The Bottom Line On Business Trust Accenture

THEBOTTOMLINE ONTRUSTACHIEVE COMPETITIVE AGILITY

Jessica LongManaging DirectorAccenture StrategyJessica leads the Accenture StrategySustainability practice in North America. Shehelps organizations leverage their assets andcapabilities to drive innovation and profitablegrowth while striving for positive, trust-basedeconomic, environmental and social impact.Jessica is based in Washington D.C.In the not-too-distant past, trust wasconsidered a “soft” corporate issue.Its connection to a company’s valuewas always there, but unclear. Notanymore. New Accenture Strategyresearch quantifies the impact of truston your company’s competitiveness.And bottom line.Trust is anything but soft.2THE BOTTOM LINE ON TRUSTChris RoarkManaging DirectorAccenture StrategyChris Roark leads the Accenture Strategycompetitiveness and zero-based costmanagement areas in North America. Heworks with leaders of consumer packagedgoods, industrial and retail companies,helping them drive enterprise value throughinnovative growth strategies, operating modeldesigns and structural cost resets.Chris is based in Chicago.Bill TheofilouSenior Managing DirectorAccenture StrategyBill leads the Accenture Strategy CustomerInsight & Growth Strategy practice. He leadsstrategy and implementation engagementsacross a range of industries, specializing inrestructuring companies for profitablegrowth, developing new go-to-marketmodels and growth strategies, and aligningorganizational and cost structures.Bill is based in Boston.

The topic of “trust” is everywhere. We are trust-ranked as individualsand as corporate entities—from social media to career websites. Chinawill assign each of its citizens a “trust score” as part of its Social CreditSystem by 2020.i Even our devices are now assigned trust scores.iiBusinesses worldwide are taking note, with some companies includingtrust measures in executive compensation packages.iii Combine thatwith headlines on everything from tainted food, to consumer databreaches, to cyber and fraud incidents—and it becomes clear thattrust is center stage.In today’s world, it is no longer a question ofif a company will experience a trust incident,but when.Adding to the intensity, trust incidents are becoming increasinglyvisible to the general public. The heightened transparency inherent inour digital world means trust is a highly flammable, ever-presentconcern. Managing trust cannot be relegated to simply addressingindividual incidents with public relations as necessary. Instead,companies need to intentionally create a culture that builds, maintainsand preserves trust. They must bake trust into their DNA, strategy, andday-to-day operations. In this age of transparency, how a companydoes things has become as equally important as what it does. Trustmust permeate relationships with all stakeholders—from employees, tocustomers, suppliers, investors, analysts and the media.To be competitive in today’s environment, companies need to executea balanced strategy that prioritizes trust at the same level as growthand profitability. Those who do benefit from greater resiliency fromtrust incidents, making them more competitive. Those who don’t areputting billions in future revenue at risk.3THE BOTTOM LINE ON TRUST54%of companies on the AccentureStrategy CompetitiveAgility Index experienceda material drop in trustand conservatively lost out onUS 180Bin revenue

REVENUE AT RISKThe Accenture Strategy Competitive Agility Indexquantifies the impact of trust on a company’s bottomline. We scored more than 7,000 companies across threeinterdependent dimensions of competitiveness: growth,profitability, and sustainability and trust. Our 2018analysis revealed that more than half (54 percent) of thecompanies we examined experienced a material drop intrust at some point during the past two and a half years.The average company that experienced a drop in trustalso saw their Competitive Agility Index score decline bytwo points.iv For every point a company’s score on theCompetitive Agility Index drops, significant revenues areat stake. Across the 54 percent of companies in oursample that experienced a drop in trust, revenues atstake conservatively equate to at least US 180 billion,based on available data.vAs the threat and visibility of trust incidents continues toincrease for businesses around the globe, we now seejust how much those incidents are putting companies’revenues at risk. Although the decline in percentagevaries by industry, all industries share a material risk. Forexample, a US 30 billion retail company experiencing amaterial drop in trust stands to lose US 4 billion infuture revenue.The numbers speak for themselves. Trust—as it relatesto competitiveness—is so important to a company’sbottom line that C-suite leaders downplay it at theirown risk. The ability to manage and measure trust aspart of your company’s strategy has become a keycompetitive advantage.4THE BOTTOM LINE ON TRUSTA US 30B retailcompany experiencinga material drop in truststands to loseUS 4Bin future revenue.

