BUILDING AND MANAGING
PUBLIC TRUST IN BUSINESS
Corporate Character, Shared Belief and Trust
Roger Bolton
RBC Strategic Consulting
Council of Communication Management
Las Vegas
April 28, 2011
1
I am going to read you a list of
institutions. For each one, please
tell me how much you trust that
institution to do what is right. Let’s
start with business. On a 9-point
scale where one means that you
“do not trust them at all” and nine
means that you “trust them a
great deal,” how much do you
trust business to do what is right?
Edelman Trust Barometer
1
2
Not at all
3
4
5
2
6
7
8
9
A great deal
3
Arthur W. Page
 AT&T PR VP, ’27 – ’46
 Corporate officer
 Member of board
 Adviser to Presidents
4
ARTHUR W. PAGE SOCIETY
Founded 1983
MEMBERS:
Chief Communications Officers
CEOs Global Public Relations Firms
Academics
5
ARTHUR W. PAGE SOCIETY
MISSION:
To strengthen the management policy role of the
corporate public relations officer by providing a
continuous learning forum and by emphasizing
the highest professional standards.
6
ARTHUR W. PAGE SOCIETY
MISSION:
To strengthen the management policy role of the
corporate public relations officer by providing a
continuous learning forum and by emphasizing
the highest professional standards.
7
ARTHUR W. PAGE SOCIETY
The Page Principles
 Tell the truth.
 Prove it with action.
 Listen to the customer.
 Manage for tomorrow.
 Realize a company’s true
character is expressed
by its people.
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 Conduct public
relations as if the
whole company
depends on it.
 Remain calm,
patient and goodhumored.
“All business in a democratic
society begins with public
permission and exists by
public approval.”
- Arthur W. Page
9
PAGE THOUGHT LEADERSHIP
The Authentic Enterprise
The Trust Report
Coming in 2011:
• Values-based culture
• New media
• New model
10
WHY TRUST?
11
The Dynamics of Public Trust in Business –
Emerging Opportunities for Leaders
12 12
WHY TRUST MATTERS
The Dynamics Of Public Trust In Business –
Emerging Opportunities For Leaders
13
WHY TRUST MATTERS
“Trust always affects two measurable
outcomes – speed and cost. When trust
goes down, speed goes down and cost goes
up. When trust goes up, speed goes up and
cost goes down.”
Stephen M.R. Covey,
In Chief Executive, June 1, 2007
14
WHY TRUST MATTERS
“To make the McLane deal, I had a single meeting
with … Wal-Mart’s CFO, and we then shook hands. ...
Twenty-nine days later Wal-Mart had its money. We
did no ‘due diligence.’ We knew everything would be
exactly as Wal-Mart said it would be – and it was.”
Warren Buffett,
Berkshire Hathaway
2003 Annual Report
Chairman’s Letter
15
WHY TRUST MATTERS
Public Trust in Business
Public trust in business is the level of
vulnerability the public is willing to assume
with regard to business.
“The Dynamics Of Public Trust In Business –
Emerging Opportunities For Leaders”
16
WHY TRUST MATTERS
 An UNwillingness to accept
vulnerability leads to regulation.
 Post Sarbanes-Oxley:
 Annual U.S. cost of regulatory compliance
estimated to be $1.1 trillion – nearly 8% of
GDP.
“The Business Case for Trust,” Chief Executive 226 (June 2007)
17
WHY TRUST MATTERS
Edelman Trust Barometer 2009
18
PUBLIC TRUST IN BUSINESS
The Dynamics Of Public Trust In Business –
Emerging Opportunities For Leaders
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PUBLIC TRUST IN BUSINESS
A century of regulation
1890 – Sherman Act
1970 – OSHA, EPA
1897 – ICC
1972 – CPSC
1906 – FDA
2002 – SOX
1914 – Clayton Act
2010 – Dodd-Frank
1934 – SEC, FCC
20
PUBLIC TRUST IN BUSINESS
Emerging “social contract”
1889 – Carnegie – “Gospel of Wealth”
1931 – Berle and Dodd – Harvard Business Review
1960 – Packard – “A contribution to society”
1970 – Friedman – “Profits”
1984 – Freeman – Stakeholder theory
2011 – Porter – Shared value
21
PUBLIC TRUST IN BUSINESS
Emerging “social contract”
 Quality products and services at reasonable
prices
 Steady employment in a healthy and safe
environment
 Support for community institutions
22
PUBLIC TRUST IN BUSINESS
Breaking the contract
1980s – Shareholder value:
Leveraged buyouts, re-engineering,
outsourcing, layoffs, short-termism,
executive compensation
1987 – Gekko – “Greed is good.”
