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Friday, 23 December 2011

Will 2012 be Gingrich?

By Andrew Hammond, Associate Partner, ReputationInc 

Who will be the Republican presidential nominee to face Obama?

 The 2012 US election season begins on January 3 when Iowa becomes the first state to hold contests to decide who will be the Democratic and Republican presidential candidates in November.  While Barack Obama will be re-nominated as the Democratic contender, the Republican race’s outcome is uncertain.

Most recently, in November and early December, Newt Gingrich surged in national opinion surveys of Republican identifiers.  Although his polling lead has narrowed in recent days, and indeed some surveys now show him in a statistical dead heat with Mitt Romney, Gingrich had been written off as a complete long shot candidate only a few weeks ago. 
But can the controversial ex-leader of the House of Representatives really become the Republican nominee, and then beat Obama in November 2012?

On the first of these questions, Gingrich does now have a plausible outside chance of becoming the Republican nominee given his strong national polling amongst party identifiers.  The last few decades of US political history indicates that the victor in presidential nomination contests usually leads national polls of party identifiers on the eve of the Iowa ballot (traditionally the first nomination contest of the election season), and also raises more campaign finance than any other candidate in the 12 months prior to election year.

From 1980 to 2000, for instance, the eventual nominee in 8 of the 10 Democratic and Republican nomination races that were contested (i.e. in which there was more than one candidate), was the early front-runner by both of these two measures.  This was true of George W. Bush, the Republican candidate in 2000; Al Gore, the Democratic nominee in 2000; Bob Dole, the Republican candidate in 1996; Bill Clinton, the Democratic nominee in 1992; George H.W. Bush, the Republican candidate in 1988 and 1992; Walter Mondale, the Democratic nominee in 1984; and Jimmy Carter, the Democratic candidate in 1980.

Moreover, in both of the partial exceptions to this pattern, the eventual presidential nominee led the rest of the field on one of the two measures.  Thus, in the race for the 1980 Republican presidential nomination, Ronald Reagan (who ultimately won) led national polls of party identifiers, although John Connally was the leading fundraiser.  While in the battle for the 1988 Democratic presidential nomination, Michael Dukakis (who eventually won) raised the most funds, but was behind in national polls on the eve of the Iowa contest to Gary Hart.

Seen through this polling and fundraising prism, the 2012 Republication race resembles the Republican 1980 and Democratic 1988 contests.  This is because, as Iowa approaches, no one candidate clearly leads the field on both measures of early front runner status:  Romney has raised the most money of any Republican candidate in 2011, while Gingrich leads some of the latest national polls of party identifiers (and is in a statistical dead heat with Romney in other national surveys).

So who is best placed to win between Romney and Gingrich?

Predictions are always fraught with difficultly.  However, at this stage it is most likely that Romney (with his superior national campaigning organisation and financing) will prevail.  However, Gingrich has a chance, especially if he wins big in Iowa and this gives him momentum in a critical mass of subsequent state nomination contests across the country.

Other candidates (especially Ron Paul -- who is currently leading the Republican field in some polls in the state of Iowa -- and Rick Perry) should also not be completely discounted.  Here, it should be remembered that neither Obama (the Democratic candidate in 2008), John McCain (the Republican candidate in 2008), nor John Kerry (the Democratic candidate in 2004) were the early front runners on either the polling or fundraising measure prior to Iowa.  Obama, for instance, was in Hilary Clinton’s shadow for much of the year before the 2008 election season began.

Whether Romney, Gingrich or another candidate ultimately wins the nomination, one of the key factors that will influence Republican prospects of defeating Obama will be whether, and how quickly, the party can unite around the nominee.  A model here for Republicans is the 2000 cycle when Bush emerged strongly from a wide field of contenders before going on to, controversially, defeat the Democratic candidate Gore in November 2000. 

However, it may be harder for Gingrich or Romney to unify the party in 2012 in such a decisive way.  Romney has hit a relatively low ‘ceiling’ of support in 2011 of around 25% to 30% of party identifiers.  This is largely because his generally moderate conservative views (which make him more electable than Gingrich in a national election against Obama) have alienated many right-wing Republicans, including those with Tea Party sympathies.

By contrast, Gingrich is generally perceived as a maverick by the Republican establishment which has considerable doubts about his ‘electability’ against Obama.  Moreover, Gingrich’s current support from right-wing Republicans could also prove fickle inasmuch as they have concerns about his perceived ethical wrong-doing, but nonetheless appear to view him -- for now at least -- as the most credible ‘stop-Romney’ candidate.

Whoever ultimately wins the nomination, most Republican operatives are particularly keen to avoid a bruising, introspective and drawn out contest which exposes significant intra-party division to the national electorate.  The last time such a scenario unfolded for Republicans, in 1992, the chief beneficiary was Democrat Bill Clinton who won a relatively comfortable victory.

While the circumstances of 2012 are different to 1992, another divisive Republican contest would almost certainly provide a much needed boost for the Obama campaign’s fortunes.  With the president’s job approval ratings remaining at or below around 45%, historically low for an incumbent seeking re-election, he remains potentially highly vulnerable to defeat.

Indeed, Obama’s re-election prospects may now rest to a very significant degree on a factor that remains largely out of his hands.  That is, whether the US economy can stage a much more vigorous recovery in 2012 at a time when other areas of the world, including Europe, appear to be heading back into recession.

Andrew Hammond is an Associate Partner at ReputationInc.  He was formerly US editor at Oxford Analytica, and also a special adviser in the Government of UK Prime Minister Tony Blair

Thursday, 15 December 2011

There’s a lot of news out there

By Paul Raeburn, Associate Director, ReputationInc

Reading Charlie Brooker’s column in the Guardian on all that has made the news this year, it brought home just how much happened in 2011.  The news agenda seems to have swung from one major story to another with barely a pause for breath.  As Brooker points out, stories like the Libyan conflict almost became dull because they weren’t resolved indecently quickly, and the killing of Osama Bin Laden was far too quickly ‘over’ and forgotten as other stories rolled in.

So what’s behind this (besides the obvious), what does it mean for those of us trying to manage and advance corporate reputations, and can we cope with another year of the same?

A perfect storm

First it’s important to acknowledge the seriousness of the economic situation, and the seemingly regular occurrences of natural disasters and political instability.   Worryingly at least two of those elements are unlikely to be any less pertinent in 2012, so no respite there.

While the media will cover news of job creation, interest in softer corporate brand-building stories has on the whole been increasingly limited due to the near permanent noise around the latest major story. 

