Today's customers, employees, and investors are increasingly demanding authentic CEOs – those who know who they are, when to lean on others, and the true state of their business. But the latest Edelman Trust Barometer shows that trust in business leaders is crashing. Compounding matters is that, despite the prevalence of corporate misconduct, value destruction, and toxic corporate cultures, executives may earn as much as 271 times more than the average worker.

To shake the image of the self-serving CEO with little to lose, business leaders are implored to be clear about their vulnerabilities – their own, their partners', and their business’ susceptibility to loss. If CEOs continue to act as though they have nothing to lose, they will fail to regain our trust.

So what does it mean to be vulnerable - and how can CEOs be vulnerable in an effective way?

Why CEOs don’t highlight their vulnerabilities

Highly regarded leaders are not shy about their vulnerabilities. The head of Berkshire Hathaway, Warren Buffett, Apple chief executive Tim Cook, and the chair and CEO of JPMorgan Chase, Jamie Dimon, spring to mind. Buffett, for instance, repeatedly tells us that Berkshire’s returns are unsustainable and that every day he allays his fears by building partnerships with the CEOs of the businesses owned by his company. Dimon is a strong proponent of the importance of admitting what you do not know. Cook, meanwhile, has often taken personal responsibility for Apple’s product failures and hiring blunders, as well as his personal weak spots.

Yet, despite widespread inspirational notions of the need to embrace vulnerability in daily life, it remains a particularly elusive task for those in leadership. Being vulnerable means exposing what you have to lose, admitting what you do not know and confessing your fears. This can easily be mistaken for weakness.

Showing weakness runs counter to the tendency of most CEOs to play up their strengths. Indeed, in an adversarial business climate, CEOs may fear exposing themselves to heightened stakeholder criticism, organizational politics and insubordination. As such, it is unsurprising that CEOs habitually over-emphasise their strengths while downplaying, or even disregarding, their shortcomings.

Yet recognizing and workshopping vulnerabilities are the keys to rebuilding trust and repairing relationships with stakeholders.

The multifaceted nature of vulnerability

Our research shows that businesses and CEOs share three distinctive forms of vulnerability.

The first is what we call endemic vulnerability or the realities of being human – and the mortality and deficiencies that come with it. Like the rest of us, CEOs have emotional and physical vulnerabilities that can strike at any time; anything from physical exhaustion to information overload or emotional burnout. Unlike many of us, however, the consequences that can flow from these most human of limitations are amplified in the executive suite - and failure to acknowledge these basic vulnerabilities can breed hubris. With time, the status, perks, and outsized compensation may further quash CEOs’ sense of endemic vulnerability. Eventually, most will learn the hard way that the guise of invulnerability is an untenable and lonely place to be.

The second is relational vulnerability: the idea that others, including partners and employees, can and will let us down. Business success depends on relationships and relationships cannot work without trust. Trust means expecting others to act in our best interests and being prepared to accept a level of vulnerability when material outcomes are at stake. By definition, then, trust entails exposing ourselves to other people’s opportunistic behaviours. The problem is often putting too much trust in others or in the wrong people, whose true intentions and abilities only become revealed over time.

The third is exogenous vulnerability, meaning that fallout from competitors, disruptive technologies and volatile markets are inevitable. Given that these disruptions can make previous formulas for success redundant, very few firms have and will remain intact over the decades. The same strengths that CEOs rely on in good times are those that can become obsolete and even dysfunctional in bad times. When they were riding high, it was inconceivable that General Motors, Kodak, and Motorola would implode the way that they did. Acknowledging vulnerabilities when things are going well might have provided these firms and their leaders with the introspection necessary to recognize their blind spots and adapt.

The challenge for a new breed of authentic CEOs will be to embrace their own, their partners’, and their business’ vulnerabilities. Where do we start?

A three-point vulnerability challenge for authentic CEOs

The core authentic leadership challenge for all CEOs is to present and manage the three types of vulnerabilities as opportunities. Our research points to a three-point starter pack for CEOs ready to rise to the vulnerability challenge.

Step 1: Diffusing hubris to address endemic vulnerability

First of all, most CEOs’ Achilles heel is their hubris. Checking your ego is the first introspective step towards managing our humanness in the executive suite. In our experience, most CEOs operate in a kind of echo chamber in which the executive team panders to them (several studies have documented this). Invariably, this results in leaders overestimating their performance and capabilities relative to competitors, leading to inflated projections and value destruction. A useful guideline for how to diagnose and disable hubris can be found here.

Step 2: Opening up to address relational vulnerability

Secondly, vulnerability involves allowing someone to act in your interests when you are looking the other way. Trust, in other words. Authentic CEOs get into trouble when they extend trust without expressly acknowledging it. Instead, any act of trust must involve a clear and judicious identification of the vulnerability and the threats involved. Attention is a limited resource, and being vulnerable absorbs a lot of attention. So the choice of whom to be vulnerable to is key. Of particular importance is being vulnerable to customers. With well-informed and engaged customers, a key action becomes to proactively share, listen and involve customers in the co-creation of value.

Being vulnerable to customers does not involve preferential treatment to the hard-up among them, for example; it means not offering a value proposition unless you are unreservedly prepared to make customers whole if and when you let them down.

Step three: Stopping the spin in tackling exogenous vulnerability

Setbacks will happen. Authentic leadership consultants often urge CEOs to share their war stories – this is supposed to convey that they are vulnerable and approachable. In our experience, this course of action is transparently forced, inauthentic and, worse, makes CEOs look like posers. Public relations-inspired rhetoric is equally superficial; it follows the playbook of accepting mistakes, apologizing, and outlining proposed changes. In an era of fake news and information overload, authenticity is only present in the simple truth.

Setbacks are exactly when authentic leaders can step up and engage in honest communication about their core vulnerabilities, such as the fact that no CEO of a big business can be on top of the behaviour of each employee and process. Likewise, when the business succeeds, CEOs need to be open about the vulnerabilities hidden in their current strengths.

Vulnerability is a precondition for authenticity. Vulnerability cannot be real unless CEOs move away from lining their pockets no matter what to having some real skin in the game.

Our three-step vulnerability challenge is a starting point for anyone who is serious about authentic leadership.