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The Moment explores the pivotal moments that changed the lives and careers of the world’s leading CEOs and defined their leadership journeys.
Claire Blake (00:04):
From World 50, this is The Moment where we explore the pivotal moments that changed the lives and careers of the world's leading CEOs and defined their leadership journeys. I'm your host, Claire Blake. Today, we're talking to Richard Edelman, CEO and president of Edelman.
Richard Edelman (00:22):
I realized over Christmas break when I was writing my essay that I'd become insular and I had to actually jolt myself into, look, that's not a good way to be.
Claire Blake (00:34):
In 1999, 50,000 protesters took to the streets of Seattle, Washington. Convinced globalization would destroy humanity, they wrecked the World Trade Organization's chances of striking new trade deals. The whole ordeal, which would become known as the Battle of Seattle, was one of the largest political protests in Seattle history and one of the first to be coordinated via the internet. This pivotal moment in history also happened to be a pivotal moment in the life and career of Richard Edelman. The Battle of Seattle, as it turns out, marked the birth of an idea that remains relevant more than 25 years later, the Edelman Trust Barometer. In our conversation with Richard, he unpacks not only the story of how the first trust barometer came to be, but also what it means to trust and be trusted as a business leader.
(01:22):
Richard Edelman, thank you so much for joining us. It's great to see you this morning. I'm going to just start with the fact that you were named after Winston Churchill. Your middle name is Winston. Did that set a pretty high bar growing up or did you ever consider going by Winston?
Richard Edelman (01:38):
No. That name was too awkward. In fact, I tried to just have the W stand for W.
Claire Blake (01:45):
Oh, I love that.
Richard Edelman (01:45):
But also, my parents reminded me that there was King Richard too, Richard the Lionhearted. So between Churchill and Richard the Lionhearted, a lot to do.
Claire Blake (01:55):
A lot to do and a lot to live up to, which we'll talk about as we unpack things. At age nine, your parents sent you to Culver Military Academy for summer camp to quote unquote learn how to be grateful for normal life. So the question is, did it work?
Richard Edelman (02:09):
A hundred percent because I was talking at night in the first two or three days and I got to stand outside for half an hour with my underpants with mosquitoes and not swat the mosquitoes. So I learned also how to carry a bat bag and to march to every meal, eat whatever was served. And I came back a changed man.
Claire Blake (02:31):
At only what, nine years old, which is pretty incredible. All right. I do want to jump in. In 1978, you had the MBA, you had the pedigree, you had a clear vision. You were going to jump into corporate America and be a brand manager at a major consumer goods company. You were forging a path that was entirely your own away from the family shadow. In your mind, what did the independent version of Richard Edelman look like?
Richard Edelman (02:55):
I was going to do a couple of years of corporate work and then I probably was going to go into politics because I really thought that that was the course outline for me. And I'd worked in two or three political campaigns. And so yeah, that would've been a fun life, but here I am.
Claire Blake (03:12):
Years later, Edelman is facing an acquisition. Your father is under pressure to sell to an ad agency. He asked you to come home to save the independence of the firm effectively. How long did it take you to say yes and did you negotiate at all?
Richard Edelman (03:26):
It took me about 10 seconds to say yes because he said, "Look, I just need you to do this for one year. If you don't like it, you can go on and do what you like, but you should do this." And so I moved to Chicago and went back.
Claire Blake (03:40):
You described your father, Dan, as a marketing genius. In those early years, the industry was about promotion, getting the product in the news and on the shelves. I'm imagining a little bit of Mad Men music playing in the background. As you climbed the ranks to president in the '80s, how much influence did your father have over your leadership or were you kind of setting an entirely new path forward?
Richard Edelman (04:02):
Well, the first big decision was he sent me to New York for what was going to be a year of training and I never left. And those 750 miles between New York and Chicago were helpful because I you know New York office was only 10 people and I had to build it up. And I was made manager of New York office at 27, which was a big throw by him. And I was only made interim manager while he was looking for someone and I did pretty well. And he just said, "Okay, just keep going." And four years later, New York was larger than Chicago office. So that was a good trial for me. And it was important that we went into pharmaceuticals, that we went into tech. So I didn't just follow what he had done because I saw opportunities in those two key sectors.
Claire Blake (04:52):
I do want to kind of shift because in this podcast, we're unpacking the seminal moments of CEO's lives and careers that truly made them who they are as individuals and leaders. So I'm going to fast forward a little bit because as I understand for you, watching the 1999 Battle of Seattle was truly that turning point as CEO where over 50,000 protesters took over the city, wrecked the World Trade Organization's chances of striking new trade deals. What did you see watching the Seattle protest? Let's start there.