In such an environment, corporate campaigning and thought leadership on major issues and policy debates feels a lot more effective and appropriate than trumpeting a self-focused narrative with small-fry corporate news. 

Don’t rely on anyone else

This year has also seen diminishing levels of trust and the continued hyping of news, and reaction to it, by social media.

The Liberal Democrat u-turn on tuition fees has affected how the next generation, already facing grim employment prospects, view those in authority. And while many corporates feel they have logical arguments around issues such as their tax status and exposure, the public often sees such issues differently and they undermine other efforts to communicate good corporate citizenship.

This atmosphere, combined with the rise of social media, means it’s less feasible than ever to rely on others to get your message out there.  The days of no comment and selective interventions to manage news and reputation are looking increasingly untenable, with plenty of others more than happy to fill the vacuum and generate noise that will define your reputation in your absence.

Mistakes will happen

All this sounds a little apocalyptic (and a little bit overly-serious), but it’s the reality with which we are faced.  The news that News of The World journalists maybe didn’t delete voicemail messages from Milly Dowler’s phone makes you consider how events might have panned out differently if there wasn’t such a frenzy around that story at the time.

At one stage this year I believed someone when they told me that Mubarak had fallen (several weeks before he actually did) and that David Hasselhof was playing Tahir Square that evening.  I almost tweeted about how excited I was to hear that the Hoff was embracing the revolution.

Had I done so I would have looked quite silly, but perhaps another story would have broken soon and my error would be quickly forgotten.  Which makes me wonder, how many potentially tricky situations for corporates were somewhat buried in 2011 by the avalanche of news?

Or perhaps that’s just a little too fanciful, as those that have come under the microscope this year may testify, the job of reputation management is getting harder than ever.

Charlie Brooker’s 2011 Wipe will be broadcast on Friday 30th December at 10:30pm on BBC Four

Friday, 25 November 2011

Love and Betrayal on the UK High Street: A Tale of Two Brands

By Nuno da Camara, Director, ReputationInc

How long does it take to win over the loving adherent of a rival brand? Well, in my case, I thought it would take years for me to consider betraying my favourite provider of consumer electronics, the much loved John Lewis, to go with anyone else. I love John Lewis with a passion. They have excellent customer service and product knowledge and are polite and charming. And they always give you such good advice on what to buy. Then there‘s the free guarantee, always longer then you get at other stores. What’s not to like?

Well, nothing, but as I sat on my sofa last weekend watching TV I was intrigued by PC World’s latest advert: staff that are trained to deliver amazing customer service is their hallmark, they claimed. Really? Surely not as good as John Lewis though, I thought. Nevertheless, having decided that it was finally time to get that home cinema sound system I had been dreaming about for months, I set off to my local PC World. Is this the beginning of an amorous betrayal, I hear you cry? Well, no. And, actually, yes. You see, I only dropped in to assess the lie of the land, an initial reconnaissance mission if you will, because the PC World store is near my house. The plan was to go to John Lewis next. However, as the autumn leaves whisked around the high street, strange things started to happen to PC World. I wanted to ask a question and a member of staff was immediately on hand. I told him what I was looking for and he gave me a useful tour of the products. I asked for an opinion on the best quality products and received a quick and sensible evaluation.

Slightly taken aback, I pressed on with my barrage of increasingly deft (or so I thought) questions, trying desperately to test his product knowledge to the core. I fully expected this informational assault on the senses to floor him at some point. But it did n’t. He just carried on being really polite and giving knowledgeable answers.

By this point, I was confused. “Is n’t he behaving just like a John Lewis person?”, said a little voice in my head.  He homed on his prey. He asked me what I would use it for: mainly TV and films? Loud music for parties? X-Box? It was a sensible attempt to fit the product to the person. The little voice got louder. And the cognitive dissonance started to get painful. I was on the ropes and he delivered the sucker punch:
“The Panasonic will be perfect for you, Sir. It’s great quality and has everything you need. And it’s £30 off, so it’s a great price as well.”

So, that was it really. How could I possibly stay faithful to my favourite retailer? A few minutes later and I am inserting my PIN at the point of sale. The betrayal takes place to the tune of £258.51. I feel slightly guilty. But the facts are irrefutable. A quality product at a great price bought on the back of good advice.
So, how long does it take to win over the loving adherent of a rival brand?? In my case, about 17 minutes. Yes, it took PC World exactly 17 minutes to convert a vociferous adherent of the John Lewis brand to a paying customer of their own. Don’t get me wrong, I still love John Lewis. But now I would recommend PC World as a good alternative option. What’s the secret? Something to do with training staff to deliver amazing customer service I guess...

Friday, 18 November 2011

Russian Dolls Time or the Beauty of Simplicity

By Anastasia Chernoivanova, Consultant, ReputationInc

Yesterday it was announced that Northern Rock was to be acquired by Virgin Money. We thought Mr Branson had already left his footprint on every possible industry: from mobile, radio, media, to trains, planes, spaceships. And now banking. We cannot help but ask: how far could the Virgin Empire be stretched? And most importantly, what lesson has been learned from Sir Richard’s failures such as Virgin Cola, Virgin Cars, Virgin Brides.

In today’s world, the business environment has turned from complicated to complex with rapidly changing consumer behaviour, rising stakeholder activism, technological revolution, social media boom, unpredictable competitor landscape, toughening regulation. The list goes on and on. Financial crises don’t make companies’ life easier either. The level of complexity only grows with the number of markets your company operates in.

No wonder more and more companies are struggling to make sense of the situation. Sooner or later diversified businesses are overwhelmed by pressure from different fronts, and treat each issue as a separate matter. However, once this happened, it t becomes very easy to lose focus on why they are running all these streams of work in the first place.

Here is where our Russian Dolls come in. Every child knows that the most important doll is the smallest one and that is why it is hidden inside all other dolls. In a similar way a company’s mission (why you exist), values (what you believe in and how you will behave) and strategy (what your competitive game plan will be) should be put at the heart of everything it does: from stakeholder engagement to risk forecasting. All other larger dolls are different in colours and sizes but they are the same in shape. It is the mission, value and strategy that define that shape. Mission, values and strategy should be simple, short and very clear in order to be understood and remembered by all employees and therefore by stakeholders.

Returning to Virgin, the secret of its success appears to be simple - Mr Branson himself. The tycoon injects his entrepreneurial spirit into his operations and puts it at the heart of the every business he touches. Successful ventures in the Branson Land live and breathe the ideas embodied by the man himself, and thus stay as true as possible to that mission and value. With yet another adventure into another Virgin territory, the world would be watching closely to see what Mr Branson may bring to the banking industry.

