The Trust Crisis

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The Trust Crisis

As measured by the 10th Annual Edelman Trust Barometer,1 trust in businesses plummeted worldwide to a 10-year low at the end of last year.  Some 62 percent of "informed adults" aged 25 to 64 reported that they trusted businesses less than they had a year earlier.  Notably, respondents in the United States and Western Europe were more suspicious than those in emerging economies.  In the U.S., 77 percent became more distrustful.

More recently, the Harvard Business Review2 surveyed its readers about the level of trust they have in businesses.  Even among this knowledgeable and elite group of executives and academics, three-fourths of the respondents indicated that they felt less overall trust in the senior management of American companies.  Almost half had less trust in consultants.  Roughly one-fifth of respondents reported lower levels of trust in academic institutions, suppliers, and customers, and 10 percent were even suspicious of their own colleagues. 

It seems that we've lost our confidence in a broad range of economic institutions, from investment banks to central banks, and from economic advisors to the governmental institutions which we expected to protect us from catastrophic losses.  Among the hardest-hit targets of that newly-acquired mistrust are MBAs and the business schools from which they graduate. 

As Dean Joel Podolny wrote in the Harvard Business Review,3 "I'm angry about the inattention to ethics and values-based leadership in business schools."  Podolny, a sociologist, was a professor and the Director of Research at Harvard Business School.  Later, he became dean of the Yale School of Management. 

Specifically, Podolny was concerned about what business schools didn't teach.  The study of economics and business administration has always relied on quantitative methods, statistics, and in more recent times, computer models.  Business school professors have largely ignored what is qualitative in business and especially those areas that touch on ethics and values. 

This has had a profound effect.  A Harvard professor surveyed MBA students and found that their definition of right and wrong was simply whatever happened to be the norm.  In other words, they thought it was acceptable to do whatever the crowd was doing. 

But trust has eroded across the board, and that fact is changing the way we view business.  Previously, the only important measure of a business was how much wealth it created for shareholders...

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