March 2025 / 20 CHF
An easy-to-use diagnostic tool can help rebuild trust and confidence in dysfunctional teams.
A Google business strategist explains how AI could transform your business and be a force for good.
How to deal with a leader who breaks the accepted norms of civility, empathy, and ethical decision-making.
Imagine these three scenarios: you’re about to sign the most expensive contract of your life with a general contractor to build your new home – your main point of contact for the next 18 months. You’re selecting a four-week language course abroad for your teenage daughter. You need to schedule a long-postponed surgery and sign the admission forms.
What these decisions have in common is the uncertainty surrounding the process and its outcome. Now, picture each scenario in a situation where you cannot trust the contractor, the language school, or the surgeon. How does that make you feel? Conversely, how would you feel if you had complete trust in them?
Just imagining these contrasts likely triggers an emotional reaction – because trust is everywhere and matters deeply. Without trust, cooperation becomes too costly. Yet, in today’s world, trust feels harder to maintain, making it even more crucial. That’s why I am excited we chose “trust” as the theme for this issue of I by IMD. I hope the articles in this issue resonate with you as much as they did with me. They pushed me to reflect on trust from multiple angles.
In his article, Ben Bryant connects trust and leadership with vulnerability, which surprised me when I first read it. He explains that sharing personal information (disclosure), being honest (feedback), and asking difficult questions (provocation) are ways for leaders to show vulnerability. Trust is built in the moments after people share their vulnerabilities – this is what Ben (Bryant) calls the dance of trust. These actions, when done genuinely, build deeper connections and trust.
In geopolitics, rising tensions force countries to reconsider whom they can and should trust. In an interview, Ros Taylor, author of The Future of Trust, explores how globalization’s uncertainties have eroded institutional trust, shifting confidence toward individuals. Meanwhile, Sander van der Linden examines how large-scale misinformation threatens societal trust and asks: instead of correcting misinformation, how can we build resilience against it?
Artificial intelligence presents another challenge to trust. In “Big Brother or a Brave New World?”, Michael Yaziji makes me want to reread the classic books by George Orwell, Aldous Huxley, and Neil Postman, reminding us why underestimating AI’s impact would be a monumental mistake. At the same time, Gopi Kallayil, Google’s Chief Business Strategist for AI, emphasizes that, despite its risks, AI also has the potential to improve lives, businesses, and societies.
Trust isn’t just a global issue – it’s personal, too. Michael Watkins offers a diagnostic tool and roadmap to rebuild trust and confidence within dysfunctional teams – the first crucial steps toward a future of high performance. George Kohlrieser advises leaders to foster trust by embracing honesty, vulnerability, and integrity, particularly in conflicts and negotiations.
As you explore this issue, I encourage you to reflect on your own experiences with trust – whether in personal relationships, professional settings, or society at large. Trust is fragile yet essential. It can never be claimed, only earned. ■
Stefan Michel, Professor of Management, Dean of Faculty and Research
04 [ In good company ]
Emulating Silicon Valley’s VC-driven model for innovation is not easy. Jerry Davis explains how Detroit, the Motor City, is finding success following an alternative route.
[
]
Trust is a valuable but increasingly rare commodity. In this issue, we offer expert advice on tackling misinformation and winning the trust and respect of all stakeholders.
06 Building trust with colleagues is like an intricate dance routine. Ben Bryant explains the steps you need to take.
11 Trust in institutions has not recovered despite political changes, economic shifts, and corporate engagement in social issues, according to the 2025 Edelman Trust Barometer.
14 People can be immunized against false or manipulated information through a set of simple exercises, writes Sander van der Linden.
18 Michael Skapinker explains why all organizations need a plan to secure trust during, after, and even before a crisis hits.
20 Michael Watkins offers a diagnostic tool to rebuild trust and confidence within dysfunctional teams – the first step toward a future of high performance.
24 Ros Taylor, author of The Future of Trust, discusses how globalization has fractured trust in institutions and triggered a renaissance of faith in the individual.
26 Companies pursuing ESG goals face pushback from shareholders. Corporate governance changes may be needed to restore trust on both sides of the social and political divide, argues Jordi Gual.
29 Trust is the bedrock of effective leadership. George Kohlrieser explains why executives must take a more emotionally intelligent approach.
30 In Coaching Corner, Angelica Adamski explains how to take positive steps to build mutual respect, trust, and understanding with a new boss.
32 In A Board's Eye View, Peter Voser suggests six steps boards can take to help their organizations navigate an unstable era of mistrust.
[ Technology ]
34 In a world of hallucinations and deepfakes, Öykü Işık and José Parra Moyano offer a practical checklist to help ensure you can trust your AI systems.
36 Artificial intelligence is evolving at a rapid rate. The IMD AI Safety clock helps you assess the risks.
38 AI could bring a dystopian future if we don’t fight against the convergence of micro-surveillance and digital inertia, argues Michael Yaziji.
41 Conversely, Gopi Kallayil, Google’s AI business strategist, insists AI could be a powerful force for good if used boldly and responsibly.
[ Communication ]
44 It’s time to ditch tired old phrases. Peter Meyers explains how to sharpen your language skills to become a more effective leader.
47 TIME magazine cover designer D W Pine stresses the importance of visual simplicity and clarity to convey your message successfully.
50 [ Diversity ]
New EU legislation requires stronger female representation on corporate boards. Diana Markaki offers guidance on navigating this transition.
52 [ Brain circuits ]
A diagnostic created by Jennifer Jordan and Alexander Fleischmann will determine if you're ready to meet the targets for greater boardroom diversity.
53 [ World view ]
If the Cold War was like a simple game of checkers, then today’s world is more akin to a game of 3D chess, writes Richard Baldwin
58 [ Diversity ]
Effective DE&I strategies enhance performance but are facing increasing resistance. Josefine van Zanten advise on how to convince the naysayers.
62 [ Leadership ]
Merete Wedell-Wedellsborg offers three ways to deal with an all-powerful boss who breaks the accepted norms of civility, empathy, and ethical leadership.
65 [ The human factor ]
When it comes to trust, a leader’s action speaks louder than words, says Shelley Zalis.
66 [ In depth ]
Salvatore Cantale and Frederikke Due Olsen strategies to ringfence your operations and supercharge your sustainability drive.
72 [ Face to face ]
Julie Linn Teigland of Ernst & Young tells are not all-powerful and shouldn’t be afraid to say, ‘I don’t know.’
Publisher International Institute for Management Development, Ch. de Bellerive 23, P.O. Box 915, CH-1001 Lausanne | Switzerland
Editorial Advisory Board
Stefan Michel Professor of Management, Dean of Faculty and Research, IMD
Christine Batruch Sustainability Advisor, Lundin Group; President, Bohdan Hawrylyshyn Family Foundation
Vincent Bieri Co-Founder Nexthink; Member of the Board of Advisors Trust Valley
Jean-Philippe Bonardi Professor of Strategic Management and former Dean at HEC Lausanne, University of Lausanne
Kate Byrne, Chief Executive, Katapult X
Des Dearlove, Co-founder at Thinkers50
Michel Demaré Chairman of IMD; Chair of the Board at AstraZeneca Plc. and Nomoko AG; member of the supervisory boards at Vodafone Group Plc and Louis-Dreyfus Company International Holdings B.V.
74 [ CEO questionnaire ]
Antje Kanngiesser, CEO of Alpiq, a Swiss-based electricity producer and supplier, reveals what inspires and motivates her.
76 [ Afterword ]
David Bach says business leaders must be a beacon of stability in a world in turmoil.
Cynthia Hansen Managing Director of the Innovation Foundation, empowered by the Adecco Group
Prince Michael of Liechtenstein Founder and Chairman of Geopolitical Intelligence Services AG; Chairman of the European Centre of Austrian Economics Foundation in Vaduz; Member of STEP
Ann-Marie Sevcsik Catalyst of social change through innovative partnerships
Michael Skapinker Financial Times contributing
Ian Charles Stewart Executive in Residence, IMD; Main Board Director Trustee International Institute for Sustainable Development; Co-Founder of WiReD Magazine
Su-Mei Thompson CEO at Media Trust
Editorial Delia Fischer, Matt Falloon, Ken Toner
Art Director Catharina De Gregorio
Printing Copytrend SA Lausanne
Send Letters to the Editor to: content@imd.org
Many regional developers have tried and failed to emulate Silicon Valley’s VC-driven model for innovation.
Jerry Davis explores how Detroit, the birthplace of Ford, is following an alternative route – with promising results
The economic vibrancy of Silicon Valley has inspired generations of local economic developers seeking to copy its recipe for success. The once-sleepy suburban “valley of heart’s delight” was transformed into the center of the global tech economy, with perhaps the highest concentration of wealth in human history. Any geographic feature can be drafted into this effort to replicate this transformation: Silicon Slopes (Utah), Glen (Scotland), Prairie (across the US), Gulch (California), and more. All are premised on the idea that clustered, high-growth entrepreneurship, typically funded by venture capital, is the shining path to a richer future and a more secure tax base.
These efforts almost inevitably fail. Few have attracted vast pools of venture capital, and none have matched the Silicon Valley model's exuberant success: the San Francisco Bay area habitually tops the league table for VC, followed by New York and Boston, while Austin has managed to stake a claim as a plausible alternative tech hub.
But what if venture capital is not the essential ingredient for economic transformation through vibrant entrepreneurship? What if there are more enduring recipes that draw on local factors? This idea is being tested in communities across the US – including Detroit, the birthplace of 20th-century mass production.
There is not just one path to growth, as Suntae Kim, Assistant Professor of Management and Organization at the Johns Hopkins Carey Business School, and others have shown. A community's assets – not a trendy model nor return-hungry venture capital – can prove a powerful source of economic vitality.
Detroit was the original Silicon Valley in the first decades of the 20th century. A city of a quarter of a million residents strategically located on a river across from Canada, it was home to producers of railroad cars and locomotives, carriages, bicycles, and a large sector of machine shops. Local innovators such as Ransom E Olds and Henry Ford were able to build auto companies out of these locally available parts, and their early success attracted suppliers and competitors that quickly established Detroit as the hub of an essential new industry. The dense ecosystem of suppliers germinated hundreds of competitors.
Ford launched the moving assembly line in 1913, and the astonishingly high employee turnover prompted by its mind-numbing repetitive jobs led the company to offer wages of $5 per day early the following year. Such high wages for unskilled work attracted migrants from around the world and underwrote the Great Migration from America's South. By 1930, Detroit had over 1.5 million residents, making it America's fourth-largest city – a place of vast wealth and diversity and all the creativity and tensions these bring.
Detroit's rich cultural diversity was not matched by industrial diversity, however. The economic mobility offered by employment at a handful of industrial giants created a strong gravitational pull, and the oppor-
tunities for entrepreneurs tended toward efforts to supply the dominant local industry. Detroit was effectively a one-trick town, and it would pay the price for its monolithism.
By the time the city reached its peak population of 1.8 million in 1950, the auto industry was already scheming to disperse production to lower-cost venues with weaker labor organization. Between 1948 and 1963, Detroit lost 130,000 jobs, primarily due to restructuring in the auto industry. The growth of international competitors and the oil shocks of the 1970s left the city’s automakers reeling and prompted a decades-long decline in population: by 2020, Detroit had roughly 640,000 residents, about the same as when the assembly lines fired up a century earlier.
The abandoned Michigan Central train station, built in 1913, became a symbol of economic decline and urban decay.
What could replace the auto industry and salvage the Motor City's economy? Despite its industrial history and the dominance of giant automotive companies, Detroit evolved a distinctive entrepreneurial terroir during its troubled times. Those who spend time in the city know that everyone seems to have a side hustle – a business (or two or three) they work on during evenings and weekends. Moreover, the vibe is one of mutual assistance rather than competition: entrepreneurs help each other out, knowing nobody else will. The defiant T-shirt slogan "Detroit vs. Everybody" might be read by outsiders as hostility, but within the city, it's about collective resilience in the face of endless challenges. When big industry left Detroit, it was left to the people to improvise alternatives.
Kim went deep into the weeds to understand this system. He spent years in residence at two very different business incubators: ACCEL, a Y Combinator-style accelerator (which typically provides seed funding and networking connections), and GREEN, an alternative incubator aimed at growing local enterprises for community benefit (ACCEL and GREEN are pseudonyms). He followed four startups at each site, attending meetings and pitches, interviewing founders, employees, and funders, and closely watching how these enterprises navigated their early months.
What he found was stark: startups growing up in the Y Combinator model almost inevitably moved away to access venture capital and rapid “scaling up” opportunities, leaving behind little benefit for the city. In contrast, those at GREEN grew more like an oak tree, “scaling deep” to set down strong roots that tied it to the community. Kim and his co-author, Anna Kim, tracked the subsequent performance of these firms and wrote a series of articles on what they mean for entrepreneurial ecosystems
The lesson seems clear: if the aim of ecosystem builders is local economic vibrancy and uplift, then the Silicon Valley model is likely to be a bust. I have pointed out in previous columns that VC-backed firms
‘On any given Saturday, hundreds of Detroiters gather to make connections, gain insights, build community, receive or offer coaching, and be inspired by the success of their neighbors’
don't create jobs even if they go public – and the vast majority never get to IPO. Adding a couple more millionaires to the local tax rolls might be nice but it will not revive the local economy. If not the VC model, then what?
A recurring theme of this column is "Nikefication" and what it means for business. The massive vertical integration pioneered by Ford in the 20th century has been replaced by relentless vertical disintegration in the 21st. All the parts of an enterprise – supplies, assembly, software services, distribution, even labor – are like Lego bricks that can be assembled into a pop-up enterprise. Even auto startups in the US increasingly look more like Nike than General Motors, with some foregoing production altogether in favor of design and marketing.
The COVID-19 pandemic nudged millions of prospective entrepreneurs to take advantage of this new situation. In the US, 19 million founders filed the paperwork to start a new business after 2020, of which five million expected to have employees – a reversal of a 40-year decline in startup rates. These businesses tended to be tiny, often headquartered in suburban homes and not in downtown cores. Moreover, their asset-light model requires much less capital than old-timey enterprises – no need for venture capital to launch a pop-up.
It may be much cheaper to start a new business now, with access to inputs from around the world, but what happens to "terroir"? What might Detroit –or any other city –do for a placeless snap-together enterprise?
Detroit's entrepreneurial revival offers clues to what one model for a vibrant local ecosystem might look like. For one thing, after over a century, Ford is back to its birthplace, having revived the once-abandoned, iconic Michigan Central train station and created a lustrous Beaux-Arts showpiece downtown. Next door is the home of Newlab, an incubator focused on mobility and energy and home to over 100 startups.
Michigan Central is also the venue for Black Tech Saturdays, a remarkable community of entrepreneurs, professionals, funders, and »
community members building new businesses and tech capabilities with a strong culture of mutual support. On any given Saturday, hundreds of Detroiters gather to make connections, gain insights, build community, receive or offer coaching, and be inspired by the success of their neighbors.
Detroit has also been experimenting with new and different ways of funding business. Venture capital continues to be heavily concentrated in America’s coastal states – particularly California, New York, and Massachusetts. As an alternative, online investment platforms such as Honeycomb Credit and Wefunder allow small businesses in the middle to raise capital from local investors. The SEC’s Regulation Crowd Funding (Reg CF) enables enterprises to raise up to $5m and allows “non-accredited investors” (essentially, not-rich people such as a business’s customers and neighbors) to participate. These non-accredited investors make up the overwhelming majority of the population. In addition to standard loans and equity, alternative formats such as revenue-sharing agreements can provide more flexibility than traditional loans. Detroit is also home to several Community Development Financial Institutions (CDFIs) and is piloting vehicles such as the Diversified Community Investment Fund. The digital revolution is catalyzing a diversity of new streams to fund business that better fit the aim of scaling deep rather than scaling up.
The enterprises populating Detroit are often very different from the VC-funded startups intended to metastasize quickly through the most generic recipe possible. Detroit’s emerging enterprises are more like the “GREEN-style” entrepreneurs shown by Kim and others to grow into community-positive oak trees that can drive local uplift. They might be JustAir, a platform founded by Darren Riley that is placing a network of air quality monitors across the city to provide critical data for residents and health professionals. Or Pingree Detroit, a worker-owned cooperative launched by Jarret Schlaff that employs military veterans to create shoes and other goods from leather cast off by the auto industry – and was part-funded via Honeycomb Credit. Or Empowerment Plan, founded by Veronika Scott to provide employment and skills training for women experiencing homelessness by manufacturing coats that turn into sleeping bags – also intended to help unhoused people. Or Chening Duker’s Pluck. eco, aiming to make zero-emission delivery affordable for local stores by solving the “last mile” transit problem.
Given its heritage of design, its entrepreneurial culture of mutual support, and its willingness to experiment with alternative finance, will Detroit be the new model for a more sustainable 21st-century form of enterprise? ■
To waltz smoothly through office life, we need to balance vulnerability and honest feedback, says Ben Bryant. And it’s perfectly fine to step on someone’s toes occasionally
Trust is foundational in leadership. It determines the quality of your interactions with colleagues and team members and the caliber of the work you produce together. Trust regulates risk-taking, experimentation, collaboration, information-sharing, innovation, and growth. Trust (like money or love) makes the world go around – until it doesn’t. Organizations create and realize potential where there is a culture of trust. In its absence, creativity suffers, engagement declines, the quality of outputs worsens, and undesirable outcomes proliferate.
JERRY DAVIS is the Gilbert and Ruth Whitaker Professor of Business Administration and Professor of Sociology, at the University of Michigan’s Ross School of Business. He has published widely on management, sociology and finance. His latest book is Taming Corporate Power in the 21st Century (Cambridge University Press, 2022), part of the Cambridge Elements Series on Reinventing Capitalism.
How you build trust is contingent on different factors. As a boss, your peers and subordinates will want to trust your decisions. They want to trust your ability to stand up and defend them, see opportunities and risks, make hard choices, and determine what is best for the organization and its people. But it doesn’t stop there. Trust is profoundly relational and reciprocal. It involves sharing information, opinions, beliefs, and, occasionally, random thoughts and feelings. It is tied to how others see and experience you as a person, not just as a leader or
through the actions you take. Trust grows when people feel comfortable expressing themselves and stepping out of their comfort zone. They learn something about each other’s inner integrity, character, values, and qualities. Getting to this level of trust isn’t easy. To know someone and to be known by others means first letting down barriers we all have, whether we are aware of them or not.
Let me ask you a few questions. When did you last hesitate to share your beliefs and opinions with your colleagues? When did you hold back on how you really felt about some issue – a work challenge, maybe, or the performance of a colleague involved in a key project? Do you routinely withhold your innermost thoughts, feelings, ideas, knowledge, or information from others? If you answered “yes” to any of these questions, the chances are that (a lack of) trust was an important factor in your decision to hold back.
How safe do others feel opening up to you? Do you find it hard to let them in for fear that their worldview may not be in accord with yours?
Do they struggle to be honest with you, even though you might invite them to do so? Once again, the chances are that trust is playing a significant role in this dynamic. We all have boundaries, and the way we manage them influences our trust in each other. Boundaries are a function of our identity: what makes us unique. They create distance between us and determine what we let out or keep in. They can be open or closed: fortresses we throw up around ourselves to buffer against judgment or attack or more permeable membranes that allow others some access to our interior world, to the feelings and thoughts we may not always automatically share. Of course, this requires a certain amount of vulnerability. Inviting others in carries risk as it gives people access to our interior world, the power to criticize or reject us, and to use what they discover for their own ends.
Figuring out how much of yourself to share and how much distance to maintain is a defining element of leadership. It’s not easy. We all »
build defense mechanisms, often without realizing it. Most of us dislike difficult feelings or conflict, so we deflect or compartmentalize. We suppress emotions or fall back on humor to avoid complex or uncomfortable scenarios.
This complexity and discomfort are very much part of leadership. As we rise through the ranks and the stakes get higher, so too does our exposure to situations that can make us feel fragile or vulnerable to scrutiny, judgment, or attack. While we may not want to be closed off or defensive, avoidance mechanisms act as an automatic self-protection system: our front line of resilience.
Consider the following exchange. Mark is the SVP of sales at a big corporation, and he’s talking to Lisa, who reports to him.
Mark: So, Lisa, we’ve been having a few issues this quarter, I think. Anything you think you should share?
Lisa: Well, as you know, that deal we had in Luxembourg fell through at the last moment. We just didn’t have the resources to do it justice.
Mark: I keep hearing these complaints about how we don’t have enough resources. We pay good salaries and good bonuses when we are successful. If we have people who can’t cope with a bit of hard work and pressure, we need to find new people.
Lisa (emphatically): This is a systemic problem. The team is very overworked. And, of course, it’s had a knock-on effect on the quality of our bids.
Mark (chuckling): Lisa, we are all overworked. You don’t need to play the victim. I don’t spend my day twiddling my thumbs, you know.
Lisa (incredulously): So, you are thinking we should just be working harder?
Mark (more conciliatory): Look, all I’m saying is we can’t afford to lose deals of this magnitude.
Lisa (more assertively): That’s not all you are saying, Mark. You are blaming my team for losing a deal we could never have won. We were set up to fail.
Mark: Oh, so it’s my fault? How did I set you up to fail, Lisa?
Lisa: You dump every bid onto us without filtering or selecting. Any bid is an opportunity for you, but for us ... half of them are just a waste of time. We know it, you know it, but you keep loading us up.
The next day, Lisa sent her resignation letter to HR and copied Mark. This exchange begins as a performance management conversation. But its purpose quickly becomes self-protection, primarily by finding a way to blame the other person. It is littered with defenses that are
designed to protect the esteem and competence of the speaker. Neither Mark nor Lisa can accept or take in what the other is saying, so they get stuck in a defensive dynamic that is hard to break free from. Mark’s opening question (“Anything you think you should share?”) is clumsy. It could come across as patronizing and untrusting – the kind of inquiry a headmaster might ask of a devious student – and may trigger Lisa’s defenses immediately. Lisa responds by suppressing or hiding her negative feelings and rationalizing to Mark (“We just didn’t have the resources”).
Mark responds with generalizations (“people are lazy”) and perhaps projections of his own insecurities (“Don’t be a victim”). Lisa responds with rationalizations rather than exploring what truth there might be in Mark’s comments (“Perhaps they appear lazy because they are highly demotivated”). Mark’s projections probably come from his own feelings of confusion, and perhaps they represent displaced aggression from his superiors.
Mark tries to bring the conversation back to its original purpose (“We can’t afford to lose deals of this magnitude”), but by now, Lisa’s emotions are bursting out, and she blames Mark for setting them up to fail. By projecting this onto Mark, she relieves herself of responsibility for the outcome and feels satisfied.
Not all performance management conversations are as blunt as this. Most executives get smarter and sharper at camouflaging aggression and defenses, so those kinds of responses can sometimes appear innocent. For example, the question “How did I set you up to fail, Lisa?” could be considered innocent or curious. However, an absence of trust means it is more likely to be felt as a defensive question – a denial of responsibility. The absence of trust is driving interpretations of what is said. Interestingly, the more camouflaged our aggressions, the more sensible we think we are acting. This is self-deception because even highly camouflaged emotions can usually be felt by others.
At best, this defensive dynamic serves to make us feel better by letting off steam, and we might feel somewhat righteous. But those feelings probably won’t improve performance, and they most certainly won’t leverage the potential of our relationships. The dynamic has created or reinforced boundaries between Mark and Lisa. Instead of closing gaps and building trust and psychological safety, the conversation may have increased the distance between them. This is the risk at the heart of the dance of trust.
Lisa and Mark are high-performing executives. So, why would they self-sabotage and not look for the underlying problems and solutions? The answer is the absence of trust: this discourages them from doing what they need to do – sharing, contributing, questioning, and challenging because self-protection becomes more important.
Trust is built on an expression of vulnerability with another person. The word “vulnerability” has been used a lot over the past decade, often
Building trust is a never ending dance in which vulnerability is expressed, experienced, and built upon.
1. DISCLOSURE
Something I know about myself that you don't
2. FEEDBACK
Something about your experience of me that I am unaware of
3. PROVOCATIONS
Risky, uncomfortable questions, hypotheses
referring to the act of self-disclosure. But it is much more than that. Vulnerability means we take a risk of being hurt or wounded. Each time we make ourselves vulnerable, we risk being rejected, mocked, or scorned. We need to be vulnerable and take risks to expose the potential of trust. After this, there is a moment of reaction or reciprocation, where the other person might also be vulnerable.
We can think of vulnerability in three actions:
1. DISCLOSURE – something about yourself that others don’t know.
2. FEEDBACK – something about your experience of others.
3. PROVOCATION – something more impulsive, that will almost certainly invoke defences.
With these three actions, we not only test the nature of the trust we have with others, but we can also grow that trust. Let’s break it down.
1. DISCLOSURE
When we reveal something about ourselves that others don’t know, it requires vulnerability: putting ourselves at risk and waiting for the reaction. This can feel uncomfortable. It’s not by chance that most of us remain pretty buttoned up when we join a new group, team, or organization. It’s only through disclosure and revealing our vulnerabilities that we move beyond seeing each other as roles or figures of greater or lesser authority, representations, or stereotypes. By sharing something
honest about ourselves – something about our childhood, for example, or how we truthfully feel in the moment – we invite others to see us as humans with the same hopes and hang-ups as everybody else.
As we disclose, if we are not ignored or mocked, we nudge past our fear of scrutiny, judgment, attack, or rejection toward greater trust in our relationships – and greater faith that those relationships will endure. However, for trust to grow, there is usually a need for a reciprocal disclosure from the other person. Trust isn’t unidirectional, but we can never guarantee what another person might do.
Indeed, there is often that moment between an act of vulnerability and a response, like when you reach out to shake someone’s hand and must wait for them to do the same. That pregnant pause is where the trust is tested. The longer the wait, the more we question the trust. This is the vulnerability we experience in disclosure.
Honest feedback can be painful to give and receive, and our fear of rejection or reprisal moderates it. Often, we soften or edit feedback because we don’t want to hurt someone’s feelings, provoke anger, or risk their disappointment. How many times have you watered down your assessment of a colleague’s performance? How often have you told a white lie to spare them pain? “Thanks, Lisa, good job” instead of “Lisa, this was OK, but it feels a little incomplete in these places.” Or instead »
of “Mark, I understand your concerns,” how about “Mark, I understand your concerns. However, your tone is making me nervous and uncomfortable.”