Every child knows the smallest doll is the most important one and if it is lost all other dolls do not matter.  A simplification? Maybe. But sometimes simplicity is what the scarcest resource, because it is so easy to forget what is hidden inside.

Friday, 11 November 2011

Bad reviews travel fast: Tripadvisor and online reputation management

By Eileen Lin, Consultant, ReputationInc

Here is the situation: You have just over an hour before the evening performance, and stumble upon what looks like a decent pre-theatre menu.  After all, anywhere with fast service and reasonable food will suffice.

The punter at the door promised you snacks within 5 minutes and drinks within 10 minutes. You enter full of hope, only to find that after 20 minutes, you have not been served at all, despite having asked the waitress twice. Then, when your food is finally ready  45 minutes later, it never reaches you, because it sat on a service stall for 10 minutes in the middle of the room, where all the guests and staff had to walk past.  At the end of the meal, you find a 12.5% ‘voluntary’ service charge added to your bill. What do you do?

Do you…
1) Refuse to pay for service
2) Ask to speak to the manager
3) Pay the full bill and vow to never come back again, or
4) Pay the full bill, nod, smile, thank the staff for their hospitality, only to scurry home to write a long and whining online review criticising the poor service?

Let’s face it.  Britons are no good at complaints or confrontations. Most of us faced with this situation would probably prefer to avoid the embarrassment of making a scene and quietly ‘vote with our feet’ instead. However, with social media, things have changed. Popular review websites such as Tripadvisor.com have enabled consumers to get their own back on restaurants and hotels that disappoint.

The extent of such influence was well-documented by a recent documentary by Channel 4, entitled ‘ The Attack of the Tripadvisors’, where a group of B&B owners, whose life and business fortune had been made hell by the review website, confronted their critics. For the hosts, the hardest things to come to terms with was the fact that customers always seemed happy when leaving the premises but as soon as they reach their nearest computer, the meal has turned sour and the stay uncomfortable.

Why didn’t you tell us so, they cry, rather than simply slating us online? We would have done something about it, they say. To illustrate the emotional damage the site has caused, one B&B owner went as far as to say that she had ‘considered paying for a hacker to destroy the website’ because it had turned her childhood dream into a nightmare.

I cannot honestly say I don’t have sympathy for these struggling independent businesses. However, they are missing a fundamental point: the reviews websites are merely a reflection of the increasingly high standard modern consumers have come to expect from anyone that seeks to take their hard earned money from them. We all laughed when watching Fawty Towers, but who among us would actually be happy to pay to stay there?

Over the years, consumers have become increasingly conscious of their collective power and rights, while social media has enabled individuals to have influence beyond their immediate network.  This rise in citizen journalist has forced businesses to re-examine how they obtain and manage customer feedback.

Rather than blaming the reviews website for mis-management and accusing the critics of being cowards hiding behind computer screens; businesses, large and small, must learn fast. Not only on how to deal with customer complaints online, but also how to turn each crisis into an opportunity, using feedback to inform business strategy and action changes. After all, we know that customer satisfaction and advocacy tends to increase when a complaint is cordially addressed, compared with when there is no complaint at all. Managing customer feedback, and thus business reputation, is no longer a communication tool, but a business imperative.

Friday, 4 November 2011

Friends in high places: the paradoxical relationship between business and government

Charles Pitt, Account manager, ReputationInc

The relationship between business and government is paradoxical. At one level government pontificates on how businesses operate and regulates their working practices – posing as our doughty defender against the unacceptable face of capitalism. At another, government is dependent on business to drive economic growth and raise tax revenue. And government is a customer – buying huge chunks of expertise to deliver its agenda whether that’s rolling out smart-meters or getting people off benefits and into work. Telling someone how to do their job, relying on them to do it for one’s income and buying stuff from them all at once does not make for clear cut roles and responsibilities.

Politicians and big business are widely distrusted so it is unsurprising that businesses invest more and more of their external relations function in getting those relationships right -- both for their reputation as well as for their profit margin.

This week the Business Minister published the list of chief executives who have been offered a hotline to ministers. This new scheme designates six ministers as the go-to person in government for some of the UK’s biggest firms.

British business is split on the benefits. Some, such as the CBI, argue that British business needs this degree of “account management”.  Others contend that the largest businesses in Britain already enjoy cosy relationships at the top of government and that formalising relationships in this way might crowd out smaller players – the very companies that need extra help with investment and exports.

However, obsessing over who at the top of business is talking to who in Whitehall distracts from the far more complex web of relationships in play. The fantasy that multi-million pound government contracts are sealed on the golf course is just that – and the fact that the very hint of such underhand dealings frightens politicians and businessmen alike reflects the better-informed consumer landscape in which they both operate. Consumers have exploited growing choice by making ever more demands on those from whom they buy, demanding ethical behaviour across the supply chain. Consumers have also forced transparency on politicians; formerly smoke-filled rooms are not only smoke-free, they are now made of glass.

Rather than nostalgically pining for a cigar in the 19th hole, the smartest business people are responding to their customers’ needs and recalibrating their relationships with government. In some cases they are investing ahead to develop proactive solutions – businesses that spot problems that have yet to be noticed in Whitehall are well-placed to offer (and charge for) the solutions.

Rather than adopting defensive positions, the best external relations managers understand the need to stay focused on the horizon. In other cases businesses are leveraging their experience to deliver what the government can no longer afford to do itself, paying for it and recouping their costs in the future savings made by the state. And chief executives have sat up and noticed – the best in-house public affairs managers are not looking to merely create opportunities for executives and politicians to meet over lunch but using their political insights to drive business growth.

Politicians and businesses are both subject to brutal accountability – whether at the ballot box or on the high street. But rather than colluding in damage limitation the wisest amongst them are embracing their shared agenda: delivering the services people want for the best possible price. Business and government working hand-in-hand, and out in the open, is in all of our interests. And if they fail us they know what we can do about it.

Friday, 28 October 2011

Measuring what matters

By Kerstin Liehr-Gobbers, Director, ReputationInc.

A column for www.research-live.co.uk.

Sitting in a board meeting recently, I was delighted to hear the CEO of a global FMCG brand say that he’s started measuring the performance of his managers based on the businesses’ reputation strength: the more positive the reputation, the better their bonuses, and vice-versa. As a reputation consultant, I know that reputation has not always achieved such revered status among the C-suite.

However, delight turned to doubt as I looked closer at the company’s approach to its annual reputation measurement. What struck me first was the lack of a target variable. There was no endgame, to borrow a sporting analogy.

