The Accenture study was not originally designed to measure the effect of trust specifically, but overall competitive agility. It looked at revenue growth and profitability over time. Then it incorporated metrics measuring sustainability and trust to draw a larger picture of a company’s ability to compete.
The analysis is wide-ranging, incorporating over four million data points. It also took into account sustainability data from over 50,000 sources to come up with a quantitative “sustainability score” for each company. This score included a proprietary measurement of trust across customers, employees, investors, suppliers, analysts, and the media.
When the analysts began to examine the data, they found that trust metrics disproportionately affected a company’s overall score. For example, a consumer-focused company that experienced a sustainability-oriented publicity debacle lost an estimated $400 million in future revenues. Another company that was named in a money laundering scandal (a major breach of trust with consumers) lost $1 billion.
In today’s severely competitive environment, a major “trust event” — when consumers suddenly question their faith in your team and product — can hamstring operations for years, sometimes permanently.
What constitutes a “trust event” differs by industry. When we think of trust, we tend to think of consumers. With social media increasing the velocity of information, even a seemingly minor incident can go viral and cause widespread outrage — and send customers flocking to competitors. Yet as I dug into the report’s data more deeply, I found that trust matters in different ways for different companies. For example, in manufacturing, media, and insurance, the cost of a trust incident was fairly low. In industries such as banking, retail, and industrial services, the impact could be five to 10 times higher.
The industries most sensitive to a trust event seem to have more complex ecosystems. For example, a retail operation needs to maintain strong relationships with hundreds — and sometimes thousands — of suppliers. Banking, another highly trust-sensitive industry, is a complex ecosystem that depends on the cost of capital. A drop in trust can send costs surging.
Further, in virtually all business to business industries, companies must stay on the cutting edge of a highly interdependent web of goods and services. That requires highly collaborative partnerships with other companies to share knowledge and expertise. Once trust is lost in the business-to-business realm, it’s devilishly hard to earn back and competitors gain an edge.