Few of us enjoy giving or receiving critical feedback, but reciprocal feedback in real time is a lynchpin of building trust.
If feedback is painful, provocation can be downright grueling, requiring reserves of vulnerability and courage. This is where trust-building can so easily go wrong. As we have just seen, asking hard or challenging questions doesn’t come easily to most of us and can trigger all kinds of defensive mechanisms and behaviors. Provocation entails entering other people’s personal space and boundaries. They may be unwilling to disclose because they feel invaded or attacked, and their initial reactions might be highly defensive.
Yet, if we want to leverage the potential of our relationships, we must continuously test, interrogate, and challenge each other. Moving forward means constantly questioning assumptions and beliefs. Of course, there is a difference between provoking for the sake of it, needling a colleague or a power play, and asking hard questions to advance the collaboration toward shared goals and purpose. This may require time to allow people to digest the provocation. This is what Lisa and Mark failed to do, as Lisa handed in her resignation.
These dynamics are a continuous play or dance in which vulnerability is expressed, experienced, reacted to, and built upon. Trust is built in the moments after people share their vulnerabilities – this is why we call it the “dance of trust”.
It can feel tempting and comfortable to play safe, especially once trust has been established. We’re often disinclined to rock the boat when we work well with someone and feel we know and trust them. But the danger is that we become too safe. In protecting the safety of the relationship, we risk neglecting its need for truth – this is where trust can start to erode.
The conversation between Lisa and Mark had the potential to be constructive and helpful, but only if trust had already been built. If this were the case, they would “trust” each other to dump their frustrations, anger, confusion, fears, and insecurities on each other along with their defenses. They would realize that the above conversation was irrational but humanly necessary. We all value civilized conversations but keeping our emotions out of our work is impossible. If there had been trust, they would have engaged in a “reset” conversation.
Let’s imagine Mark and Lisa could have that conversation. By saying, “Let’s reset”, you create a space for a more open and disclosing conversation. Next, they would need to own or take back their defenses. It might be tempting to repeatedly restate their rationalizations, fantasies, displacements, projections, and denials. But if they are aware that these are not leveraging their potential as a pair, they can work
past their defenses. A more open, trust-building conversation might go something like this:
Mark: Lisa, let’s reset. I want to explain my defensiveness in yesterday’s meeting. I was feeling under quite a lot of pressure about our results this quarter, and I displaced that pressure onto you. I know that I revert to sarcasm and denial to express that.
Lisa: Thank you, Mark. I know I became defensive, too. I was so angry I just wanted to rationalize why we lost the bid. The team is not doing their best work, and I think it’s the loss of motivation. I feel responsible for that, but I also think it’s not all within my control. So, I took that out on you.
Allowing others to glimpse your real, inner self – your emotion and humanity – helps to forge better connections and deeper trust. There will be limits to what or how much you choose to disclose. Oversharing or revealing too much can undermine your authority, and there will be times when circumstances dictate that you maintain some distance.
Leadership is about building self-awareness and knowledge to figure out how much vulnerability you need to share and when it makes better sense to maintain distance, to contain your feelings, thoughts, and emotions – as well as those of others – because the situation or context demands it. Ironically, containing and keeping a distance can lead to others trusting you. This is especially important as a boss or manager, where you might need to contain or hold the anxieties of your subordinates, as well as your own. Mark displaces the anxiety he gets from his bosses onto Lisa, his subordinate, rather than containing it.
Containment and the ability to hold anxiety are as critical to your leadership as disclosure, feedback, and provocation. Imagine being the captain of a ship that has hit an iceberg. If you panic and scream in terror alongside the crew and passengers, you will make the situation far worse. Containing your emotions and holding on to dissonance gives others space to express their feelings. This is part of trust-building, too.
None of this is easy, but it isn’t meant to be. It is tough at the top. However, understanding leadership and trust as complex, relational dances – shifting dynamics that do not remain static – is the point at which leaders start to learn and grow. ■
BEN BRYANT is Professor of Leadership and Organization at IMD. He is the Program Director of IMD’s Transformational Leader program. Previously, he was Director of the CEO Learning Center at IMD and Director of the Leadership Stream of the IMD Executive MBA for 15 years. His book Dissonance will be released later this year.
According to the 2025 Edelman Trust Barometer, trust in employers is declining for the first time. Sat Dayal suggests practical measures to get back on track.
In a volatile world where trust has become both an asset and a liability for business leaders, the 2025 Edelman Trust Barometer paints a sobering picture: trust in institutions has not grown despite political changes and economic shifts. Instead, we face a “Crisis of Grievance” – a widespread sense that the actions of business and government are hurting us, serving a select few in a system that favors the rich, and where the rich are getting richer. This sense of grievance against business, government, and the rich is held by 61% of the public. Grievance comes at a cost. The more aggrieved we are, the more likely we will show a zero-sum mindset: the feeling that what helps people who don’t share our politics comes at a personal cost.
Leadership is at a crossroads. While trust in business remains higher than in government, media, and NGOs, the study shows that employer trust is declining among employees for the first time globally (See chart 1).
Employees and the wider public expect businesses to do more: more on job skills and better working conditions, more on societal impact, and, in general, a lot more empathy.
Through 25 years of the Trust Barometer, we have seen how trust has shifted from authorities to peers (2005), reinforced a mass class divide (2016), and taken center stage in the battle for truth (2018). Yet, in recent years, we’ve also seen business become the most trusted institution (2021).
To navigate this newest of new realities, organizations and their leaders must actively work to address grievances by building and sustaining trust. Here’s how:
1. Strengthen leadership credibility Trust in CEOs and business is lower among those who feel a high sense of grievance. The report finds a 34-point gap in CEO trust between those who hold a low and high sense of grievance (See chart 2).
Leadership trust is not just about competence – it’s about perceived fairness and ethics. »
The percentage of employees who trust
What businesses can do:
Lead with empathy. Employees and consumers want leaders who listen and respond to their concerns. Open forums, direct engagement, and leadership accessibility build credibility. Show accountability. Acknowledging mistakes, taking corrective action, and setting measurable goals for improvement can reinforce trust in leadership.
Act on employee feedback. Employees who feel unheard will more likely be skeptical of leadership. Regular feedback loops through surveys, town halls, or direct dialogue can help businesses course-correct in real time.
Encourage ethical decision-making. Providing training on ethical leadership and reinforcing values-based decision-making helps create a culture of integrity.
2. Address economic fears and job insecurity
According to the findings, employees increasingly worry about globalization, automation, and economic downturns threatening their livelihoods. Business leaders must recognize that building trust isn’t just about messaging – it’s about taking action to drive change.
What businesses can do:
Invest in workforce development. Training, upskilling, and reskilling programs reassure employees that they have a future in the company and industry.
Commit to fair wages and job security. Competitive pay and transparent job stability policies foster a sense of security. Prioritize internal trust. Employees who trust their employers are
more likely to be positive towards the broader institution of business. Open communication about organizational changes, market conditions, and company strategy can mitigate uncertainty.
Promote financial literacy: Helping employees manage financial challenges through education and support programs can build resilience and confidence in the company.
3. Take responsibility for societal issues, but remain authentic
The public’s expectations of businesses extend beyond delivering products and services. According to the report, people believe business leaders are not doing enough and should do more to address climate change, affordability, misinformation, and discrimination – this is particularly strong among those with a higher sense of grievance (See chart 3).
What businesses can do:
Align actions with business strengths. Organizations should focus on areas where they can make a difference. For example, a technology company should prioritize digital inclusion, while a retailer may seek to address supply chain ethics.
Avoid ‘performative activism’. The public is skeptical of companies that make bold statements but fail to back them up with action. Be transparent about motivations. Business leaders must clearly articulate why they are engaging in societal issues, whether it’s a moral imperative, a business necessity, or both.
Foster local partnerships. Collaborating with community organizations enhances credibility and ensures impact at the grassroots level.
4. Build trust in AI
At a time when artificial intelligence is high on the agenda for many organizations, the Trust Barometer highlights suspicion toward this technological transformation, particularly among those who feel highly aggrieved. Trust in AI drops by 22 points among individuals with high grievance levels. Without clear safeguards and ethical considerations, businesses risk alienating customers and employees.
What businesses can do:
Develop ethical AI policies. Ensure transparency in how AI is used, particularly in hiring, consumer data, and decision-making processes. Educate stakeholders. Businesses should proactively communicate the benefits and limitations of AI and other emerging technologies. Include diverse perspectives. AI and technology governance should incorporate input from employees, customers, and external experts to ensure fairness and accountability.
Enhance digital literacy. Educating employees and consumers about AI and technology fosters trust and responsible adoption.
5. Make trust-building a shared responsibility
The Crisis of Grievance is not just a corporate issue but also a societal one. The report suggests that for those with high grievance, business is seen as 81pts less ethical and 37pts less competent compared to those with low grievance. And while businesses can lead the way to create meaningful change, this must be a collaborative effort with governments, media, and NGOs.
What businesses can do:
Work with policymakers. Engage in policy discussions that promote economic fairness and social stability.
Partner with NGOs. NGOs are perceived as the most unifying institution among those with high grievance, making them valuable allies in restoring trust.
Support credible media. Businesses must prioritize transparency in their communications and work with trustworthy media partners to combat misinformation.
Encourage civic engagement. Supporting employees’ participation in societal issues, including volunteering and advocacy, strengthens the relationship between businesses and communities.
At a time when four in 10 see hostile activism as a viable means to drive change, the 2025 Edelman Trust Barometer sends a clear message: trust can never be taken for granted. Business leaders must navigate a more skeptical, frustrated, and uncertain world where trust is fragile and expectations are higher than ever.
The solution demands not simply better messaging or branding but authentic action, economic responsibility, and ethical leadership. Organizations that invest in their people, demonstrate integrity, and engage meaningfully in societal issues will be better positioned to rebuild trust and drive long-term success.
In an era where grievances shape public perception, trust is no longer a passive asset but an active commitment. With greater trust comes greater optimism for the future and lower levels of grievance (See chart 4). Business leaders who understand and address the root causes of distrust will strengthen their organizations and contribute to a more stable and positive future for all. ■
SAT DAYAL is Managing Director of Edelman London’s Technology Practice. He has represented technology brands and leaders since the dot-com era, including early mobile, cloud, and digital media brands. He is Edelman London’s Diversity, Equity, and Inclusion lead and is also responsible for activating Edelman’s global citizenship agenda in the EMEA region.
It’s possible to immunize people against false or manipulated information through simple exercises that policymakers and platforms could easily roll out, writes Sander van der Linden
In September 2024, the city of Springfield, Ohio, found itself in the spotlight. During a presidential election debate, Donald Trump repeated an outlandish claim: Haitian immigrants in Springfield were abducting and eating the community’s domestic cats and dogs. “They’re eating the pets of the people that live there, and this is what’s happening in our country,” Trump announced on live television. The story soon went viral on social media, making its way around the globe and garnering tens of millions of comments, memes, and AI-generated images of panicked pets from users on both sides
of America’s political divide. Meanwhile, city officials in Springfield scrambled to debunk the claim, confirming that they had not received any such report. US National Security Council spokesman John Kirby went further, decrying right-wing media for “disinformation” and warning the claims were “dangerous”.
Falsehoods, fallacies, and “fake news” are not new. Since humans first invented language and began organizing into communities, societies, and empires, we have been prone to creating, spreading, and consuming misinformation and its more nefarious, wilful sibling, disinformation. Whether it’s to deliberately mislead and manipulate other people or a simple product of human error, the fact is that misinformation has been well-documented since Roman times.
Gaius Julius Caesar Augustus was an arch manipulator, promulgating falsehoods and propaganda to besmirch the reputation of his enemy, Mark Antony, in the last century BC. Throughout history, abundant examples exist of countries, governments, and industries manipulating public opinion. During the First World War, the British authorities passed laws prohibiting the press from publishing anything negative about Allied troops. The Aspidistra Transmitter broadcast programs to German households in the 1940s, informing them that the war was going badly for Hitler. And, in the 1950s, big tobacco firms went out of their way to sideline research linking smoking to cancer. The Frank Statement advert put out by Philip Morris et al (mis)informed smokers everywhere: “At one time or another during these years, critics have held (tobacco) responsible for practically every disease of the human body. One by one these charges have been abandoned for lack of evidence.”
From the great wars of the 20th century to the conflicts in Israel and Ukraine, from non-existent weapons of mass destruction to allegations of election rigging in the US, from actual warfare to cyber warfare to cognitive warfare, misinformation is nothing new. The only difference now is that human and technology interactions are reshaping our relationship with information. We have access to technology-powered content creation tools and communication channels that can send (mis)information around the globe in fractions of seconds. In that sense, we may be at an inflection point.
In our always-on, hyper-connected, internet-powered world, misinformation can travel faster and further than at any other time in our history; the speed of propagation has accelerated exponentially. The way that we consume information has also changed. From Facebook to Instagram and the news apps on our mobile phones, our feeds are managed by algorithms that curate what we see based on what we’ve already consumed. In a world where social media has converted everyone into a content creator and consumer, journalist and reader, misinformation can circulate quickly and freely. And as our appetite for content grows and the kind of content we consume becomes more homogenized by machines, misinformation has the potential to proliferate at scale.
Misinformation constitutes any information that is either false or misleading in some way. Disinformation is a subset of misinformation with some psychological intent to deceive or harm others. It can be difficult to disentangle the two, as malicious intent can be difficult to prove. Misinformation often leverages a grain of truth or a real societal event but then distorts the context or the implications, and it can be difficult to identify. While flat earth theories and reptile politicians feel obvious, they make up a fairly small percentage of the news or content people consume daily. Biased or partisan content can masquerade as facts and can originate even in the most credible source unless they assiduously and routinely prioritize transparent fact-checking – and correcting, where necessary.
Legacy media remains subject to checks and balances, but anyone can pretty much say anything they want on X, Facebook, YouTube, or TikTok. Libertarians might argue that this is no bad thing: that when information is centralized, it is akin to handing a microphone to a dictator. However, without guardrails in place, misinformation can propagate on social media like knotweed. It can feel like we are living in a fictional reality where blatant falsehoods have become the norm.
Then there’s the AI factor. In 2024, US Democratic political consultant Steven Kramer was indicted and fined for sending out deep fake robocalls mimicking Joe Biden’s voice and urging New Hampshire residents not to vote in their Democratic primary. In Slovakia, an AI-generated conversation on political fraud between the chairman of Progressive Slovakia and a highly respected journalist went viral on social media two days before the general election in 2023.
As AI evolves, it will only become harder to distinguish between fact and fiction. Spotting the lie before it’s too late is about to become even more difficult. Given AI can generate content at mind-boggling speed and scale, it will also become easier for bad actors to produce endless variations and amalgamations of fact and fiction, information and misinformation as they figure out what resonates best with which users.
In an environment where partisan and even extremist views are increasingly the norm, there is a risk that any common narrative or sense of truth will disappear, leaving different camps more disposed to simply accepting or rejecting information depending on what they want to believe. We are seeing a gradual and systemic degradation of shared beliefs. Whether politics, education, the environment, or health and healthcare, we are coalescing into opposing blocs, making us more vulnerable to misinformation. During the pandemic, people burned down 5G masts in the UK because of conspiracy theories linking cell towers to COVID-19. In Iran, people read that consuming methanol could cure the virus. More than 700 died as a result. The American Journal of Tropical Medicine and Hygiene estimates »
that as many as 5,800 people were hospitalized because of misinformation about COVID-19 on social media.
Heightened socio-political tension, deepening polarization, the accelerating and unchecked flow of content on the internet, AI, and deepfakes – all of it can breed paranoia and distrust. It can make us doubt each other and diminish our faith in the legitimacy of our authorities, media, electoral processes, and democracies. It can create feedback loops where we actively anticipate misinformation and become more distrustful, making us vulnerable to consuming more misinformation if it chimes with our worldview. The result? More polarization, more confusion, more chaos.
Debunking misinformation: you can’t unknow what you know
The standard response to misinformation has traditionally been debunking – using a substantiated truth to expose the falsehood of a claim and discredit it. However, this approach has severe limitations due to human psychology.
When you debunk something, you inadvertently support what psychologists call the continued influence of that thing. Without wanting to, you give it more substance. Why? To discredit something, you first have to repeat it, which is problematic because of the way our brains work.
‘When you pre-emptively expose people to a microdose of a falsehood, you can deconstruct it and refute it in advance so they build up the psychological and cognitive antibodies to become more resistant in the future’
When we absorb a falsehood and integrate it into our memory, it becomes entangled there – making friends with the other facts we store and hold to be true in our minds. Repeating that falsehood, even to fact-check or debunk it, means that we end up strengthening it: the memory network associated with that piece of misinformation becomes more robust.
Let’s say you read that New York is more populous than London. The idea takes root in your memory. The next day, you talk to a geographer who tells you New York is not as populous as London. In doing so, the falsehood has effectively been repeated and its place in your memory reinforced. However, now you have a kind of retrieval error when you go to access that information: you will be accessing false and true in-
formation concurrently. This means you will have to purposefully suppress the misinformation: I remember hearing about New York being more crowded than London, but was this true or false?
These kinds of cognitive gymnastics are hard for the brain. In my research experiments, I’ve seen many instances of this. Tell a group of volunteers that a fire was caused by oil and paint cans poorly stored in a warehouse, and then later, correct yourself and tell them that the cause of the fire is unknown. Again and again, the same volunteers will tell you that paint and oil caused the blaze, even though they have been told this was not the case. It’s a persistent behavior: our brains are hardwired to store information in a way that makes debunking problematic. The old courtroom saying about striking something from the records is based on a fallacy: just as you can’t unring a bell, it is near impossible to unhear something we have been told to believe. Once a falsehood has bedded in, it is tough to get it out. A far better approach to dealing with misinformation is to pre-bunk it: to inoculate against it in advance. What do I mean by this?
When you give someone a vaccine, you give them a weakened dose of the disease or virus you are trying to prevent, which triggers antibodies and confers resistance to future infection. The same thing is possible with our minds.
When you pre-emptively expose people to a microdose of a falsehood, you can deconstruct it and refute it in advance so they build up the psychological and cognitive antibodies to become more resistant to a full dose in the future.
We put this to the test in the lab by asking volunteers to read something that pre-bunks a specific misconception – the idea that shark cartilage capsules cure cancer, say, a misconception that went viral in alternative medicine worldwide in the noughties but that was thoroughly debunked by the scientific community in 2007.
Our volunteers read an article about climate change on a template copied from the National Academy of Science. It appeared scientific and authoritative, but as they scrolled through it, they could see it was nonsense: logical flaws in the narrative, and signatories at the end of the article included names like Charles Darwin, Mickey Mouse, and Professor Geri Halliwell of the Spice Girls. Once they finished reading the article, we asked them to browse the internet for climate change content. We repeatedly found that our volunteers were not duped by misinformation on the web or social media – no matter how plausible or convincing it might appear.
The climate change piece signed by Mickey Mouse was light-hearted, but we found the same effect with more serious subject matter. Consistently, even when we asked people to read more weighty, nuanced content, we found that exposing them to clearly manipulated information made them more immune to misinformation when exposed to it on the internet.
In contrast to debunking, pre-bunking is gaining prominence in the academic world as a way to pre-emptively build resilience against anticipated exposure to misinformation. This approach is usually grounded in inoculation theory – a medical immunization analogy that argues it is possible to build psychological resistance against unwanted persuasion attempts, much like medical inoculations build physiological resistance against pathogens. Psychological inoculation treatments contain two core components: a forewarning that induces a perceived threat of an impending attack on one’s attitudes and exposure to a weakened (micro)dose of misinformation that contains a pre-emptive refutation (or pre-bunk) of the anticipated misleading arguments or persuasion techniques.
Taking these findings out of the lab, my Cambridge colleagues and I have worked on free access games that users can use to inoculate themselves against misinformation. One is called Bad News (forgive the pun). Here, we put players into the shoes of an online manipulator – a misinformation grifter who is fear-mongering and peddling conspiracy theories. We use inactivated fictional humor in the game to let players launch and experience a misinformation attack by this nefarious fake news tycoon. The game went viral, with millions of people going through the intervention and building immunity to misinformation. A second game with the World Health Organisation called Go Viral helped pre-bunk misinformation around COVID-19. Again, we used humor, challenging players to deploy falsehoods about virus-busting medicine and flooding WhatsApp with silliness about gargling lemons and gorging on kiwi fruit. Another game on US Homeland Security encouraged players to use bots to create outlandish conspiracy theories about foreign interference in American elections. Here, we saw people wage huge bot wars about topics such as pineapple on pizza and the ramifications of covert Italian cultural interference on US pizza-topping restrictions.
Using levity and humor in games to viralize weakened or inactive doses of misinformation has proved highly successful in building psychological defenses to falsehoods. However, the effect is limited to those who actively sign up to play.
To scale the impact, we worked with Google to build short misinformation debunking ads that appeared on YouTube. Again, we used the same concept: humorous, non-overtly political content to raise awareness of manipulation and help users build their immunity. One of our videos tackles the way bad actors foment extremism by painting complex dilemmas as black or white, using misinformation to strip nuance and paint opposing ideas or concepts as inherently right or wrong. Revenge of the Sith leverages the Star Wars franchise, presenting an
inactivated strain of misinformation in the form of a debate between the characters of Anakin Skywalker and Obi-Wan Kenobi. The video has Anakin say: "Either you're with me, or you're my enemy," to which Obi-Wan replies, "Only a Sith deals in absolutes." Our narrator then explains this is a false dilemma: misinformation deals in absolutes to manipulate and polarize opinion to meet its own ends. Testing the impact of the video within 24 hours of its launch, we found that millions of viewers were better equipped to identify and neutralize misinformation as a result.
Our work in inoculating people against misinformation is still at the trial stage. It’s hard to scale social media games globally or to mandate adverts on YouTube, especially because Google and other platforms operate advertising revenue models. We hope to see pre-bunking integrated into national educational curricula so that new generations can be better inoculated against misinformation on social and other media from an early age.
We continue to work in the UK, the US, and Europe, where our findings have been adopted into university teaching – so far, on an ad hoc basis. My goal is to see this instituted more systematically and at a population level. That, and to help build top-down pressure on social media companies to do more, ideally in response to legislation. It is incumbent on authorities and decision-makers to prioritize this.
In this age of AI, social media, and polarization, “seeing is believing” is no longer a useful heuristic. It is becoming more difficult for human beings to discern fact from fiction, and we have perhaps less incentive or inclination to do so. This troubles me. Look through history and you can clearly see trends. Whenever major societal or cultural issues spike, whenever conflict breaks out in our world, it is usually preceded by a massive influx of propaganda and misinformation. We are at a peak moment in supply and demand for misinformation, powered by technologies that did not exist in the past. We urgently need to build resilience to manipulation in the post-truth era to avert all-out information warfare and whatever that might entail. I’m cautiously optimistic that we have the wherewithal to do this. However, the solution will need to be as multi-layered as it is systemic. ■
Scan the code to play Bad News, the fake news game.
SANDER VAN DER LINDEN is Professor of Social Psychology in Society and Director of the Cambridge Social Decision-Making Lab in the Department of Psychology at the University of Cambridge. He is the author of the award-winning book Foolproof: Why We Fall for Misinformation and How to Build Immunity.
All organizations should have a plan to secure trust during, after (and even before) a crisis hits. Michael Skapinker offers a host of examples, both good and bad, to learn from
Here are some news stories about tech giant Meta from the past few years. December 2022: Meta pays $725m, without admitting liability, to settle a lawsuit over claims it allowed Cambridge Analytica, a political consulting firm, and others to access the data of up to 87 million users.
May 2023: the EU fines Meta €1.2bn for privacy violations.
July 2024: Meta agrees to pay the state of Texas $1.4bn after allegations that it used millions of people’s biometric data without consent.
How badly did these events affect Meta’s performance? At the end of 2024, it announced revenues up 22% and net income up 59%, and it said that the number of people using its services, which include Facebook, Instagram, and WhatsApp, rose 5% in December to 3.35 billion daily.
So, here’s one answer to what companies should do when they have lost customers’ trust: just carry on. When billions use your products to keep in touch with family and friends and to share news of holidays, hairstyles, and side hustles, they are prepared to overlook misuse of their data.
Then again, look at Boeing: five years after two of its 737 Max aircraft crashed, killing 346 people, the company is still embroiled in the legal consequences. Its reputation has taken the biggest hit in its 109-year history. Its recovery has been hampered by a door plug of an Alaska Airlines Boeing 737 Max blowing out in mid-flight in January 2024 – and the discovery by investigators that Boeing workers had been warning of slapdash production practices before the accidents.
There is an obvious difference between Meta and Boeing’s troubles: no one died from the alleged data breaches. But then no one died, at least not directly, from “Dieselgate”, the discovery that Volkswagen had in-
stalled “defeat devices” that allowed millions of its vehicles to reduce their nitrogen oxide emissions when they were in an environmental test laboratory. Although the story broke in 2015, the legal ramifications rumble on. Martin Winterkorn, the VW chief executive who resigned after the scandal became public, went on trial in Germany in September.
Admittedly, the VW affair was striking in the deception involved, but other corporate breaches have flamed and died away. Who remembers the “horsemeat in beef” scandal of 2013?
I have been reporting on corporate scandals for nearly 40 years. (My first was the mid-1980s Guinness scandal in which several executives went to prison for artificially boosting the company’s shares during a takeover battle.) Why some scandals dominate the news and others don’t depends on many factors, including what else is happening at the time.
However, for scandals that stick, and companies never know when they will, I have observed several practices leaders should follow when their organizations are in trouble.
The first is to immediately acknowledge the severity of what has happened. Boeing failed to do this. While expressing its “heartfelt condolences and sympathies” to the families of those killed in the two crashes, it said it had been working to “make an already safe aircraft even safer”. The Boeing 737 Max was far from safe. It emerged that it incorporated software that forced the planes’ noses down when they were in danger of stalling, but with a tendency to over-correct. Boeing test pilots had discovered the issue in simulator flights, but the company had failed to act.
Instead of claiming the 737 Max was safe, Boeing would have done better to ground the aircraft rather than waiting for the world’s regulators to do it (which they soon did). It should then have announced an immediate investigation into the planes’ functioning.
Second, if people have been injured or killed, make them your priority. The textbook airline industry best-practice case was a British Mid-
land aircraft crash on a motorway embankment in England in 1989. Forty-seven passengers died, but 79 survived, many of them injured. Michael Bishop, the airline’s chief executive, went straight to the site to give interviews and supervise the rescue operation. Where injuries or deaths have occurred, companies should immediately announce telephone hotlines for those affected and appoint people to liaise with families.