Richard Edelman (05:22):
So I had been manager of Edelman Europe and I didn't really know about NGOs until I was in Germany and I was in Frankfurt actually. And there was a overnight release from the chemical factory that left yellow detritus on cars. And then there was a big protest by NGOs and I'm like, who are these people? And I learned that they were deeply important in German society. And I had this in the back of my head when I went back to the US and saw this happen at the WTO when people protested globalization. I thought, I should really understand and our clients should understand what role NGOs play relative to business, government, and media in society. And we were stunned to find in our first study that in fact NGOs were the most trusted institution. And it maintained that position until COVID when government became the most trusted.
(06:15):
And then a year into COVID, business became the most trusted institution, the only one both competent and ethical. And so the trust barometer has been a very important item in Edelman's growth, but also I think in the understanding more broadly of the central role that trust plays in society.
Claire Blake (06:39):
If I kind of go back once more towards watching Seattle and thinking this is really about trust, taking in all the context of everything you just shared and the history and what you were unfolding, was it as easy as, okay, we're going to start the trust barometer. Was this Richard's kind of project and product to launch or was this a conversation you had with your dad who was still very present in the business at that point in time? What was it about this moment for you and thinking we have to track this to help the world understand what's happening?
Richard Edelman (07:14):
This great kind of triumphalism about the fall of the Berlin Wall and the belief that capitalism had triumphed over communism and that democracy was the absolute right way to proceed was all called into question by these protestors in Seattle who said, "Free markets are actually causing jobs to leave and go to cheap labor and places where they don't have the same environmental standards." And they had legitimate objections. It really struck me that Francis Fukuyama and all these others who had written Samuel Huntington about, in a very triumphal way, that trust is simply a legal construct, was just not so. That trust is effectively the means of achieving a viable society. It's not just a legal construct. It is essentially the most simple kind of exchange of human emotion, and therefore it's so important for business. It actually, it's never been in the construct for marketers.
(08:20):
If you ask them, it's price, quality, relevance, all these things. For me, it's the first hurdle. If you want to buy a garment made by Shein, well, what are their labor standards? And is it going to be embarrassing for me to wear this if I'm found out? Or what do they do with their wastewater? All these things become quite relevant to people who are observing and in a world where information is much more easy to access.
Claire Blake (08:48):
Yeah. So I mean, I think it's pretty remarkable in your comment here, and I think this is why I'm digging, because again, we have the benefit of 26 years later. When I look back to this, to your point, it wasn't in the repertoire. This wasn't something that we were looking at or talking about, especially weren't talking about it in the importance of business. So when you decided, this is something I want to do, we're going to create this trust barometer, how did you pitch it internally and what did your father, who was chairman of the board, think about the idea then?
Richard Edelman (09:17):
I think he said, "Son, if you think this is the right thing, go ahead." And I worked with my research team and did it. And I think the first amount of money we spent on it was, I don't know, a couple hundred thousand dollars. And we did it in five markets and we just proved the case. And now we do it in 28 markets and spend a lot more than that. And we do it about 10 times a year in different contexts. We do one on health, we do one on tech, and we do one on brands, do one on employees. So it's become quite vertical.
Claire Blake (09:49):
How was that first report received?
Richard Edelman (09:51):
It wasn't a very big crowd in Davos, let's put it this way. Now it's standing room only, but it was a slow build and you had to believe in it. But there were very important people over that period who started to talk about it and make it more than just Richard Edelman getting up and giving a bunch of facts. Now it's used quite prevalently in business.
Claire Blake (10:17):
What did the first trust barometer report back in 2000 tell you?
Richard Edelman (10:22):
It showed me that both business and government had serious vulnerabilities on trust. For business, it was the question of ethics. For government, it was the question around ability. Also, that there was a real kind of volatility of trust related to events. So for example, Japan has never recovered from Fukushima, the nuclear incident caused by the typhoon. For the last 15 years, Japan has been the least trusting country in the world. It was straight in the middle of the pack and it went to the bottom and has stayed there. So if you don't have sort of acceptance of and change in policy as a result of a catastrophe, then you never rebuild trust. And you also see a big change in the last 25 years with the mass class divide. This idea that people are all the same, it's not true. Top quartile versus bottom quartile of income, total different impression of institutions.