WHAT IS THE COMPETITIVEAGILITY INDEX?The Competitive Agility Index is a measure of acompany’s competitiveness developed by AccentureStrategy to measure the value of an interdependentstrategy targeting growth, profitability, and sustainabilityand trust. Our analysis shows that companies can nolonger rely solely on traditional or historical gauges likemarket cap and total shareholder return to paint the fullpicture of their future competitiveness.We base measurement on how effectively their strategybalances results across the dimensions of growth,profitability, and sustainability and trust. TheCompetitive Agility Index relies on publicly availabledata (including historical and future consensus data), aswell as innovative sustainability and trust measurements.Accenture Strategy uses this data to calculate a score tohelp companies quantify their competitiveness.Accenture Strategy uses proprietary data to assess andmeasure each company’s competitiveness versus peers.Accenture Strategy calculated index scores for 7,030companies across 20 sectors and 127 discreteindustries using more than 4 million data points from thepast two and a half years.The methodology, powered by Arabesque S-Ray , focuseson the relationship between not only revenue andprofitability, but also connects sustainability and trust asequal factors that influence how well a company is poisedto compete. Growth, profitability, and sustainability andtrust each comprise equal thirds within the CompetitiveAgility Index.COMPANIES BY GEOGRAPHYNA2,858APAC2,323EALA1,8495THE BOTTOM LINE ON TRUST

TRUST INAN ERA OFTRANSPARENCYStakeholders—from investors to customers—arefocused on corporate behavior like never before ascompanies operate under the public eye, in an era ofunprecedented risk and transparency. Ubiquitoussocial media makes trust part of the mainstreamconversation with all stakeholders. A company’sbehaviors and actions have an immediate impact onreputation because they can now be shared virally,universally—and instantly.Accenture Strategy defines trust as a consistentexperience of competence, integrity, honesty,transparency, commitment, purpose and familiarity.Trust not only defines the quality and sustainability of acompany’s relationships with its stakeholders, it buildsshared value.We view a trust incident as any event or circumstancethat results in the loss of real or perceived trust ina company. The Competitive Agility Index measuresthis from the perspective of six stakeholder groups:employees, customers, suppliers, media, analystsand investors.6THE BOTTOM LINE ON TRUST

WHO HAS ASTAKE IN TRUST?Traditionally, a company’s view on trust was that itmattered only in its downside impacts. Today,enterprises are prioritizing new paths to helpaccelerate growth. Our analysis shows accessing thisgrowth is increasingly reliant on trust. Because of this,companies must carefully consider all stakeholders’perspectives.see a disconnect. The workforce of the future wants toempathize with and represent their employer’sbusiness values. When that occurs, it ultimatelyenhances engagement and productivity. In recentAccenture Strategy research, more than one-third ofworkers surveyed ranked reputation as a top-threemotivation to work for their current employer.viiToday’s customers have more choices than ever. Theyare looking to affirm their own values when choosingcompanies with which to interact. When product andservice quality live up to brand promise, companiescreate better customer experiences, improving theirreputational value and trust. Companies that cannotdeliver on brand promise or transparency will losecustomer trust and consequently, business. A recentAccenture Strategy study of 25,000 global consumersfound that, of customers who switched companies inthe past year, 46 percent did so because they lost trustin the company.vi And switching isn’t the total cost.Customers are willing to speak up, organize andboycott when their expectations aren’t met.Suppliers and trusted partners are key players intoday’s business value chain. They enable fasterinnovation cycles with more flexibility. RecentAccenture Strategy research points out that 84 percentof supply chain executives say they will increasingly usedistributed manufacturing networks (more third parties)to meet customer demands.viii At the same time, globalsupply chains are increasingly forcing companies todevelop a much deeper understanding of productorigins and supply chain risks. Regulators are tighteningthe rules in areas like workers’ rights, geneticallymodified organisms and deforestation. They also arechallenging the limits of trust and responsibility asculpability is extended throughout an ecosystem.Employee trust is crucial in the war for talent as acompany’s reputation and actions become moreimportant to job seekers. Employees, more than ever,look for a company’s everyday actions to match itsvalues—and are more likely to switch employers if theyThe opinions of the general public also impact trust,which play out in real time across all forms of media.Businesses need to have an omnichannel view acrosssocial media sentiment; online product and companyreviews; print, digital and broadcast media coverage;7THE BOTTOM LINE ON TRUSTand emerging media channels to stringently manageand influence perceptions and to limit the damagethat negative viral sentiment can cause.Without credit in the market and consequentfunding, most businesses cannot enable theirlicense to grow and general competitiveness.Analysts and investors are interested in a broaderperspective of business trust, including not onlyfinancial performance, but extra-financialperformance (i.e., environmental, social-impactmetrics). For example, a joint report developed withthe United Nations Global Compact found that 88percent of investors see sustainability as a route tocompetitive advantage.ix Companies need to meetthis increasing demand for sustainable investmentsand extra-financial transparency to retain analyst andinvestor trust.