Third, ensure your staff understand what is happening, as they will feel it deeply if their company is being trashed on the news and social media. Top management needs to level with them. In 2002, when Nike was criticized for its suppliers’ use of child labor, Maria Eitel, its vice president for corporate social responsibility, told me that the worst aspect was the effect on employees’ morale. She said: “They were going to barbecues and people would say: ‘How can you work for Nike?’”
Tell staff the truth and update them on what the company is doing. They are your best ambassadors.
Communicate proactively and with transparency
Fourth, get the story out. We all tend to minimize any harm we might have done or hope no one ever finds out the worst. In today’s news environment, that is a vain effort. It will not be just mainstream reporters digging into what happened. So will legions of social media sleuths. There may be an official inquiry, where the worst will emerge. In the case of the Boeing crashes, the US congressional inquiry uncovered the headline-generating statement of a factory supervisor who had told his boss: “For the first time in my life, I’m sorry to say that I’m hesitant about putting my family on a Boeing airplane.”
At every point, companies in trouble should say what they know rather than having it dragged out of them. One obstacle to companies being open is fear of admitting legal liability. But Keith Ruddock, who worked as an in-house lawyer for the Weir Group and Shell, wrote in 2018: “If a lawyer takes their role of protecting the company from any legal exposure in a crisis situation too far, they may (eventually) win the legal case, but could well have already lost the reputational argument. Most companies can withstand a major financial impact, but a reputational disaster will take years to recover from.”
Fifth, the organization will probably need new leaders if the corporate crisis was caused by lax or bad management. At Boeing and VW, the problems went too deep for the existing top management to continue. That is not to say the corporate scandal will be the end of it. For example, VW now faces additional problems, such as a lack of competitiveness in the transition to electric vehicles and falling market share in China.
The final lesson on dealing with loss of trust is to try not to lose it in the first place. A company that focuses on doing the best for its customers, without cutting corners, and listening to its people when they report problems, is less likely to run into trouble. This does not mean it never will; running a business for any length of time without something going wrong is hard. Where that trouble could come from is something leaders should examine regularly – as well as asking those who produce the products and staff who deal directly with the customers. If a reputation-wrecking scandal is brewing, they will be the first to know, which may avoid serious trouble later. Not every company can skate over its problems the way Meta has – and even it had to pay out billions for its lapses. ■
MICHAEL SKAPINKER is a Financial Times contributing editor, an I by IMD editorial advisory board member, and the author of Inside the Leaders’ Club: How top companies deal with pressing business issues.
Michael Watkins offers a diagnostic tool and roadmap to rebuild trust and confidence within dysfunctional teams – the first crucial steps toward a future of high performance
When Tony Banet stepped into his role as CEO of Especias Hispania's North America division*, he inherited a team fractured by distrust. During the six-month leadership gap before his arrival, intense battles had erupted between marketing teams competing for resources to support new product launches. The previous CEO had created a cut-throat culture where individual success was all that mattered. This had resulted in what Banet described as "pervasive protectionism". Team members focused on defending their territories instead of supporting collective success. Key executives played politics and withheld information, while marketing leaders engaged in constant turf wars. Even potential partners had withdrawn due to the toxic team dynamics.
Banet knew he would have to diagnose and repair these multifaceted problems before he could improve the team's performance. New leaders often inherit teams with serious trust issues – not just isolated breakdowns between individuals but systemic problems that undermine performance.
Rebuilding trust is essential if you want to lead a high-performing team. However, this takes more than the usual leadership skills. You will first need to become an investigator to uncover and understand the sources of damage. Then, you need to be a healer to fix the foundations of trust.
Trust breakdowns can stem from many sources: we’ve all seen these play out and perhaps suffered the consequences. Your predecessor might have pitted team members against each other, as Banet discovered. Long-standing personality clashes may have created deep-seated tensions. Differing work styles may have resulted in chronic mis -
understandings. Organizational changes like mergers or downsizing could have left the team insecure and defensive. A history of unmet expectations or past failures, whether from previous leadership or between team members, might have gradually taken its toll.
Your awareness of these issues and other trust deficits is the first step toward creating a more cohesive, high-performing group. Once you have a better idea of the nature of the problems, you can look to implement targeted strategies to address them, ultimately fostering an environment where trust can be rebuilt and strengthened over time.
These “repair” strategies take many forms and should be tailored to the types of trust breakdowns you face. For example, if there is unhealthy competition or personality clashes, you might engage the team in defining a shared set of values and rules for collaborative behavior. If there are many misunderstandings, consider establishing communication guidelines and encouraging a more open environment.
However, before you embark on this two-step process of diagnosis and repair, it’s important to understand the different kinds of trust that influence a team’s performance. Insight into the multidimensional nature of trust will empower you to apply the appropriate repair strategies, just as a doctor knows what medicine to prescribe for each ailment.
Team trust is not a monolithic concept; it embodies many meanings and manifests itself in various forms: confidence in a colleague's expertise, reliance on their word, faith in their intentions, willingness to show vulnerability, openness in sharing information, and adaptability to change.
To help clear a way through the fog, I have developed a framework for understanding, diagnosing, and repairing trust issues based on six key dimensions of trust.
‘Insight into the multidimensional nature of trust will empower you to apply the appropriate repair strategies, just as a doctor knows what medicine to prescribe for each ailment’
1. Competence: The belief that team members possess the necessary skills, knowledge, and expertise to perform their roles effectively.
2. Reliability: Confidence that team members will consistently deliver on commitments, meet deadlines, and follow through on promises.
3. Integrity: The conviction that team members will act ethically, honestly, and in alignment with shared values, including trust in the fairness of decision-making processes.
4. Emotional: The expectation that team members will offer emotional support, empathy, and care for each other's well-being, creating a safe environment for vulnerability and personal expression.
5. Communication: The certainty that team members will communicate openly, transparently, and accurately, sharing important information in a timely and honest manner.
6. Flexibility: Confidence that team members can be flexible and open to change when the situation demands it, willing to adjust their roles, behaviors, or strategies in response to new challenges or opportunities.
Let’s explore these six dimensions one by one (see table below) and examine how they show up in the workplace. What kinds of problems can emerge within your team based on the dimension of trust in question? What signs should you watch for? And what specific strategies can be implemented to restore trust in your team?
Diagnosing and repairing trust issues in teams in a way that builds lasting, robust trust requires a systematic and sustained approach, not just knowledge. It’s one thing to recognize specific trust problems and symptoms or to know a few appropriate repair strategies to ease tensions; it’s another prospect entirely to transform a fractured, underperforming team’s dynamics and results.
With this in mind, here is a seven-step roadmap to help you navigate the entire complex and sensitive process, from diagnosis and repair to monitoring and leadership. »
TRUST DIMENSION
Competence
Reliability
• Reluctance to collaborate
• Redoing others' work
• Uneven task distribution
• Increased workload for dependable members
• Missed internal deadlines
• Difficulty in coordinating tasks
• Suspicion among team members
Integrity
Emotional
Communication
Flexibility
• Reduced information sharing
• Breakdown in team collaboration
• Lack of psychological safety
• Difficulty with challenging conversations
• Interpersonal stress
• Information hoarding
• Misunderstandings
• Inefficient collaboration
• Resistance to peer-initiated changes
• Difficulty in problem-solving
• Conflicts during changes
• Frequent peer complaints or corrections
• Excluding certain members from tasks
• Expressing doubt about others' abilities
• Frequent missed commitments
• Excessive follow-ups between peers
• Reluctance to depend on certain members
• Gossip and backbiting
• Lack of transparency
• Prioritizing personal over team goals
• Reluctance to share personal challenges
• Emotional distance
• Avoidance of constructive conflicts
• Frequent misinterpretations
• Surprise actions
• Reluctance to ask for clarification
• Rigid adherence to familiar methods
• Negative reactions to new ideas
• Difficulty in group brainstorming
• Individual skill-building
• Encourage cross-training
• Celebrate progress
• Establish peer accountability systems
• Encourage realistic peer-to-peer commitments
• Recognize consistent performers
• Collectively define team values
• Encourage peer-to-peer feedback
• Establish team ground rules for ethical behavior
• Organize peer support circles
• Facilitate team-building exercises
• Implement peer check-in systems
• Develop team communication guidelines
• Implement regular peer-to-peer updates
• Encourage open questioning and clarification
• Promote a team culture of flexibility
• Conduct team workshops on agility
• Recognize and reward adaptive behaviors
This instrument assesses potential trust issues in the six key dimensions within a team. Use the Likert scale (1 = Strongly disagree, 5 = Strongly agree) to reflect how much you agree with each statement as it applies to your team.
Instructions:
Please rate each statement based on your experience with your team.
Scale:
• 1 = Strongly disagree
• 2 = Disagree
• 3 = Neutral
• 4 = Agree
• 5 = Strongly agree
Statements
On competence
Peers often express doubt about the abilities of specific team members.
Team members frequently correct or complain about the work of others.
Some team members struggle to handle more complex tasks due to gaps in their skills or expertise.
On reliability
Some team members often don’t follow through on their commitments.
There are excessive follow-ups between team members to ensure tasks are completed. Some team members can’t be relied on to complete essential tasks.
On integrity
There is gossip or backbiting among team members. Some members of the team are excluded from essential tasks.
Some team members prioritize their personal goals over the team’s objectives.
On emotional sharing
Team members are reluctant to share their personal challenges.
Emotional distance exists between team members. Constructive conflicts are avoided, even when they could benefit the team.
On communication
Team members frequently misinterpret each other's messages or intentions.
Surprise actions or decisions by team members happen too often.
Team members rarely ask for clarification when they don’t understand something.
On flexibility
New ideas from team members are often met with negative reactions.
Team members use familiar methods, even when new approaches are suggested.
It’s challenging to engage team members in group brainstorming or problem-solving sessions.
Dimension scores
Add up the scores from each dimension to diagnose potential trust issues:
• 3-7: Low
• 8-11: Moderate
• 12-15: High
Overall score
To calculate the overall score for team trust, sum the total scores across all 18 questions.
• 18-42: Low overall trust
This score indicates significant trust issues across multiple dimensions. Your team likely struggles with basic trust levels, which can impede collaboration, innovation, and overall performance. Immediate and focused interventions are necessary to rebuild trust and foster a more collaborative, cohesive environment.
• 43-71: Moderate overall trust
This score suggests that while trust is present in some areas, underlying issues need to be addressed. Your team may be functioning, but these gaps in trust could lead to increased stress, inefficiency, and occasional conflicts. Targeted efforts to improve trust will help enhance team dynamics and prevent further erosion.
• 72-90: High overall trust
This score reflects a strong foundation of trust across most dimensions. Your team is likely working well together, with minimal friction, good communication, and a sense of reliability and integrity. However, it's important to continue nurturing this trust to maintain and strengthen the relationships within the team.
• Conduct a comprehensive assessment. Begin by thoroughly assessing trust levels across all six dimensions. Use the “Team Trust Diagnostic Instrument” (see panel) supplemented with interviews and observations if feasible. Synthesize and analyze the data to get a complete picture of the team's trust landscape.
• Analyze root causes. Once you've identified which trust dimensions are compromised, dig deeper to understand the root causes. Consider historical events, structural issues, individual behaviors, and external pressures that may have eroded trust. Use techniques like the "5 Whys" or fishbone diagrams to uncover the underlying problems.
• Establish your priorities. Not all trust issues can be addressed simultaneously. Prioritize based on the severity of the trust breach, its impact on team performance and well-being, the team's readiness to address the issue, and available resources. Create a matrix to visualize and rank trust issues based on urgency and importance.
• Create an action plan. Develop your plan to address the prioritized trust issues. For each dimension, set clear objectives, select appropriate repair strategies, assign responsibilities, and establish timelines. Ensure that the plan addresses both short-term wins and long-term cultural changes.
• Role model trust. To foster trust, you must be trustworthy. Model trustworthy behavior, provide necessary resources, create a safe space for open dialogue, and align organizational systems to reinforce trust-building efforts. Consider bringing in external facilitators or coaches for severe trust breaches.
• Monitor and adjust. Trust-building is an ongoing process that requires constant attention. Regularly reassess trust levels, gather feedback on the effectiveness of implemented strategies, and be prepared to adjust the action plan as needed. Celebrate successes and implement a system for early detection of trust issues.
• Embed trust in your team culture. To sustain improvements, incorporate trust-building into onboarding and training programs, include trust metrics in performance evaluations, regularly discuss its importance, and recognize behaviors that exemplify the six dimensions of trust. Consider developing a "Trust Charter" that outlines the team's commitment to maintaining high levels of trust.
Banet rebuilt trust by fostering communication, accountability, and collaboration. He encouraged open dialogue, reinforced shared goals, and ensured team members had clear roles and responsibilities. He helped shift the team’s mindset from competition to cooperation by promoting transparent communication and aligning incentives with collective success.
He also led by example, modeling trust and consistency in his actions while encouraging others to do the same. He facilitated conversations that addressed past tensions, established clear expectations, and created opportunities for cross-functional collaboration.
‘By understanding the six dimensions of trust and employing a systematic approach that includes assessment, root cause analysis, and targeted intervention, you can rebuild and strengthen trust in your team’
Although it took some time, these efforts improved relationships and team cohesion. Trust levels had visibly improved within months, and the team operated with greater alignment. Banet’s example illustrates that even in fractured teams, trust can be restored through deliberate cultural change, ultimately paving the way for high performance and long-term success.
Diagnosing and repairing trust issues within teams is a complex but essential process for fostering high performance and well-being. By understanding the six dimensions of trust and employing a systematic approach that includes assessment, root cause analysis, and targeted intervention, you can rebuild and strengthen trust in your team.
Keep in mind that trust is delicate and can be easily broken, but with consistent effort and commitment, it can also be repaired and reinforced. As teams navigate the challenges of modern work environments, those prioritizing trust-building will be better equipped to collaborate effectively, innovate, and achieve their goals. ■
*Names have been changed to protect confidentiality.
Scan the code for a downloadable version of the diagnostic test on the facing page.
MICHAEL D WATKINS is Professor of Leadership and Organizational Change at IMD. He co-directs IMD's Transition to Business Leadership program. Watkins is a globally recognized leadership transitions expert and author of the best-selling book The First 90 Days: Proven Strategies for Getting Up to Speed Faster and Smarter A Thinkers50-ranked management influencer, Watkins has developed proven frameworks and tools to help professionals navigate personal and organizational change challenges.
In an interview with I by IMD, Ros Taylor, author of ‘The Future of Trust’, explores how the nebulous nature of globalization has fractured trust in institutions and triggered a renaissance of faith in the individual.
I by IMD: What has caused today’s crisis of trust?
RT: There have been many crises of trust in the past, so this is not unprecedented. However, the way it's playing out is new. Globalization means that, as an individual, you need to trust many more companies, institutions, and people than you did before because your contacts with the outside world are multiplied and spread geographically and culturally wider. You have to trust things you have never seen and may only have a very abstract idea about. That is a characteristic of the 20th century and the beginning of the 21st century. There is an increasing number of institutional bodies we need to trust to go about our daily lives – institutions we cannot fully understand. There is a backlash against that, which was accelerated by the pandemic: it demanded a massive amount of institutional trust, which people struggled to deal with.
How does this erosion of trust in institutions play out?
An example is rail companies in the UK. Once, it was just British Rail – one state-run organization. Now [since privatization in the 1990s], there are multiple rail companies that may or may not be accountable to the government (you're not entirely sure how and how much), plus a track system and stations all run separately. There is no sense of a coherent institution looking after the railways and working to run them in the most efficient way. What we see as a result is a turn away from trusting institutions and a turn toward interpersonal trust, which is less open to scrutiny but simpler and easier to understand. You could regard the return of Donald Trump [as US President] as an example of a desire to cut through the need for institutional trust and to put one's
trust in an individual who promises to take away the complexity. That speaks to our desire for interpersonal trust and how novel institutional trust is in terms of human development and civilization – how rapidly it has grown and how ill-equipped we are to deal with the cognitive and intellectual demands. Interpersonal trust is something we are almost programmed to do. Making the switch and saying institutions are more important than individuals is hard for the human brain.
Why is interpersonal trust such a powerful force?
Interpersonal trust is key to the human experience and a necessary part of primitive early societies. People had to trust each other when they only knew a limited number of people and only occasionally traveled beyond where they lived. Before people lived in towns and cities, interpersonal trust was at a premium. Then, gradually, there would be manageable elements of institutional trust – for example, loyalty to a sovereign you didn't see but knew.
Why are some people more comfortable than others with institutions?
They see how they fit into modern society and feel comfortable with their position. They don't see institutions as a threat to their prosperity. Those institutions may be an important part of what they do. If you're not part of that world and you don't see how you fit into it, it's more difficult. You don't have a stake in that institution. You don't see how you relate to it. It is something that operates, as far as you're concerned, in the shadows in a way that you don't understand.
Have businesses contributed to the crisis of trust?
I don't hold business particularly accountable for what has happened. Businesses often find it easier to negotiate this trust relationship because their relationship with customers is very transactional. It's much simpler to grasp than my relationship with a government where I pay taxes. The decisions on what I should get from that government and what everybody else gets are something I have very little power over. However, businesses need to understand that there's a premium on interpersonal trust. People are turning back toward it and beginning to prefer it. People put a premium on the ability to talk directly to a business – with the move to bots and virtual assistants and the reluctance to invest in call centers, that creates problems for businesses. I don't think many companies have quite grasped that. If you can provide some kind of interpersonal relationship and build interpersonal trust, your customers will probably be happier. That feels like a good idea, given where trust is going.
How can leaders foster greater interpersonal trust?
They can make it clear why they've taken certain decisions and be as straightforward as possible about that: to be more transparent about their motivations and actions. What are an organization’s ultimate motivations apart from making money? Where are its red lines? It will benefit businesses to be more transparent and establish what makes their company different. What makes them more trustworthy? What identity do they have? That’s more than just branding; it is what the CEO and the organization’s leaders say and how they behave. People are more alert to wrongdoing and bad behavior, particularly among
senior people in organizations. Unfortunately for those leaders, they can't separate themselves from the institutions they work for. It will become more important for executives to personify the values their brand claims to stand for because it's the only way people can get a sense of what the organization is for and what it believes in. Otherwise, with the proliferation of institutions and companies, it becomes too difficult for a human brain to take in all the competing institutions that they should trust or are required to trust. The interpersonal element will have to play a much bigger part, though I suspect some leaders will dislike that intensely.
What are the implications of the rapid development of AI?
There's a real danger of it becoming an enormous problem. It may become its own kind of institutional trust problem. People who understand how it benefits them will be perfectly happy. People who see only that it's taking away their livelihood or something they value and replacing it with something inferior will not. The sheer unknowability of AI puts it almost in a different league from other kinds of trust. There's an example I give in my book that the algorithms used to power AI are so complicated that you can't expect a jury in a regular trial to be able to understand them. So, who can judge whether they are fair or not? There are decisions about who is entitled to state welfare benefits, for example, which AI is increasingly making which will affect people lower down the income scale, and the black box nature of it –the fact that it's so hard to talk about is going to lead to a lot of distrust and potentially some quite violent opposition.
‘It will benefit businesses to be more transparent and establish what makes their company different. What makes them more trustworthy? What identity do they have? That’s more than just branding; it is what the CEO and the organization’s leaders say and how they behave’
‘The Future of Trust’ explores how trust defines our lives, how it can be won and lost, and what its future might look like. The book is part of Melville House's FUTURES series.
What are the best and worst scenarios for the future of trust?
Human beings have an enormous need to trust. Society can't function at any level without trust. It certainly can't function at a town, city, state, or international level without huge amounts of trust. In the worst case, we might be starting to lean toward a place where institutional trust becomes so difficult that people reject it, and that is the end of the globalized society as we understand it. The best case is that institutions do a better job than they have of explaining why they're useful and necessary and in a language that ordinary people can understand. They start to behave in ways that foster trust and to understand the limits of their authority. It’s not been appreciated by many people, especially on the left, the degree of distrust that’s out there. There is an assumption on the left that the rule of law is a good thing, but that is a view increasingly not shared by people who want to cut through all that. They want a charismatic individual who can turn all that on its head and enable them, as they see it, to break free. That is a dangerous place to be, but the impulse should not necessarily be to say we need more laws. Instead, it should be to say: We have a lot of laws –have we done a good enough job explaining why we have them? Have we convinced enough people of their worth? ■
ROS TAYLOR is the author of The Future of Trust (Melville House, 2024).
A former BBC and Guardian journalist, she is a freelance journalist and podcast presenter at Podmasters. Previously, she was a research manager for the Truth, Trust & Technology Commission at the London School of Economics and the co-author of The 2018 Democratic Audit (LSE Press).
Companies pursuing ESG goals increasingly face a backlash from shareholders who fear a drop in financial performance. Changes to corporate governance may be needed to restore trust on both sides of the social and political divide, argues Jordi Gual
In 2019, Emmanuel Faber, then Chair and CEO of Danone, was considered a trusted leader for turning Danone into an “enterprise à mission” – a new corporate structure in France, similar to a B-Corp in the US – which allowed companies to include in their legal charter nonfinancial goals, like social and environmental impacts. Under his leadership, Danone divested unhealthy food products, increased the use of recycled packaging, pledged to achieve net zero, and launched a regenerative agriculture program.
Despite these ambitions, by 2021, Faber had lost the trust of his shareholders, who argued that his social and environmental agenda was creating a drag on Danone’s financial performance, making the company less competitive. His well-publicized ouster highlights the difficulties of running a company: how to balance social, environmental, and financial goals without losing the trust of capital markets?
Lately, ESG criteria have come under attack. In the current political climate, is it possible, in the words of Oxford academic and author Colin Mayer, to restore trust in a broken corporate system, which increasingly profits from creating problems for people and the planet rather than seeking to solve them?
In my book, Confiar no tiene precio (Trust is priceless), I draw upon my experience as Chairman of CaixaBank (Spain) between 2016 and 2021 to explore how the current questioning of capitalism and democracy has its roots in a loss of trust between economic and social actors. For the macroeconomy to work, we need to restore trust at the level of our enterprises – from our vision of the firm and investment orientation to our ownership structures and corporate cultures.
It’s important to understand three philosophies underpinning how firms operate today.
The first is the “classical liberal” approach, which insists that a company’s sole focus should be maximizing financial performance. Although it acknowledges the need for some regulatory framework to guarantee “the rules of the game”, it views the responsibility of public authorities and other regulatory bodies as providing public services with minimal interference in the functioning of the free market.
The second approach may be called “enlightened capitalism”. Here, companies adopt a more holistic view of profitability, incorporating the interests of other stakeholders beyond their shareholders. Followers of this approach recognize that social and environmental considerations can also contribute to the business’s long-term success. However, when a direct conflict arises between maximizing profits and pursuing social or environmental goals, the company will prioritize financial returns over nonfinancial objectives.
Finally, we have companies following the “stakeholder approach”, introduced in the 1980s by the American business philosopher Edward Freeman. Under this approach, businesses seek to maximize value creation – not just financial but also social and environmental – for all stakeholders, including customers, suppliers, employees, investors, and local communities. Stakeholder companies must balance these often-conflicting interests while ensuring long-term financial viability since a failed company creates value for no one. The company can maximize its impact overall by successfully creating value for a diversified group of stakeholders.
This is the approach that corporate leaders like Faber have tried to pursue. The question is whether such a company can be viable and competitive – and whether such an approach can restore the trust in the corporate world that seems to be lacking today.
Economic viability requires a company to produce enough profit to meet investor expectations, typically by covering the cost of equity with a risk premium. However, this does not mean that all the value generated must be captured by investors alone.
At first glance, distributing the value created among several different stakeholders might appear to hurt a company’s competitiveness. For example, ethically sourcing raw materials, reducing emissions, and ensuring living wages throughout the value chain will bring higher costs. However, a stakeholder company generates competitive advantages in other ways. For example, building strong, loyal relationships with
‘Mars is proof that a large corporation can have a positive social and environmental impact while remaining profitable. However, it requires an ownership structure and a personal commitment from its leaders, management team, and board of directors’
customers, suppliers, and employees increases the chances they will remain with the company for a long time, developing important company-specific experience that reaps dividends in the long run.
Despite these potential benefits, the bottom-line impact of including social and environmental goals remains a matter of debate. Some authors (like Eccles and Klimenko) find a positive correlation between financial results and ESG metrics; however, it might be that successful companies just have more potential for having a good impact. This lack of clear causality leads other authors (like Porter, Serafim and Kramer) to recommend only focusing on ESG areas that can improve a company’s competitive positioning; actions that drive only reputational gains are not enough. The issue is further complicated by the lack of standardized ESG metrics to measure impact across companies and sectors.
Where there is more conclusive evidence of successful companies that have adopted a stakeholder approach, it often applies to a specific subset of corporations – as in the case of Danish industrial »
companies wholly or majority-owned by long-term investors, such as family owners or foundations.
It is crucial to clarify what makes these firms special. Family ownership, by definition, takes a multigenerational view, which constitutes a form of “patient” capital – that is, fewer risky investments, more R&D, and longer-term payoffs, where business continuity is a primary concern. Their growth may be slower, but their financial results are less volatile. Their reputation tends to be higher since their stakeholder “contracts” are more stable, even in challenging times.
For these types of firms, they are wise enough to realize, as the economist Joseph Stiglitz observed, that for every CEO who wants to do the right thing, there are plenty more who don’t. So, stakeholder firms seek markets where they can really differentiate themselves – and build trust, based on the greater attention they pay to their social and environmental impacts, satisfying the interests of multiple stakeholders and benefiting from the trusted relationships they cultivate with those stakeholder groups over time.
If stakeholder-driven companies are financially viable and competitive, why do they remain the exception rather than the rule? And why has there been a backlash against the “stakeholder view” of the firm? I can point to several reasons.
First, corporate regulations often limit the discretion that directors can exercise when considering interests other than those of the company’s shareholders. Alternative corporate structures, like public benefit corporations, have had limited adoption, and their effectiveness, as mentioned, is still under debate. As Faber’s ousting proved, most companies prioritize their shareholders when push comes to shove.
Second, it is easier to adopt a stakeholder approach when a single shareholder with a majority or controlling stake can steer the vision. Without that, a dispersed capital structure makes achieving the kind of consensus needed to execute a long-term vision harder. Instead, the company’s vision and strategy are left to managers who are often incentivized to achieve short-term (quarterly) results.