Corporate reputation is a strong measure of a business’s perceived competitiveness and future ability and should be related to behavioural outcomes, since it actually motivates stakeholders to invest in, apply for, recommend or endorse a company.

But without a set of clear behavioural objectives to measure reputation against, the FMCG company in question was left with a generic reputation measurement model that simply reflected the mean score of stakeholder perceptions of each reputation dimension – be it innovation, customer service, corporate responsibility, governance, leadership and so on.

In this approach, the weightings of each dimension of reputation are assumed to be equal and the impact on behavioural outcomes goes unmeasured. So high scores might be enthusiastically received by the CEO but it may be a case of false optimism. The simple mean score approach fails to account for how important stakeholders think each dimension is and how reputation impacts their future behaviour.

Even more worrying is that such results can lead managers – who are motivated to maximise their bonuses – to focus their efforts on driving reputation scores up in areas that are not necessarily beneficial to the overall goals of a business.

For instance, the initial reaction of the FMCG company I mentioned was to focus on improving the poor perception of its community work. But there was no way of knowing whether this investment would make a difference to reputation or whether key stakeholders would give the firm credit for its efforts.

Measuring reputation should be about understanding which stakeholder groups a business needs to build equity with and which messages or perceptions will drive the company’s bottom line. The question all companies should be asking is: How does reputation influence practical decision-making among key stakeholders that will ultimately help or hinder business growth?

Friday, 21 October 2011

Olympus – Blind to Basic Reputational Truths

By Mark Hutcheon, Associate Partner, ReputationInc

The unusual sight of ‘CEO as whistleblower’ – was in full view this week as Michael Woodford blew the lid on a bizarre internal cover up at camera company Olympus.

While the story doesn’t have the corporate villainy or bad taste of News International’s Phone Hacking scandal, it once again reveals how cavalier companies are with their money, values and their reputation (arguably their most valuable asset).

Mr Woodford came out of the Olympus dark-room and revealed a very different picture of the Japanese firm after stumbling across a bewildering series of payments and decisions. Holding the company up to the light (and scrutiny) the CEO was shocked at a “catalogue of calamitous errors and exceptionally poor judgement…result[ing] in the shocking destruction of shareholder value of USD 1.3 billion.”

The scandal has turned attention on Japanese business - once heralded for its model corporations built on loyalty, technology and obedience.   Their consensus-driven corporate culture in this case breeds a fatal absence of challenge. Workers worshipped the chairman, knew their place and everything flowed from those reference points.

Until CEO Mr Woodford picked up his pen of truth to write the script for change. Culturally, he broke sacred laws of Japanese business – challenging your leader – in his case by insisting on transparency and honesty. Reputationally he got it right, just none of the company’s other directors could see the bigger picture.

Independent voices should be seen as a healthy feature of a modern corporation not least as they continually test whether the brand lives up to internal and external expectations.

Olympus wanted an outsider to shake up the company in the way a Japanese executive would not, but he clearly underestimated what this meant. Scrutiny of global business, mistrust of the markets and public expectations of transparency are normal operating conditions for businesses and Mr Woodford reflected this. In Japan, not so.  While the CEO learned the hard way you don’t challenge your leader in Japan, Olympus and possible Japanese industry has learnt that it cannot control the truth and therefore your reputation.

The bare facts are these: Olympus has destroyed $1.3bn – or about a quarter of its fast-dwindling market value – on a series of ill-explained and frankly incomprehensible deals and fee payments. Olympus ended up paying Axes and Axam, a related Caymans-incorporated entity a fee of $687m – 36 per cent of the value of the deal. These appear to have been overlooked or ignored in deference to the authority of its leaders.

The values of a corporation are the signposts and promises of how consumers can expect it to behave. Act in line with those values and you earn trust – a valuable commercial commodity. Go further and voluntarily reveal your genetic code if you want stakeholders to understand what the business stands for and believes in.
What is clear is management detached themselves from the values - the DNA of the business – encountering no challenge or oversight because no one dared question.   Rather than see the British CEO as a threat…Ironically he was their wake up call and the reality test Olympus needed as he represented the view of external stakeholders.

The Olympus affair appears to highlight the reputation risk in decision-making conducted solely through the internal lens of a company. If leadership and management cannot connect to a bigger picture, it will suffer reputationally and commercially.

Potentially, Japan’s country brand will emerge tarnished too.  As the FT put it “its manufacturing prowess is considerable, but the value created is often poorly husbanded by the practices of corporate Japan. Without better governance, these will continue both to stifle the dynamism of Japanese industry and to drag on growth.”

There are lessons for all companies in this story.  Companies have to accept change to their historical beliefs to stay relevant and reputable. The discreet, private corporation doesn’t exist anymore. Scrutiny is inevitable – in fact opening up the business to share its values, ideas and heritage are pathways to trust and enhanced reputation – not risk.

Olympus had its time for change and missed it. When the problem was revealed, it should have been managed in a discreet manner to minimise the reputational damage. Yet the board put personal loyalty above the interests of the company and its reputation, like its shares, are suffering (Olympus’s shares have fallen by 41 per cent since Friday’s board meeting).  On top of that trust in the governance or integrity of the brand is damaged all over the world.

A concluding thought for companies and comms directors: if you have a legacy issue – alleged or real surrounding your business – confront it early and seriously if you want to contain and close it.

Friday, 14 October 2011

Blackberry’s (reputation) crumble

By Maita Soukup, Account Manager, ReputationInc.

Despite the ill will on Twitter, the demands for compensation, and the business media’s early epitaphs to Research in Motion, this week’s Blackberry crisis was fundamentally a case of bad timing.  Had the business not already been facing serious doubts about its leadership and innovation capability, the global service interruption would have made one day of front page headlines – not three.

While the loss of service was an annoyance to customers, what makes this technology disruption so different from the lacklustre broadband service we’ve come to expect, or the multitude of glitches consumers found immediately after laying out hundreds of pounds for a shiny new iPhone?

In other words, what transformed a technical failure into a global reputation crisis?

First, when the spotty service began on Tuesday, RIM was already operating against a backdrop of falling sales, and diminishing faith in its ability to compete against the other smart phone makers on the block.  The global technical failure was a conveniently placed nail for disaffected investors to hammer into the company’s coffin.

Secondly, the server meltdown coinciding exactly when enthusiasm about Blackberry’s main competitor, Apple, took on a quasi-religious dimension following Steve Job’s death earlier this month.  Never as sexy as the iPhone, until this week Blackberry at least had reliability on its side.  At the first sign of weakness, Apple evangelists and technophiles took to social media with a distinct hint of schadenfreude in their criticism of RIM.