23
PUBLIC TRUST IN BUSINESS
Breaking the contract
 WorldCom
– Ebbers
 Enron
– Lay, Skilling & Fastow
 HealthSouth
– Richard Scrushy
 TYCO
– Dennis Kozlowski
 HP
– Patricia Dunn
 MSO
– Martha Stewart
 UnitedHealth
– Bill McGuire
24
PUBLIC TRUST IN BUSINESS
Breaking the contract
2008 – Aggressive pursuit of high-risk
financial instruments.
“Trust no one.”
-- The Wall Street Journal, September 2008
25
PUBLIC TRUST IN BUSINESS
Breaking the contract
 Goldman Sachs
 BP
 HP
 Toyota
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He’s
back!
27
PUBLIC TRUST IN BUSINESS
U.S. Trust in Business Executives
How do you rate the honesty and ethics of people in this field?
Source: USA Today/Gallup
100
90
80
70
60
50
40
30
20
10
0
1976
1981
1985
1990
1992
1994
1996
1998
2000
2002
2003
2005
2007
2009
% Very High/ High
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PUBLIC TRUST IN BUSINESS
U.S. Trust in Institutions
How much do you trust each institution to do what’s right?
Source: Edelman Trust Barometer
70
60
50
Business
40
30
29
20
10
20
08
20
06
20
04
20
02
20
PUBLIC TRUST IN BUSINESS
U.S. Trust in Institutions
How much do you trust each institution to do what’s right?
Source: Edelman Trust Barometer
70
60
50
Gov't
Business
40
30
30
20
10
20
08
20
06
20
04
20
02
20
PUBLIC TRUST IN BUSINESS
U.S. Trust in Institutions
How much do you trust each institution to do what’s right?
Source: Edelman Trust Barometer
70
60
Media
Gov't
Business
50
40
30
31
20
10
20
08
20
06
20
04
20
02
20
PUBLIC TRUST IN BUSINESS
U.S. Trust in Institutions
How much do you trust each institution to do what’s right?
Source: Edelman Trust Barometer
70
60
Media
Gov't
Business
NGOs
50
40
30
32
20
10
20
08
20
06
20
04
20
02
20
DRIVERS OF CHANGE
Arthur W. Page Society White Paper:
“The Authentic Enterprise”
33
DRIVERS OF CHANGE
Globalization
Digital
Network
Revolution
Stakeholder
Empowerment
34
GLOBALIZATION
International
Corporation
Multinational
Corporation
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Globally Integrated
Enterprise
GLOBALIZATION
The “Flat World” is reshaping the corporation.
 Shifting from hierarchical, monolithic,
multinational …
 … to horizontal, networked and globally
integrated.
 Operations are componentized, virtualized
and distributed over an ecosystem of
business relationships.
36
THE DIGITAL NETWORK REVOLUTION
Web 2.0
37
THE DIGITAL NETWORK REVOLUTION
Rapid and massive changes in the way
people:
 Access information
 Communicate
 Make connections
 Build communities
38
STAKEHOLDER EMPOWERMENT
Highly influential new stakeholders
 Common interests
 Share information
 Expertise
 Mobilize
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STAKEHOLDER EMPOWERMENT
CUSTOMERS
INVESTORS
LOCAL
COMMUNITY
EMPLOYEES
COMPANY
ACADEMIC
COMMUNITY
NGOs
GOVERNMENT
40
MEDIA
STAKEHOLDER EMPOWERMENT
CUSTOMERS
INVESTORS
LOCAL
COMMUNITY
EMPLOYEES
COMPANY
ACADEMIC
COMMUNITY
NGOs
GOVERNMENT
41
MEDIA
DRIVERS OF CHANGE
Globalization
Digital
Network
Revolution
Stakeholder
Empowerment
42
DRIVERS OF CHANGE
Implications for enterprises:
Threats …
 Influential new stakeholders
 Demands for transparency
 Less control over messaging, segmentation
 Risks to brand and reputation
 Regulatory activism
43
DRIVERS OF CHANGE
Implications for enterprises:
And opportunities …
 To reach stakeholders
 To advance policy interests
 To build brand
 To enhance reputation
44
THE AUTHENTIC ENTERPRISE
Arthur W. Page Society White Paper
45
THE AUTHENTIC ENTERPRISE
In this dynamic and radically open
environment, a company must answer:
 What business are we in?