Third, the nature of the shareholders plays a role. Those with longterm investment horizons (as in family-owned firms or foundations) will be more inclined to support long-term strategies. However, when the capital structure within the same firm is shared between investors with divergent time horizons – for example, pension funds with a focus on steady growth versus private equity – it becomes practically impossible to reach a consensus.
Other factors include the company’s culture and traditions. How are board members chosen? Are shareholders with long-term or shortterm horizons prioritized in board appointments? Are corporate regulations and best practices designed to protect minority shareholders from majority control or, in the case of dispersed ownership, to ensure
executives remain accountable to all investors? Traditional shareholder-driven firms do not always operate under the same dynamics as stakeholder companies, where a majority owner also prioritizes the interests of non-shareholders.
Corporate governance should not create barriers to stakeholder-oriented approaches. Rather, to build trust, it is necessary to find ownership structures that strike a fair balance between shareholder and stakeholder concerns, not penalizing one or the other but arriving at a desirable level of diversity that supports the ecosystem on which a business depends.
I’ll conclude with an optimistic example of a food company that has built trust through a stakeholder orientation: Mars Inc., famous for M&M’s, Snickers, and Mars bars. Privately held by the Mars family for over 100 years, the company has long operated according to five principles: quality, responsibility, mutuality, efficiency, and freedom. The company states: “It is our independent family ownership that gives us the freedom to think in generations, not quarters, so we can invest in the long-term future of our business, our people, and the planet.”
This culture results in low employee turnover, and its decentralized structure encourages personal autonomy and ethical behavior. In December 2024, it announced plans only to use responsibly sourced cocoa in its supply chain by 2030. Additionally, Mars actively supports regenerative agriculture and has pledged to achieve net zero, all while running a $50bn business with over 100,000 employees in 80 countries. Mars is proof that a large corporation can have a positive social and environmental impact while remaining profitable. However, it requires an ownership structure and a personal commitment from its leaders, management team, and board of directors to do what Danone could not.
If public trust is waning in most liberal economies, then corporate legislation may need to change to support more stakeholder-driven companies and not place them at a disadvantage relative to their shareholder-beholden counterparts. If our legal and regulatory frameworks made it easier to pursue more diverse corporate models, we might see more companies where profits, though necessary, were not an end in themselves but a means to achieve a greater purpose and generate a positive social and environmental impact for all. ■
JORDI GUAL is Professor of Economics at IESE Business School, a research fellow at the Centre for Economic Policy Research (CEPR) in London, and Chairman of the Board of Directors of VidaCaixa. He is a member of the advisory board at Telefónica España, a member of the board of directors of Telefônica Brasil, and an associate at Oxera consultancy (London).
Trust is the bedrock of effective leadership. It calls for executives to take a more emotionally intelligent approach, writes George Kohlrieser
Trust is declining dramatically worldwide. The 2025 Edelman Trust Barometer reveals a widespread lack of trust in institutions, organizations, and their leaders. This trust deficit manifests as disengaged employees, skeptical customers, and underperforming teams. What can leaders do to turn this around? Trust is hard to build and easy to destroy. It is the invisible thread that binds teams together. Trusting someone is an act of will, a leap into uncertainty, which is why it often feels risky. This is particularly the case at work, where relationships take on a different dynamic than in our personal lives. However, the result is what makes the bond of trust and its possibilities so powerful. To reap these rewards, leaders must understand the emotional foundations of trust and work hard to cultivate and sustain it.
are not left in the dark. Trust thrives when people know where they stand.
High-performing teams operate in an environment of psychological safety, where individuals can voice ideas, admit mistakes, and take risks without fear of humiliation or punishment. This safety must be built on a deeper emotional foundation: the leader’s willingness to be vulnerable.
Leaders who admit when they don’t have all the answers or openly acknowledge mistakes enable their teams to do the same. A leader who never shows vulnerability may command compliance but will struggle to inspire the trust of a team. This also means understanding and talking about emotions like anger, fear, loss, uncertainty, and even joy and gratitude. To build trust, leaders must pay attention to how team members and others feel.
Trust is an active emotional engagement and an act of faith between people, a dynamic process shaped by repeated choices, dialogue, and behaviors. It must be earned and created continuously. This requires mindfulness that the interactions and events each leader and team faces will influence how much trust is created. Here are four key areas each leader can reflect on to build and maintain their level of trust in their organization:
Trust cannot exist without honesty, and honesty alone is not enough –it must be based on transparency and delivered with authenticity. Employees and stakeholders do not expect perfection, but they do expect truthfulness with authenticity. Executives who hide bad news or sugarcoat difficult realities undermine the faith that others put in them. A CEO who openly addresses financial struggles with employees can earn more trust than one who lets uncertainty breed fear. Transparency does not mean oversharing or overexposing each vulnerability. It means creating emotional safety with honesty and ensuring people
It is easier to lead when everything is harmonious. However, deep trust in teams is built when a leader steps into difficult conversations, facilitates open dialogue, and ensures conflicts are resolved productively. Leaders who are a secure base do not shy away from tension and conflict. They view conflict as an opportunity for shared problem-solving, deeper understanding, open communication, and reinforcing bonds. Avoiding conflict, sugarcoating, or suppressing difficult conversations only erodes trust in the leader and the team.
Emotional intelligence is crucial here. Empathy, active listening, and a calm demeanor can help navigate disputes without escalating them into trust-breaking confrontations. Leaders who mediate rather than command or micromanage cultivate a culture where employees feel heard, valued, and motivated to find solutions together.
Trust between all parties is the foundation of any successful negotiation. Leaders who negotiate with integrity, transparency, and respect achieve effective agreements, enduring, stronger partnerships, and greater trust. Transactional, zero-sum tactics – where one side aims to dominate rather than collaborate – might result in short-term gains »
but can lead to long-term damage and broken trust. When trust is broken in this way during negotiations, deals become fragile, relationships deteriorate, and future collaboration becomes more difficult. Negotiation means mutual gains and mutual losses.
No matter how fast the world changes, trust will remain the bedrock of leadership. Leaders who embrace honesty and vulnerability, foster emotional bonding – even with an adversary – and consistently demonstrate integrity in conflicts and negotiation cultivate the kind of trust that powers long-term success and a team that is motivated and liberated to perform at their best.
Indeed, the clearest sign that you have genuinely won the trust of your team is when an employee can confidently say: “I know you’ve got my back.” ■
Satya Nadella became CEO of Microsoft in 2014, at a time when the company was struggling with internal silos and a rigid, competitive culture. Rather than enforcing top-down control, Nadella prioritized empathy and transparency. He launched open forums where employees at all levels could voice concerns. He shifted Microsoft from a “know-it-all” to a “learn-it-all” culture. This enlightened approach revitalized Microsoft, proving trust can be built through emotional bonding and shared purpose.
Indra Nooyi, as CEO of PepsiCo, built trust through emotional engagement with employees. One of her most impactful initiatives was writing personal letters to the parents of 400 top-performing employees, thanking them for raising exceptional individuals. This strengthened loyalty and created a culture of mutual respect. Nooyi’s leadership demonstrated that trust flourishes when employees feel valued not just as professionals but as people.
Travis Kalanick , Uber’s former CEO, exemplified how toxic leadership can destroy trust. His hyper-competitive approach fostered a culture of fear and unethical behavior. Reports of unchecked harassment, retaliation against whistleblowers, and manipulative tactics to evade regulators eroded trust. Employees felt unsafe speaking up, and customers lost confidence in Uber. A public backlash and internal turmoil led to Kalanick’s forced resignation. Trust, once broken, requires significant effort to rebuild.
GEORGE KOHLRIESER is Distinguished Professor of Leadership and Organizational Behavior at IMD and has directed the High Performance Leadership program for 25 years.
Frederick Wieder contributed to this column.
Senior
managers can find themselves gripped by
anxiety and insecurity when a new boss arrives. Angelica Adamski explains how to take positive steps to build mutual respect and trust
When you hear the word trust, what springs to mind? Perhaps you think about your direct reports. Maybe you think about your effectiveness as a leader: the relational dynamics you model and how you empower your team to build trust so they can contribute, share, experiment, grow, and speak up whenever necessary. How do you think about trust in the context of leading upwards? If you are a senior leader reporting to a top executive, the C-suite, or a board, do you feel you have the agency to voice your opinion, raise an objection, share an idea, or even ask a question? Or are there times when you feel unsure or even fearful about making yourself heard?
Creating the circumstances that empower you to proactively engage with the most senior echelons of leadership takes courage but is also part of your duty as a leader. It’s your responsibility to provide top management with the ideas, insights, and feedback that challenge the status quo, foster innovation, and drive growth. This can feel overwhelming. It’s common for even the most seasoned leaders to be sometimes paralyzed by doubt and a loss of trust between their bosses and themselves.
Take John, the CEO of a large company, who has begun to struggle at work. A private equity firm has acquired his organization, and things are changing fast. A newly appointed board is mapping a slew of structural changes, and a new chairman is overseeing the process. John has led the company for years and feels hugely invested in its people and future. He has a profound sense of ownership and responsibility to the organization. Now, he feels he lacks visibility on the decisions the board and the chairman are making. News has reached John that the chairman has been talking to the CEO of a company in the
same sector. This has not been communicated officially to him. John has begun to guess the chairman’s motivation. He worries that the board has found him lacking and is dissatisfied with his leadership. John is convinced the chairman wants a replacement CEO and that he is about to be fired.
Paralyzed by anxiety and conscious of a negative energy beginning to infiltrate the company, John decides to find support. He contacts an executive coach, and they meet to diagnose the situation. The coach asks him to put into words what has happened in recent weeks and why he believes he is about to be fired.
In stepping back and articulating the problem, John unearths important insights about himself. He realizes how vital trust and respect are to him. To function effectively, confidently, and without fear, he needs to feel both toward and from his new boss.
The coach asks what he truly knows about how the chairman views him and his capabilities. Again, something critical emerges. In his efforts to continue with business as usual, John has not made it a priority to reach out to the chairman. He has failed to initiate communication, ask questions about the organization’s direction, or offer his feedback and perspectives. In the absence of open, trust-based communication, and with rumors filtering back to him about the chairman’s thoughts, John has become prone to making assumptions about his future that have left him feeling powerless.
It becomes clear that he needs to challenge these assumptions. He needs to communicate with the chairman and the board and discover if they can trust each other. The coach asks him to set out what he needs to achieve secure base leadership. Clearly, it’s time to meet the chairman and discuss frankly and openly what each party wants.
The prospect makes John anxious. To help him prepare, the coach suggests they role-play the conversation, each taking turns playing both parts. This is another discovery moment for John. For the first time, he sees the chairman as a human with his own ideas and needs instead of an adversary. John reaches out to the chairman and suggests going for a coffee. He chooses a neutral environment – a local hotel – where he will feel more at ease and better equipped to talk openly.
Ahead of the meeting, John works on techniques to help him feel grounded and composed. He works with his coach to articulate the outcomes he wants from this first encounter. Instead of focusing on his fears about being fired, having to find a new job, and his ability to provide for his family, he decides to prioritize what matters far more to his leadership: establishing trust with his boss.
Going into their meeting, John takes a moment to find a quiet spot in the lobby. He sits in stillness and grounds himself in positive energy, focusing again on the true objective in front of him. The talk goes well. John is careful to listen more and to talk a little less than he would
normally. He learns that the chairman has also been feeling insecure about their relationship and unsure how to engage with John to have his expert feedback and guidance on the new direction for their company. They have found a place to start building mutual trust. It’s early days, but John and his boss agree to schedule a regular check in – an informal, human discussion to test ideas. A new collaborative relationship forged on mutual respect takes shape.
John’s story sheds light on how hard it can be for even senior leaders to push through the hierarchy and build trust upwards. It is human to feel fear, and it is only natural to want to feel the acceptance of our superiors. It can affect our ability to perform if we don’t feel trust toward those with authority over us, yet that is what is expected of leaders. The onus is on leaders to find a way to build that trust.
You might say: sure, but John’s story had a happy outcome. What if his fears had been confirmed when talking to the chairman? What if the chairman was sizing someone else up for John’s role and looking for a way to get rid of him? Remember that first insight that John achieved in his coaching journey? In stepping back and articulating what was going on, he could pinpoint what he needed: mutual trust and respect.
Let’s say John had discovered his boss felt neither of these things for him – nor was he willing to work toward building them. John would have been armed with important information about the culture at the head of his organization and faced with interesting choices: to persevere with the relationship or to find another job. Knowledge trumps fear. In John’s case, knowing his values and priorities and whether they aligned with the values of his new boss helped him lose fear and move forward.
1. Do you ever allow fear to get the better of you? If so, why are you feeling scared, and is it serving you?
2. Do you find it hard to sift between assumptions and facts – are you sure about the things that frighten you?
3. What do you stand to lose – or gain – by having a courageous conversation to build trust upwards? ■
ANGELICA ADAMSKI is an experienced executive coach (PCC) with a strong background in building and leading high-performing teams across the banking, mining, construction, and power industries. Having worked on every continent, she brings a global perspective, helping organizations navigate cultural differences and foster collaboration. With deep expertise in strategic thinking and leadership development, Adamski supports executives in unlocking their full potential.
Board members have a central role to play in helping organizations steer a safe path in a polarized and skeptical world, writes Peter Voser
The double shock of the COVID-19 pandemic and Russia’s invasion of Ukraine, followed by a seemingly fundamental geopolitical realignment, has coincided with an unprecedented crisis of public trust. People fear for their livelihoods, worry about new technologies, and suspect their leaders – in government, media, and business – are lying to them. They believe “the system” is fundamentally broken.
Societies have become polarized and mistrustful. Think of the heated debates over vaccines and climate change. Public expectations are often conflicted and poorly informed. For instance, some assume that a major problem like decarbonization can be instantly solved, while others dispute whether any action is needed.
Disinformation campaigns aimed directly at companies cloud the public discourse. Even routine business decisions – such as choosing a supplier or drafting a corporate training program – are often judged through a politicized lens.
Alarmingly, 40% of people now approve of “hostile activism” – from attacking individuals online to damaging public or private property, according to the Edelman Trust Barometer. Among 18 to 34-year-olds, this rises to 53%. Perhaps unsurprisingly, 94% of executives in a PwC survey said they faced at least one challenge in building trust with stakeholders, and a similar number agreed that building and maintaining trust improved the bottom line.
There is a silver lining: unlike most institutions, businesses are still perceived as trustworthy overall, especially by their employees. This is both an opportunity and an obligation. Business leaders must step up and lead, and corporate boards have a key role to play. They can provide a much-needed long-term perspective to guide corporate strategy and serve as an early warning system for management, thanks to their broad industry insights and regular contact with different stakeholders and shareholders.
As management teams navigate this global crisis of trust, corporate boards can help by focusing on six dimensions of re-establishing trust.
A company is trusted if it consistently does what it promises – if it delivers on its purpose and core values reliably, transparently, authentically, and ethically. Corporate boards must act as guardians of purpose and values, helping to define them and ensuring that business strategies and decisions align. The authority and credibility of a board can also underpin a company’s communication, which must demonstrate how these values benefit stakeholders and society.
We have all witnessed instances where companies seemingly made a 180-degree turn on their stated values. However, values must be neither flavor-of-the-day decisions nor marketing slogans. It is the duty of boards to ensure that values and business purpose are truly aligned.
2. Enhance transparency and accountability
Trust is rooted in truth, so boards must champion the clear and consistent disclosure of company activities. Rigorous oversight prevents misconduct through negligence, poor processes, or malpractice. Boards should insist on independent reviews to validate claims and data and loop in external stakeholders as they establish transparency and accountability. This is especially important for contentious topics, such as sustainability and innovation.
A lack of transparency and the fear of the unknown feeds distrust, particularly with emerging technologies like generative artificial intelligence, which is being deployed in everyday business processes at a speed never seen before. I’m reminded of the IBM training manual from the 1970s, which stated: “A computer can never be held accountable. Therefore, a computer must never make a management decision.” It was true then and remains true today. AI lacks both empathy and gut feelings. If businesses fail to communicate clearly how they plan to use AI, then they will stoke suspicion and erode trust, which in turn prevents society from realizing the full benefit of one of the most impactful innovations in history.
3. Strengthen stakeholder engagement
Stakeholder engagement is vital in building trust. Boards should push for (and lead) an open dialogue with all stakeholders – from shareholders to customers, partners to employees and community leaders. They should ensure that the management maintains robust feedback channels.
Working in harmony: a board must ensure that transparency, cooperation, and stability are embedded in the company DNA
Engagement starts with shareholders but must extend to employees, outside experts, and the broader community. This wins trust advocates for a company and helps gain a balanced picture to support better decision-making.
4. Promote fact-based decision-making
Boards aren’t just corporate fact checkers (although it’s part of the job), but they must make sure that business decisions and innovations are supported by data and clearly articulated information that is credible with target audiences – from regulators to partners and end customers. By proactively sharing evidence and expertise, boards can also help to “pre-bunk” harmful disinformation campaigns.
5. Serve as sounding boards on public issues
Among the most important roles of a corporate board is to act as a sounding board for management initiatives. Any executive or project team can fall victim to groupthink. Boards can protect and build trust by assessing the potential political and social ramifications of major corporate moves, anticipating and managing stakeholder concerns before they escalate, and offering strategic direction to navigate complex, polarized environments.
‘Values must be neither flavor-ofthe-day decisions nor marketing slogans. It is the duty of boards to ensure that values and business purpose are truly aligned ’
6. Guide ethical leadership and culture
Corporate values must not rest on tactical decisions. They have to be a company’s North Star, rooted in its purpose and anchored by fundamental principles. They are the cultural glue that holds a business together. Boards can help companies by ensuring the business is led by executives who champion ethical behavior, that it supports a culture of integrity, openness, and respect, and that it has metrics in place that measure and reward ethical conduct. This is about much more than compliance. Ethical, authentic, and transparent leadership is essential for a business to build long-term trust and protect its reputation.
I have little doubt that our world will be stuck in a crisis of trust for years. That’s why corporate boards have a strategic responsibility to help navigate this era, minimize and mitigate risk, and rebuild trust where it has been lost. To succeed, boards must focus on long-term, sustainable strategies that benefit shareholders and society. They must anticipate and prevent any future crisis by framing robust ethical frameworks. Finally, boards should use their credibility and influence to bridge divides, uphold facts, and restore public confidence. ■
PETER VOSER has served as Chairman of the Board of Directors of ABB since 2015 and is Group Chairman of PSA International. He served as Chief Executive Officer of ABB from April 2019 to February 2020 and as Chief Financial Officer and Executive Committee member from 2002 to 2004. Voser was CEO of Royal Dutch Shell from 2009 to 2013.
In a world of deepfakes, hallucinations, and bias, Öykü Işık and José Parra Moyano offer guidance on how to trust your AI systems
From bias and copyright infringement to hallucinations, deepfakes, and false information, we are all familiar with the unhelpful (at best) and damaging (at worst) idiosyncrasies of AI that have overshadowed the development and adoption of one of history’s most significant technological advances. For example, during the 2024 UK election, a video of former Prime Minister Rishi Sunak declaring plans to introduce compulsory military service in conflict zones appeared on social media. It was a deepfake; there were no such plans. And in 2018, Amazon was forced to scrap an AI-automated hiring tool after it discriminated against women due to male-oriented bias in its data.
Rogue AI can also have serious commercial consequences. In 2012, the financial services firm Knight Capital lost nearly half a billion dollars in less than an hour after an AI-powered algorithm triggered unintended stock trades. As a result, the company had to be sold to a rival. Unforeseen problems may well emerge with the rapid development of AI agents – systems based on Large Language Models (LLMs) that can operate autonomously on the internet and other platforms.
For organizations and leaders, these risks and realities represent more than just eye-grabbing headlines. They can make the difference between success and failure in a future that will likely be shaped by those who harness AI most effectively and credibly. Trust is at the heart of the matter. Society is already anxious about the existential repercussions of AI, such as mass job losses and concerns about autonomous models. Flaws in how AI operates add to these fears and threaten the basis of trust in technology to improve our lives.
What can businesses and executives do to encourage greater trust in AI – and their growing reliance on it – among their customers, policymakers, investors, employees, and wider society? Organizations and leaders must address two questions. Do you trust AI as a source of information for your work? And can you put your hand on your heart and say you trust the AI your organization is developing or using to deliver its services? For many of us, the answer is probably: “I can’t be certain.”
Given the vast number of cases where AI has failed the trust test and a lingering lack of faith in the technology, it’s crucial to have a robust “due diligence” process in place to minimize the risks. The nature and speed of AI’s advance may make this appear analog and cumbersome, but taking pains to adopt a responsible approach will likely save some embarrassment or much worse. Ultimately, it could differentiate your organization in the marketplace from others with weaker governance systems. Based on these two key questions, we’ve developed a practical checklist for you and your organization to strengthen faith in AI.
1. Verify sources
Always ask for and verify the sources or references behind GenAI output. In 2024, an AI-powered chatbot created by the New York City authorities to help small business owners made headlines when it provided advice that was against the law. This had negative reputational implications for the city and risked business owners making potentially harmful and illegal decisions. Verifying the bot’s advice and sources would have limited the damage.
2. Healthy skepticism (trust but verify)
Maintain a critical mindset toward GenAI outputs and validate with secondary sources, especially for cybersecurity-related tasks. Deepfakes are the fastest-growing social engineering vector in AI-enabled cyber-attacks. Using our eyes and ears is still the best way to differentiate between AI-generated and genuine human content.
3. User reviews and feedback
Look for user reviews and documented case studies that illustrate real-world performance and reliability. You can also tap into helpful monitoring tools such as the Galileo Hallucination Index, which measures the performance of leading LLMs.
4. Transparency in data sources
Request clarity on the data sources and methodologies used to train AI to better assess potential biases. Most biased outputs can be traced to training data sets that were not carefully curated and were unrepresentative of the group for which the output would be used. Facial recognition systems are a great example. A study by Joy Buolamwini and her co-author Timnit Gebru (Proceedings of Machine Learning Research, 2018) showed the error rate for light-skinned men was 0.8%,
The independent International Organization for Standardization (ISO) has developed guidelines for managing risks around using artificial intelligence. This framework offers a helpful starting point for organizations looking to establish safer systems and processes to build trust in the fast-moving technology.
but it was 34.7% for darker-skinned women. By asking for transparency in data sources, you will be able to control whether the training data set is fit for the purpose for which the AI is being trained.
1. Solve real problems
Erik Brynjolfsson of the Stanford Institute for Human-Centered AI has estimated that “ billions of dollars are being wasted” on AI by companies, with insufficient focus on generating value. Avoid investing in AI for its own sake; instead, focus on solving specific pain points where clear value can be demonstrated.
2. Model cards and transparency
Transparency matters. Utilize model cards to document how your team assesses and mitigates risks (e.g., bias and explainability) and make this information available to users. Model cards accompany machine learning models to give guidance on how they are intended to be used, including performance assessment. For example, they can draw attention to how they perform across a range of demographic factors to indicate possible bias.
3. Continuous auditing
Implement regular audits of AI performance and fairness to proactively identify and address any issues. If you are unsure how to conduct this kind of audit, bodies such as the European Data Protection Board and the Dutch-based ICT Institute have published helpful checklists.
4. Accountability and governance
Define clear accountability structures and governance policies around your AI systems. This might include ethics boards or external audits to bolster user trust. For example, IBM has established an AI ethics board, while Fujitsu has set up an external advisory committee on AI ethics.
5. Education and communication
Educate your users about how AI works: its limitations and the measures taken to ensure its reliability. Clear, jargon-free communication can help demystify AI and build trust. Take Duolingo: when it introduced its conversation practice tool Duolingo Max, which is powered by Chat-GPT, the language instruction company warned that AI-created responses may not always be accurate and encouraged learners to report errors. So, a starting point could be as simple as informing a customer they are talking to a chatbot, not a human, and that there are limits to what it can offer help with – but that a person is on hand if needed.
While AI undoubtedly offers unprecedented possibilities for growth and operational improvements, organizations must be careful to balance the urgent need for trust against rushing to grab commercial gains.
Putting in place strong systems that continuously challenge the trustworthiness of the AI that you use and expect your customers to interact with marks an important first step in enhancing faith in the technology and the businesses that increasingly rely on it. ■
ÖYKÜ IŞIK is Professor of Digital Strategy and Cybersecurity at IMD, where she leads the Cybersecurity Risk and Strategy program and co-directs the Generative AI for Business Sprint. She is an expert on digital resilience and how disruptive technologies challenge our society and organizations.
JOSÉ PARRA MOYANO is Professor of Digital Strategy at IMD. He focuses on the management and economics of data and privacy and how firms can create sustainable value in the digital economy. He is a member of the World Economic Forum’s Global Shapers Community of young people driving change. Moyano will deliver a stream at IMD's Orchestrating Winning Performance program.
THE IMD AI SAFETY CLOCK SUPPORTS THE SAFE DEVELOPMENT AND RESPONSIBLE USE OF ARTIFICIAL INTELLIGENCE BY ASSESSING AND ILLUSTRATING THE RISKS
Concerns over the rapid evolution of AI have triggered a crisis of trust, from fears over job losses to philosophical questions about the future of humanity. In response, Michael Wade and the team at the TONOMOUS Global Center for Digital and AI Transformation in Lausanne have created the “IMD AI Safety Clock” to offer clarity for policymakers and business leaders.
Moving between 11:00 pm and midnight, the clock measures how close we are to Uncontrolled Artificial General Intelligence (UAGI) –systems that could operate outside human control with the potential to cause significant harm to humanity. Wade’s team draws on about 4,500 sources to monitor changes in technology
Since its launch in September 2024, the clock has moved five minutes closer to midnight - at 11:36 in the high-risk zone. The latest move, in February, was sparked by factors such as the rise of open source models like DeepSeek and semi-autonomous AI agents like OpenAI Operator, massive US and Chinese AI spending plans, and US moves to rescind legislation providing protection against AI risks. These events, coupled with generally weak global regulation, raise concerns about AI operating beyond human control, emphasizing the urgent need for stronger safety measures to mitigate the risks.
and regulation, from developments in large language models, chips, agentic AI, weaponization, robotics, and critical infrastructure, to evolving global and national regulatory frameworks and the corporate policies of major AI developers.
