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What’s the point of Davos, if no one trusts leaders?

Feb 04, 2013 Business Daily, Leadership

“Less than one fifth of the general public believes business leaders and government officials will tell the truth when confronted with a difficult issue. There also is a growing trust gap between institutions and their leaders – globally, trust in business is 32 points higher than trust in business leaders to tell the truth; trust in government is 28 points higher than it is for government officials.
The continuing lack of faith in traditional leaders was reinforced by a series of highly publicized wrongdoings again last year. Former McKinsey managing partner Rajat Gupta was convicted of passing inside information. Bob Diamond resigned as CEO of Barclays after the revelation of rampant fixing of the Libor rate by traders. Bo Xilai was removed from the highest ranks of the Chinese government after exposure of personal corruption.”

Edelman Trust Barometer 2013

The World Economic Forum has just held its annual gathering at Davos. This is where the rich people, the important people and the powerful people go every year to discuss the state of the world amidst serene snowy landscapes.

You might also want to know that annual membership of the WEF costs upwards of US$ 50,000; and a ticket to the annual gathering is in the region of US$ 20,000. Per person. Not including accommodation and travel. The attendees nevertheless include everyone from presidents and global CEOs to leading academics and NGO heads.

All very nice. But there’s a problem here. Much as the Davos assembly likes to regard itself as comprising the world’s successful elite, the world at large seems to have a somewhat different view.

Edelman’s annual survey of trust and credibility, sampling a general population as well as a more informed public across 26 countries, revealed some startling truths recently, as shown in the excerpt. And forces me to ask this question: what is the point of having deep and meaningful pontifications when most of the world at large seems to have difficulty believing a word you say?

The world’s leaders, political and corporate alike, have to face this unpleasant truth head on. The hoi polloi, having been put through the economic turmoils of the past few years, have a problem putting their faith in leaders these days. The world economy was blown up, remember, not by the ordinary folks but by the bad decisions and sheer greed of those who led them. The pain of the blow-up, however, was borne pretty squarely by the poor, in the form of income losses and austerity programmes.

So no surprises then, that the public are not lining up to sing hosannas to the great and good assembled in Davos.

Gillian Tett, commenting in the Financial Times (25 January) regarding the same survey, wrote: “These days, academics and technical experts are still trusted. But CEOs, government officials and regulators are bottom of the list.” And that in this era of social media, people are placing way more trust in “other people like me” than in traditional authority figures.

If you’re a business leader, I suggest this should worry you a great deal. You have handed over trust and credibility as a leader, and you have to do a great deal to recapture it. First, you have to get away from the rhetoric and aloofness of elite gatherings, and get back down amongst the people that really matter: your customers, your employees and your shareholders.

Second, you have to rethink your business models, and steer them away from being shrewd short-term pocket-liners towards being wiser institutions that generate real, lasting value for a whole range of people.

And most importantly, it might be time to take a dose of that very bitter medicine called humility. Its tartness should make your eyes water and dispel the illusion that you know better, and can be trusted to come up with the right answers.

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  • The point of Davos is to:

    stimulate the host country’s economy

    let anyone interested in business leaders have an idea of their priorities

    give haters a voice

  • Adam

    An excellent article, indeed!
    Unfortunately, the truth has become too unpalatable; just ask Jean Claude Juncker, who as Head of Euro Finance, admitted in 2011 after being confronted by the media that “when it becomes serious you have to lie.” As much as austerity compounds problems for the ordinary folk and exacerbates the serviceability of the over-burdening debts of most countries by raising its bond rates; the alternative to that (i.e. the current path of deficit financing both on public and household balance sheets) is wholly unsustainable and equally detrimental to all folks. Rest assured in both cases, the pain is still never equally distributed. May be that’s the problem, may be if voters could be assured that the pain would be equally distributed, then they’d be prepared to accept and deal squarely with the economic realities. But unfortunately history suggests that assumption to be categorically false, most societies when faced with todays’ economic realities have always indirectly voted for “inflation”, for the unsustainable quick fixes (if it meant postponing the problems by paying off today’s obligations with future promises).

    I agree with Gillian Tett’s statement, but I’d slightly differ on the culpability of some influential academics, who like Krugman, still implicitly propose to deal with the problem of debt with more debt. I think some of todays’ influential armchair economists and academics reject the wisdom of ages by suggesting and attributing new names to failed solutions to old problems while expecting optimistic results. In my humble opinion, it is very difficult to solve problems when the causes themselves are not defined and understood in detail. One thing is clear, if the prescriptions emanating from Davos in the past few years are any indication, then the trend of lessening trust among people appears firmly in place. Unless we accept the truth, history might yet prove again that a lot of what we think we know just ain’t so. Courtesy of Mark Twain’s famous quote, “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

  • mo

    The amount spent on the accomodation and membership fee could save some lives…..indeed “what is the point of Davos?” more of a club for the afluent in the name of something else.

  • Supposing I did trust these so-called leaders, what value would these gatherings add to my life? I suspect that these meetings are brainstorming sessions for how the rich and powerful can further enhance their wealth and power.