At the turn of the year we drew your attention to a package of trends that we bundled together under the heading of ‘The New Morality’. The trends were being driven by on-going financial uncertainty and a series of institutional crises. The trends included ‘The Self-Preservation Society’ (a greater focus on local and family concerns rather than global ones) and ‘C-Suite Scrutiny’ (a re-casting of the CSR agenda focussing on corporate pay and governance, rather than carbon footprints and labour conditions in the developing world).
If anything Q1 2013 has seen both the financial uncertainty and the institutional failure accelerate. We now live in an EU where citizens can wake up to find that the government has helped itself to a slice of their savings, or at least, find that the banks are closed for a fortnight and re-open restricting people’s access to their own cash. Following last week’s budget in the UK, talking of a mere ‘lost decade’ might make you one of economic forecasting’s optimists.
Away from economics, Europeans have found they cannot trust the labelling on the food they eat. In the UK, the NHS (after Mid-Staffs) is the latest entrant into the institutional hall of shame, following the press (phone hacking), the BBC (Jimmy Saville), the police (Hillsborough cover up), MPs (expenses), church (take your pick), and business (corporate tax ’avoision’).
Individually, these are not small events. Collectively, they could be the source of a ‘reckoning’ with powers that be (from politicians to brands) that is starting to take shape. Key characteristics of the New Morality are consumers expecting more of institutions and corporations, whilst simultaneously cutting themselves some slack in relation to their own behaviour (“everyone else is taking the p*ss, why shouldn’t I?”, as a focus group respondent put it to me the other day).
In most countries people are not (yet) rioting in the streets in anger at these events. They are still using banks, and engaging with other institutions. They have no choice. But this is not the same as ‘getting away with it’. All of the institutions and brands that have participated in the institutional omni-shambles will face the following consequences:
· Diminished trust
· Eviscerated loyalty
· Increased scrutiny
Above all, they face a future in which there is an appetite for plausible alternatives to their services that did not exist before. Any product or service that owes its existence to the lack of alternatives is surely in a vulnerable position. Plausible alternatives have a habit of coming along.
Responses are required, but they have to be meaningful and real. Two contrasting examples come to mind. Starbucks’ response to being ‘outed’ for not paying corporate taxes looked knee jerk and half-hearted (did they think they had something to apologise for or didn’t they?). Did they come out of it all any better than Amazon or Google? I am not sure they did.
Alternatively, Barclay’s closure of its Structured Capital Markets business (or ‘tax avoidance unit’ as it was dubbed in the media), feels like the action of business that is thinking seriously about its long term future in a world that has been irrevocably changed by recent events. It may not be enough to revive Barclay’s reputation at a single stroke, but it feels like a pretty good start to me.
Paul Flatters, Chief Executive, Trajectory Partnership