“The IMD AI Safety Clock is designed to raise awareness, not alarm,” says Wade. “By clearly communicating these risks, the clock serves as a tool to make complex issues more understandable and actionable, guiding necessary measures to ensure the responsible development of AI.” 11:35 11:30 11:40 11:45 11:50 11:55 12:00 11:25 11:15 11:10 11:05 11:00 11:20
THE CLOCK CURRENTLY SITS AT 11:36, IN THE HIGH-RISK ZONE
The clock reading reflects a deep analysis of three AI pillars: sophistication, autonomy, and execution capability.
AI SOPHISTICATION
The performance of AI systems in high-level reasoning and problem-solving across diverse domains.
AI AUTONOMY
The ability to operate and adapt independently without human intervention.
AI EXECUTION
The ability to perform physical tasks and to interact with the “real” world. Trends
The alarming number of significant, recent AI developments illustrates the accelerating pace of change. This rapid evolution underscores an unsettling reality: many of these updates have heightened the AI risk profile.
OpenAIreleasesGPT-3
GlobalPartnershiponAIlaunchedbyG7 EUproposesAIActRiseofautonomousvehicles:Tesla,Waymo,Uber
We strongly believe that AI development must be subject to robust regulation. There remains an opportunity to implement safeguards, but the window for action is closing fast. Ensuring that technological advancements align with societal safety and ethical values is imperative to mitigating the growing risks.
OpenAIreleasesChatGPTEUadoptsAIActRiseinopen-sourceLLM:Meta,MistraletalAIdevelopersboostsafetypolicies
OpenAIreleases ChatGPT-4 RiseinGenAI cybersecuritythreats California’sSB1047lawvetoed AI&roboticsfurther interwined AIchipcompetition intensifies
AgenticAI breakthroughs GrowthofAIinmilitary &geopoliticsUSderegulation dismantles AIguardrailsSurgeinopen-sourceAI
AI carries the threat of bringing to life the chilling visions of Orwell and Huxley. We must work hard to fight against the convergence of micro-surveillance and digital inertia, argues Michael Yaziji
Although an oversimplification, examining how AI is used in China and the West through the lens of George Orwell, Aldous Huxley, and Neil Postman is illuminating. In China, AI’s encroachment into public and private life increasingly resembles Orwell’s 1984, reflecting a government-driven expansion of surveillance and control. In the West, AI’s profit-driven design seems to fulfill Huxley’s Brave New World prophecy, offering relentless streams of attention-grabbing content that threaten to trivialize civic discourse. Adding a further dimension is Postman’s warning, articulated in Amusing Ourselves to Death, that the medium by which we consume information shapes not only our habits but our modes of thinking. While it may appear that China and the West diverge sharply, the signs are that these models are converging, combining the most troubling features of both dystopias.
In China, facial recognition technology, predictive policing, and the social credit system exemplify the ubiquitous state power that Orwell feared. The analysts IHS Markit estimate that over 600 million CCTV cameras are operating nationwide, many equipped with AI-driven facial recognition software that can identify individuals within seconds. These tools monitor citizens’ activities, penalize perceived dissent, and enforce loyalty to officially sanctioned narratives. Although local variations exist, the trajectory remains clear: surveillance and technological governance bolster a top-down order in which potential critics may self-censor or face retribution. Such developments echo 1984’s grim scenario wherein individuals grow accustomed to constant oversight. (It should be noted that cameras attached to AI systems are also rapidly proliferating in the West.)
The West’s move toward Huxley’s and Postman’s visions
In the West, AI’s encroachment into the digital marketplace may lack the overt centralization seen in China, but it is no less insidious. Rather than being orchestrated by a state apparatus, this dynamic is driven by a profit model that monetizes user engagement. Social media platforms such as YouTube, Instagram, TikTok, and Facebook use AI algorithms to captivate attention, continually refining recommendation systems that lure users with bursts of compelling or polarizing content. The incentive is straightforward: time spent scrolling translates directly into advertising revenue, fueling an ecosystem that keeps us hooked.
In 1932, Huxley imagined a society that required no overt oppression: its citizens were placated by easy pleasures and made docile by consuming “soma”, a chemical sedative. Now, algorithmically engineered feeds serve as a “digital soma”, tempering any impulse toward rigorous civic engagement by offering streams of digestible entertainment. Political discourse is distilled into memes and sound bites, subtly crowding out thoughtful debate. Instead of an iron-fisted restriction of information, the public is invited to gorge on more content than it can process. As in Huxley’s vision, the result is not overt subjugation but complacency born of constant diversion – a process that undermines the will to question or rebel.
Postman’s critique prefigures how we arrived at this moment. Forty years ago, he argued that when news, politics, and education became “television-friendly”, they necessarily adopted the grammar of entertainment. AI platforms take this further. While traditional television was a one-size-fits-all entertainment mode, modern social media refines and personalizes the “onslaught of superficialities”, ensuring not just amusement but a sense of personal relevance and indispensability. By analyzing billions of data points (likes, clicks, and watch times), these systems can customize headlines or video snippets precisely to a user’s emotional triggers. They amplify fleeting outrage, viral dance challenges, or conspiracy theories while discouraging sustained critical reflection. The endless feed format has become a digital update to Postman’s insight: no longer is “all the world a stage”, but all the world is a personalized distraction.
Globally, we spend an average of 4.5 hours a day on mobile devices – around 2.5 of these are immersed in algorithmically curated social media feeds. Postman warned us about this shift from depth to “algorithmic shallows”: our modes of thinking have been shaped by the medium itself. We might feel perpetually informed – swiping through endless headlines or updates – yet we rarely achieve the analytical grounding needed to comprehend intricate global challenges. The synergy of Huxley’s sedation-by-pleasure and Postman’s entertainment-driven discourse yields a cultural landscape where trivial concerns often overshadow the substantive, and momentary outrage briefly displaces measured analysis.
Nonetheless, Western societies are not monolithic. Some European countries, for instance, have adopted robust data-protection regulations (e.g., GDPR) and proposed AI governance frameworks (e.g., the
‘We might feel perpetually informed – swiping through endless headlines or updates –yet we rarely achieve the analytical grounding needed to comprehend intricate global challenges’
EU’s AI Act) to mitigate manipulative tech-driven practices. These measures are nascent, however, and face resistance from corporate interests and political inertia. The bigger picture remains one in which consumer appetites for round-the-clock amusement and profit-driven algorithms align almost too seamlessly, reinforcing a steady diet of distraction that threatens to erode the civic fabric from within.
Orwell’s state oversight and Huxley’s trivializing distraction might seem to occupy separate worlds. In China, media outlets such as the People’s Daily communicate an official line. At the same time, in »
Western countries, infinite digital content addresses users’ tastes with an abandon that appears to champion freedom of choice. When AI is centrally harnessed to unify opinions, as in certain authoritarian contexts, it creates stark information gatekeepers; when unleashed in an unregulated capitalist market, it swamps citizens with so many pieces of content that discernment and cohesion become elusive. Both approaches stifle reflection and action – one by limiting the range of permissible ideas, and the other by fragmenting the public’s attention into endless micro-entertainments.
Convergence between these models is no longer purely speculative. Authoritarian states can incorporate Western-style consumer seduction into their data-driven ecosystems, just as Western governments look to AI for policing, security, and “predictive” applications that echo the logic of a social credit system. In China, technology giants like Tencent and Alibaba work closely with government oversight, aligning commercial interests with national priorities. In the West, state agencies increasingly rely on or purchase data from private tech firms, reinforcing a dynamic where corporate and government powers intersect. Under these conditions, the notion of a clear divide between Orwellian and Huxleyan paradigms fades.
The future could witness both heavy-handed state oversight and the manipulative power of nonstop entertainment flourishing side by side, forming a hybrid system that leaves citizens both scrutinized and distracted.
It is worth asking how societies can resist these converging forces. In China’s tightly controlled environment, meaningful dissent often must be covert: activists resort to encrypted communication, peer-topeer networks, VPNs, and coded language, seeking to outmaneuver ever-evolving algorithms that track social media activity. These measures can fail once AI refines its capacity to detect subtle irregularities in communication patterns, leaving little room for error.
In the West, resistance theoretically has wider channels – citizens can push for policy reforms, demand greater transparency in AI algorithms, or call for stronger data protections. Digital literacy campaigns, such as those funded by the European Union’s Digital Education Action Plan and civic education initiatives in several US states, hold the promise of reminding people to reflect on their media consumption. Yet, each countermeasure faces entrenched corporate and political interests; under current business models, outrage and maximal user engagement translate directly into profit. Consumers either need robust willpower to forgo digital addictions or must learn to participate critically, questioning algorithmic biases and the echo chambers that reinforce their viewpoints.
The fate of AI’s influence on society cannot be divorced from human decision-making. While there is an element of inevitability in the pro -
‘Societies have a narrowing window to determine whether AI becomes a tool for empowerment or a mechanism for subtle and not-so-subtle domination’
liferation of powerful technologies – nations and industries rarely relinquish tools that give them a competitive advantage – it is still possible to shape AI so it enhances rather than impedes collective freedom. Regulatory frameworks can be strengthened nationally and across transnational bodies like the European Commission to balance incentives toward deeper civic engagement. Open-source AI research can provide meaningful transparency. Grassroots movements, investigative journalists, and ethical technologists can expose manipulative practices and organize to curb AI abuses.
However, the question remains whether citizens, policymakers, and thought leaders have the will and foresight to unite across borders for this cause. China’s model of streamlined control may concentrate power in the hands of a few, while the West’s model disperses it among multinational corporations and political actors who each have reason to maintain the status quo. The confluence of these forces – where government-driven surveillance meets business-driven distraction –could erode human agency to a point beyond what Orwell or Huxley individually imagined. Should these dystopias fuse, the resulting system could be one where everyone is perpetually watched, perpetually entertained, and perpetually malleable.
Societies have a narrowing window to determine whether AI becomes a tool for empowerment or a mechanism for subtle and not-so-subtle domination. In China, the push toward advanced surveillance signals the realization of Orwellian fears; in the West, the unrelenting flow of addictive content demonstrates Huxley’s cautionary tale. It would be a mistake to assume that these paths will remain entirely separate, for the expanding exchange of data, technologies, and practices points to a more ominous amalgamation. Whether the future is shaped by robust, equitable frameworks or surrenders to the creeping alliance of surveillance and distraction is a choice that rests, however precariously, on our collective will to resist. ■
MICHAEL YAZIJI is Professor of Strategy and Leadership at IMD, where his expertise spans strategy, leadership, and sustainability. He lectures regularly on artificial intelligence and leads the IMD faculty interest group on the topic. Yaziji is co-director of IMD's Stakeholder Management for Boards program.
Artificial intelligence has the potential to profoundly change every aspect of life on Earth. Used boldly and responsibly, it could be a powerful force for good, argues Gopi Kallayil, Google’s AI business strategist
Artificial Intelligence is perhaps the most far-reaching technology ever created. It could prove more significant than the advent of the printing press in 1440, electricity in 1762, and the automobile in 1886. AI has existed as a concept for decades, but now it’s coming of age. All of us can engage with it using everyday language, and the architecture and computer power exist to make it come alive. Its capabilities are still being built, and we’ve yet to see what humans will do with it. However, AI is so pervasive and rapidly growing that it will develop exponentially, profoundly altering nearly every field of human existence and changing how we live and work in ways we can't imagine.
While we’re excited about the potential of AI, we understand that with advanced technologies come challenges, such as potential bias in algorithms, privacy violations, malicious use, job displacement, social manipulation, and the creation of uncontrollable AI systems. This means responsible development with robust oversight and ethical considerations is crucial. In 2018, Google published seven Principles of Responsible AI (see box) and appointed a governance team responsible for monitoring and reporting on compliance.
We want everyone working at Google and those who interact with us to understand that these are the core AI principles we follow and to be consistent with them, ensuring that AI is bold and responsible.
Let me demystify artificial intelligence. To do that, we must first look at a unique human capability: natural intelligence (NI). This involves learning from the past, responding to new situations, comprehending intricate ideas, creative thinking, emotional insight, and flexibility. It is the type of intelligence that created the ballpoint pen. It’s a simple instrument with elements – from the development of the forging process to communicating thoughts on tablets with rudimentary ink to the invention of the compression spring and plastic – that have taken thousands of years to develop. »
Be socially beneficial.
Avoid creating or reinforcing unfair bias.
Be built and tested for safety.
Be accountable to people.
Incorporate privacy design principles.
Uphold high standards of scientific excellence.
Yet, for all the insights, breakthroughs, and capabilities our natural intelligence has brought us, it is a limited resource. For example, if your leadership team consists of five people, then that team possesses the intelligence of five people. But what if, with this same team of five, you could tap into the intelligence of 50 people? This is what AI is about and what computer scientists have been trying to do: mimic our natural intelligence in computer systems and amplify that capability, emphasizing the word amplify rather than replace.
AI systems not only amplify the capabilities of the human brain, but they also mimic different types of cognitive functions. Systems that mimic the right side of the brain (more intuitive and creative) are what we broadly refer to as generative AI, while systems that mimic the left side (more quantitative and analytical) are called analytical AI. Each system serves a different function, and each can complement the other.
Analytical AI explores existing data to understand patterns, make predictions, and gain insights. These systems perform complex calculations, analyze large datasets rapidly, and allow for systematic workflow problem-solving and optimization. By prioritizing objective analysis, analytical AI can identify patterns and trends, providing valuable insights that might otherwise be difficult for human analysts to detect.
Generative AI systems create new data. They use deep learning neural network models to generate new content that mimics human creation – images, text, music, programming code, and even entire pieces of artwork. A neural network is an AI method that teaches computers to process data in a way inspired by the human brain. These systems recognize patterns and understand and respond to human emotions. They adapt to unpredictable situations and generate innovative solutions to complex problems.
Just as the human brain integrates both hemispheres to function effectively, advanced AI systems are being developed to combine generative and analytical capabilities, allowing these integrated systems to manage a broader range of tasks with greater sophistication. For example, generative AI can enhance predictive analytics (a subset of analytical AI) by enriching data models and generating possible scenarios, improving the accuracy of forecasts.
Google declared itself an AI-first company in 2016. Our AI Strategy is underpinned by the belief that AI can inspire and empower people in many fields, including healthcare, security, energy, transportation, manufacturing, and entertainment. We’re helping three audiences –consumers, communities, and companies – to reach their highest potential with AI. Let me explain this strategy one audience at a time.
Consumers (i.e., the eight billion-plus humans on the planet) use var-
ious Google products to manage their lives. Seven Google products – Search, Gmail, Android, Chrome, Google Play, YouTube, and Maps – are each used by more than two billion people monthly. We’re asking: “How can we enhance the experience for consumers by using the power of AI across all of these products?”
Take one example: search. Historically, if you were searching, you had to navigate to a rectangular box on Google and type in words to find the information you were looking for, and you needed to be fairly precise. You had to know what you were looking for so that Google could help you find it. But that's not how human curiosity works. We often look at something, become curious, point to it, and say: “What is it?” We can't even describe it. The launch of Google’s Circle to Search feature on your smartphone means you can use intuitive gestures like circling, scribbling, highlighting, and tapping to learn about what's on your screen without switching apps.
Access to education and healthcare, as well as climate change, are among many pressing societal problems. We’ve been asking at Google: “Can we use AI to solve any of these issues?”
For example, floods affect more people than any other environmental hazard. Flood-related disasters have more than doubled since 2000, with nearly 1.5 billion people exposed to significant risk annually. Upgrading early warning systems to make accurate and timely information accessible could save thousands of lives.
Engineers at Google asked: “Can we use AI to predict flooding and provide those who live in the area earlier notice?” Our team explored the potential of machine learning to create better flood forecasting models. They collaborated with academic researchers to combine the best hydrological physics-based flood simulations with our AI approach.
They built a flood prediction model where AI runs simulations to determine the millions of ways in which the river could behave, depending on the level of water, how fast rains flow, which embankment collapses, which tributary is swelling, and which dam has to release water because it's at capacity. The AI-powered model runs simulations and can predict flooding, indicating the different combinations by which the river can behave. This would be difficult to do using traditional methods.
The team tested this system around the Ganges in India. Nearly half a billion people live nearby. During the monsoon season, the river will likely flood, affecting agricultural land, homes, and livestock. The people living in the area get one day's evacuation notice, so the flooding causes a great deal of property damage.
The tests were a success, and now, during the Monsoon season, the system captures all this data and starts predicting: “The Ganges river will flood the town of Patna in the next five days,” and so on. That information is distributed to the local authorities and the general population through Google alerts and Google Maps, giving people time to evacuate. Google forecasting is now available in more than 100 countries. AI-powered, AI-generated, and AI-distributed – this is an example of AI benefiting the worldwide community.
Google enables organizations to use AI to work smarter, make better decisions, leverage powerful tools to streamline operations, gain deeper insights, bring innovative ideas to life faster, and build sustainable and successful businesses that continue to thrive and grow in an increasingly prosperous world.
This is best illustrated in the case study of Omoda, an innovative Dutch fashion retailer. The company had been undergoing extreme change due to the acceleration of online shopping, the variety of available payment methods, and the introduction of fast fashion, resulting in a return rate of up to 50% of the items sold. Omoda asked us: “Can we build an AI-based system to predict whether an order will be returned?
And if so, how much of the order?” So, we built a model looking at historical data where we knew the items with a higher probability of being returned and new real-time data, which included variables like payment methods or order size. When an order came in, the system would combine historical and real-time data to get a prediction.
Omoda used the prediction to change its operating process model. The AI model successfully predicted returns for 70-75% of orders, reducing returns by 5% and increasing profit margins by 14%. The company plans to optimize the model further to reduce CO2 emissions and enhance personal sizing recommendations.
As you launch your business strategy, ask yourself the following: What is your plan for growth this year? What are the priorities and challenges? Then, most importantly: “How can I use AI to enable the strategy?
To determine the AI capabilities that can enable the strategy, you’ll need:
1. An understanding of where AI is now and where it's going. Be ahead of the curve, and then constantly look inside and outside your industry to learn how others are using AI.
2. A spirit of experimentation. It's hard to predict what’s next because new developments and capabilities are always emerging. You want to get in early and continually try tiny experiments to see what succeeds.
3. Smart people who have AI skills and talent. If you don't have those people internally, you can partner with external organizations that have AI capabilities. And this could be technology companies like Google and Microsoft or consulting firms like Accenture.
Whether it’s faster and more efficient access to information, flood forecasting, or finding financial and eco-friendly solutions for excessive product returns, the steps are the same: identify a problem, determine the desired outcome, and then ask how AI can provide a better solution. ■
GOPI KALLAYIL is Google's Chief Business Strategist for AI. He works with Google's largest customers to help transform their business through AI-powered marketing and improving the consumer experience. Gopi has spoken at TEDx, The World Happiness Summit, and Wisdom 2.0. His books, The Happy Human and The Internet to the Inner-net, are published by Hay House.
The soulless language of management speak leads to uninspired and disengaged teams. Peter Meyers explains how to sharpen your language skills to become a more effective leader
How much of the language in our day-to-day business interactions is wrapped in jargon: the over-used buzzwords that provide a linguistic shortcut to what we want to say? From boots on the ground or low-hanging fruit to blue-sky thinking and defending our position, we all do it. We all use this surface lexicon that spares us the effort of bringing original thinking to our interactions.
In our relentless pursuit of efficiencies – a corner-cutting that extends to the way we speak – we’re creating a world where interaction becomes superficial, meaning muddied, and inspiration and engagement are swapped out for utilitarianism. Just look at the stats. Workforce engagement has sunk to less than 23% globally, according to Gallup, with less than half of employees understanding what is expected from them at work. The same survey reveals that less than 30% of workers feel any real sense of mission or purpose in their jobs. The language of leadership is a contributing factor that needs to be addressed.
In my work with leaders from Fortune 500 companies over the past 25 years in 32 countries, I’ve asked what percentage of the time people find themselves disconnected from a conversation or meeting. The answer? Between 50% and 80% of the time. Consider the loss of investment from our most precious resource – time and talent – if we’re unable to listen to each other at least half of the time. The problem is getting worse: holding someone’s focus for any length of time feels like a heroic act.
Communication at work is about more than sharing goals and targets. It is about connecting with people and elevating their work so they aspire to achieve more and make a difference in the world. When we resort to management speak, we not only risk robbing that work of its soul, but it becomes more difficult for people to stay engaged and focused. We don’t realize that we’re reaching for the same worn-out phrases, and over time, we fail to notice that fewer people are listening.
In falling back on those pat phrases, we eschew the granularity of communication, direction, and feedback that people need to learn, grow, and think more creatively – let alone feel inspired and motivated. How many times have you heard a team member praised with phrases like “good job”, “you killed it”, or “you knocked them dead in there”, but failed to go into what specifically was so effective? How often do you take the time to explain to someone what they are doing well (or poorly) and what it means to the work and their career progression, to the organization, or to the impact you seek to have through the work?
Do you ever question the language you use? Do you think about the message that people are receiving? Does it align with your intentions? How do you or the tone you adopt come across to others?
We need language to think, process, create, solve problems, and devise new ideas. If we erode language and settle for linguistic shortcuts, aren’t we in danger of eroding our thinking and the quality of our leadership? We have hundreds of conversations every week, each an opportunity to touch, move, or inspire each other. But how often do we fail even to make a connection?
Language matters. Communication is as much a core leadership skill as any other. In a world where purpose and meaning are missing, engagement is plummeting, and employees are switching off, leaders need to dig deeper to find the words not just to inform (or “tick a box”) but to inspire. Here are a few things you can try:
Reading expands your vocabulary: the work of great authors, for example, will expose you to more nuanced ways of expressing yourself. Then there’s the magic of reading a classic aloud.
When you read something aloud, you engage more fully with the language. You simultaneously use your eyes, ears, and intellect. There is a kinaesthetic response within your mouth and tongue as you form the words. This creates neural pathways that run parallel to the author’s thinking. It’s like following in the tracks of a great sprinter or cooking a meal with a master chef.
Try picking an author whose work you love – for me that would be a David Foster Wallace or a Ralph Waldo Emerson – and walk around your study or a room, reading their work out loud as if it were your own thoughts. After half an hour or so, try writing something. It doesn’t have to be anything specific: automatic writing is ideal. When you’re
done, review your writing and see if new words and syntactical structures are available to you.
2. Switch up the ‘I:You’ ratio
When you speak to a colleague or a client, how often do you pause and ask yourself: what does this person need from me? What are their psychological and emotional needs, as well as their business needs?
When speaking to others, we often fixate on our own needs. We use the first-person pronoun: I want, I expect, I need. In doing so, we miss an opportunity to inspire or lift another person.
In my book, As We Speak, I make this point emphatically. Individuals are interested in themselves. We all want to hear things that matter to us and us alone. As a leader, if you use “I” excessively, you risk having your interlocutor switch off and disengage cognitively, emotionally, and psychologically. Switch the “I” and “you” ratio. Lead with “you”: Here’s what you need, what you expect and want, and what your chal-
lenges look like. Make the exchange about the other person. Using the pronoun “you” shows other people that you consider and care about their concerns and needs.
3. Be prepared
When we communicate, we bring an energy that determines how well we engage with or inspire our audience. Think about actors, musicians, athletes, or dancers and the exercises they do – the psychological and emotional warm-up that ultimately decides how they perform.
If you know you are going to speak to someone, prepare in advance. Find a way to access a state of mind that is resourceful and optimistic, where instead of frustration or boredom, anger or fear, you are primed to show up with a sense of purpose, with intellectual generosity, with a gift that you have prepared that you want to share with others.
Make it a habit to warm up before communicating with others and find ways to drop into a zone where you feel resourceful: primed to »
One of the curiosities of management speak is the pervasiveness of war terminology and the language of violence. I’ve assembled some examples in the mock monologue – some of the most common phrases we hear and use daily like knotweed, strangling authenticity and meaning. It’s something we all do. Being aware of it is the first step toward communicating more effectively.
Ask yourself, what do these phrases mean? How often do you use or hear them? Is this what you really want to say? How many are synonymous with war or violence? What impact do you think that has on us? How could you say the same things in a more human and relatable way?
‘ We’ve been on the front lines for this client for a long time. They were hitting their targets but wanted more bang for their buck. They were eating up the competition. It was like shooting fish in a barrel. But last year, we started to lose ground, and it’s been an uphill battle for the last six months. The client has always been a real straight shooter. We were in their crosshairs. We circled the wagons, rallied the troops, and called for a sit-down. We had a new idea and decided to pull the trigger with a killer presentation. We had established a beachhead in the company and came armed with intel about dissension among the ranks. We had a plan of attack to halt what looked like a coup. We fired the opening volley, and before we knew it, they were shooting holes in every bullet point, blowing our argument to pieces. Then, they dropped a bomb, saying our strategy had created a ton of collateral damage to their brand. We had our backs up against the wall. We were facing the firing squad. They hammered us with a barrage of questions.
All we could do was shoot from the hip and try to keep them at bay. I thought it was overkill. We had hit our targets just as they asked. It’s not our fault there’s a trade war going on. So, we’re not pulling our punches anymore: we’re armed with the facts – locked and loaded. We’re going in with more boots on the ground. We’re going to kill it this quarter.’
choose words, open doors, and express emotions that encourage, empower, and inspire.
We use about 10,000 words a day. Of those, hundreds come blasting out of our mouths like linguistic bombs: let’s set the world on fire; we destroyed the competition; take your best shot; let’s bite the bullet; bring out the big guns. The language of violence pervades the way we communicate: micro-aggressions that infiltrate our common vocabulary, subtly conditioning the way we connect.
Although, as a society, we’ve made progress in banishing abusive terminology – slurs that tie to gender, race, or sexual orientation – we still need to pause and re-examine the way we communicate.
In the age of AI and robotics, for example, do we want to refer to our skills, knowledge, or body and voice as “tools?” As we aspire to gender equality, do we want to refer to women as “working moms?” And when leadership sits at that inflection point between motivation and demoralization, do we want to stick to the vernacular of war?
I’m not suggesting you must formulate a new lexicon, but I would challenge you to think more about the language you use in your leadership practice. Be conscious of the words that you choose.
We are entering a new era in leadership, an era in which automation, AI, and technology will take over mundane tasks, and the onus will be on leaders to bring out the best in people.
