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Power Sheet – January 20, 2015

January 20, 2016, 3:52 PM UTC

In case the U.S. presidential race hasn’t tipped you off already, something new and strange is going on with the way people evaluate institutions and the leaders who run them. The evidence arrives in the 2016 Edelman Trust Barometer, compiled from research by Edelman, the world’s largest PR firm, and released this week at Davos. The headline is that worldwide trust in institutions has hit a post-recession high, but with a crucial qualification: Informed, well-off people are highly trusting in institutions, while the rest are decidedly not, and that gap is now the widest it has ever been. The message for leaders: People like you are already on your side, but not many others are, and those are the ones you’d better attend to.

The research paints a coherent picture that fits with political and social trends around the world. The “informed public” – people in the top quartile by income with at least a college degree, highly engaged with the news – have been well served by the major institutions (business, government, media, NGOs); of course they’re mostly trusting. The “mass population” – everyone else – hasn’t been, on average, and is naturally much less trusting. In the U.S., the “trust index” of the informed public is 71; among the mass population it’s 45, the widest gap in the world. Most of the informed public (63%) believe they’ll be better off in five years; most of the mass population (55%) believe they won’t be, one of the largest optimism gaps in the world. The trust gap between the top quartile by income and the bottom quartile by income is 31 points in the U.S., the widest in the world.

Is it any surprise that the biggest stories in U.S. politics today are Donald Trump and Bernie Sanders, the candidates who speak most powerfully to the mass population’s distrust, and that the established political pros missed them entirely?

Yet lurking in the data is good news and an opportunity for leaders. It turns out that the overall public thinks business is better than those other institutions at keeping pace with changing times, and they strongly believe – 80% agree – that a company can “both increase profits and increase the economic and social conditions in the community where it operates.” In fact, that turns out to be the key question in whether a person is becoming more trusting of business or less. Among people whose trust in business has increased, 45% say it’s because it “contributes to the greater good.” Among those whose trust in business has fallen, the largest group of them, 50%, say it’s because business “fails to contribute to the greater good.” This is what it’s all about. More people now think a CEO should be “personally visible” in discussing societal issues than in discussing financial results.

One more relevant data point: When the researchers asked the overall public who’s credible – a technical expert, a financial analyst, or any of several other categories – the biggest increase in credibility from last year was for CEOs.

The opportunity for leaders seems clear. Put your head back above the parapet. Show, don’t just say, how your organization contributes to the greater good. Then go ahead and earn high profits; you won’t be penalized in public opinion. CEOs like Unilever’s Paul Polman and Starbucks’ Howard Schultz have set a high bar, so you’d better bring your A game. But in an era when much of the public seems ready to take up torches and pitchforks, you and your organization face a great and unexpected opportunity to be trusted.

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What We're Reading Today

Michigan Governor: "I'm sorry and I will fix it"

In his State of the State address, Gov. Rick Snyder focused almost entirely on the Flint water crisis. He outlined a plan that included doubling Michigan National Guard troops to man Red Cross stations, appealing President Barack Obama's rejection of declaring the lead-tainted water a federal disaster, and asking for $28.5 million from the legislature to cover Flint's immediate needs. Snyder will also release all his emails related to the crisis from 2014 to 2015 as critics have decried his slow response.  Detroit Free Press

Texas says 'No' to daily fantasy

Joining New York, Nevada, Illinois, and other states, Texas Attorney General Ken Paxton said that daily fantasy sports games are a form of gambling. Paxton concluded  that it takes only "'partial chance' for something to be gambling; it does not require that chance predominate." DraftKings CEO Jason Robins and FanDuel's Nigel Eccles both disagreed with Paxton's conclusions and will continue to operate in Texas. ESPN

Low oil prices test banks' limits 

Capital reserve requirements are keeping U.S. banks safe even as oil companies struggle to repay loans. Brian Moynihan's Bank of America, John Stumpf's Wells Fargo and Jamie Dimon's JPMorgan all have taken profit hits with oil prices dropping below $30. It's one of the first substantial tests of requirements imposed after the 2008 housing crisis. NYT

Questions about Ted Cruz's "natural born" citizenship 

Whether Ted Cruz is a "natural born citizen," as the U.S. constitution requires presidents to be, is more complex than Donald Trump lets on. A strict interpretation of the requirement would mean that Cruz, along with such former candidates as John McCain, George Romney (Mitt's father), and Barry Goldwater, wouldn't have been eligible. The Supreme Court has never ruled on the meaning of "natural born citizen." Fortune

Building a Better Leader

Penguin Random House scraps university requirement for employees

It says there's no link between degrees and success on the job, and it wants a workforce with more diverse backgrounds. BBC

The more success a woman has... 

...the more likely she is to report feeling unhealthy. Stress and workload might be the reason. Fortune

For retirement, plan not just for your finances...

...but also for your happiness. Those with a strategy for after-work life tend to enjoy it more. Knowledge@Wharton

At Davos

Biden calls for 'moonshot' to cure cancer 

Speaking at the World Economic Forum in Davos, Vice President Joe Biden said he wants to get multi-billion-dollar funding for cancer research. Biden sees himself as a "catalyst" for conversation, bringing researchers and funders together. CBS News

Gender gap to grow larger

In a report released by the World Economic Forum, human resource department heads said they believe the global economy will lose 7.1 million jobs to "disruptive labor changes" such as robotics and 3D printing by 2020 while creating only 2 million new jobs. Women will lose 48% of those jobs, they say, but will be disproportionately hurt by the trend since they make up less of the workforce. Fortune

CEO confidence falls to six-year low

Only 27% of CEOs expect global economic growth to improve over the next 12 months vs.  37% last year. Concerns over China and oil persist. Johnson Controls CEO Alex Molinaroli says emerging markets "are the real concern" because many rely on strong oil or a strong China to grow.  Reuters

Up or Out

Volkswagen names Hinrich Woebcken head of its North American business, which includes the U.S., Mexico, and Canada. Yesterday a federal judge named former FBI director Robert Mueller "settlement master” to negotiate settlements of the 500-plus lawsuits filed against VW over the emissions scandal. Fortune

Home Depot has promoted Ann-Marie Campbell to head of U.S. stores, replacing Marc Powers. WSJ

Caterpillar named Denise Johnson president of its Resources Industries group, succeeding Ed Rapp. PR Newswire

Fortune Reads and Videos

Microsoft's pledge to donate $1 billion of cloud resources... universities and non-profits over the next three years is more than simple philanthropy. The company may also want those users to become paying customers.  Fortune

Tesla sues German auto parts maker... 

...over Model X's falcon wing doors. Turns out they're very difficult to build.  Fortune

Apple makes its move in India

Tim Cook's company has filed with the Indian government to set up its own retail outlets in the country. Fortune

The most common bad password: "123456" 

Second place is "password." Fortune

Happy Birthday

South Carolina Governor Nikki Haley, who delivered the Republican response to President Obama's state of the union address last week, turns 44 today Biography

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Produced by Ryan Derousseau