(11:21):
The United States now being the place with the biggest divide between the top and bottom quartile and attitudes towards institutions at 30 points.
Claire Blake (11:32):
It's pretty remarkable. I think when I look at your tenure just as CEO, Edelman was a $6 million agency. Today it's over a billion dollar business. Your trust barometer turned the firm into an institution. I mean, we're talking about it here, standing room only in Davos, but something people look to every year to be an earmark for where things are shifting. You've got over 25, 26 years of tracking trust, and you've witnessed some major inflection points that we've just discussed, the Iraq war, the 2008 financial crisis, rise of populism, COVID, et cetera, et cetera. I mean, the reality is very few people have this front row seat for this long reviewing data on how trust has evolved. But in my opinion, Richard, you're not just watching the data, you're also living through these moments in real time. I am curious if there's ever been a time where a finding from the report showed up in your personal life or just felt very personal or convicting to you as CEO and as a human.
Richard Edelman (12:32):
Well, I mean, I'll tell you, as I'm Jewish, October 7th two years ago was a huge shock for me and the resulting protests and marches. And I realized over Christmas break when I was writing my essay about this year's data about insularity, where people only agree with those who have the same media sources and have the same solutions to social issues and same values that I'd become insular. And I had to actually jolt myself into, look, that's not a good way to be. We saw the Iraq war where the premise of the war was a bit false. And then the 2008 financial crisis where banks were called out for frankly extending credit where they shouldn't and creating vehicles that were risky. And then we had COVID, which was a disaster for trust, diminished belief in experts and top-down authority. So events kept happening that were prompts for continuing to invest in the trust barometer.
(13:42):
You need to read more media that disagrees with you. You need to be around people who have different political views. You need to have an expansive prism as opposed to narrow because you need not to be sheltered. You need to do debates, you need to not try to win the debates, you need to not try to order people, you need to be respectful. And so that was my New Year's resolution and it was profound. And I actually said this at the end of my presentation in Davos and I urged all the 250 people in the room to do the same, just examine themselves as to whether they've become insular because it's very easy to say, "Oh, you're the wrong." No, no. People have their views for a reason. And that's why I started the trust barometer work in 2000. The NGOs had a reason for marching on Seattle.
(14:33):
Whether they should have thrown chairs through the windows of McDonald's is another thing, but I certainly appreciate their willingness to bring these issues forward.
Claire Blake (14:44):
I mean, people have their views for a reason, and also being willing to share your own personal conviction says a lot about who you are as a leader and how you've continued to evolve.
Richard Edelman (14:55):
But also, I went to the Middle East. I wrote a blog post after October 7th, which probably reflected my religious background and the marches and all this. And we did donate both to Red Crescent as well to the Israeli Ambulance Service, same amount of money. But I went and sat for an hour and a half, both in Dubai and in Riyadh and with the teams. And some of them had lost family members of bombing, of churches and mosques. And I said, "Listen, I mourn with you." And I learned. I learned by going and listening. And I also learned by having a phone call with our team after Minneapolis where 900 people were on the call and some people who have Latino background talked to what it's like, about what it's like. And I learned. Mine was to convene. It's not to opine. It's just to say, "I hear you and it helps me. Thank you."
Claire Blake (15:49):
Yeah. I mean, for someone who's been in seat for 30 years to feel that conviction that learning by listening is still paramount and the pinnacle of leadership, again, says a lot about you. I do want to ask, the big implication of being the house of trust is that you are held to a higher standard. You've represented oil companies, tobacco. We've talked about pharma, tech, many who have been accused of breaking public trust. How do you manage that tension?
Richard Edelman (16:16):
So one of my first decisions as CEO was to get out of the tobacco business. We resigned our tobacco business, and that was 1997, 98. My dad disagreed with me and I said, "Look, I feel very strongly. We're trying to build our healthcare business. This is very important." And I was just about to go on the board of the Center for Disease Control Foundation. And Bernie Marcus, who was head of Home Depot, found out that Edelman was working on tobacco and he said, "You can't join the board and you should really reconsider your position." And I said, "You know what? You're right." And I went back and we resigned and I feel very good about that decision. And we don't do firearms and we don't do coal. We do work on energy companies and we work on Shell and Chevron and ADNOC. And I'm proud of the work we do.
(17:06):
I believe deeply in a diverse energy portfolio. And I think that it's an intelligent approach. It's not a huge part of our business. It's three or 4% of our business. And I know that certain people protest me at college campuses and that's okay. Again, they're entitled to their view. I sit there and I listen to them and I say, "Here's what we do."