Getting this right will require us to find a new language that speaks to the deeper and richer possibilities of humans. That will require a serious improvement in our thinking, interpersonal strategy, and vocabulary. ■
PETER J MEYERS founded the consultancy and training firm Stand & Deliver in 2000. He developed the company’s “high-performance leadership communication” methodology by building upon experiences and insights from art and sports psychology. His book As We Speak: How to Make Your Point and Have It Stick, co-written with Shann Nix, is published by Simon & Schuster.
Responsible for TIME magazine’s iconic covers, D W Pine explores his creative process and shares insights on how to cut through the noise and make an impact
In the time it takes to read this sentence, your brain could have processed yet another visual. The average person is presented with roughly 10,000 images daily, mainly through advertisements, social media, news, product packaging, and websites. Breaking through the visual clutter is a challenge that requires a keen understanding of human attention and the visual landscape we navigate, especially since most of those images are now carried in our pockets. In this saturated environment, the key lies in creating something that grabs the viewer’s attention and holds it.
As the Creative Director of TIME, responsible for designing the red-bordered cover of the 100-year-old publication, I spend most of my time staring at a blank white space smaller than a piece of paper. It’s been called the “most important real estate in journalism”. The design has undergone several transformations throughout its history, but the commitment to visual simplicity and impact has remained constant.
Of course, nearly all the thousands of images we face daily are gone in an instant, so I'm pleasantly surprised when a cover can break through and grab people’s attention. The mission is to be clear, simple, impactful, and occasionally provocative, putting the iconic red frame around what’s important. To that end, I approach the cover design as a journalistic poster.
When an image or design embraces visual simplicity, it creates space for the mind to roam. It invites us to engage more actively, to interpret and connect with the work on a deeper level. It's like a pause in the noise, a moment of clarity, where the viewer's experience becomes just as important as the visual itself.
Visual simplicity is about more than aesthetics – it's how it shifts our perception, allowing us to focus, reflect, and engage with a subject or an idea in a clear and open way. It's the beauty of the quiet spaces and the moments that don’t demand attention but speak volumes.
Not everyone has a red border and a global audience of more than 100 million, but the principles of visual simplicity are relevant to everything we create. Here are two key lessons from my experiences that I hope will resonate as you seek to make the most out of your own creative or innovation process:
At TIME, we’re fortunate to collaborate with some of the world’s best artists and photographers, but the “blank white canvas” seemed incredibly daunting to fill when I started my job in the late 1990s. It wasn’t until my young daughter and I visited the Metropolitan Museum of Art, just around the corner from our offices at Rockefeller Center in New York, that I started understanding it.
In one of the gallery rooms, two oversized white canvases hung high above my daughter’s blank stare. “Look at this,” she said with a smile, “someone forgot to paint it.” I laughed and agreed, rolling my eyes. How is this art?
‘The mission is to be clear, simple, impactful, and occasionally provocative ’ D W PINE
Robert Rauschenberg’s White Paintings, created in the 1950s, are among his most iconic works and stand as a radical exploration of what art could be. At first glance, as the title suggests, the paintings are entirely white – seemingly devoid of anything. However, their significance lies not in the blank space but in what that blankness invites the viewer to consider. Since that day at MOMA, I have thought more about that painting than any other visual.
Rauschenberg, who coincidentally designed several TIME covers (including one as the first living artist to feature on our front page in 1976), took the idea of the "blank canvas" to its extreme. Yet, the simplicity of white paint on a white canvas demonstrates that art »
‘Simplicity brings focus. But it requires a mastery of restraint – the ability to decide what to remove and what to leave untouched ’
doesn’t need to be full of obvious content to be meaningful. Instead, it focuses on the process, context, and interaction. Rauschenberg loved that the painting collected dust and turned different colors depending on the time of day. What at first appears to be nothing creates a space for the viewer to imagine more.
For our cover, I find it critical to spend most of my time thinking about what not to include. I constantly edit my ideas. Constraints encourage you to dig deeper to discover creative solutions you might not have previously considered.
Those constraints also include limiting my tools. I use two fonts – a specially designed serif typeface called Haffner and a commonly used san serif called Franklin. This constraint helps me focus on what we want to say and how we’re going to say it visually. I limit my color palette to black, white, and red. I don’t have to spend time thinking about those things – it’s like walking into an ice cream shop with 31 flavors and knowing I will always order the mint chocolate chip. Simplicity brings focus. But it requires a mastery of restraint – the ability to decide what to remove and what to leave untouched. It’s not just about using fewer elements; it’s about using the right elements in the right way. Every detail matters, even if it appears minimal.
A recent example of this visual simplicity is our cover of Elon Musk sitting behind the resolute desk (24 February). The image, which garnered worldwide media attention and a response from US President Donald Trump, was simple. The cover story focused on the many ways Musk, who is not an elected official, was amassing power as he and his team began dismantling the federal government. We tried several headline directions and had other visual elements sitting on the desk, but in the end, it was important to be visually clear – Musk, holding a mundane cup of coffee, comfortably seated in the world’s most powerful chair.
Creativity thrives in simplicity. When faced with limitations, it’s easy to get caught up in trying to do everything at once. Focus on the most important aspects of your project, stripping away the unnecessary. It's about finding ways to turn the noise into something powerful and impossible to ignore, much like the Rauschenberg paintings.
I am often asked where ideas come from. It’s not an easy question to answer, but I’ve learned they typically don't come from brainstorming meetings or ideas sessions. They can happen anytime, anywhere, of-
ten when you're not even thinking about them. Inspiration can strike while walking down the street, taking a shower, observing trends, or through persistent trial and error. Ideas are born from a seemingly endless combination of sources.
Usually, my first ideas on a project turn out to be the best, but creativity can also take time. Constraints may lead to frustration, but it's crucial to trust the process and keep refining the idea. Breaks in the action are beneficial, and distance from a project allows you to return with a fresh perspective. Even during stressful deadlines, I would occasionally leave the office (Central Park was close by) for a short walk to clear my head and trust that new ideas would emerge. And they always did.
However, having lots of ideas doesn’t mean they should all survive or be presented. During my first few years at TIME, I worked hard to present dozens of different options and visual directions for the editors to choose from, thinking I was doing them a favor by offering lots to choose from. I didn’t realize I was just inundating them with more images. It took some time for me to understand that the value I added was in visually editing the process. Ideas also benefit from collaboration. When working with artists, I generally suggest a direction they should
explore, but I always want them to bring their talents and thoughts to the project. Creating visuals in isolation is challenging when the aim is to resonate with a wide audience. And while collaboration often yields the best results, it's also important to strike a balance. The phrase “too many chefs in the kitchen” is certainly apt when it comes to design.
Visual – and creative – simplicity involves a great deal of thinking, but don’t overthink it. Limit your options (mint chocolate chip). Be bold and memorable (Rauschenberg). Trust the process (a walk in the park). Just a few simple steps to help us all grab people’s attention and hold it. ■
D W PINE is the Creative Director of TIME, where he shapes the editorial design for one of the world’s most influential media brands. Over the past 25 years, he has designed more than 1,000 TIME covers, including 15 “Person of the Year” covers. Pine was named as one of the "25 People Who Defined Visual Culture" by Artsy
New EU legislation requires stronger female representation on corporate boards. Diana Markaki offers guidance on navigating this transition
With increasing legislation mandating board diversity, such as quotas, organizations are under pressure to appoint more women to their boards. Rather than viewing this as just a compliance requirement, boards and organizations should recognize it as an opportunity to gain a competitive advantage. Adding a woman to a traditionally male-dominated board should not merely fulfill diversity objectives; it should result in better decision-making and performance.
Anyone who has served on a board can tell you that the appointment of a new member can significantly shift board dynamics, potentially posing a challenge to existing trust and relationships. As someone who has often been the only woman on the board, I can attest to the unique challenges and rewards of navigating those dynamics. But, as the founder of The Boardroom, the first private club for women executives who aspire to be board members, I’ve also seen firsthand how diverse boards can drive success. Well-managed diversity at the board level brings fresh ideas and new ways of thinking. It can help organizations innovate, improve performance, and stay ahead of their competitors.
How can boards and organizations most effectively navigate these necessary changes to their advantage? The key to success is ensuring a smooth integration process for new members and fostering an inclusive atmosphere of openness, respect, and collaboration. This process should be led by the board chair, supporting the integration of new members in a way that transforms board dynamics and turns diversity into a strategic asset.
Trust is the foundation of any high-performing board. Building trust must be the priority when a new member joins, particularly the first woman on a traditionally male-dominated board. It’s essential for sitting members to demonstrate respect for her expertise, perspective, and experience. Trust building isn’t just a matter of good intentions – it’s a deliberate process that requires attention and effort. For sitting members, this means offering support by actively listening to the new member’s ideas and giving her space to contribute meaningfully. One of the board chair’s key responsibilities is setting a welcoming
and respectful tone from the outset. For the new appointee, establishing credibility within the existing dynamics is crucial, and that starts with being recognized for the value they bring. This early trust-building effort will create a strong foundation that can reduce friction later. Proactively taking steps to establish trust from the beginning, rather than allowing it to develop passively, is essential to fully harness the benefits of diversity.
Adding a new member is not just about filling a seat; it’s about infusing the board with a variety of viewpoints and fresh ideas that bring additional value and impact. Through effective inclusive practices, diversity, whether based on gender, background, or experience, can challenge the status quo and encourage more creative solutions. This leads to deeper, more insightful discussions that improve decision-making. One of the greatest benefits of diversity is that it promotes healthy disagreement. When people bring differing perspectives to the table, it challenges assumptions and pushes the board to explore issues more thoroughly. Sitting members should view the new appointee’s opinions as an opportunity for growth and learning rather than a challenge to their authority or approach. The board chair plays an essential role in fostering a healthy culture where diverse and different viewpoints that might run against the grain are actively welcomed and encouraged. In this way, members collaborate to tackle challenges from multiple angles, giving the board a better chance of anticipating issues, finding creative solutions, and positioning the organization for long-term success.
All members should feel comfortable speaking up, particularly those new to the group. However, it is only natural that, in the early stages of integration, a new member may feel hesitant about contributing, especially if the established dynamic does not feel inclusive. Sitting members should consciously create a welcoming and professional environment and encourage open, inclusive, and free dialogue. This sends a strong signal that everyone – including the new appointee –has an equal opportunity to contribute. The board chair is responsible for actively managing the tone of meetings and must ensure that no one dominates the conversation and that everyone’s contributions are acknowledged. If a new member’s voice is overlooked or interrupted, the chair has a duty to step in and correct the dynamic. If the chair doesn’t act, others should.
Implicit biases – often unconscious – can influence how board members perceive and evaluate one another. These biases may manifest in subtle ways, such as dismissing certain viewpoints or failing to recognize the value a new member brings to the table. Sitting members must proactively identify and address any biases that may hinder the new member’s ability to contribute fully. Ask yourself: What are my own biases? How do they affect the way I view and interact with other
board members? Do I treat certain board members differently? If so, why? By exploring and challenging our biases, we can seek to minimize their impact on board activities and discussions. Adding a new member allows us to run a diagnostic on our own biases and to work harder to ensure they do not influence our behavior and decisions.
While trust and respect will develop over time, the board may require additional – and more structured – support and processes to integrate new members effectively. Informally, it’s important for sitting members to be proactive in mentoring the new appointee and providing guidance, particularly in the early stages of their tenure. More for-
‘One of the greatest benefits of diversity is that it promotes healthy disagreement. When people bring differing perspectives to the table, it challenges assumptions and pushes the board to explore issues more thoroughly’
mally, consider pairing the new member with an experienced mentor on the board or involving them in strategic discussions to ease their transition and ensure they feel part of the team. By actively supporting their integration in informal and formal ways, the board not only helps the new appointee succeed but creates a stronger environment for performance that can benefit more fully from a broader pool of expertise.
The first woman on your board isn’t just a trailblazer – she’s the catalyst for a future where inclusive leadership and decision-making become a competitive advantage. The boards that understand and act on this opportunity by proactively welcoming and integrating new members will reap the greatest rewards. ■
DIANA MARKAKI has served on the board of directors of Ellaktor, a publicly traded infrastructure group, and sits on the board of 5G Ventures, which manages Phaistos Fund, a multi-million sovereign fund that invests in 5G technology. She is the founder of The Boardroom, the first private club for women executives who aspire to be board members. Markaki contributes to IMD's Women on Boards program.
A new law, The Gender Balance on Corporate Boards Directive, requires large listed companies in the EU to appoint members of the underrepresented gender (usually women) to 33% of all director roles and 40% of non-executive director roles by June 2026. Take this quiz devised by Jennifer Jordan and Alexander Fleischmann to see if you’re ready to meet the targets
1. How can we ensure that women are considered for the top jobs?
a. Through a positive selection process that excludes men.
b. By using external auditors.
c. By relaxing the job spec.
2. How can we tackle unfair biases that may prevent women from being promoted?
a. Through focusing solely on unconscious bias training.
b. By blaming people for behavior that shows unfair bias.
c. By using metrics to analyze the stats regarding promotion and adapting processes accordingly.
3. Women already occupy many senior management roles in our company. How can we help them progress to boards?
a. Look for board candidates with non-traditional backgrounds.
b. Provide financial education and training for women.
c. Create greater psychological safety for male senior management.
4. Our leadership has good intentions. How can we motivate them to do more to promote women?
a. Assess them on their record of promoting women.
b. Draw up explicit KPIs for them.
c. Devise informal ways to signal you’re serious about this.
1 (b). Appointing external auditors tasked with ensuring diversity of candidates to review lists for executive roles increases transparency and accountability. It ensures that women are considered for roles conducive to progression to the board.
2 (c). Enshrining robust formal criteria for promotion and appointment to key roles works best. Without objective standards, women are likely to be disadvantaged by unfair biases. While unconscious bias training is used widely today, research shows it doesn’t work in bringing about less biased, more lasting behavior change compared with goal setting and putting the focus on the system as opposed to the individual. Highlighting undesirable behavior – in other words, shaming individuals – only causes resentment and will backfire.
3 (a and b). Women in senior management tend to be drawn from HR and communication roles. These are traditionally not seen as bringing boardroom-relevant experience – but in turbulent times, non-traditional backgrounds can bring new perspectives to boards. Still, financial literacy is key to be seen as equal on boards. Hence, greater financial education for women will help smooth their path to progress and benefit the company in reputational terms when your leaders sit on the boards of other organizations.
4 (a, b, and c). Leaders and managers at all levels should be held formally responsible for gender equality in their promotional practices. Informally signaling you are serious about meeting the targets will help, but setting explicit KPIs will hold people accountable for their actions – and speed change faster than declarations of good intent.
Action to address gender imbalance in the boardrooms of large EU companies has largely been left to the initiative of such organizations. As of June 2025, addressing the imbalance will be required by law. Eradicating the barriers to progress now will ensure you fulfill the requirements progressively and productively without having to resort to panic solutions down the line. ■
JENNIFER JORDAN is a social psychologist and Professor of Leadership and Organizational Behavior at IMD. She is the Program Director of the Women on Boards and the Leadership Essentials program and co-director of the Leading Digital Execution program.
ALEXANDER FLEISCHMANN is a Diversity, Equity, and Inclusion research affiliate at IMD. He received a PhD from WU Vienna and researches inclusion, equity, and chronic illness in the workplace.
It may feel like Donald Trump is capsizing the geopolitical boat, but could he just be accelerating a longer-term trend in the balance of global power? Geopolitics have long been heading for a messy destination, argues Richard Baldwin
During the Cold War, geopolitics was like checkers with two players and simple rules. The game was so straightforward that almost every match ended in a draw. Some countries stood behind the eastern player, the Soviets, while others supported the western player, led by the US. They were two worlds with their own rules, banking systems, supply chains, and economic philosophies.
The Soviet Union’s collapse triggered a new phase of geopolitics that was more like bingo. One main player (the US) called out the numbers while everyone else sat with their bingo cards, trying their best. Some won, others didn’t. Many people didn’t like the game but could do little about it. The US dominated almost every sphere: economic, military, security, intelligence, cultural, and financial. The dollar was the lynchpin of the world financial system.
Today, it’s a lot more complicated. The game has become something akin to 3D chess with about 150 players at the table: some play when the pieces are on the top plane, some when they're on the bottom plane, others all the time, and some never play. The rules are unclear,
in flux, and different for different regions and domains. The global landscape has never been more confusing and challenging to navigate.
To understand why this is happening and how businesses might respond, it helps to consider what has been driving these changes. Spoiler alert: it’s not just President Donald Trump.
In 1990, the G7 industrialized countries controlled about two-thirds of world GDP and all the rules, institutions, and systems that went with it, with the US as leader. Fast forward to 2022, and the G7's share of global GDP had plummeted to just 44%. While the US share has held steady at around 25%, other G7 members saw their GDP shares drop. Meanwhile, China experienced a miraculous rise from 2% to 17%. While impressive, this isn't enough for dominance. Even when China eventually surpasses the US economy, it won't achieve the dominance the G7 once enjoyed. For starters, it doesn't have a coalition of massive economies following its lead. »
These shifting sands have played out in market influence. In 2001, more countries counted the US as their largest market compared with China. However, by 2018, China had become the dominant buyer for many nations. This shift reflects China's waxing and America's waning leverage.
China’s rise has coincided with America’s gradual but deliberate retreat as the hegemonic bingo caller on the world stage. One root cause was the US mismanagement of the technology and globalization shocks that affected all advanced economies in the 1990s and 2000s. This fumble led to a backlash among the US middle classes, with politicians from the left and the right blaming foreigners rather than policymakers. The narrative has resonated among voters across the States. There is a popular consensus that the US should focus on domestic affairs: “Make America Great Again” and “America First”, to coin a phrase or two.
‘China’s extraordinary rise to global manufacturing dominance is not as widely recognized as it should be. Beginning at 5% in 1995, China’s share of global output has soared to 35% today’
ates an intriguing global economic power structure: a former global hegemon that wields control in the financial sphere yet has consciously stepped back from its role as hegemon – or even leader of the G7 –in the broader domain. At the same time, the US remains the dominant force in military spending. This combination of financial and military muscle, alongside its retreat from global economic leadership, creates a complex and puzzling situation.
As the US has eased back, China has stepped up. China’s extraordinary rise to global manufacturing dominance is not as widely recognized as it should be. Beginning at 5% in 1995, China’s share of global output has soared to 35% today. China overtook Germany in the late 1990s, Japan in the early 2000s, and the US in the late 2000s. Since surpassing the US, China’s share of global manufacturing output has doubled again. This ascent in manufacturing happened so quickly that policymakers in G7 countries were caught off guard, failing until recently to fully grasp the implications. China’s share now exceeds the combined output of the following nine largest producers.
Other factors are at play. For example, life expectancy in the US is lower than in China and other major economies. But perhaps most telling of all is the death of the American Dream. Social mobility has fallen behind many other advanced economies, including European nations. While 90% of people born in the 1940s earned more than their parents by age 30, less than half of those born in the 1980s achieve the same milestone. A common narrative is that many Americans can't afford to buy the houses they grew up in, let alone accomplish the traditional American Dream of buying something bigger and better. This frustrating reality – in the works since Ronald Reagan’s time as president –has stoked considerable anger.
While the US has turned its focus inward in some areas, it has maintained superpower status in two crucial domains. First, it continues to dominate global financial markets and banking. The dollar's role as the world's primary currency in debt markets and international trade invoicing gives America extraordinary leverage. Even more important is the central place of US banks in international payments and the US government’s weaponization of that dominance. This cre-
For decades, Chinese growth was nothing short of miraculous. Following the death of Mao Zedong in the mid-1970s and the leadership transition to Deng Xiaoping, China experienced a boom that transformed its economy and society. During at least two decades of this period, average annual growth exceeded 10%. At such a rapid rate of expansion, the income of an average Chinese worker would double more than five times over a typical working life. However, since 2007, Chinese economic growth has decelerated markedly. Today, growth hovers around 5% and forecasts suggest it could remain at this level or even decline further. In Western economies, a consistent 5% growth rate would be cause for celebration, but it might seem underwhelming for a population accustomed to three or four decades of miraculous growth.
The slowdown raises questions for the Central Communist Party (CCP). It has exercised an increasingly tight grip on the economy and society in recent years, consolidating control over key sectors, imposing stricter regulations on businesses, and tightening social oversight. Are these two trends a coincidence or a strategic recalibration aimed at maintaining stability in a slower-growth environment?
A common narrative about the collapse of the Soviet Union posits that citizens were willing to support their government as long as living standards were rising, as they did during the 1950s, 60s, and 70s. When growth stagnated and the comparative success of Western economies became more evident, popular support for the regime waned. Could China face a similar challenge?
For most of the three decades of miraculous growth, China was a navel gazer – with policymakers focused on industrialization and improving »
Nations with China as the biggest market
Nations with the US as the biggest market
Source: Lowy Institute − China versus America on global trade
% OF PEOPLE EARNING MORE THAN THEIR PARENTS AT 30 YEARS OLD
Source: The Fading American Dream: Trends in Absolute Income Mobility Since 1940 (Raj Chetty et al)
the economic well-being of its citizens. This began to change during the 2010s. The launch of the Belt and Road Initiative (BRI) in 2013 was pivotal. By offering substantial investments in infrastructure projects, it supported development in several developing countries and helped to create a more interconnected global economy. While the initiative has faced criticism – most notably concerns about over-indebtedness and the long-term viability of some projects – it has largely been a win-win endeavor. Many countries in Asia, Africa, and Latin America have benefited from improved infrastructure that facilitates trade, investment, and integration into the global economy. In return, China has bolstered its economic ties and influence, creating connections that linked developing nations more closely to its markets.
The move represented a significant change in the global economic and geopolitical landscape, as China positioned itself not only as an economic powerhouse but as a key partner for developing nations.
China’s outward focus took a more assertive turn in the 2010s as it began to shift from economic engagement to military and territorial strategies. A symbolic step was the construction and militarization of artificial islands in the South China Sea. In 2018, the removal of presidential term limits meant President Xi Jinping could remain in office indefinitely, a shift toward more centralized authority within China’s political system. The Hong Kong National Security Law was passed in 2020, undermining the “one country, two systems” framework many believed would preserve Hong Kong’s political and legal autonomy.
Source: World Development Indicators (WDI)
More recently, kinetic actions involving the Chinese Coast Guard and vessels from neighboring countries have heightened tensions in the South China Sea. This holds global significance, particularly for Europe, as a substantial portion of its trade with East Asia flows through these waters.
China’s more restrained approach earned it the image of a panda, but now it resembles more of a dragon.
Geopolitics has become messier for business to navigate because the economic order has changed. As the US has recoiled from global economic leadership and turned inward, a power vacuum has emerged, part of which China has filled. The US remains the superpower in all things financial and unrivaled in military capabilities, but China has become the hegemon of global trade. No one nation is calling out the bingo numbers anymore. This lack of cohesion – what the political scientist Ian Bremmer calls a “G-Zero world” – means that manycountries exercise significant power within their regions in a confusing game of 3D chess: Russia and Turkey in the Near East; Saudi Arabia, Israel, and Iran in the Middle East; and China in the Far East.
This situation has made life much more complicated for businesses. Many are ill-equipped to cope with a multipolar world, but most must get up to speed quickly. Here are five points to consider:
1. Geopolitical tensions are here to stay; it’s not just the Trump effect.
President Trump’s approach to foreign and economic policy has shaken things up more aggressively than previous US administrations, and the potential implications for business worldwide will likely be significant in the near term. However, the move toward a more chaotic geopolitical landscape, shaped by the trends outlined here, has been in train for many years and will continue long after Trump departs the White House.
2. Much of the real fireworks will involve China and manufactured goods. Services (will slide by with less intervention.
The key battleground will be in the manufacturing sector. China’s rise to dominance will continue to pose considerable challenges for other governments and companies seeking to manage resources, supply chains, labor, consumer demand, and the fallout of the burgeoning Trump-led trade war. Services will likely be saved from the worst of this unless they touch on areas such as infrastructure with national security aspects (e.g., 5G) or privacy issues (e.g., TikTok).
3. Companies need the capacity to identify geopolitical risks and rapidly assess the severity of any particular shock.
To anticipate changes and adjust, organizations must have the resources to monitor events and translate what they mean for the business. For example, this could involve adding talent in-house supported by external specialists.
4. To achieve resiliency, companies need well-oiled mechanisms for deciding who does what
Clear processes, roles, and responsibilities will improve your organization’s ability to respond or change tack effectively when necessary. This decision-making capability must be clearly defined and communicated from the boardroom to the shop floor.
5. Planning is everything, even if most plans will remain on the shelf. Scenario planning, tailored to the different areas of the business, will offer a sense of security in this age of uncertainty. You may not ever need to download these plans, but the collective process of creating them will establish an environment and culture of readiness and help uncover weaknesses and unseen risks while reassuring investors and other stakeholders. ■
The June edition of I by IMD will focus on the ramifications of a turbulent geopolitical and economic global landscape for leaders and their organizations.
RICHARD BALDWIN is Professor of International Economics at IMD and Editor-in-Chief of VoxEU.org since he founded it in June 2007. He was President/Director of CEPR (2014-2018), and a visiting professor at many universities, including MIT, Oxford, and EPFL. He worked in the Bush Sr White House in 1990-91 following trade matters for the Council of Economic Advisors. Baldwin will lead a stream at IMD's Orchestrating Winning Performance program.
Source: World Development Indicators (WDI)
Leave no one out:
Effective DE&I strategies are proven to enhance performance, yet they still face resistance – perhaps now more than ever. Josefine van Zanten and Luca Condosta offer advice on how to convince the naysayers
The positive business impact of a joined-up, strategic approach to diversity, equity, and inclusion (DE&I) on decision-making, innovation, and performance is well documented. Research shows that hearing, integrating, and giving space to diverse perspectives and people leads to stronger analytical capabilities, better problem-solving abilities, and enhanced partner, stakeholder, and employee representation and engagement. This approach, in which inclusive environments and leadership styles are crucial prerequisites for diversity to thrive, can better equip organizations to face the challenges of a complex and polarized world.
The library of research that supports this position has grown rapidly over decades, leaving little doubt that adopting a credible DE&I strategy is not just doing the responsible thing from a societal or personal point of view but also from a business perspective. For example, Malgorzata and Stephen Smulowitz found that female board membership enhances stakeholder strategies and Jonathan Bauweraerts et al showed that family female directors have a positive impact on family-run SME innovation investments.
