While watching “Mary Poppins Returns” this past holiday, I couldn’t help but notice the Scrooge-like bank that was upending lives. I found myself wondering what types of companies will be the Scrooges of the future. Which ones will we lose trust in?
Enterprises, like all human institutions, operate on trust. When people trust them, they’re more willing to transact business and establish partnerships. They demand fewer safeguards, whether contractual, legal or regulatory. Transactions have less friction. It’s easier to attract customers, build brands, grow companies, attract and keep great employees, and successfully innovate.
But, as many of us know from personal experience, once trust is lost, it’s almost impossible to regain. American enterprise is in danger of reaching such a tipping point — and, as has so often been the case in recent decades, the tech industries that are responsible for so much economic creativity and dynamism are getting there first.
I think Jon Swartz had it right in his recent Barron’s piece: “Regaining Trust Is the No. 1 Issue for Tech in 2019.” Do you personally trust your social networks to treat your data with respect, and to avoid using it to manipulate you in ways you can’t understand? When you bring a smart speaker into your home, do you trust it — or are you simply reconciled to having to distrust its surveillance as the price of life in the 21st century?
For that matter, do you consistently trust companies to price their products fairly? Do you think artificial intelligence, Big Data and automation companies are doing enough to help society manage the impacts of their work — on employment, on inequality, on the ability of human beings to find meaning in their lives?
If you’re reading this, you’re probably in the tech industry, in business or both. If you’re hesitant to answer “yes” to some of these questions, imagine how outsiders are answering them. In tech, we’re on the frontlines of the trust crisis that’s emerging in American business — and, since we’re so high profile, our response will have outsized impact.
When polls report that Americans age 18-29 are more positive about socialism (51 percent) than capitalism (45 percent), that’s a red-lit fire engine siren blaring in our faces. As businesspeople, we’ll be making a fatal error if we interpret it as a sign that we need to spend more on public relations, or that millennials just don’t understand where prosperity comes from.
Truth is: We’re being told the current system is out of whack, and the fundamentals need to change. Free enterprise won’t be sustainable if people don’t trust individual enterprises, or no longer believe the system enables prosperity “for the many, not just the few.” Right or wrong, society won’t forever permit capitalists to be capitalists unless they respect a wider set of stakeholders — unless they earn and deserve trust.
Being trustworthy doesn’t mean a business can’t earn a fair profit or won’t look out for its own interests. It does, however, mean that customers, business partners and, ultimately, citizens shouldn’t constantly be worrying about how they’re being taken advantage of.
Increasingly, many of them do worry — and not without reason. If this trend continues, it’ll take us to places few of us want to go. Right now, we in the tech industry have more power to turn it around than almost anyone else. Let’s use it before we lose it.
James Barrood is the CEO and president of the New Jersey Tech Council.