8 minute read 3 May 2019
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Five ways to make trust your competitive advantage

8 minute read 3 May 2019

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To truly unlock the value of digitalization, authenticity must be put front and center of every customer experience.

It is a challenging paradox, that the very source of value in the digital age—data—is also becoming the biggest source of risk. On the one hand, enterprises must embrace technology to bring innovative, convenient and customized experiences to their customers, using data-driven business models. On the other hand, delivering these experiences means gathering increasingly personal customer data, raising issues of privacy, security and ethics.

As a result, trust is increasingly becoming the yardstick for measuring customer loyalty, employee engagement, maintaining competitive advantage and, importantly, securing credibility with regulators and investors.

A “must-have” in the digital economy

Customers are becoming increasingly aware of the value their data generates for companies and they are willing to share data, as long as it results in favorable outcomes for themselves. And increasingly employees want to work for companies that reflect and uphold their own values and ethical standards. The risk of losing the trust of these two key stakeholders is nothing short of lethal for businesses.

Results of the 2019 Edelman Trust Barometer underscore the benefits enjoyed by businesses that invest in building and maintaining trust.

The survey found that employees who trust their employers show greater advocacy (71%), loyalty (78%), engagement (74%) and commitment (81%). Moreover, 78% of respondents say that how a company treats their employees is one of the best indicators of its trustworthiness.

Trust is not just important for new businesses but also for large incumbents that are using data in new ways as they transform digitally. A majority of respondents (67%) said that a good reputation may get them to try a product, but if they can’t trust the company behind the product they will stop buying.  While digital transformation is an imperative in today’s marketplace, companies with significant legacy brands must be careful of the risks and focus on building long-term value.

Trust then, is a “must-have” in the data-driven digital economy, making it a critical core competency for enterprises looking to gain an advantage in today’s ferociously competitive climate for customers and talent.

Due to loss of control, people fear flying more than driving cars. Technology needs to be designed to give people personhood and autonomy.
Jaron Lanier
Scientist, author, musician and artist

Five key pillars of the trust imperative

For companies, establishing and nurturing trust with their key stakeholders will depend on the ability to deliver on their stated purpose, use technology ethically and ensure beneficial outcomes.

Here are five core principles that can help guide the way:

  1. Trust as a product or service feature: In the era of AI, algorithms and automation, technology is working alongside us and directly on our behalf, often without our input. This is triggering deep seated biases and sparking fear and distrust. Understanding human psychology and designing for it will be critical to instilling trust and consequently, spurring adoption. Make trust by design a guiding principle embedded throughout the lifecycle of conceptualizing, designing and testing a product or service prior to release. At every milestone, ask yourself – how is this product or service creating trust with my customer? 
  2. Radical transparency: Clearly articulating the value proposition of a product or service, and, crucially, delivering on that proposition, will be critical to building trust. Through radical transparency, companies can show the intended benefit to the customer and alert them to the potential risks. Being open about the pros and cons allows customers to make the choice of whether or not to participate.
  3. End-to-end traceability: Mishandling and misappropriation of data and instances of product failure can result in deep and irreversible mistrust. End-to-end traceability, with blockchain or distributed ledger technology for example, can instill more confidence by giving customers insight into the lifecycle of the product or service.
  4. Unwavering integrity: A critical aspect of trust is knowing the other party’s intentions. Customers want to see that companies are working in their interest. Companies need to clearly articulate their purpose and install an ethical framework that supports their purpose, especially when it comes to the use of new technologies. When companies show unwavering integrity, customers will feel confident in engaging with their products and services.
  5. Assurance: The old adage still stands true – trust is earned not given. Using metrics, such as the net trust score proposed in the Embankment Project for Inclusive Capitalism report, provides a means for measuring trust and can help convey assurance of trustworthiness. It also provides a way to track progress and ensures the entire company focuses on maintaining healthy levels of trust. 

Ultimately trust must become embedded in the very fabric of a company’s purpose, values and strategy. And to create a lasting legacy of trust will require leadership, culture and empathy, underpinned by a critical set of building blocks that will enable the organization to tangibly deliver trust.

The only way we can build trust with everybody is by sharing information and letting people decide which products and services they want to use.
Emrah Gultekin
CEO and co-founder, Chooch AI

Watch this video from the EY Innovation Realized summit where a multidisciplinary panel discuss the future of human and new technology interactions.

Building competitive advantage for now, next and beyond

The digital transformation imperative has led enterprises to embrace data-driven processes and business models. But to truly unlock the value of digitalization, they must make trust a core pillar of their transformation efforts.

The need for trust will grow even louder as new technologies mature in the coming years. AI algorithms that are automating decision-making can have tangible consequences in people’s lives, such as preventing access to opportunities or manipulating opinions to result in specific outcomes. Augmented reality (AR) and virtual reality (VR) experiences immerse the senses and, if tampered with, can become powerful tools for manipulation. 3D printing promises to democratize manufacturing, but virtual designs can be altered or stolen.  

What you really need is human oversight and for human beings to look at these systems and use them as advisers but also be able to say here is a place where the system is not perfect.
Ethan Zuckerman
Director at MIT Center for Civic Media and EYQ Fellow

Companies looking to reap the efficiency benefits from such technologies must remember that sometimes humans must be in the loop. Empowering front-line employees to assist customers and improve their experience can go a long way in building trust.

While today the focus is on embedding trust into the design of products and services, providing transparency and traceability as well as integrity and assurance, tomorrow will demand entirely new strategies. In the world of AR and VR experiences and 3D printing, developing markers of authenticity may become one way of imparting trust. In a bid to give customers more control, new business models are emerging where companies pay customers for their data. And other new ideas may emerge that we haven’t even thought of yet.

Transformation and innovation leading to ethical outcomes will be a significant competitive advantage. Ensuring a relentless focus on trust means that CEOs need to ask themselves who is responsible for, and laser-focused on, trust. We believe that the risk function is best positioned to foresee and mitigate the threats from a rapidly evolving risk landscape. 

Risk management functions can help organizations balance the upsides and downsides of transformation, instilling confidence in the organization while also anticipating any unintended issues that arise.
Amy Brachio
EY Global and EY Americas Advisory Risk Leader

Watch this Forbes video from the EY Innovation Realized summit to hear business leaders discuss how organizations can drive value when trust is the currency for measuring customer loyalty and maintaining competitive advantage

Ultimately one thing is clear, the trust imperative will be equally, if not, more important as the disruption imperative for enterprise success and competitiveness across the three dimensions of now, next and beyond.

 Key questions for C-suites and boards:

  • Who is responsible for fostering and maintaining trust in your company?
  • What measures are you taking or will take to ensure that: i) your stakeholders trust your company, and ii) you have confidence as an organization that you can keep that trust?
  • Does your company have an ethical framework that is supported by your purpose?
  • When it comes to new technologies, does your company evaluate the potential for unintended consequences that can erode trust, as well as the upside advantages that can create trust?
  • Is trust a key ingredient in your product or service development and deployment process?

Summary

In the digital age, data is both the biggest source of value and the fastest-growing source of risk. Enterprises embrace data-driven business models to bring great experiences to customers, yet grapple with issues of privacy, security and ethics. Trust is now essential for customer loyalty, employee engagement, and competitive advantage. 

This article was informed by insight shared at Innovation Realized, the EY immersive and boundary-breaking summit for C-suite executives and market influencers to propel innovative thinking into meaningful action. 

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