So, why do DE&I strategies and initiatives still struggle to take hold in the workplace? From our collective decades of experience working in the field, we know that a big part of the battle is how to “take people with you”. All the research evidence, initiatives, and strategies in the world will never be enough if you cannot transform the culture of an organization and the attitudes of its people, particularly in-groups who might feel they have the most to lose. Organizations often find their incumbent workforce can be broken down into two groups that really make a difference on this journey: “allies/advocates” and “dissidents”.
From senior management to junior staff, allies can be counted on to speak up, set an example, and become standard bearers for DE&I initiatives, actively supporting the transformation to a diverse, equitable, and inclusive organization. Taking allies with you is rarely seen as an obstacle to progress, even if training or a guiding hand might be required. In our experience, the more fundamental – and difficult – task in implementing a successful DE&I strategy and reaping its benefits is to build trust with and persuade the majority of the in-group. These people doubt or question the value of DE&I or perhaps harbor reservations or opposition to the “official corporate line” based on cultural, personal, or religious grounds.
In this article, we will outline some steps to help you develop an impactful approach to DE&I, with practical advice on how to foster trust with the “dissidents”.
Unfortunately, many organizations and leaders think that one-off events, alongside other standalone initiatives such as employee networks, are adequate measures to tick the DE&I box. While these activities can be appreciated by the workforce and create positive energy, they can feel peripheral to the core culture and strategy of the organization. At worst, they are token gestures. Such one-off initiatives do
not lead to more diverse, equitable, and inclusive organizations. Our first insight is that DE&I must go well beyond standalone activities: bring DE&I into the core of every aspect of the business strategy and development, including its culture. To make sure DE&I is genuinely at the core of what your organization does, ask yourself:
• What does DE&I mean to us as an organization? Is it reflected in our mission and values?
• How does our DE&I strategy align with the overall strategy, operations, and values of our business? Do we have a multi-year DE&I plan that is measured and updated as circumstances change?
• How can DE&I contribute to the organization’s key areas of focus? What does DE&I mean for those areas?
Second, for organizations to inspire a cultural shift and to increase diversity through inclusion with the support of equitable systems, it is vital that a senior, credible, and impactful leader is responsible for the design and management of the DE&I strategy. This leader and their team must be supported with the right tools and processes to drive diverse talent development, position DE&I with the brand, oversee the implementation in the organizational culture, and so much more. Crucially, there also needs to be active sponsorship from the very top.
• Is our DE&I strategy actively promoted and sponsored by top management?
• Who leads our DE&I strategy? How senior are they? Whom do they report to?
• What tools and processes are in place to support and develop leaders so they are equipped to seek out diverse talents from all regions and backgrounds?
Finally, your DE&I strategy and any related initiative(s) must be delivered globally in an “on-message” way that reflects the organization’s values while being mindful of cultural and regional nuances. This can prove a tricky balance at times. We advise, however, that the organization’s guiding values and strategy must ultimately be embraced by all.
• Is there consistency in the message and understanding of our DE&I strategy and initiatives across all business functions and all levels of our organization?
• Does our DE&I strategy and/or initiative reach and involve all regions in which we operate (within our organization) in a harmonized way while leaving flexibility for local cultural requirements and sensitivities?
• Are we – and all our people – staying true and aligned to our organizational values and the purpose and spirit of DE&I?
This last set of questions touches on a difficult but essential part of any DE&I journey: understanding how to navigate and overcome mis- »
trust and resistance from in-groups and dissidents in your organization. These are, after all, the people you need to win over and take with you to become a truly diverse, equitable, and inclusive organization. They might be gatekeepers in positions of power or influence across the chain of management, or they could be individuals with strongly held personal beliefs in some of the regions (or countries) you operate in.
Based on our work in the field, we have identified two pathways that can help build trust with and effectively manage dissidents and resistance – and foster broad-based support for DE&I.
1. Increase awareness and acknowledge differences
Responsible leadership in DE&I means recognizing that conflicting ideologies are only natural in diverse environments. By acknowledging these differences openly and transparently, rather than sweeping them under the carpet or dismissing them as “out of touch”, leaders can reduce tension in their teams and encourage healthy dialogue about sensitive issues. Consider how you might create safe spaces where all employees can express their views without fear of retaliation, offense, or ridicule. These opportunities for honest exchange help to build awareness, respect, and understanding, while offering a safety valve for people to express themselves. A more structured approach has seen organizations establish formal forums, such as voluntary employee resource groups (ERGs), for organized and respectful discussions on challenging topics.
To reinforce this environment of openness while doubling down on the DE&I imperative, leaders need to set the tone from the top by encouraging language and policies that emphasize collaboration and common goals, rather than highlighting divisions. For example, does your organization have clear policies that outline acceptable behavior and processes for addressing conflicts? This approach can help to create a culture of “allies for all”, where all team members can feel heard and respected – and part of the same dialogue and journey, even if their views differ.
In addition, leaders should make the case for the benefits of unity over division by celebrating and sharing examples of successful collaborations and projects involving diverse groups across the organization and/or companies in the same industry. This kind of storytelling shows that diversity creates a positive impact for the business through inclusion. This can, in turn, help to counter dissenting voices who might argue that diversity is being done “for its own sake” or to tick a public relations box. What about championing internal role models who have credibility within the business? These individuals could, for example, explain why some aspects of DE&I are not just a matter for our personal lives and inappropriate topics for the workplace – an argument often raised in opposition to DE&I policies. For example, addressing sexual orientation, do you know someone in your organization who might be willing to explain the costs of not “coming out”?
2. Actively build bridges between different groups
Overcoming dissidents, mistrust, and resistance from in-groups requires a stream of concerted bridge-building initiatives to nurture
As a leader, becoming an activist role model is crucial in persuading dissidents and doubters to join you on the DE&I journey. Here’s how to do it well:
1. Lead by example and publicly commit to DE&I goals. Demonstrate inclusive behavior in all your interactions. Leaders who embody DE&I principles set a powerful example for others to follow. Clearly communicate the company’s DE&I objectives, showing commitment to diversity, equity, and inclusion. This transparency inspires trust and accountability.
2. Amplify marginalized voices. Use your platform to elevate voices that are often unheard. Promote their perspectives, ideas, and achievements within and outside the organization.
3. Engage in continuous learning. Commit to ongoing education on DE&I issues. Leaders who stay informed can better address challenges and inspire others to do the same.
4. Make DE&I a core business strategy. Integrate DE&I into the company’s core mission and strategy rather than treating it as an add-on. This integration can make DE&I efforts more sustainable and impactful.
5. Mentor and sponsor diverse talent. Actively mentor individuals from underrepresented groups, providing them with opportunities for growth and leadership.
6. Create accountability structures. Establish clear metrics and regular reporting on DE&I progress. Hold yourself and your organization accountable for meeting these goals.
7. Engage with the community. Collaborate with local organizations and communities on DE&I initiatives. This not only strengthens the company’s reputation but also contributes to broader social change.
better understanding and appreciation of differences. For example, peer mentorship and reverse mentoring programs are powerful tools for driving change in DE&I, offering each party a window into another world. Why not try pairing individuals from different backgrounds to promote understanding and knowledge sharing?
Regular, structured DE&I training and workshops that focus on cultural competence, unconscious bias, and conflict resolution can effectively equip team members with the practical skills they need to
understand and communicate with each other more effectively, learn more about their behaviors, and bridge divides.
Bridge-building also calls for greater accountability at leadership levels: leaders must be accountable for the delivery of DE&I strategies and set an example. Have you considered establishing clear, achievable DE&I goals for senior management, including metrics that feed into performance reviews? These goals and KPIs hold leaders accountable and ensure they are living the organization’s core values while actively building an inclusive workplace culture.
positive interactions between different groups. As part of a joined-up approach, they spotlight DE&I and show, at a public level, that your organization cares and is heading in a certain direction which everyone needs to get on board with.
‘DE&I is not something that can be boiled down to a few events each year or a couple of worthwhile initiatives. It must ultimately be lived and breathed by all areas of your organization’
If your organization is serious about becoming a role model in DE&I and reaping the rewards associated with it, then this ambition must be reflected from the top down through your values, mission, purpose, structures, HR policies, and corporate strategy. DE&I is not something that can be boiled down to a few events each year or a couple of worthwhile initiatives. It must ultimately be lived and breathed by all areas of your organization and embodied in the way the business functions and engages with its stakeholders.
This means designing and implementing a DE&I strategy that aligns with and is integrated across every aspect of the over-arching strategy of an organization, with the right policies, practices, and leadership behaviors to back it up. This inevitably requires finding effective ways to bring everyone – or the majority – along with you on the journey, not just DE&I allies or underrepresented groups, but the traditionally dominant in-groups and incumbent dissidents who can stand in the way of real change.
Anonymous feedback systems and surveys about DE&I topics can give employees a safe platform to hold leaders to account, express their concerns, make suggestions, and share experiences. This information helps to identify issues and areas for improvement.
Although they can often feel like the only areas some organizations invest in for DE&I, employee resource groups (ERGs) and diversity awareness events can, and should, play a role in the mix – if they form part of a cohesive, comprehensive strategy.
An ERG should provide support, networking, and advocacy for underrepresented groups and facilitate cross-group interaction in your organization. When establishing these groups, it is worth thinking about how to avoid the “silo effect” that can result in ERGs becoming irrelevant talking shops or echo chambers detached from the business. How do your ERGs relay their findings and ideas? What happens to those ideas? Are they tested and followed up at a senior level? Try focusing ERGs at intersections in the business to enable all groups to support each other in their aims, while feeding back into management with clear alignment. ERGs should be leveraged to enhance and increase talent acquisition among a greater diversity of candidates, especially in areas where there is a danger of a monoculture.
Events that celebrate cultural, religious, and social diversity at work can, for some, feel detached from business realities. However, if managed well, they can foster a sense of greater belonging and promote
By acknowledging the views of the naysayers, increasing awareness of conflicts and differences of opinion, and implementing comprehensive and joined-up measures to build bridges and foster greater understanding, you can challenge the status quo and shape a more diverse, equitable, and inclusive business. ■
JOSEFINE VAN ZANTEN is the Chief Diversity, Equity, and Inclusion officer at IMD and works as a senior advisor to global organizations. She has been an HR executive in several Fortune 500 organizations. Her experience spans many industries, including IT (HP), oil and gas (Royal Dutch Shell), life sciences and chemicals (Royal DSM), and construction (Holcim).
LUCA CONDOSTA is a transformational leader with a robust track record of driving change at the intersection of people, sustainability, and data. He was named on the 2024 Outstanding Role Model List, which recognizes executives who paved the way for LGBTQ+ inclusion at work.
Merete Wedell-Wedellsborg advises on what to do when those in positions of authority behave in ways that contradict widely accepted norms of civility, empathy, and ethical leadership
Aclient said recently with a sigh: “It’s like the world suddenly suspended the rules and went on fast-track.”
Since the global “vibe shift” of Donald Trump’s presidency, he noted that his colleagues were moving ever faster: “We feel the swells of geopolitics on the shop floor. We are trying to keep up, but it feels like we are constantly falling behind.” He is not alone. Many professionals and political leaders are experiencing an acceleration in decision-making and power dynamics that seem to dissolve conventional constraints.
Leadership behavior is evolving, too. The executives I work with report seeing leaders emulate what they observe in dominant political figures. As one remarked: “We see world leaders behaving as if checks and balances don’t apply to them. It’s infectious and reshapes our ideas of what acceptable and effective leadership looks like.”
Reactions to these shifts are deeply divided. For some, values like mutual respect, moderation, and attention to the greater good appear to be fading, replaced by egoism, maximalism, and a survival-of-the-fittest mentality. Others welcome the change and note that a rebalancing of corporate leadership is taking place. “I can’t wait to get out of the pronoun debate, the greenwashing, and the endless virtue signaling and get back to business”, one executive declared. Another summed up the facts: “It’s simple: the laws of speed and power have shifted. The only question is how to adapt.”
What should one do when those in positions of authority behave in ways that contradict widely accepted norms of civility, empathy, and ethical leadership? How should one navigate a world where leaders who attempt to mediate and build bridges are ridiculed, undermined, or emotionally overwhelmed?
The political leaders of Denmark, Mexico, Panama, Canada, and Ukraine have all had to navigate these rapid shifts in the face of a turbulent new American presidency. Each has had to contend with extreme demands, rapid context-switching, and a stark departure from conventional norms.
As defined by economist Albert Hirschman’s classic concept, when faced with a decline in the value of a relationship, individuals can choose one of three paths:
Exit: Withdraw from engagement, either by leaving an organization, country, or professional setting.
Voice: Actively challenge and push back against dominant figures, often at significant personal risk.
Loyalty: Remain within the system, adapting and seeking incremental change from within.
Each will mean trade-offs. The price of resistance has increased but so has the risk of passive acquiescence. If you meet unreasonable demands from all-powerful leaders, defiance feels untenable, and deference feels intolerable. Forget the moral high ground. The only path forward is to engage and maximize your influence by building enough power and clout to respond effectively and understand the psychology of omnipotent leaders.
Omnipotent leaders see themselves as exempt from the norms of ethical or socially acceptable behavior due to a heightened sense of self-importance and entitlement. The mission (or rather their mission)
justifies most, if not all, means to an end. Such leaders often exhibit moral licensing, believing past good deeds justify present transgressions. A tell-tale sign is excessive risk-taking and skirting formalities and rules of procedure.
In rare cases, omnipotence is associated with underlying and chronic pathological personality traits such as narcissistic personality disorder. More often, omnipotence is an emerging and transient psychological state. Leaders may become “high on their own supply” and exhibit omnipotent traits following significant recognition or a victory rush, such as winning an election, receiving extensive media praise, or achieving a major career milestone.
Omnipotence can also be understood within the broader framework of leadership overconfidence and hubris. The hubris syndrome is a condition wherein prolonged power and success lead to narcissistic tendencies, overconfidence, and diminished capacity for critical self-reflection. Research indicates that CEOs often become less altruistic and more self-serving after ascending to their role, exhibiting behaviors that prioritize personal gain over collective welfare, frequently coupled with condescending attitudes toward subordinates and colleagues.
How can mere mortals – and perhaps conventional and earthbound leaders and collaborators – respond when faced with power dynamics and styles that defy conventional norms of engagement? Three key approaches can be employed:
First, understand that theatrics matter. These leaders often frame interactions as symbolic victories rather than substantive discussions. As psychologist Robert Cialdini notes, the principle of commitment and consistency suggests that once a leader has taken a public stance, they are likely to defend it at all costs. Therefore, positioning negotiations as grand, strategic events while subtly steering outcomes can be an effective means of achieving objectives without confrontation.
Second, a common mistake in dealing with such leaders is excessive deference or sycophancy. While flattery may yield short-term gains, it ultimately reinforces erratic behavior. Instead, a more effective approach is identifying and acknowledging legitimate strengths while subtly redirecting discussions toward constructive outcomes. Sometimes, your biggest problem is that you don’t have a seat at the table, even if you feel you have the right to be there. So, defining yourself as a main character and getting noticed is a necessary step.
Third, Ronald Heifetz’s theory of leadership as thermostat-setting applies to all-powerful leaders. This idea suggests that effective leadership is about regulating the emotional and strategic temperature in the organization – ensuring that tension is neither too low (leading to complacency) nor too high (leading to chaos). However, dialing down the temperature is rarely an effective option, as omnipotent leaders »
thrive on drama and high-stakes narratives. The challenge is not to eliminate the drama but to regulate its intensity – ensuring that negotiations and decision-making remain within manageable thresholds.
Key takeaway: Don’t think you can subvert the drama; play your part in it instead. Rather than challenging an omnipotent leader head-on, anchor your ideas as a natural plot in the leader’s vision, define yourself as a main character, and shape the narrative early. Whoever speaks first sets the stage.
Ego-driven leaders exhibit distinct behavioral patterns. Some operate with low self-awareness yet hold an insatiable appetite for power. Their reactions to perceived ego threats can be volatile, making it essential to engage with emotional intelligence. Maintaining a stable emotional stance while avoiding reactionary responses prevents unnecessary escalation. Omnipotent leaders are often very tied to their person – the public and/or private narrative about who they are. Playing into the persona rather than appealing to reason is an effective strategy.
Understanding defense mechanisms is also critical. Leaders operating under stress often resort to immature defense mechanisms such as projection, denial, or aggression. Recognizing these tendencies allows for strategic positioning – acknowledging their authority while maintaining personal integrity.
These tendencies often surface in a psychologist’s practice when leaders struggle with criticism. For example, a senior executive might express frustration that “No one appreciates how much pressure I’m under”. Instead of challenging this defensiveness, a psychologist might say, “You’re carrying a lot, and it makes sense that you want your team to recognize that. Have you found ways to help them see the bigger picture?”
Key takeaway: Frame feedback to omnipotent leaders that align or complement their self-image. Validate their leadership before steering the conversation toward constructive insights. Add new adornments to the omnipotent leader’s self-image. Not with hollow compliments but by reinforcing those grains of character that may in fact support your cause.
Understanding that power-driven leaders construct their own reality is crucial. Omnipotent leaders are supreme candidates for what Daniel Kahneman calls “priming”. The first analysis, interpretation, or version of events often shapes how others perceive the issue. I observe this often in executive teams: the leader who speaks first defines the terms of the debate, making it harder for alternative views to gain traction. Therefore, get there first and shape their first impressions and baseline understanding. If you get there second or third, the initial reaction is to reject and attempt to correct a jarring worldview. This is useless and likely counterproductive. Omnipotent leaders’ worldviews are deeply personal and often resistant to external influence. Think of it as confirmation bias taken to the extreme. People are more likely to be
influenced by those who validate their perceptions rather than challenge them outright. Omnipotent leaders see challenges as disloyalty.
In such environments, prepare for rapid “context-switching” and decision-making that prioritizes dominance over deliberation. As in clinical psychology, you do not need to like or agree with an individual to engage with them effectively. Instead, focus on creating a good enough rapport so you can work together. This means finding something that connects you both and avoiding confrontation and critique. The most skilled negotiators I have worked with can create a feeling of sympathy and understanding even with people most others shun.
The last resort is “escalation and full fight mode”. Rarely have I seen this strategy work, even though it feels good in the moment. It should only be used if nothing else works, and it is more effective if done in conjunction with other leaders. The concept of cognitive dissonance suggests that when people encounter information that conflicts with their worldview, they either double down or adjust. A well-timed escalation can signal to others that resistance is valid, encouraging them to step forward. When leaders see that opposition is organized, they may reconsider their stance to avoid losing credibility.
All-powerful leaders care deeply about their public image. If escalation makes their actions or decisions look unreasonable in the eyes of stakeholders, they may shift course to protect their reputation. Sometimes, escalation is necessary to show that an alternative future exists. It’s about making “the unthinkable thinkable”, as one of my clients put it. A well-timed escalation can expand perceived options and make compromise seem the more rational choice.
Key takeaway: Speed matters – shape the story before they do. Build rapport by finding even the smallest points of agreement. If escalation is inevitable, don’t go for it alone.
In a world where power dynamics are accelerating and all-powerful leaders set the tempo, the challenge is not simply to resist or comply but to navigate strategically and psychologically. For some, the level of cynicism, cold-hearted realism, and brinkmanship required to deal with omnipotent leaders has a bitter taste. Isn’t playing their game their way a declaration of moral failure?
Perhaps there is something larger at stake. In an era where the price of speaking truth to power has risen, the ability to engage effectively with dominant personalities will determine not just individual success but the broader trajectory of leadership in the years to come. ■
MERETE WEDELL-WEDELLSBORG is Adjunct Professor of Leadership at IMD. She is an authorized clinical psychologist who specializes in organizational psychology. Her professional and research interests include sustainable high performance, crisis management, ethical leadership, and creating strong bonds and shared identity in top teams.
People don’t work for companies. They work for leaders they trust. And that trust is being tested like never before, writes Shelley Zalis
Trust isn’t just a leadership buzzword –it’s everything. It fuels relationships, powers performance, and creates cultures where people and businesses thrive. Yet today, we are living in a crisis of trust. According to the 2025 Edelman Trust Barometer:
didn’t wait for instructions or prioritize profits. It pulled millions of bottles off the shelves, put consumer safety first, and communicated transparently. That decisive action earned them something money can’t buy: lasting trust.
We saw the same kind of leadership in 2024 when McDonald’s responded to an E. coli outbreak impacting hundreds of customers across multiple states in the US. Instead of downplaying the issue, McDonald’s acted swiftly and transparently by recalling affected ingredients, closing impacted locations, and openly communicating with the public. The company reinforced its reputation for trust by taking responsibility and prioritizing customer safety. That’s the power of trust. It’s earned before it’s needed. It’s what carries a business through crisis, uncertainty, and change. Trust sets companies apart.
The data doesn’t lie: companies with high-trust cultures outperform competitors by 2.5 times. According to one MIT Sloan Management Review study, employees in high-trust environments experience 74% less stress, 50% higher productivity, and 40% lower burnout.
• 61% of people globally believe institutions serve the few, not the many.
• Trust in government and media is plummeting, and even business –the most trusted institution – is slipping.
• Trust in employers has fallen from 78% in 2018 to 73% today.
The biggest takeaway? Trust isn’t built by institutions – it’s built by people. The leaders who understand this will be the ones shaping the future.
People don’t work for companies – they work for leaders they trust. But that trust is being tested like never before. More than 62% of employees fear losing their jobs to automation and globalization, creating widespread uncertainty about the future of work. At the same time, employees are questioning whether their companies truly see and value them as workplace instability grows and organizations struggle to maintain transparency and accountability.
If you’re a leader, these numbers should stop you in your tracks. Because trust isn’t about what you say, it’s about what you do.
Trust isn’t just logical. It’s emotional. It’s the invisible force that turns customers into lifelong advocates and employees into top performers. Companies that appreciate this don’t just survive crises – they emerge stronger. When Johnson & Johnson faced the Tylenol crisis in 1982, discovering that tampered capsules had caused multiple deaths, it
The message is clear: leaders who prioritize trust drive results. They create workplaces where people feel seen, respected, and valued. And in a world where talent is everything, leaders can’t afford to ignore that.
The readout from the 2025 Edelman Trust Barometer is a wake-up call. Trust is fragile, and skepticism is rising. But that also means leaders have an opportunity to step up, take action, and rebuild trust from the inside out.
This moment demands more than just good intentions. It calls for:
• Workplaces where people feel respected, not just managed.
• Leaders who understand that trust is about actions and not words.
• A shift from profit-driven leadership to purpose-driven leadership.
Trust is the foundation of strong teams, resilient businesses, and leadership that lasts. In a time when trust is scarce, the leaders who prioritize it will be the ones who thrive. Because trust isn’t just part of leadership – it is leadership. ■
SHELLEY ZALIS is Founder and CEO of The Female Quotient. She is an unwavering advocate for gender equality and an influential voice in redefining leadership for the modern era. She has recently been selected for Leaders50, a biennial listing of inspiring leaders from around the world.
Salvatore Cantale and Frederikke Due
Olsen present four highly effective strategies to split your operations and supercharge your sustainability drive
In 2023, Solvay completed the strategically planned and highly anticipated separation of its business into two independent entities: (the new) Solvay and Syensqo. The move was designed to better capture market opportunities, drive growth, and enhance the Belgian chemicals multinational’s strategic focus by segregating its core operations from its high-growth specialty businesses.
The “new” Solvay (once referred to in the company’s document as EssentialCo) inherited Solvay’s foundational activities, including soda ash, peroxides, and silica – industries with stable, long-term demand but lower growth potential. EssentialCo aimed to establish a focused platform for reliable, cash-generative businesses that underpin industrial applications worldwide. Meanwhile, Syensqo (or SpecialtyCo) would concentrate on high-growth markets with differentiated products, such as advanced materials, composites, and specialty solutions for selected industries.
This separation allowed both companies to manage and operate their assets with greater clarity, a more specialized and appropriate management, and the necessary agility in their respective markets, empowering them to seize growth opportunities that align with their core strengths. The spin-off was effective on 9 December 2023. Solvay and Syensqo started trading as separate entities on Euronext Brussels and Paris two days later. On 12 December, the combined value of the two was €1.6bn or 13.4% higher than the “old” Solvay market capitalization from three days before – a result in line with stock market reactions to similar spin-offs.
We believe the Solvay approach can be extended to help companies manage broader environmental, social, and governance (ESG) challenges, particularly firms with legacy or traditional operations with significant environmental footprints and slower growth potential. Just as Solvay spun off its operations to enhance growth and focus, companies can take a similar path to separate and manage their “ESG-heavy” and “ESG-light” assets.
Finding the appropriate way to ringfence ESG-heavy from ESG-light assets enables companies to strategically position themselves in a transforming market. By segmenting their operations, companies can focus on what matters most: pursuing growth by allocating the right
‘By segmenting their operations, companies can focus on what matters most’
resources, assets, and talent to each business unit without compromising efficiency.
This strategic ringfencing not only clarifies a company’s value proposition but also has the potential to accelerate the green transition. By isolating and managing ESG-heavy assets separately, companies can drive progress in their sustainable business units while addressing the complex, long-term sustainability challenges of traditional assets. Ultimately, this segmentation helps companies achieve a balanced, forward-looking growth strategy, meeting consumer expectations while advancing green transformation goals.
There are several strategies companies can deploy to pursue ringfencing of high-impact assets. Each strategy offers a variation in the organizational complexity and level of sustainability responsibility the company retains, allowing it to choose the best fit for its business model and long-term goals. »
High sustainability responsibility, low transformation complexity
The company keeps ownership of assets with significant ESG challenges but segregates them into a separate business unit within the group. By doing so, it retains all the sustainability responsibility and gains some strategic focus benefits with minimal transformational complexity. This strategy can enable the company to capture new growth segments, enhance talent retention, and better position itself for the green transformation.
Many companies across industries have adopted different versions of this solution. The global bank HSBC created a Climate Solutions Unit to focus on sustainable finance, carbon markets, and investment in climate-friendly initiatives. By setting up this specialized unit, HSBC could align with the green transformation without a full-scale restructuring, attract talent passionate about sustainability, and adapt to the growing demand for green finance.
Swedish automaker Volvo acquired Polestar in 2015 and later ringfenced its electric vehicle (EV) operations under the Polestar brand. Still part of the Volvo Group, this separate entity could be dedicated to high-performance EVs, enabling Volvo to retain its main, traditional vehicle business while positioning Polestar to capitalize on the fast-growing EV market. This allowed the brand to innovate more freely within the EV segment without disrupting its core operations and enhanced Volvo’s appeal to talent interested in green technology.
