Trust is the Bedrock Beneath Every Lead With We Business — Part 1 “Why So Much Distrust?”
This post is the first in a series of eight that examines the bedrock beneath every Lead With We business: Trust that builds reputation, culture, sales, and loyalty during a time of crisis.
Of all the institutions studied in the latest annual trust survey, US respondents report trusting business more than any other institution, at 61 percent. Higher than NGOs. Higher than government. Much higher than the media.
“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 and reputation can be threatened,” according to the 2022 Edelman Trust Barometer.
Having said that, distrust is now society’s default emotion. Almost 60 percent of people say their default tendency is to distrust something until they see real evidence that it’s trustworthy. Often, they perceive just the opposite. Consider WeWork. McKinsey. Facebook and Arthur Andersen. In fact, many company names become so toxic they are forced to change them.
The release of this latest Edelman’s Trust Barometer got me thinking: Can and should the public trust business?
The simple answer is absolutely. But for that to happen, business must earn that trust with the evidence that a majority of people need to believe in it.
Now, if you know me, you’re aware that I focus on the positive when it comes to advising and reporting on the state of and the future of business. On the whole, I see the business world moving rapidly in the right direction, forging a Lead With We landscape that responds appropriately to a confluence of crises across the globe and encompasses a much “wider We” in its assessments of growth and success. That means we no longer measure our impact merely on the shareholders in the investor class — but all “shareholders” in our collective future.
But not every business leader has read that Lead With We memo. And it’s important that we’re not blind to bad actors and bad behaviors in business. They provide a clear juxtaposition to those companies consistently doing the right things in today’s world. They tell us a cautionary tale of business-as-usual leading not to the collective good — but to exposure, massive expense, and even incarceration. All owing to corporate holdouts whose old school attitudes and actions corrode current consumer trust in corporate America.
Let’s take, for example, two notorious business characters, Martin Shkreli and Elizabeth Holmes. Neither had a good January 2022.
On the 14th, a federal judge ordered the “Pharma Bro,” Shkrleli — a name synonymous with greed — banned for life from the pharmaceutical industry. And to return $64.6 million in profits he earned from artificially jacking up the price of the prescription antiparasitic AIDS drug Daraprim overnight.
The price hike had prompted near-universal condemnation from the public and press. Shkreli was unique in the world for having drawn the ire of Hillary Clinton, Bernie Sanders, and Donald Trump.
Two weeks later, on the 31st, another federal judge approved several companies Shkreli founded settling a class-action lawsuit for an additional $28 million. Score one for justice in business. Outcomes like this begin to restore public trust in our institutions. Because the message seems to be that you can’t get away with unconscionable corporate behavior anymore: If we don’t find you today, we probably will tomorrow.
Shkreli’s former companies, Vyera Pharmaceutics and its parent firm Phoenixus AG had earlier agreed to a $40 million payout to end a lawsuit filed by the Federal Trade Commission. All over alleged illegal monopolistic activity that might have been tolerated generations ago.
It’s worth noting that Shkreli faced all those legal consequences while he was already behind bars. In 2018, he was sentenced to seven years in prison for fraud. Astoundingly, that conviction was unrelated to his 2015 hiking the Daraprim price by 5,000 percent.
The judge in the 2018 case specifically cited violations of the public trust, calling out Shkreli’s “egregious multitude of lies” when he previously managed a hedge fund and another pharmaceutical company. He was ordered to forfeit $7.36 million out of which he defrauded his former investors.
When judges denied Shkreli’s audacious 2020 request for a furlough — he said the world needed him to work on COVID-19 vaccine — it was for multiple reasons. All of which can be summarized: He simply could not be trusted.
And Shkreli’s hardly alone Gordon Gekko, whom you can trust only to want to make money. Before riding in like white knights with cooperatively created vaccines for a global pandemic, perhaps no other industry has garnered as much negative publicity in the past two decades for naked trust-eroding self-interest laid bare than Shkreli’s: Big Pharma.
A few years before the Daraprim scandal, Mylan NV acquired the right to market EpiPen — the most effective epinephrine auto-injector on the market — as part of its acquisition of Merck KgaA in 2009. Over the next seven years, the price of EpiPen skyrocketed 535 percent while it's marketing dramatically increased and the company wound up with 95 percent market share.
This was thanks, in part, to Mylan hiring lobbyists faster than any other US company during this period, according to the Center for Public Integrity, thus increasing the size of its raw market by, for example, widening the drug’s labeled uses.
You can’t blame a company for wanting to make more money though, right? Business is in the business of staying in business.
Yet Mylan’s leadership faced a slew of criticism from lawmakers, doctors, patients, and the public. Why? It was accused of profiting from people’s pain. In short, trust had been eaten away. The CEO got called on the carpet in front of a televised Congressional committee. Four separate lawsuits consumed company resources and dominated the news for a while.
Did its leaders face dire consequences like Shkreli would later? One industry expert lamented: “You would think the CEO of a company whose stock has lost 63% of its value would be shown the door and shoved out. You would be wrong … Mylan CEO Heather Bresch received a hefty raise and significant contract extension.”
So did Mylan President, Rajiv Malik, who was also sued civilly for price-fixing scheme: a decent raise, and a contract extension. An obvious example of how and why the public loses trust in business — and how your board should not respond to ethical lapses from leadership.
In 2016, Bresch keynoted a high-profile industry event, but declined to appear before a Senate committee to review the $465 million settlement that Mylan reached with the US Department of Justice for shortchanging Medicaid — which means stealing from the public. “We absolutely raised the price and take full responsibility for that,” she says. C’est la vie. Trust us — it’s just business.
What’s the lesson in this evolution of public sentiment regarding corporate malfeasance? That greed in the long run doesn’t pay the way it used to. One major reason is that a single business’s blow to the public trust weakens trust in the whole business community.
Over the next several weeks, I’m going to be writing here about trust and lack thereof for business. Who’s got it? How do you get it? How do we lose it?
Because today more than ever, trust is a base ingredient in any successful business. Today more than ever, doing business with a defensible purpose — where profit and positive purpose intertwine — requires 100 percent commitment to a movement beyond the profit margin, which I’ll explain throughout the rest of this series.
No matter where you and your business are along your purpose journey, the Lead With We landscape leaves no room for any attitude, decision, or action not undertaken in concert with your entire brand community — not just your C-Suite or your board or your financial backers.
It’s up to all business to build, rebuild, and fortify trust. I think the best way to do this is to Lead With We. All business should follow a “Virtuous Spiral of Collectivized Purpose in Action.” Which entails ALL of us continuously shifting from a narrow “Me” focus to a wider We focus. The collectivized purpose of business is, in fact, to help us all live, work and grow together, in new ways that restore and protect the natural and social systems on which all our futures depend. The more we all do that, the stronger the trust we’ll enjoy.