 What markets do we serve?
 What differentiates us?
 What do we value?
 What will endure?
46
THE AUTHENTIC ENTERPRISE
The enterprise must be grounded in a sure
sense of what defines and differentiates it
(mission and values).
And those definitions must dictate consistent
behavior and actions.
47
THE AUTHENTIC ENTERPRISE
au·then·tic, adj.
 Conforming to fact and therefore worthy of
trust, reliance, or belief: an authentic
account by an eyewitness.
- American Heritage Dictionary
48
THE THREE CORE DYNAMICS
The Dynamics Of Public Trust In Business –
Emerging Opportunities For Leaders
49
DEFINING TRUST
The Three Core Dynamics
 Trust Safeguards
– Legal compliance mechanisms
 Balance of Power
– Risks and opportunities are shared
 Mutuality
– Based upon shared values or interests

50
CORPORATE CHARACTER
The Dynamics Of Public Trust In Business –
Emerging Opportunities For Leaders
51
CORPORATE CHARACTER
MISSION
 Align business interest with the public
interest in a meaningful way.
 Focus on the core contribution that the firm
makes to society.
 Strategy and operations are designed to
fulfill the mission.
52
CORPORATE CHARACTER
VALUES
 Build a values-based culture that aligns
with mission and strategy.
 Ensure that values are adhered to
consistently across the enterprise.
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ALIGN BUSINESS INTEREST
WITH THE PUBLIC INTEREST
The Dynamics Of Public Trust In Business –
Emerging Opportunities For Leaders
54
ALIGN BUSINESS/PUBLIC INTEREST
IBM – A Smarter Planet
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ALIGN BUSINESS/PUBLIC INTEREST
GE Imagination
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ALIGN BUSINESS/PUBLIC INTEREST
PepsiCo – Performance with Purpose
57
ALIGN BUSINESS/PUBLIC INTEREST
Business Model Matters
How you make your money is
as important as what you make.
58
THE VALUE OF VALUES
The Dynamics Of Public Trust In Business –
Emerging Opportunities For Leaders
59
THE VALUE OF VALUES
Our Credo
We believe our first responsibility is to the
doctors, nurses and patients,
to mothers and fathers and all others who use
our products and services.
In meeting their needs everything we do must
be of high quality.
60
60
THE VALUE OF VALUES
“While consistent growth is the output of this
financial model, the fuel that drives it -- the
energy behind it -- is our culture … how we
behave.”
-- Jack Welch, GE Annual Report 1996
61
THE VALUE OF VALUES
“I came to see, in my time at IBM, that culture
isn’t one aspect of the game – it is the game.”
-- Lou Gerstner, Who Says Elephants Can’t Dance?
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THE VALUE OF VALUES
 Top down
 Bottom up
 Formal
 Informal
 Part of the vernacular
63
STAKEHOLDER RELATIONSHIPS
The Dynamics Of Public Trust In Business –
Emerging Opportunities For Leaders
64
STAKEHOLDER RELATIONSHIPS
Coca-Cola
 Activists targeted Coke’s India operations
 Allegation: pollution and water scarcity
65
STAKEHOLDER RELATIONSHIPS
Coca-Cola Partnership:
World Wildlife Fund
 Pledge to replace the water it uses
 $20 million to help conserve seven of the
world's most important freshwater river
basins
66
STAKEHOLDER RELATIONSHIPS
How do you build relationships with
disparate stakeholders?
 Be transparent
 Listen
 Look for common ground
 Be willing to change
67
SHARED VALUE AND
SHARED BELIEF
The Authenticity Effect
68
SHARED VALUE
“Diminished trust in business is causing
political leaders to set policies that sap
economic growth….
“The purpose of the corporation must be
redefined around shared value.”
