Over the past 20 years CEOs have witnessed tremendous upheavals as a result of globalisation and technological change. In the PwC 20th Annual Global CEO Survey, nearly 1,400 CEOs share their views on the impact of these forces on growth, talent, trust and society.
In this survey a sizeable number of CEOs are firmly convinced that, in an increasingly digitalised world, it’s harder for businesses to gain – and retain – people’s trust. They also think it’s become more important both to run their companies in a way that addresses wider shareholder expectations and to establish a strong corporate purpose that’s reflected in their organisation’s values, culture and behaviour.
So which risks arising from connectivity concern CEOs most? When ‘technology’ and ‘trust’ pop up in the same sentence, most of us automatically think of how reputations are made and lost overnight through mass communications. And, indeed, 87% of CEOs believe social media could have a negative impact on the level of stakeholder trust in their industry over the next five years. But as new technologies and new uses of existing technologies proliferate, they say new dangers are emerging – and old ones are getting worse.
It is no wonder as many companies already collect a vast amount of customer data, which they use to target specific customers and influence their behaviour, often in very subtle ways. As the Internet of Things (IoT) spreads to everything from wearables to consumables, cars, and every conceivable part of the home, what companies know about people will increase exponentially.
This data is an incredible asset for companies and their customers. It enables businesses to deliver a better service, develop closer relationships with their customers and earn their trust. It enables customers to get more targeted offerings and engage with companies in more meaningful ways. But what happens if a company crosses the line between anticipating customers’ needs and intruding on their privacy, or if a government tries to access the data in an effort to control security risks? And what happens if the data gets lost or stolen and ends up in the hands of criminals? Even worse, people’s physical security could be compromised, as cars and homes become increasingly connected.
The growing use of data in the workplace also poses new trust issues. As HR departments slowly but surely increase their use of data analytics, talent management is turning from an inexact art into a science. But monitoring employees’ activities in – and out of – work can quickly turn sour. What are the limits of the information companies can gather? How transparent is the use of that data in making decisions about employee rewards or penalties?
CEOs recognise the complexity of the situation. A full 91% say breaches of data privacy and ethics will have a negative impact on stakeholder trust in the next five years, and 89% are already on the case. However, CEOs in the largest companies are doing much more to address these areas than those in the smallest firms.
Security breaches aren’t confined to customer data; cyber spying is now a major threat in some industries, for example. Businesses in key areas like infrastructure, energy and banking are particularly prone to attacks. This explains why so many CEOs worry that breaches affecting business-critical information and systems could also impair public trust in their industry. The vast majority are already taking steps to try and forestall such problems – although, again, it’s the largest firms that are most active in this regard.
The companies that are most effective in addressing these issues will be those that are not only strengthening their IT security, risk and governance strategies, but also collaborating with government (for example, to create the right regulatory environment for public clouds, which can offer better end-to-end security and privacy management) and engaging with stakeholders. They will need to decide what levels of transparency stakeholders should be entitled to and how to balance competing interests, as well as educating people on how to manage their technology footprint. Employers will also have to consider how much information it is necessary or acceptable to gather on their people, and how open they should be about what they’re collecting, and why and how it will be used.
IT outages and disruptions are another source of concern. If the lights go out in a world that’s heavily reliant on technology, the consequences can be extremely disruptive. What happens if customers can’t access their money when they need it, or if their connected homes lock them out? Deeply inconvenient though such incidents are, they pale into insignificance next to the physical risks that will arise as we become more connected. Picture, for instance, the sort of accident that might occur as a result of a computer glitch in one or more smart cars.
It’s no wonder so many CEOs fear that IT outages and disruptions could impact stakeholders’ trust and why so many are taking action. But addressing such risks is very difficult. The complexities and interdependencies of enterprise systems are a big problem.
Behind automation, robots and smart machines lie algorithms. These may be nothing more than instructions for computers to achieve particular outcomes, but they shape lives to a much bigger extent than many people imagine. The way we navigate websites, how we interact with connected devices, how the growing gig economy works: all are influenced by code. This raises questions about what safeguards are needed to ensure that machines carry out human orders effectively, in the way they were intended. It also raises various ethical questions. To what extent, for instance, is it acceptable to influence human choices? And can the humans who write these codes – or the companies they work for – be trusted?
A trust strategy for a digital age
In some respects, digital connectivity has made us more trusting; in the sharing economy, for example, consider how many people let strangers stay in their homes or buy from businesses they’ve never heard of before. In other respects, digital connectivity has eroded trust by creating new threats and exposing organisations to far more scrutiny. The growing complexity of technology and the increasingly distributed way in which we work, with greater individual autonomy, have also made it much harder for companies to build trust – or rebuild it, once it’s been lost. And no firm gets it right every time, which is why effective crisis management is as crucial as robust risk management.
But if forfeiting people’s trust is a sure-fire route to failure, earning their trust is the single biggest enabler of success. As an example, the take progression from assisted to augmented to autonomous intelligence heavily which depends on how much consumers and regulators trust machines to operate on their own. That, in turn, depends on whether those who create the machines have the right risk and governance structures in place, the means to verify and validate their claims independently and the mechanisms to engage effectively with stakeholders.
In short, trust is an opportunity, not just a risk. Many CEOs believe that how their firm manages data will be a differentiating factor in future. These CEOs understand that prioritising the human experience in an increasingly virtual world entails treating customers with integrity.
But, how? As a start, below quoted are the five tough questions for CEOs about gaining from connectivity without losing trust:
- Does your CIO know the extent to which the technology you’re investing in today will affect how your stakeholders trust you tomorrow?
- What are you doing to protect customer and employee data from theft, loss or misuse – and how robust are those strategies?
- How can you build the right infrastructure for collecting, managing, governing and securing data?
- As cybersecurity risks increase, have you got clear protocols in place for when systems go down and inconvenience your customers?
- What can you do to measure and leverage trust in your brand as a competitive advantage?
Source: PwC 20th Annual Global CEO Survey, 2017