However, none of these forces would have had quite such a devastating effect on RIM’s reputation had the business managed its response to the crisis faster, and more proactively. 

The apology video from BB’s founder Mike Lazaridis was faultless in content: he showed true remorse; admitted failings; and provided new information. However, it was too late.  There was simply no way to reverse the tidal wave of negative sentiment that took a life of its own during the first 48 hours of the crisis.

Essentially, RIM lost control of the story during the critical first 12 hours of disruption.  The floodgates were left wide open for both traditional and social media channels to speculate, voice frustration, and begin demanding rebates for the service failure.

Responding to a crisis successfully is all about preparation and anticipation.  Had RIM been more proactive in managing its investors’ eroding confidence over the past six months, the negative sentiment picked up by media would not have been nearly as deep.  Similarly, had the company responded earlier and more definitively to the initial service disruption, it would have retained more control over the emerging story – rather than being on the back foot as new updates and criticism ran rampant throughout social media.

I may be in the minority, but I am confident that RIM can recover its reputation as a reliable innovator over time.  However, it will require the company’s leaders to share a clear vision for the businesses’ future (sharpish!) and then re-align its approach to innovation and operations to deliver on that ambition.

Friday, 7 October 2011

“Even the champagne was flat”: why the party conference has changed.

By Charles Pitt, Account Manager, ReputationInc

A regular criticism of party conferences is that they are now dominated by corporate guests (and their public affairs advisers) eager for valuable face-time with government ministers and senior opposition spokesmen in the amenable setting of a hotel bar. So the argument goes that having abandoned the affordable jollity of seaside resorts the “real activists” are priced out of the event and their voice is no longer heard. But this thumb sketch misses a critically important change that has affected the art of lobbying – a change that is directly responsible for the growing corporate presence at political conferences.

Consumers are now more politically aware than ever - 24 hour news, blogging and social media have transformed how we engage with the issues that matter to us. And as a consequence traditional routes for the politically-minded are less and less relevant. Activism in local government or local political parties has been supplanted by focused campaigns that target narrower interests. The collation of mass email lists has enabled special interest groups to develop a ruthless streak that would have been thought out of character even a decade ago. And the politically-aware consumer is now confident that such activism is working – unpopular government policies can be killed off when the right message is fired at the right target.

Politically-aware consumers are bringing pressure to bear on businesses as well as politicians. Where corporate and social responsibility might have in the past been a neat marketing tool it is now a serious business function – one that has been relatively-well insulated from cuts despite the recession. And where businesses were historically likely to exploit contact with government ministers to resist legislation that ran counter to their interests they are now looking to work with government in their customers’ interests. Note the way businesses position themselves as thought leaders who are setting their own agenda rather than following the regulators. Instead of arguing that carbon emissions targets set by the EU are unachievable many businesses are actively working to meet tougher targets to tighter deadlines – and telling their customers all about it.

The activism that presents at party conferences reflects this change. Some journalists have complained that in packed-out fringe meetings every question seemed to be coming from a chief executive or NGO founder. Chief executives have not chosen to invest their time and money in cross-examining junior ministers, or shadow ministers, for light amusement but because they are under increasing pressure to prove their social purpose to their customers and shareholders, and one way in which they can do this is to be seen to be actively engaged in the political process. As for the NGOs, their glossy brochures and slick heads of communications show that they went corporate some time ago.

The glory days of party leaders taking on a heckler in the conference hall or a speech from an unknown activist that upstaged the prime minister may be a thing of the past. But activism aimed at shaping the policy agenda is as lively as ever – it just looks very different. Consumers are expressing their concerns on the high street as much as at the ballot box or the public meeting. Businesses are responding to this by raising the standard of their political engagement and delivering it in a more transparent way. And one of the many consequences of this is that there are more chief executives (and their public affairs advisers) attending party conferences. But perhaps next year they could try to be a little more sparkling, for the journalists' sake – if Trade Unionists, Liberal Democrat Borough Councillors and Conservative Peers can party surely the NGOs and chief executives can too (with their public affairs advisers)?

Friday, 30 September 2011

Leveraging Innovation to enhance Corporate Reputation

By Jeremie Guillerme, Consultant, ReputationInc.

Being perceived as an innovator enhances corporate reputation and business performance. However, besides technology companies that consistently top reputation league tables, how can firms in more traditional sectors, such as food and beverage, leverage radical innovations to enhance their reputation?

Looking at the latest Fortune’s Most Admired list, it is clear that companies perceived as most innovative enjoy a significant reputation advantage over their competitors. The corporate reputation of innovators such as Google or Apple is clearly triggering admiration and envy across all industry sectors.

Academic research provides evidence that a reputation for innovation leads to various business and reputational benefits such as:
- customer loyalty
- improved favourability
- propensity to pay premium prices
- and perhaps most importantly: customer excitement (Henard & Dacin, 2010)

Ultracompetitive marketplaces require companies to think beyond customer satisfaction and market needs to become providers of excitement. Remember Steve Jobs’ mantra: “people don't know what they want until you show it to them.”

However, all industry sectors are not born equal when it comes to creating excitement. In the present context, the task is certainly easier for a technology company than it is for a large food and drinks company. While the high-tech industry has generated many disruptive innovations lately (tablets, apps, streaming technologies and so many others), the consumer goods industry has mostly focused on incremental product changes (improved taste, different portion sizes, more convenient packaging, etc.).

It would however be unfair to say that the food and beverage industry has not provided any disruptive innovation. Innocent is one notable example of a company that succeeded in creating excitement about a new product category, and reaped the associated reputational benefits. But what can be said about larger, sometimes century-old global players with well-established brand portfolios?

Acting under the constraint of increasingly stringent health-related regulations, these companies are also trying to create the new product category that will enhance their reputation for innovation as well as generate consumer excitement. However, large incumbents face a challenge that new players like Innocent did not. How to enhance an innovation profile with radically new products while avoiding blurring the reputation of a well-established company? Being a disruptive innovator can indeed be highly regarded, but doing so shouldn’t confuse stakeholders on your vision and purpose.

A classic example of a large food and drinks company successfully launching a disruptive innovation without losing focus is Nestlé’s Nespresso venture, which radically changed the way coffee is sold to consumers through a clever product associated with a profitable business model:

- A new, premiumized coffee giving consumers a ‘connoisseur’ feeling

- A business model where an appealing appliance (see the design of the coffee machines) is the starting point of virtually unlimited repeat purchases of high-margin coffee capsules

- A closed distribution circuit eliminating any competition

The resulting consumer excitement has led the new brand to the success we all know. However, it is interesting to note that, in order to achieve this level of innovation, Nestlé has had to create an entirely separate organisation, with its own staff and office buildings. In a well-known Harvard Case, a senior VP from the company mentions how difficult it was to break away from the company’s culture: “internally, there was a lot of scepticism about the possibility to commercialise Nespresso. The business was physically moved out of Nestlé so that it could establish credibility and so that it didn’t have to fight against all the company’s rules”.