Michael E. Porter and Mark R. Kramer, Creating Shared Value – Harvard Business Review
69
SHARED BELIEF
BELIEF
Engage the decisionmaker by forging a
shared belief
Corporate
Character
Values and
Purpose
ADVOCACY AT SCALE
Build constituency
with more audiences,
through the advocates’
networks
CONFIDENCE
Increase confidence
that their actions
matter
ACTION
Spur decisionmakers to act on
that belief
ROLE OF THE CCO
Not only develop channels of communication,
but networks of relationships
Not only position, but define the corporation
Not only change perceptions, but change
realities
“The Authentic Enterprise”
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THE AETNA CASE
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THE AETNA CASE
150-year history
“Rugged oak stability”
 Integrity and fiscal prudence
 Innovation
 Corporate citizenship
 Fairness and benevolence
73
THE AETNA CASE
Aetna in the 80s
 Stagnation
 Shareholder value
• Profitability
• Death to Mother Aetna
 Culture change efforts
74
THE AETNA CASE
Aetna in the 90s
 Focus on growth
 Strategic repositioning:
• Health care
 Major acquisition
• Managed care expertise
75
THE AETNA CASE
“A head-on collision”

Best of both

AET – customized solutions, excellence,
process, slow

USHC – off-the-shelf, lightening fast, antiprocess, command and control
76
THE AETNA CASE
Culture wars…
 Process vs. command and control
 Off-the-shelf vs. customized
 Brutal battles for domination
77
THE AETNA CASE
Customers and shareholders first
 HMOs = preventive health care
 Strong form managed care
– Referrals
– Pre-authorizations
– Denials
– “Mother, may I?”
78
THE AETNA CASE
Anti Managed Care Backlash
 Physicians, patients rebelled
 Additional regulation
 Jay Leno and David Letterman
 “As Good As It Gets”
79
THE AETNA CASE
CAROL:
They said it's not covered under my plan. And it's
not necessary anyway.
DR. BETTES:
It's amazing these things weren't done.
CAROL:
F---ing HMO bastard pieces of s---. I'm sorry,
forgive me.
DR. BETTES:
No. Actually, I think that's their technical name.
80
THE AETNA CASE
And it gets worse …
 Trial lawyers -- class actions suits
 More acquisitions
 Integration issues
 Market cap = -50%
81
THE AETNA CASE
Who’s angry?
 Doctors
 Legislators
 Patients
 Regulators
 Brokers
 Trial lawyers
 Customers
 Shareholders
82
THE AETNA CASE
New CEO - A Doctor
 Setting a new strategic direction
 Striving for operational excellence
 Changing the culture
83
THE AETNA CASE
How we did it
 Mission
 Strategy
 Operations
 Brand
 Values
 Stakeholder relationships
84
THE AETNA CASE
Mission
85
THE AETNA CASE
Aetna Chairman’s Initiatives
 Genetic testing
 Disparities in health care
 Care at the end of life
 Depression management
86
THE AETNA CASE
Strategy
Cost-effective, high-quality health care
 Information sharing with physicians
 Consumer directed health plans
 Chairman’s Initiatives
87
87
THE AETNA CASE
New Brand Positioning
We provide information and helpful
resources to help you make betterinformed decisions for your health and
financial well-being.
88
88
THE AETNA CASE
Brand
 “We Want You to Know”
 “Plan for Your Health”
 Aetna Navigator
 MedQuery
89
89
THE AETNA CASE
90
THE AETNA CASE
Practice The Aetna Way (Values)
Proud to Work for Aetna
79
79
56
2003
2004
84
74
65
57
83
78
70
48
82
87
68
69
2005
2006
46
2002
91
2007
2008
2009
THE AETNA CASE
Stakeholder relationships
Settle Class Action Lawsuit
 Reform policies
 Transparency on claims payments
 Advisory Board
 Foundation for Quality Care
92
92
THE AETNA CASE
The New York Times
May 23, 2003
93
THE AETNA CASE
“The once notoriously stingy and fiercely
unpopular company is now frequently cast
as the country's most physician-friendly
insurer.”
BusinessWeek, Jan. 4, 2006
By Jessi Hempel and Diane Brady
94
THE AETNA CASE
Key Takeaways
 Re-evaluate core purpose (mission)
 Align strategy, ops, brand
 Build strong, values-based culture
 Engage stakeholders
95
CREATING TRUST
The Dynamics Of Public Trust In Business –
Emerging Opportunities For Leaders
96
“All business in a democratic
society begins with public
permission and exists by
public approval.”
- Arthur W. Page
97
CREATING TRUST
How do you get “public permission” and
“public approval?”
By being an authentic enterprise …
… that operates in the public interest –
doing the right thing for all stakeholders –
... and does it consistently – up and down
the entire organization.
98
Join the dialogue at Page Turner, the Arthur
W. Page Society blog:
http://www.awpagesociety.com/awp_blog/
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BUILDING AND MANAGING
PUBLIC TRUST IN BUSINESS
Corporate Character, Shared Belief and Trust
Roger Bolton
RBC Strategic Consulting
Council of Communication Management
Las Vegas
April 28, 2011
100