Photograph by Josh Robenstone
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LEADERSHIP: Amanda Gome: Five years ago, you began talking about the erosion of trust in institutions.
Rachel Botsman: Yes. For a long time, people stopped needing to trust each other because trust flowed through institutions. But two things happened: technology and social media forced institutions to be more transparent, revealing problems and flaws. And at the same time the trust that exists between individuals can be scaled globally...
For a long time, people stopped needing to trust each other because trust flowed through institutions.
AG: In your new book, Who Can You Trust?, you claim we are at a tipping point with trust in institutions – banks, government, media and charities – at an all-time low while millions rent their homes to perfect strangers. Has trust in institutions hit rock bottom or will it keep falling?
RB: Assume that for some time to come the prevailing mood will be anti-elite and anti-authority – a feeling that our traditional systems are deeply failing us.
I think trust in big institutions and the established order will continue to unravel and collapse. The heat that banks are feeling is now also moving to technology companies such as Facebook and Uber.
AG: So where does it end?
RB: If you think about it the rejection of the media, politicians, the intelligence services and the truth-defending organisations that underpin democracy threatens to create chaos. We can’t pull the rug out because what do we have left? And that’s when a dangerous trust vacuum opens up, which can be filled with lies and conspiracy theories.
AG: So are institutions doomed?
RB: No, they just need to learn how to adapt because if they don’t alternatives arise in their place. Trust doesn’t disappear; it shifts somewhere else.
Institutional trust was not designed for the digital age.
It wasn’t designed for an age of Alibaba or Amazon or Uber, where supply and demand can find each other and people trust platforms that cut out lots of intermediaries. It wasn’t designed for an age of automation and AI. It wasn’t designed for an era of radical transparency, where if you are a CEO or politician you have to act as if you are behind glass.
AG: So when institutions break the rules?
RB: There have to be penalties, loss of position and power. And not behind closed doors or else there is a sense of inequality: some people get punished, others get away with a leave pass. Look at the GFC and anger about captains of finance who were never really punished.
AG: What’s the next phase for institutions?
RB: Finding a place in a distributed trust model. It’s to operate in a way similar to Airbnb. Institutions won’t be designed in a top-down, hierarchical way but more horizontally with new business models and behaviours. They must be inclusive, dynamic and personalised. Organisations that understand and inject humanness into customer experience will edge ahead.
And we are starting to see decentralised autonomous organisations – some will sit on Blockchain and they won’t have a board. Some might not even have a CEO and the leader will have to get consensus from the crowd.
AG: And what about the role of CEOs? One chart from the Edelman Trust Barometer 2017 shows staff are more trusted to talk on a range of issues than either a CEO or a media spokesperson. When a CEO sees that they are quite shocked.
RB: CEOs get it when you talk about declining influence, which is more in their comfort zone and they now have their heads around social media and peer influence. But it’s much more challenging for them to hear there has been a shift in trust away from experts and authorities. Many then ask, well, how do we go back? But they have to let go of the model of trust that flowed in a linear vertical fashion.
AG: Do you have a way to shift a CEO’s mindset?
RB: Sometimes it works to say to the leader: think like a consumer or voter. Ask them how did Brexit and Trump happen? Did you book your last holiday on Airbnb or buy a book on Amazon – get them to think about trust in day-to-day life.
AG: It’s not all bad news. Take media. Paid digital subscriptions are up: could we be shifting back to old models?
RB: It’s very hard to tell if that is a Trump reaction or whether we are realising that we have to pay for quality content. But we know media has lost a lot of trust.
We are getting innovation. Wikipedia is thinking through how to get citizen journalism partnering with mainstream journalism. One brave media company will eventually divorce Facebook and Google, placing a value on content over distribution.
But all intermediaries like media are going to be very affected in the next five years. Auditors, lawyers – anywhere value is in the trusted relationship, because algorithms will replace those relationships.
AG: So who should manage trust in an organisation? Should communications or marketing be in charge of trust?
RB: Trust doesn’t sit in one place and it isn’t a project. Trust is embedded in the DNA of an organisation.
Salesforce has a chief trust officer but the first thing the trust officer says is, ‘Trust doesn’t reside with me. I am responsible for embedding it.’
AG: But someone has to deal with it when it breaks down.
RB: Then it’s a reputation issue and the communications function deals with it. But the timeframe is so compressed now, sometimes a few minutes. A tweet about Uber’s surge pricing might appear in one person’s feed in the morning and have flown around the world on social media by the afternoon, leading to a full-on protest. Once trust breaks down there is an erosion of faith and then legitimacy, and it’s very hard to rebuild trust from that point.
AG: Hence the huge focus on transparency in corporates.
RB: Yes, but if you need things to be transparent then you have kind of given up on trust.
Andy Haldane, chief economist at the Bank of England, told me that in the GFC he would have created a fire if he had been completely transparent, so the intelligent thing to do was to hold some information back.
AG: Now trust is being digitised.
RB: Yes, and we are digitising reputation. People will have a trust score like a credit score. It’s already happening in China – the government is developing a system to rate its citizens in a project called Social Credit System to enhance trust nationwide. It’s voluntary now but will be mandatory in 2020.
The behaviour of every citizen and company will be ranked positive and negative and publicly ranked against the whole population. It will affect eligibility for loans, jobs, even where your children go to school – all collected from big data. For example, someone who plays video games a lot might be considered idle. Or nice messages about the government might make your score go up.
AG: So in the future we will be data-mined and rated?
RB: It looks so. Individual’s actions will be judged by standards you can’t control. Judgement can’t be erased.
The frightening thing is that there is no culture of forgiveness, no way to delete transgressions. And while we can’t stop this era we do have data rights we should be asserting now.
AG: But how do you have a digital identity without giving away data?
RB: We desperately need GDPR (General Data Protection Regulation). Now in Europe the consumer can demand from a company the data they have on you and the way they are using the data.
And you should have a choice of whether you sell your data or not. GDRP is very important because the data belongs to you.
AG: But you would love the greater efficiency that technology brings and that means giving data away.
RB: Efficiency is the enemy of trust. Take Amazon which launched a security camera and lock system so while you are away they can open your door and drop packages. Would you let them into your house?
RB: But would you ask them what else the camera was collecting? We love the idea of no post office but what are we giving up?
We need to ask more questions, slow down and have a look at what we are giving away. Companies need to be upfront on that. We shouldn’t let convenience trump trust.
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