However, the new venture remained bound to Nestlé by a set of unconditional values and principles formulated by its CEO Peter Brabeck: “very simple, not a lot of words, no mission statement—just a list of the things we didn’t want to change at all, even as we evolved.”

What learning can we draw from the Nespresso case, looking at it through the lens of corporate reputation management?

1- Even large companies in more ‘traditional’ sectors can create disruptive innovations and enhance their reputation as an innovator.

2- Fostering cultural change internally is not always sufficient to drive radical innovation. Sometimes innovation has to happen outside of the company culture.

3- Maintaining the overall coherence with the company’s vision and purpose is critical to avoid stakeholder confusion about your activities.

Friday, 23 September 2011

The new normal for Corporate Communications functions

By Mark Hutcheon, Associate Partner at ReputationInc

The past decade has witnessed transformational change in areas ranging from geopolitics to teenage leisure pursuits. But one of the most dramatic shifts has been in communication as digital technology, social networking and 24 hour news have become dominant forces in the transfer of information from business to business, from business to consumer and from consumer to consumer. The new dynamic has forced every business function to adapt, perhaps none more so than corporate communications.

Once, corporate communications was relatively simple. Its main role was to liaise with the press: sending out releases when necessary, arranging half-yearly meetings between members of the media and the chief executive and making sure a coterie of senior journalists were on your side.
For some corporate affairs directors, the role was even more prescriptive: asked to act as guardians of information, they saw their job as ensuring the press knew as little as possible about the businesses for which they worked.

Today, such control is almost impossible. Thanks to the internet, virtually anyone can find out virtually anything about virtually everything. That alone imposes fundamental change on the corporate communications department. But the situation has been intensified by the economic downturn and its impact on the reputation not just of banks but almost every aspect of the corporate world.

Consumers are demoralised, disillusioned and disappointed by a wide variety of sectors and industries – which means companies have to work harder than ever to gain their customers’ trust. And who takes responsibility for this task? Invariably, it falls to the corporate communications team.

So the corporate communications function is broader and deeper than it has ever been. The nuts and bolts of traditional media management - writing press releases, developing relationships with key journalists and ensuring they have access to senior executives when interim and full-year figures are released – remains. But, as every corporate affairs director knows, the role has become far more sophisticated.

Today’s corporate communicators have to cope with 24 hour news flow so journalists expect to be able to talk to people in the know from morning to night, seven days a week. But news flow is not just about journalists responding to a corporate announcement. Today, news can emerge from bloggers, social network sites, activist websites and the like. As events ranging from the Arab spring to the UK August riots make clear, spreading information is breathtakingly easy these days – and corporate communications teams need to be able to monitor what the electronic world is saying about their company and – equally importantly – influence those messages.

At the same time, companies are under pressure to cut costs, so corporate affairs directors are being asked to justify their budget and do more with less. Chief executives expect their corporate communications team to bring the outside world in, explaining the way the company is perceived and shaping those perceptions. They expect the press office to deliver genuine thought leadership, offer meaningful advice about how to enhance their company’s reputation and act as an antenna to risk. These are high value functions that will test the competencies of the best communicators.

To many corporate communications directors, this plethora of demands can seem excessively challenging. But what if they view the ‘new normal’ as an opportunity to take the corporate communications function to the next level?

Smart operators are already changing their teams to reflect the new reality – ensuring staff have the requisite skills to cope with the demands being placed upon them. Sometimes, this involves recruiting new talent. But existing team members can become superb advocates for their organisation, if they receive appropriate training and gain an understanding of what they need to do and how best to do it.

Despite the recession, raising the skills and competency bar through capability building is vital. Shrunken, newly assembled or over-worked teams will enjoy both a performance and morale boost from an investment in their in the competencies.

As we see it, the classic development approach is still relevant. Discover the competencies (and therefore gaps) most needed to advance the business and reputation goals; design a learning methodology and deliver it across multiple points and channels. It should reflect the learning philosophy of the company, mix foundational level training with master-classes customised to different levels and exploit the latest experiential learning tools.

Wherever your function is on its journey , competencies in reputation management, corporate campaigning, reputation foresight and reputation content are becoming indispensible.
There is no going back to the old ways. Corporate affairs directors have to adapt. Those who face up to the challenge, relish it and ensure their staff are equipped with the requisite skills can prove their own worth and elevate the status of their entire team.

The alternative is a slow erosion of the corporate affairs function. And, for savvy, sophisticated communicators, that is simply unacceptable.

Friday, 16 September 2011

Building Reputation from the Inside Out: The Power of Employees

By Nuno da Camara

As I listened to Stephen Dorrell’s comments on the failure of the Care Quality Commission to uphold health standards this week, I was reminded once again of the fact that every organisational reputation issue is fundamentally about behaviours inside the organisation.

The Care Quality Commission, said the former Health Secretary, allowed a culture of ‘tick-box’ bureaucracy to develop rather than physically carrying out site visits on a regular basis. The root of the problem is cultural and, therefore, relates to the behaviour of leaders, managers and employees inside the organisation. Similarly, the Deepwater Horizon crisis this year was caused by BP’s inability to establish a proper safety culture on its offshore drilling sites. Culture was also at the root of Toyota’s recall of several of its US models in 2010 due to the ‘sudden unintended acceleration’ problem. As the company Chairman Akio Toyoda explained to the US Congress, the company got its priorities wrong and developed a culture of volume, rather than one of quality and safety. Examples of how culture is at the root of reputation abound. Admittedly, this may seem like a fairly obvious point but the fact still remains that when a reputation crisis hits the headlines much of the focus is on repairing relationships with external stakeholders. Even more worryingly, reputation is rarely considered from an internal organisational point of view. Yet, given the instrumental role of internal culture it is critical to explore how reputation works with employees and how it can be built from the inside out.

Firstly, we should look at why reputation is not always automatically associated with employees. The issue is largely semantic. By definition, reputation is what other people think of your organisation. In this context, we tend to think of employees as part of the ‘organisation’ and not part of the ‘other people’. The reality, of course, is that employees are actually stakeholders of the organisation (i.e. the management team who employs them) and are therefore ‘other people’ too.

