The Innovation Paradox: Risk versus Progress

I had the pleasure of attending the release of the 2015 Edelman Trust Barometer Annual Global Study results in Toronto on 3 February 2015 at the kind invitation of Bob Richardson (a long-time friend from our days as student leaders at Carleton University). I also made the journey in from Kitchener to see my fellow A.W. Page Society board colleague, Richard Edelman, whom I’ve always respected as one of the profession’s most influential thought leaders.

The bottom line from Richard’s fast-paced presentation on the global results is that trust, as an earned outcome of stakeholder relationships, took a beating in 2014. All sectors (business, government, NGOs and media) experienced an “evaporation of trust” due in part to a number of global crises and events that caused the public and influencer groups to have less trust across all institutions.

Among the most interesting findings from the report, especially for Canadian institutions, is that while the general public’s perceptions of trust in these four institutions remained relatively flat over the year, the views of the “Informed Public” — those Canadians that dig deeper into public issues — were more negative than in 2014. In Canada NGOs were the most trusted, followed by government as the second most trusted institutions. The Trust Barometer story doesn’t paint a good picture for the business community (a decrease of 15%) or the media (down 11%) in these challenging times. Overall Canadian’s perception of trust — as measured on the Global Trust Index, has moved the country from a nation of “trusters” in 2014 (60%) to a more neutral position with a score of 53%.

The good news for Canada, on the global stage, is that while our trust in our own country has declined seven percent over the last year, “Brand Canada” — trust in nation where a company is headquartered — vaulted Canada into the global leadership position tied with Sweden, Germany and Switzerland (sounds like the results of the World Junior Hockey Championships). This is great news for Canadian organizations and companies who compete in global markets — by positioning the brand,  product or service as “Made in Canada” — global consumers will have a greater trust in your company’s offerings.

However my most significant take away yesterday was the trust results related to the public’s perceptions of innovation and the implementation of new technologies. According to the findings “There is a new factor depressing trust: the rapid implementation of new technologies that are changing everyday life, from food to fuel to finance.” The report states that “the Trust Barometer has uncovered a profound concern for the pace of change. By a two-to-one margin, respondents in all nations feel the new developments in business are going too fast and there is not adequate testing.” The study showed that 51% of global public believe that the pace of change in business and industry is “too fast” compared to 28% who feel it is “too slow”.

As Richard states in the study’s executive summary “Business sees innovation as imperative to competitiveness but fails to grasp the underlying problem of resistance based on fear of the unknown. The source of anxiety in this new age of disruption is lack of understanding…the consequences of being glossed over, from risk to environment, privacy violations and loss of jobs in disrupted industries.”

To overcome this growing distrust, especially as it relates to the public’s concern about innovation and the pace of change, Richard offered seven (7) imperatives:

1. Businesses must have a new aspiration — in addition to seeking the public’s acceptance of its license to operate it must also seek the license to lead.

2. Organizations must work with government — in most jurisdictions throughout the world (and true here in Canada), the public sees government as the regulator of change and innovation. Government gives you credibility and the confidence of the people.

3. Be fair and be seen to be fair — “pay your taxes” and help lift up the dreams and aspirations of the middle and lower classes.

4. There must be a new Innovation Compact — there must be a real and realized opportunity for individuals to opt out of innovation. “The individual must feel empowered to speak out, to be the other half of the innovation engine along with the genius programmer or scientist, to be a key part of the process of accepting the new”.

5. Companies must solve the big global problems — the supply chains in Africa, the threat of infectious disease, the lack of  water in cities like Sao Paulo, to name just a few of the most pressing issues facing the world.

6. Realize the importance and value of “peer-to-peer” engagement — especially within your own workforces. The public trusts your employees but they don’t trust your CEOs.

7. Commit to radical transparency — make commitments and keep them. According to the study “the number one way to add trust in the fast-changing marketplace is to have business make test results publicly available for review (80 percent) or to have a partnership with an academic institution (75 percent). Transparency becomes the fuel for discussion of innovation, the rational backbone.”

Richard closed off his remarks with a quote from Professor Klaus Schwab, the founder and executive chair of the World Economic Forum: “Now is the time to minimize risk and build trust by meeting legitimate expectations of all their stakeholders…to find solutions to today’s most pressing social problems.”

The minimization of risk (real and perceived) and the building of trust has been a long-time area of research and interest for me. In my next post, I will harken back 30 years to the ground-breaking studies from the field of “risk communications” that may help us make sense of the fears, concerns and perceptions of risk as it relates to this innovation paradox.