To succeed in today’s unpredictable brand-business environment, organizations must build Trust Capital. In general, most businesses focus on three forms of organizational wealth: Financial Capital, Intellectual Capital and Human Capital. However, there is a critical fourth component: Trust Capital.
Financial Capital is the money used by a brand-business to buy what it needs to make its products. It is also the money used to provide its services to the sector of the economy on which its operation is based.
Intellectual Capital is the combination of three things. One, Intellectual Capital is the organization’s intellectual property including trademarks, patents, licenses and brands. Two, Intellectual Capital is the brand-business’ unique processes, databases and infrastructures. Three, Intellectual Capital is the brand-business’ special customer, franchisee/owner-operator and supplier relationships that can leverage, build and maximize the organization’s wealth.
Human Capital is the collective skills, knowledge or other intangible people assets of the brand-business’ individuals. Human Capital is the “people talent” of the brand-business that helps creates economic wealth.
Trust Capital is stakeholder confidence in the leadership, credibility, integrity and responsibility of a brand-business to deliver its promises of value to its stakeholders. Trust Capital is an intangible asset that increases the power of marketing expenditures and reduces the cost of new brand introductions.
Trust Capital is what the organization draws on during troubling events, mishaps or crises. Trust Capital is a valuable asset in those occasions when a brand needs to defend itself in unexpected, unfortunate situations. Generating and accumulating Trust Capital in a trust reserve provides a trust buttress helping to weather crises of character. Trust Capital helps to assure enduring profitable growth.
In an uncertain world of diminishing and even disappearing trust, Trust Capital is an important component of brand-business organizational wealth. As a valuable asset, trust takes time to build. It does not happen by saying, “Trust me.”
Trust is earned over a long term. However, trust can be lost quickly. Facebook, VW, WeWork and Boeing are good examples of how easy it is for trust to become mistrust in a matter of moments. How management behaves after a crisis or mishap is critical: actions speak louder than words. But, having a full trust reserve of Trust Capital stabilizes the situation helping organizations return to their trusted relationships with stakeholders.
Trust Capital is built on three pillars:
(1) A brand is a promise. Promise what you can deliver and deliver what you promise.
(2) Be consistent. Quality is not how well you do on the average. Quality is how consistently you live up to expectations.
(3) Be true to your values. Honestly represent your true nature and beliefs. Be authentic.
Trust Capital is an intangible asset that strengthens customer loyalty. People prefer to do business with businesses they trust. What should brand-businesses do to build Trust Capital? Here are four actions to take right now.
First, Create A Trust Agenda.
It is critical to produce the right results by doing the right things in the right way. To generate Trust Capital, CEOs must have a corporate strategic platform based on a Trust Agenda. This Trust Agenda addresses issues such as:
- How will we build trust across our geographies, our brands, our people, our shareholders, our franchisees, our partners, our suppliers and our local communities?
- How will we ensure that corporate responsibility is integrated into all of our decision-making?
- Are we a good global and local corporate citizen?
- How sustainable are our actions? A Trust Agenda will ensure that a sustainability opportunity is priority. This means meeting the needs of customers, communities and businesses without compromising the needs of future generations.
Having a Trust Agenda allows an organization to be a steady force for good while not standing still.
Second, The CEO Must Be The CTO, Chief Trust Officer.
The CEO cannot delegate the leadership necessary for building corporate Trust Capital. It is a CEO responsibility. The CEO is the Chief Trust Officer. Chief Trust Officer is a fundamental, ongoing, leadership responsibility. Trust building begins at the top.
The role of Chief Trust Officer is more than a title. Studies show that increased trust is a critical factor leading to increased preference and loyalty, generating high quality revenue growth.
Third, Do What You Say You Will Do.
Do what you say you will do. This is the foundation upon which trust is built. It is a cliché to say that actions speak louder than words. It is a cliché because it is so true. Nothing kills trust more than promising and not delivering. Fed Ex built its business on the promise that documents and packages would be delivered on the next day. Many trust Fed Ex more than the US Postal Service. Some people do not trust flying fly on a Boeing 737 Max? The previous Boeing CEO swore that the plane was safe even though internal engineering documents attested otherwise. American Airlines is silently putting Boeing 737 Max equipment into its schedules. Do you trust American Airlines?
Fourth, Build Leadership, Credibility, Integrity And Responsibility.
Leadership must be demonstrated, not merely claimed. The brand-business must be a thought leader. Are you the industry innovator? And, are you growing in size? In the 1980s, IBM was the behemoth of technology. But, Apple was considered the most innovative. In the 1990’s, Hoover, Electrolux and Eureka were the biggest vacuum cleaner brands. Dyson was perceived to be the most innovative.
- Credibility means your statements and actions are plausible. Be dependable. Be capable, competent and an expert in your field. Provide superior complaint resolution. Be a trustworthy source of information. Ford Motor Company’s previous CEO was unable to articulate a plan for the brand-business. People continue to question Facebook’s credibility, as its statements have not lived up to its actions.
- Integrity means having customers’ interests at heart. Be accountable for actions. Behave ethically. VW intentionally programmed its diesel engines to activate emissions controls only during tests. Drivers who thought they bought eco-conscious vehicles were actually driving emissions polluters.
- Responsibility provides competitive advantage. Demonstrate good global corporate citizenship. Corporate Social Responsibility is not a separate division within the organization. CSR is not a department. It is a way of doing business. Some companies are making it a core of their operations. Some companies such as Patagonia and fashion house, Stella McCarthy have responsibility as a foundational value.
Together Financial Capital, Intellectual Capital, Human Capital and Trust Capital ensure that a brand-business will be successful in managing for high quality revenue growth. Trust Capital is becoming the most critical of these. Even more, under the pandemic’s agonizing experiences we want brand-businesses that we can trust.
In our ever-changing and uncertain world, trust is under attack. Building trust must be a brand-business priority. Accruing Trust Capital is essential for high quality revenue growth for enduring profitability and success. Without trust, nothing else matters.
Contributed to Branding Strategy Insider by: Larry Light, CEO of Arcature
The Blake Project Can Help You Build A Trusted Brand In: The Brand Positioning Workshop
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