Moreover, employees do form reputational judgments about the organisation that they work for and this impacts on their behaviour and commitment at work. Today, there are numerous surveys and rankings of employer reputation which attest to this fact (e.g. http://www.greatplacetowork.com/). Employer reputation or the reputation of an organisation as a "good place to work" is strongly associated with employee engagement; and, employee engagement has been reliably linked to organisational performance . The time has therefore come to properly acknowledge employees as a reputational stakeholder in their own right.

Furthermore, employees are unique in the stakeholder map of any organisation because they come into daily contact with the other stakeholders. As Andrew Moss, the CEO of Aviva, one of the world's largest insurers, noted in a round table discussion on corporate reputation: ‘our reputation is shaped on a daily basis by the many thousands of people who are serving our customers in our call centres’. Beyond the realm of customers, reputation is also being formed by constant employee interactions with suppliers, investors, regulators, NGOs, media and other stakeholders. So, if an organisation has a good reputation with its staff this will have a powerful multiplier effect on its reputation with all stakeholders. Happy staff are keen brand advocates and are worth their weight in gold.

In addition, a highly dynamic feature of employees is that, as well as being the main actors in organisations, they are also an audience and consume the same media as other stakeholders. As such, employees read and hear about their organisation all the time and are highly aware of its reputation externally. Naturally, employees are motivated to work for organisations with a good external image. In many cases, this is exactly what attracts employees to organisations in the first place and, once they join an organisation, it is what makes them proud to be a part of it. This is often referred to as Perceived External Reputation and research shows that it has a positive impact on employee identification, commitment and performance .

There are therefore two types of reputation with employees:

Reputation as a “Good Place to Work” - Employee belief in organisational leadership, goals and strategy and perception of how the organisation manages reward and recognition, career development and work/life balance, which impacts on employee engagement and commitment.

Perceived External Reputation – Employee perception of how the external stakeholders view the organisation, which impacts on employee pride and advocacy.

These two types of reputation are strongly related to each other. Employees of an organisation with a high "good place to work" reputation are more engaged and committed and perform better at work. This has a positive impact on external reputation, which is perceived by employees and adds to their motivation even further. Hence, a positive feedback loop is set off in which a good reputation is sustained for the long term. Conversely, if internal reputation as a “good place to work” is poor, this will demotivate employees and eventually feed into a poor external reputation, which will only serve to demotivate employees further.

Since culture is at the heart of reputation organisations must focus on the development of internal reputation and its impact on employee behaviour. Without doing so, and without being aware of the gaps in internal and external reputation, organisations will not be able to sustain a good reputation over a long period of time. But the prize for those organisations that do understand the critical links between internal and external stakeholders is a reputation that looks after itself and keeps on getting better for years to come.

Thursday, 8 September 2011

10 years on from 9/11: the communications challenges of the campaign against terrorism remain as important and pressing as ever

By Andrew Hammond, Associate Partner at ReputationInc

The US and wider Western response to the attacks of 11 September 2001 has been dominated by counter-terrorism and military might. While major successes have been achieved, including the unseating of the Taliban regime in Afghanistan, an overwhelming emphasis on ‘hard power' has fuelled controversy across much of the world.

Even former US Defence Secretary Donald Rumsfeld acknowledged the problem when, in 2006, he asserted that the United States “probably deserves [only] a ‘D’ or a D-plus’ as a country as to how well we’re doing in the battle of ideas” [in the anti-terrorism campaign], and that “we have to find a formula as a country” for countering the jihadist message.

A decade on from 9/11, the death of Osama bin Laden, especially when taken in combination with the ongoing ‘Arab Spring', offers a remarkable window of opportunity for policymakers to re-emphasise the importance of diplomacy and communications in the campaign against terrorism. As US President Barack Obama has emphasised, this must include an “alternative narrative” for a disaffected generation in the Islamic world.

According to the just-released annual findings of the Pew Global Attitudes Project, in 9 of 13 key countries for which relevant time series data is available, significantly fewer people think more favourably of the United States in 2011 than before 9/11. Nowhere is this phenomenon more evident than in the Islamic world. In Turkey, for instance, US favourability ratings have declined precipitously from 52% in 2000 to 10% in 2011. In Egypt, the fall-off is from 23% in 2000 to 12% in 2011.

Even in Britain, Washington’s staunchest ally in the campaign against terrorism, there has been a significant fall in favourability towards the United States from 83% in 2000 to 61% in 2011 (with a low point of 51% in 2007). The partial improvement since 2007, a trend also in evidence in several other countries, is due in significant part to the greater international appeal of Obama than George Bush.

The overall fall-off in popularity of the United States in the last decade is so serious because of the erosion of US soft power -- the ability to influence the preferences of others derived from the attractiveness of a state’s values, ideals and government policies. History underlines the key role that soft-power instruments (which include diplomacy, economic assistance and communications) have played in obtaining desirable outcomes in world politics.

For example, the United States used soft resources skilfully after the Second World War to encourage other countries into a system of alliances and institutions, such as NATO, the IMF, the World Bank, and the UN. The Cold War was subsequently won by a strategy of containment and cultural vigour that combined soft and hard power.

Like the Cold War, the challenges that are posed by the campaign against terrorism cannot be met by hard assets alone. This is especially so as the anti-terrorism contest is one whose outcome is related, in significant part, to a battle between moderates and extremists within Islamic civilisation. The US will secure greater success in meeting its goals if it demonstrates an enhanced capacity to win more moderate Muslim support.

It is in this context of winning Muslim ‘hearts and minds’ that, ten years after 9/11, Obama now has such a precious political window of opportunity to re-launch the campaign against terrorism. Seizing the moment would require the United States giving higher priority (as it did during the Cold War) to activities such as public diplomacy, broadcasting, development assistance and exchange programmes.

US public diplomacy is in particular need of revitalisation. Here, Obama should fully resource and implement the ‘Strengthening US engagement with the world’ strategic initiative launched last year. This identifies many priorities, including better combating the messages of violent extremists, and ensuring that US policy is better informed by an understanding of attitudes of foreign publics.

Such a re-launched anti-terrorism campaign would continue, of course, to include a significant military and counter-terrorism component. However, barring a major new attack on the US homeland, or that of a key ally, hard power could be de-emphasised in relative importance, including through the planned withdrawal of troops in Afghanistan from 2011-13.

Original article in PR Week:

Friday, 2 September 2011

How good customer service enhances reputation, both offline and online

By Marit Sillavee, consultant at ReputationInc

According to the European Parliament’s recent study, 40% of EU consumers purchased goods or services online in 2010, up from 20% in 2005. Why such a dramatic rise?