Lastly, Nestlé established its Health Science division to focus on nutrition, health, and wellness products, aligning with the shift towards a more health-conscious consumer market. By targeting emerging markets in health and sustainability, Nestlé was better able to attract talent interested in innovation within nutrition science and could position itself as a proactive player in the shift toward healthier consumer choices.
These examples highlight how ringfencing enables companies to pursue growth in new, sustainable segments while keeping legacy operations intact, enhancing focus, and fostering innovation.
The concept of a good bank and a bad bank is about creating focus and clarity in financial strategy. In times of distress, banks with troubled assets often divide themselves into two entities: the "bad bank," which takes on high-risk, non-performing assets, and the "good bank", which retains healthy, low-risk assets. This separation allows each entity to focus on its specific goals and challenges.
The bad bank has a clear mandate to manage, restructure, or dispose of toxic assets without affecting the operations of the more profitable segments. It becomes a focused unit dedicated to handling risks and maximizing the recovery of value from distressed assets. The good bank can concentrate on its core, stable business operations, free from the burden of problematic assets. This focus enables the good bank to attract investors, rebuild trust, and expand its services without the distraction of managing losses.
By separating the two, the bank prevents the bad assets from impacting the good ones. As long as they remain combined, investors and counterparties would be uncertain about the bank's financial stability and performance, which hinders its ability to borrow, lend, trade, and attract capital.
Scan the code to read how ExxonMobil made this work in practice.
Low sustainability responsibility, low transformation complexity
Selling ESG-heavy assets but continuing to operate them under a lease contract from the purchaser allows the company to reduce its direct sustainability liabilities while retaining operational capacity and control.
A key advantage of a sell-and-lease-back arrangement is its relatively low complexity. There’s no need for significant restructuring, new management teams, or complex regulatory approvals, making it a less disruptive yet effective way to address sustainability challenges. Additionally, this strategy unlocks capital that can be invested to capture growth opportunities in sustainable sectors. From a reporting perspective, accounting rules allow companies selling high-emission assets to transfer ownership – and the liability for the associated Scope 1 emissions – to the buyer. Under the Equity Share Approach, companies can continue to use their divested assets through leaseback agreements while reporting the related environmental impact as “value chain” Scope 3 emissions – effectively transferring the responsibility for any ESG impact to the buyer. This approach risks being perceived as greenwashing when stakeholders view the move as an attempt to hide or sidestep any negative environmental impacts rather than actively addressing them, especially if the buyer has a poor green track record.
Several companies from different sectors have used sell-and-leaseback strategies to manage their assets, even in contexts unrelated to sustainability. In 2023, British Airways sold and leased back four large aircraft (two Boeing 787-10s and two new Airbus A350-1000s) to Griffin Global Asset Management. The airline freed up capital for investments while retaining fleet access, enabling better adaptation to market changes. Tesco, the UK-based grocery giant, has leveraged
Complexity of transformation: the level of organizational change required to implement the strategy. For instance, ringfencing assets within the same organization involves relatively low complexity but keeps full responsibility for the environmental or social impacts on the company’s balance sheet. In contrast, full divestiture is the most complex transformation involving the sale of assets without further involvement from the company. This minimizes sustainability responsibility but requires significant effort in terms of negotiations, restructuring, and risk management.
Sustainability responsibility: how much environmental/ social/governance responsibility the shareholders retain for emissions from ESG-heavy business. Environmentally heavy assets could refer to those with high pollution, resource consumption, or ecological impact, and socially heavy assets could involve labor-intensive sectors with potential human rights concerns or issues related to worker safety, wages, and working conditions. Governance-heavy assets could involve assets not aligned with the rest of the organization and whose governance presents challenges.
The four ringfencing methods offer unique advantages best suited to different strategic goals and organizational contexts. But how to choose? Here’s a guide on when to use each:
Quadrant 1: Ringfence ESG-heavy assets in a separate unit
This approach is suitable for a company that wants to maintain ownership and sustainability responsibility of high-impact assets but seeks focus and agility without major restructuring. It is ideal for companies with stable, cash-generative ESG-heavy units and a need to balance legacy operations with growth in sustainable segments.
Quadrant 2: Sell and lease back ESG-heavy assets
Quadrant 3: Spin off ESG-heavy assets
Suitable for companies ready to fully separate ESG-heavy units to allow both the parent and new entity to focus on their core strengths. This approach is useful when a company’s high-impact operations risk diluting overall performance and market value and when a separate entity can operate with its own management, strategy, and ESG focus. The complexity is high, but the potential to unlock value and provide a clear sustainability path for both entities can outweigh the challenges.
Quadrant 4: Full divestiture of ESG-heavy assets
We envision four archetypal strategies depending on how companies want to mix and match complexity and sustainability. »
This method best suits companies seeking lower complexity when unlocking capital and reducing sustainability responsibility while retaining operational control over high-impact assets. As it reduces direct ESG accountability by transferring ownership to the buyer, this solution comes with high greenwashing risks. There is also the option of the “partial sale” of some assets, mixing the complexity of divestiture with the operation control of a sell-and-lease-back transaction.
this strategy to optimize its real estate portfolio: starting in the 2000s, it initiated a large-scale program to monetize its property holdings. In 2024, a BNP Paribas offer document highlighted a deal in which Tesco sold seven Tesco Express assets across central and southern England and leased them back under a 15-year agreement. This arrangement typifies the sell-and-lease-back model, whereby Tesco retained operational control of the assets while transferring ownership to another
The preferred solution for companies aiming to completely distance themselves from high-impact assets and redirect all resources toward sustainable growth. This method is highly transformative and best suited for companies committed to pivoting fully into green segments. As in Quadrant 2, this strategy carries high reputational risk because it reduces the sustainability responsibility by transferring the “hot” assets to another entity.
party. This strategy allowed Tesco to generate significant capital that was then reinvested to strengthen its core retail operations.
In conclusion, the sell-and-lease-back strategy can provide an effective way for companies to manage their ESG-heavy assets, capture growth in sustainable sectors, and support their green transition, all while keeping organizational disruption to a minimum. However, it »
is important to recognize the potential risks from accusations of greenwashing, depending on the nature of the assets and the type of buyer involved.
Scan the code to read the reasons behind Shell and BP’s decision to sell the Sapref refinery in South Africa.
High sustainability responsibility, high transformation complexity
In a spin-off of an ESG-heavy unit, the company will ringfence its high-impact business units into a standalone entity. This strategy involves significant complexity and requires a major organizational transformation. The process includes creating a separate legal entity and forming a new management team, recalibrating leadership in the existing business, setting up independent operations, and handling the financial and regulatory processes for listing the new company (if publicly traded). The challenges associated with dividing assets, personnel, and liabilities between the parent and the new entity should not be underestimated.
This strategy has the potential to unlock value, particularly if the market perceives the ESG-heavy business as a drag on performance. It is often pursued to allow the core company to focus on growth areas aligned with sustainability and innovation while enabling the spun-off entity to manage its high-impact operations independently. A spin-off can accelerate the green transition by freeing the parent company from ESG-heavy operations and allowing the spun-off entity to target sustainability improvements at its own pace.
In late 2024, TC Energy completed the spin-off of its liquid pipelines business into a new company called South Bow. The decision was part of the company’s long-term strategy to focus on natural gas, natural gas storage, and power and energy solutions, aligning with its commitment to the energy transition. TotalEnergies had intended to spin off its Canadian oil sands assets to align with its strategy of focusing on low-carbon investments and reducing its carbon footprint as the company considered these assets incompatible with its climate ambitions. However, in 2023, it received an unsolicited offer from Suncor Energy to acquire these assets, and the spin-off did not proceed.
In conclusion, the spin-off of an ESG-heavy unit is a complex but effective way for a company to find growth, streamline its operations, and accelerate its green transition. It allows both the parent and the spun-off company to thrive in their respective areas while addressing their specific ESG challenges in a more focused manner.
Scan the code to read how Siemens AG pursued a strategic split to focus on different growth trajectories.
Low sustainability responsibility, high transformation complexity
Selling assets entirely with no future involvement offloads all environmental and social responsibility to the buyer. While this may involve complex negotiations, significant organizational change, and financial restructuring, it allows the company to distance itself fully from the associated high-impact activities. An advantage of this strategy is that it can expedite a company’s green transformation by allowing it to focus resources exclusively on sustainable initiatives. While divestment removes direct sustainability responsibility, similar to the sell-and-lease-back strategy, it risks greenwashing criticism if not communicated transparently because stakeholders may view it as an attempt to merely offload and avoid being accountable for any environmental impact.
In 2021, Finland-based Neste divested its fossil fuel-related assets to focus on renewable energy. This extreme form of ringfencing enabled the firm to reallocate resources toward developing greener products, thereby transforming its portfolio. Today, the company is recognized as a global leader in renewable fuels, playing a critical role in worldwide decarbonization efforts. In the early 2000s, Ørsted (then Dong Energy) embarked on a transformative journey to address regulatory and environmental pressures. By pivoting from fossil fuels to renewable energy, Ørsted successfully reshaped its business model.
Scan the code to discover the thinking behind DONG Energy’s decision to rebrand as Ørsted.
Strategic focus, the ability to capture more granular growth opportunities, sharper capital allocation, and access to a specific investor base are often cited as key drivers of ringfencing. This move enables each entity to align its resources and management with distinct goals, serving as a catalyst for unlocking value. It was in this context that Ilham Kadri, CEO of Solvay, announced in an investor call on 15 March 2022 about Solvay’s separation into two companies:
“By launching two independent, strong companies, we will create two new leaders in our industry, each with sharpened strategic focus, well-positioned to enhance value for shareholders, customers, and team members alike.”
Based on our research, including cases such as Solvay, we’ve found that ringfencing can offer distinct advantages that address the complexities of sustainability transformation and stakeholder engagement – not only with regard to CO2 emissions as considered in the examples above but in a much broader context of ESG.
For example, the Solvay spin-off enabled its two new companies to follow distinct “customized” sustainability policies: more aggressive for Syensqo, with targets to reach carbon neutrality by 2040 and to reduce Scope 1 and 2 greenhouse gas emissions (GHG) emissions by 40% by 2030 (compared with 2021); while Solvay committed to carbon neutrality by 2050 and to reduce Scope 1 and 2 GHG emissions by 30% by 2030 (compared with 2021).
Here are three benefits to consider from a ringfencing approach:
Sharper sustainability strategies. Ringfencing enables companies to develop and execute targeted sustainability strategies tailored to each entity’s unique ESG profile. For example, the greener entity can focus on accelerating its transformation and capturing opportunities
Ringfencing ESG-heavy assets from ESG-light ones is more than just a financial strategy – it can be a powerful catalyst for unlocking value and accelerating a company’s green transition. While we have featured some examples from the energy industry to showcase our ideas, we believe that this approach could be deployed to address ESG issues beyond energy and emissions. Consider supply chain and labor issues, for example, where companies face reputational, regulatory, or operational risks due to unethical practices in one division or part of its supply chain. In the 1990s, Nike’s reputation took several hits because of allegations related to child labor in supply chains. While Nike did not explicitly use any of the strategies outlined in this article, it effectively "ringfenced" the problem by isolating supply chain reforms while continuing its core business operations. Nike set up separate governance structures to manage its supply chain ethics and then implemented stricter labor standards and audits for its manufacturing partners.
‘Ringfencing ESG-heavy assets from ESG-light ones is more than just a financial strategy –it can be a powerful catalyst for unlocking value and accelerating a company’s green transition’
Times have changed, and a similar backlash today could bring down an entire company. However, a well-executed ringfencing strategy would shield the company from a financial or reputational collapse due to issues in one division. Through a proactive approach, the affected company could maintain trust with customers and investors while working toward ethical reform in a contained, more controlled environment (and with less “noise” from other parts of the business).
in sustainable markets, while the browner entity can focus on managing high-impact operations and long-term decarbonization. By dividing these responsibilities, management teams can dedicate their efforts to more specific, well-defined objectives, enhancing the impact of sustainability initiatives.
Enhanced stakeholder engagement. Ringfencing allows companies to engage more effectively with external stakeholders, such as investors, regulators, NGOs, and activists. The greener entity can attract sustainability-focused investors and comply with stringent regulatory standards, while the browner entity can demonstrate its commitment to addressing high-impact challenges by engaging constructively with activists and regulators. By presenting clearer and more focused ESG profiles, both entities strengthen their ability to raise capital, meet stakeholder expectations, and build credibility.
Attracting new talent. In an era where younger employees increasingly seek alignment between their values and their employer’s mission, ringfencing offers a powerful tool to attract and retain top talent. By establishing distinct entities with clear and focused missions, companies can build motivated, skilled workforces that are deeply aligned with each entity’s objectives.
By isolating and separately managing their ESG-heavy assets, companies can focus their sustainable business units on growth and innovation without the operational and reputational constraints of carbon-intensive operations. This approach smooths the path to sustainability and positions businesses to capitalize on emerging opportunities in more sustainable markets. In an era of urgent challenges, ringfencing offers a practical, forward-looking solution for companies committed to leading the charge toward a more sustainable future. ■
SALVATORE CANTALE is Professor of Finance at IMD where he is program director of the Strategic Finance program. Cantale works at the intersection between strategy, business models, and financial results while shedding light on the relationship between ESG and finance to increase the understanding of how ESG policies impact both sustainability outcomes and financial results.
FREDERIKKE DUE OLSEN holds an MSc in Finance and Accounting from Copenhagen Business School (CBS) and an MBA (with Honors) from IMD. She works for Copenhagen Infrastructure Partners in its Flagship Investment Team. With a background in equity research and a short stint teaching at university, her previous employers include SEB Group, Carnegie Investment Bank, and CBS.
Leaders are under pressure to project certainty and to know all the answers. Julie Linn Teigland of EY tells Howard Yu why it’s better to admit you’re unsure and collaborate to find a solution
Julie Linn Teigland is a business leader, innovator, and advocate for women’s inclusion. A Managing Partner at EY, she is responsible for 160,000 knowledge workers across Europe, the Middle East, India, and Africa. In 2021, she was named among Fortune magazine’s Most Powerful Women (International). We met for an in-depth conversation at her company’s London HQ overlooking the Thames.
Howard Yu: I’m fascinated by your journey. Looking at your career path, you never lost your real passion. Julie Teigland: No, I haven’t. I’m still passionate.
By the time leaders reach your level, they can often be cynical. That’s what I see – deep cynicism among top leaders. Why is there widespread cynicism in the corporate world?
You’re right. A lot of people turn cynical, dangerously so. Cynicism creeps into upper management because certain long-held beliefs are no longer valid. Their foundation is crumbling. The MBA thinking from 30 years ago isn’t relevant, so people lose their way.
Leaders think they must project utter confidence. They’re terrified of seeming vulnerable. Why is that?
Because everyone, especially analysts, expects them to have answers. Wall Street demands clarity: where are you going, why, how? It’s hard for leaders to stand before them and admit, “Well, I don’t know everything.” Here is the missing piece in these conversations: a leader should be able to say, “We’re 80% sure, but this remaining 20% is unknown. Here’s where we’re investing to figure it out.” No one says that.
People feel cornered by how questions get framed. During the 2008 financial crisis, the talk was all defensive. Exactly. The financial crisis was about assigning blame – banks, governments, everything. So, everyone was defensive: “Here’s what we’ll do, here’s the plan.”
Maybe the trauma of 2008 set the tone for how executives handle crises.
I like that theory. Of course, today’s situation is entirely different, but people are still copy-pasting the old method. The fundamental challenges in today’s world are overlooked. It is better for companies to admit they’re uncertain and invest in discovering real solutions rather than dishing out a five-point plan that’s not grounded in today’s reality. Leaders probably do it because of psychological pressures – analysts, shareholders, and employees. Everyone wants a direction, so leaders assert that they have it. But they’re not calling out the big unknowns.
With the rate of technology changes and everything else, how do you handle that conversation within EY? Employees often look up to leaders like parents: “Tell us everything’s fine.”
As a responsible leader, how do you get your people to grow together and mature collectively?
As a genuine leader, you say, “Here’s what I do know, and here’s what we need to learn together.” That’s real. Take AI in professional services. It will disrupt how we deliver knowledge, staff engagements, and train
our people. You can’t pretend it won’t. So, if you believe in transformative leadership, you must show some vulnerability – admit you don’t have all the answers. That honesty binds everyone together. The leader should be ready for tough questions: “If you don’t know, what are you doing about that?” You don’t have all the answers, but you outline how you plan to learn. You can’t just say, “I don’t know. Have a great day.” You say, “I don’t know, so let’s explore, test, figure it out.” That’s true transformative leadership.
I like that. Some folks hesitate to show vulnerability because they think it’s a weakness but it’s a strength if you show a path forward. How do you re-open curiosity for senior experts who’ve been around forever and might think, “I already know all I need”? Is it possible?
Absolutely. The best learning is on a team. It might be a leadership team or a client-serving team. They bond over discovering new ideas. That experience becomes more sustainable because they do it together. And if the top leader creates urgency – explains the “why” and the purpose – nobody feels singled out. It’s not, “Bob, your expertise is obsolete.” It’s, “All of us need to explore the next steps.” That’s why setting that sense of urgency from the top is critical. We have a “Wave Space” experience – bringing leadership teams into new scenarios with new tech in a 360-degree setting. It sparks curiosity. You see them
tribute responsibilities. You need closure, an explicit moment where everyone recognizes what’s happened and how to move on. Hiding it under the carpet never works. The best thing is to embrace the issue, learn from it, and come out stronger. Product failures, safety recalls – you name it. The faster you admit the problem and show a path forward, the faster you repair it. If you keep ducking, it drags on.
These vital steps – the reflection and the learning – aren’t measured in quarterly reports, but they’re the lifeblood of an organization.
Right. Humans learn from mistakes, and so can companies, especially in professional services. You want the client to come back because your team knows them. It’s more efficient and meaningful. You need to remember that loyal base as you innovate.
Let’s do some fun questions before we wrap up. First, you mentioned vulnerability. How do you define it?
Being able to say what you don’t know and being open to figuring it out.
That’s lovely. What do you do when you’re afraid?
I do what I advise our young partners: consult, consult, consult. Talk with your team, your friends, and your colleagues. They might know what you don’t. That’s how you figure out solutions. That’s how you lead together.
‘Product failures, safety recalls –you name it. The faster you admit the problem and show a path forward, the faster you repair it. If you keep ducking, it drags on’
We all use ChatGPT these days. What’s your latest favorite use case?
Benchmarking real estate prices and brainstorming Christmas gift ideas. For instance, ChatGPT suggested a cocktail-mixing machine –very cool. The more advanced your prompts, the more interesting the results, but watch for hallucinations.
Finally, what’s the latest movie or show you have loved?
I saw Wicked last week – three hours of pure wonder with my 17-yearold son. We had a blast. ■
standing there, minds blown, realizing they’re experts in one corner but know nothing about adjacent fields. It’s scary but also freeing. Then, you absorb everything like a sponge. If more leaders embraced that, we’d have real transformation. Authenticity, openness, and curiosity – that’s the recipe. A leadership team that goes through that experience is tighter afterward. Everyone claims a piece of the new knowledge. A sense of possibility. That’s powerful. Executive teams that do this are stronger.
Another side to leadership is the ability to endure deep discomfort or even emotional pain. Can you expand? For example, restructuring can be very painful. Sure. Companies are laying off thousands of people. It’s devastating for those let go and also for the leadership team that survives. You lose part of your workforce – it’s like cutting off an arm. It’s traumatic. You have to re-form that team, acknowledge what’s happened, and redis -
HOWARD YU is LEGO® Professor of Management and Innovation at IMD and co-directs the Strategy for Future Readiness program. Recognized globally for his expertise, in 2023 he was honored with the Thinkers50 Strategy Award and inclusion in the Thinkers50 list.
Antje Kanngiesser is the CEO of Alpiq, a Swiss-based electricity producer and supplier working toward a clean energy transition by providing flexible power plants. Find out what motivates and inspires Antje, an IMD EMBA alumna, in our quick-fire round of questions.
1. What is your personal motto? If I don’t like it, I change it. If I can’t change it, I accept it.
2. Name three traits that make a great business leader. Authenticity, endurance, and empathy.
3. What experience has had the greatest influence on your leadership style?
In 2003, I presented my manager with a potential but unbelievably bold solution to a problem. She said: “If you are convinced about it, trust yourself and let’s go for it.” That we did, and we won the case.
4. How do you balance your well-being and personal life with leadership?
My job has always been an integral part of my life, just like my family. All relationships, including the one with myself, need attention. What is crucial is quality, not quantity, and decisive action in line with my life motto above.
5. What advice would you give to an aspiring CEO?
You are only a leader if you have followers. If you are patient, like challenges, enjoy taking responsibility – even for inherited liabilities –and are approachable and not afraid to get your hands dirty, you will have a great time.
6. What one factor or trend will change your industry in the next five years, and why?
The addition of photovoltaics means we will have abundant solar power from March to October, leading to negative power prices. This is disruptive and won’t stop unless PV technology imports are hindered. I am waiting for the innovators to use this abundant solar energy. These will be the winners and true enablers of net zero and fossil independence from other continents.
7. What is the most important trait that business leaders will need in the future?
It is an evergreen that’s becoming even more important in these
turbulent times. It is about empathy for how our employees might feel about the environment in which we operate. Companies are once again a place where political and social issues need to be discussed.
8. Name one thing people might be surprised to learn about you.
I love a good action film so much that I find myself running, jumping, and fighting along with the characters.
9. What talent would you like to have?
To be musical.
10. What trends are undervalued today?
Part-time work. The negative impact on our social systems, tax revenues, and the social security of the individuals concerned is heavily underestimated. CEOs and companies should take responsibility for information and apply and advocate for sustainable conditions, too.
11. What is the best advice you have ever received?
In a conflict involving cultural differences many years ago, an Indian friend said to me: “Antje, can you be more generous?” This simple question triggered the recurring reflection about how I feel about myself and what impact I have on others.
12. Who would you love to be just for one day?
An animal – to find out how it sees the world and our species.
13. Name a place that inspires you – and tell us why.
A silent place in nature – at a lake, on a mountain, or in a forest – makes me realize what matters.
14. What is the craziest thing you have ever done?
When I met my husband 18 years ago, I gave up my previous life (country, job, professional qualification, and personal life) in the blink of an eye because it felt right. And it still does.
Who would you like to have dinner with, and
Helmut Schmidt, the German Chancellor from 1974 to 1982, is reported to have said: “Those who have visions should go to the doctor.” I would like to know what he thinks of today's Europe and what role it should play in the world.
The global geopolitical and economic chessboard is changing before our eyes. What are the implications for business and leaders? How can organizations adapt in an increasingly unpredictable environment? What kind of leadership is required? In the June edition of I by IMD, a host of diverse experts will offer guidance and in-depth analysis to help you navigate through the fog.
At this year’s World Economic Forum in Davos, President Volodymyr Zelenskyy of Ukraine delivered a stark reminder: North Korean troops are now fighting in battle closer to Davos than Pyongyang. The message was clear: geopolitical turbulence is accelerating, and the world’s economic and political systems are more interconnected than ever. But the backdrop to this year’s forum was also a deeper crisis: a growing loss of trust in institutions.
This was my first time attending the annual meeting of the World Economic Forum, and I now understand why this gathering has become such a fixture on the agendas of so many leaders across sectors. At a time of growing division, the opportunities for leaders to come together, listen to one another, and discuss solutions to global challenges are increasingly scarce. Davos provides a rare space for these critical conversations.
But back to trust, the topic of this issue of I by IMD. The 2025 Edelman Trust Barometer reveals that trust in government, media, and business continues to erode, with five of the world’s largest economies –Japan, Germany, the UK, the US, and France – ranking among the least trusting nations. Perhaps even more troubling, 70% of respondents believe government officials, business leaders, and journalists intentionally mislead the public. This is the world business leaders must now navigate.
Trust is a CEO’s most valuable asset. It enables leaders to drive change, build resilient organizations, and create lasting value – not just for employees, investors, and customers but for society at large. In an era when politics is increasingly turbulent and transactional, can business become a source of stability and predictability? This is the challenge, and the opportunity, for leaders today.
At Davos, this played out in three key conversations. The first was about AI and workforce upskilling. With AI transforming entire industries, employees are right to feel uncertain about their future. Trust is strengthened when leaders don’t just adopt new technologies but also invest in their people. Many CEOs emphasized the importance of large-scale upskilling initiatives – not as corporate social responsibility but as a strategic imperative.
The second was about combating disinformation. Business leaders increasingly recognize that rampant disinformation is not just a political issue but a business risk. Misinformation undermines consumer trust,
creates political instability, and destabilizes markets. Some leaders at Davos called for stronger public-private collaboration to fight false narratives – something that will be critical in the AI age.
The third conversation was about economic growth and competitiveness, particularly in Europe. Nowhere was the trust deficit more visible. Without faster economic growth, Europe cannot sustain its social model or meet its growing defense needs. The urgency of this became even clearer with President Donald Trump’s return to office. What happens if – or, perhaps better, when – US support for European security weakens? Many speakers agreed that Europe must take responsibility for its future. That means accelerating innovation, increasing productivity, and channeling capital – all areas where business has a leading role.
Energy costs in Europe remain a major barrier to competitiveness. However, the solution is not to swap past dependencies on Russian gas for new dependencies on US or Gulf state suppliers. The real answer lies in accelerating the energy transition. Business leaders at Davos were clear: a domestic, clean, affordable energy supply is critical for Europe’s long-term industrial competitiveness. This is a prime example of how business can rebuild trust – by delivering solutions to problems that matter in collaboration with governments and civil society.
Despite the political turbulence of 2025, what struck me most in Davos was the resilience of purpose-driven leadership. Despite shifting political currents, many CEOs remain committed to sustainability, inclusive leadership, and long-term value creation. That’s what trust is built on: consistency, long-term thinking, and action.
At IMD, we see this as our mission – to equip leaders not just to navigate today’s challenges but to restore trust in business by delivering real impact. The world is watching. And trust is earned, not assumed. ■
David Bach IMD President
It’s go time.
Time to get yourself out of bed and get going, because the day belongs to those who claim it.
It’s go time.
Time to live, love, learn, teach, work and play on SA’s Bozza Network.
It’s go time.
Time to rewrite your story, stake your claim, or start that start-up.
Time to slay, make your moves, and add your own unique flavour to the world.
It’s go time.
The time for waiting is over.
The time for going is here.
