) Good at what they do Is honest Keeps its promises Works hard to have a positive impact on society
  35. 35. Thank you. @edelmanIreland 42

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