Differentiation. It’s one of the two generic competitive strategies.
You’d think it’s a no-brainer. If everyone sells coffee in supermarkets based on price, invent Starbucks. If water is free from the faucet, invent Perrier. If fund performances are undifferentiated, invent index funds.
So, if your industry ranks near the bottom in trustworthiness – why not invent a trust-based company? Would that not be obvious?
Let’s not make it too tough, by tackling used cars or Congress, but let’s take the next-worst trust-scoring industry – financial services.
In a recent Gallup survey, of 22 professions, the most trusted was nursing – as it has been for many years. 85% of respondents rated nurses high or very high in “honesty or ethical standards.”
Financial services were represented in the survey by banking, insurance, and stockbrokers.
- Bankers were ranked 11 out of 22, with 28% rating them high or very high. That puts bankers below psychiatrists and chiropractors.
- Insurance people get only a 15% rating, which ranks them at number 16 out of 22 – below lawyers.
- Stockbrokers rank 19th out of 22, with only 11% saying they are high or very high. Well, at least they beat congress!
There is some evidence that financial planners, had they been included, would have scored better, though I doubt investment bankers, traders, mortgage bankers and credit card companies would have raised the industry’s average. And the Edelman Trust Survey puts it even more starkly: “Financial services and banks are the least trusted industries for the third year in a row.”
Net net – by and large, if you’re in financial services, people don’t trust you, your company or your industry.
Again – wouldn’t it be a logical, obvious, in-your-face strategy to build a highly trusted company? Sure it would.
And so, the big question – why hasn’t anyone done it?
Why Are There No High Trust Strategies in Finance?
I can think of five possible answers to this question, and the first one is to deny it.
- Wait – some companies really are high-trust.
- The nature of the business is highly competitive – you can’t be high trust and stay in business.
- The industry is full of untrustworthy, greedy, anti-consumer people.
- The industry is so over-regulated that trust never has a chance to get traction.
- The industry simply does not understand the nature of trust.
I’ll give my analysis in the next blogpost.
Meanwhile, what do you think? Are those the five possible answers? Which one strikes you as right?
Good book: Trust Inc. – Strategies for Building Your Company's Most Valuable Asset. Essays by over 30 trust experts. Available now for pre-order.
Filed Under: maximizing organization | Trust and Culture