Claire Blake (17:30):
We started this conversation with your insight from the late '90s that NGOs were the most trusted institutions at the time. Fast forward to now, business is actually the most trusted and has been for a few years. How do you see trust evolving in the next— let's throw it way further out. Not five years, let's say 10, 20, 30. If this is double the amount of time that you've done it, how do you see trust playing out?
Richard Edelman (17:53):
So at the moment, business is the most trusted institution. I think the implementation of AI is going to be the litmus test for business. There are going to be job losses and job shifts and maybe the job losses come before the job gains. And we just have to be honest with people. I mean, our trust data finds that 70% believe that leaders are lying about this. That's not okay. So we had our town hall on transformation and we said, look, we're putting in all sorts of tools. Our organization structure is moving from being pyramidal to maybe figure eight, and in some cases rectangular. There are going to be shifts in jobs, but this is Darwin and we intend to eat the other dinosaurs. We're not interested in being eaten. And the way to do this is to have everybody be AI fluent and to be AI forward.
(18:43):
And so we're going to do the best we can to grow. That's what it takes. And again, for me, clarity comes every week when I write my blog post. And I think the most important thing I want to leave with your listeners is that trust is now built locally. It's built in my employer. It's not top down. It's not even peer-to-peer. It's at the company because it's the only place you can have decent conversations without throwing tomatoes at each other. And it's the only place that there's a standard of behavior and where you truly do have a diverse group of people coming together for an end purpose. And so I do think how companies treat AI is just fundamental. If you have a layoff, you must provide for a retraining money and re-skilling.
Claire Blake (19:33):
Much of what you just shared is getting ahead of trust is worth thinking forward and relative to AI jobs and helping people know where your firm stands. Can you just opine a little bit on when trust is broken? What have you seen leaders do to build trust? How have you had to personally build trust when trust is broken?
Richard Edelman (19:52):
I go back to Oscar Munoz, who was CEO of United when they had that unfortunate incident with the passenger being removed from the airplane because the plane was oversold and they had to fly two pilots to Louisville. He owned up to it. He said, look, our systems are wrong and we're changing it. We'll never put a passenger off a plane if a person's got a paid ticket and we're going to give $10,000 as incentive instead of $1,000. And he was very matter of fact and said, I apologize to the doctor who we pulled off and it'll never happen again, but this is leadership and acknowledgement, change in policy and forward and be with your people and say, look it, it's not your fault. It's not that the gate agent did wrong or something else. It's our fault. And we had a similar situation with one of our clients where somehow we paid some blogger money and we were lampooned, this is 20 plus years ago, and it was called flogging or something.
(20:51):
And I didn't blame any of the account people. I said, "I blame Edelman. I blame me. I blame lack of training and lack of standards." So everybody had to go through training about blogging. If you're going to blog or if you're going to engage with bloggers, here's how you do it. So I got some heat and fine. And then people after a year saw, okay, they've improved, next. You just be matter of fact about it. And don't freak out. You can't micromanage a crisis.
Claire Blake (21:18):
Yeah, that's really good. I'm thinking, Richard, as we come near to a close, I am thinking that we've had the privilege in this podcast to sit down with CEOs who are one year into role, a decade in the role. Never had 30 years in the role. You've been insistent that you're not retiring anytime soon.
Richard Edelman (21:35):
Nope.
Claire Blake (21:35):
It's obviously personal for you in what you all are doing is my guess, but maybe elaborate a little bit further. Why the strong reaction to not wanting to retire anytime soon?
Richard Edelman (21:46):
Because the work I do is so important and the work is so stimulating. And whether it's about getting data centers accepted or working on a new mRNA vaccine or being involved with consumer products that all of a sudden are facing domestic competitors because of nationalism. This is really fascinating why I should get out of bed every morning and get to work. And I really, this is what I was born to do and I'm good at it and I like doing it and I like being the boss and I like leading and I like helping people.
Claire Blake (22:23):
Well, I would tell you, I mean, I think it's both nature and nurture in your case, but I think that in the time that we've spent together, the lesson you have to share with the world around people being allowed to have the views that they have, but the pinnacle of leadership, being to listen and the fact that you have this personal conviction around, I had become too insular. What an incredible reminder for all of us on the importance of a worldview, the importance of listening, and the importance of just staying open. Richard, this has been awesome. Thank you so much.
Richard Edelman (22:56):
Thank you for having me on.
Claire Blake (22:59):
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