Quite simply, more and more people have Internet access and the skills to surf the web, and it doesn’t hurt that e-commerce outlets have invested heavily in ensuring that the entire ‘click-and-buy experience’ is now so generally straightforward and stress-free.

It comes as no surprise that a large majority of online shoppers find consumer reviews highly relevant. To remain credible and trustworthy, it is therefore a must for an online outlet to allow commenting and, furthermore, also even encourage all customers to rate and comment products and the entire shopping experience.

Ocado, the UK online retailer for instance sends their users an e-mail after the goods have been delivered so that they can let the firm know if the driver was helpful and happy and remembered to ask back the plastic bags for recycling. No wonder they have won plaudits for their service.

Customer service remains crucial – even in an increasingly on-line world. Social media guru David Spark’s latest newsletter presented the following useful statistics on the importance of good customers’ service:

The average "wronged customer" will tell 8-16 people about their experience.
A typical business hears from only about 4% of its dissatisfied customers, 96% just go away and 91% will never come back.
95% of complaining customers will come back if the complaint is instantly resolved and customers who get their issue resolved tell 4-6 people about their good experience.

So, if you don’t want your customers to trash your reputation, firms would be wise to eliminate bad customer service in the first place. Is there a simple, foolproof recipe, which ensures high profit margins and good reputation for all consumer-facing outlets, be they online or offline?

One increasingly utilised area of best practice is to develop an easy-to-use feedback system whereby unhappy customers can express dissatisfaction. Here, it is crucial to always, always, respond immediately to each and every complaint. It is also key to be transparent about your products – if you don’t, consumers will ‘fill in’ the gap by reviewing the products you sell and describing honestly its quality, colour, smell and functionality.

Firms are also increasingly utilising other cutting edge technologies, e.g. the Transparency Toolbar, an application that tells you if the products that you’ve chosen are safe, healthy, green and socially responsible. As a downloadable application, this has the potential to work with all online shopping sites. I love the comment of Josh Dorfman from the Huffington Post on this particular application:

“Any free-market loving capitalist will tell you that transparency is crucial to an efficient, functional economy. Without complete information, consumers cannot send accurate demand signals to suppliers about what they truly want and, therefore, what suppliers should produce.”

It is interesting that even today, regardless of how open or closed a website is, brand name is of major importance. According to the European Parliament’s survey, if a brand has a credible reputation and a relationship already established offline, it is more likely to be trusted by consumers in the online environment. Therefore – to gain a bigger market share online, it is essential to cement or establish offline relationships with consumers, in one form or another.

And last but not least, the study finds that men (yes, men) are more likely to buy online than women. How have online shops managed to attract an audience who are commonly perceived to resent shopping?

I guess the explanation is simple – men don’t mind buying goods, they just mind having to take the trip to the high street and fight for their right for a pair of pants. Shopping online is perfect: they can buy a whole new wardrobe within 15 minutes and get it delivered to their door next morning. Researching male audience perceptions of online shopping experience (which sites they prefer, how do they choose the online outlet, is the online outlet’s reputation important to them, etc) would thus help online outlets to target their commercial activities and draw even more male shoppers to discover the wonders of online shopping.

After all, men are a growing audience shopping segment. Women will also continue shopping online, but let’s face it - they will never give up spending time in boutiques and department stores!

Friday, 26 August 2011

Follow the Leader: Apple’s corporate reputation after Steve Jobs

By Mark Hutcheon & Jeremie Guillerme

As the world digests the news that the Apple King has left the orchard, the big issue of leadership transition is raised. Can the company’s enviable reputation be maintained with the top man, icon and founder no longer around?

When they leave an organisation, iconic leaders may not only leave big shoes to fill for their successor, but also a corporate reputation gap to catch-up with. This is why leadership transitions often require taking a look at how a company’s reputation is shaped. In this particular case, this means asking whether too much of Apple’s reputation equity was built on its previous leader Steve Jobs.

First signs of nervousness came from the stock market, with investors greeting new chief executive Tim Cook by selling shares and marking the company's value down by more than 5%. The share price of Apple recovered to near parity within 24 hours of the news, and one would expect that consumer and employee sentiment will follow the same curve. Nonetheless, Cook has the duty of protecting the precious commodity of confidence and trust in the reputation of the company.

To convince so many people that the best days for the company lie ahead is a phenomenal challenge to any leader or communicator. With his reputation of being an operations expert rather than a visionary leader, Tim Cook will need to deliver clear messages to investors, employees, and Apple enthusiasts across the world that the company will continue to bring new technology breakthroughs to market, and surprise consumers.

For the next two or three years, Cook will benefit from Apple’s legendary new product pipeline. His ability to nurture the culture of innovation and creativity will be put to a more difficult test only at the end of this transition period. This should leave him with enough time to define his CEOship as much as his personal style, while being inevitably constrained by the aura of the former leader, who will stay around in spirit and physically as Chairman.

The future of Apple will bring interesting insights on how a leadership change can affect a company’s corporate reputation. As the global economy has led multinational companies’ ownership and management structures to get more and more complex, a charismatic leader remains a strong reputation asset. However, even the world top-ranked company in terms of reputation will need to demonstrate its ability to maintain and develop its reputation when the magic of its iconic CEO has disappeared.

Friday, 19 August 2011

Thinking intelligently about the future: understanding and managing reputational risk

“It takes 20 years to build a reputation and five minutes to ruin it.” - Warren Buffett

I’ve decided to commence this post with possibly the most overused quote in the world of reputation management. But I have a good reason for doing so. As events as recent as the UK riots and the News of the World scandal testify, Buffett’s aphorism remains as relevant as ever.

‘So what?’ you may ask. We’re all well aware that reputations can crumble as quickly as the proverbial cookie. But what can be done about this, apart from putting well thought out crisis management plans in place?

Quite a lot, actually. The answer lies in a crucial but often little understood concept—that of reputational risk.

Understanding Reputational Risk

I’ve come across various definitions of reputational risk over the years, some needlessly complicated, but I often find it useful to start by thinking about reputational risk simply as a broad range of uncertainties that could have an impact, positive or negative, on an organisation’s reputation. From this simple definition, two important points can be gleaned:

(1) Reputational risk encompasses both threats AND opportunities. Reputational risk management is therefore not just about preventing disasters or crises from occurring, but also about being well positioned to leverage opportunities which may emerge in the short or long term future.

(2) Since the components that drive an organisation’s reputation are both multi-faceted and constantly shifting, so too are the sources of reputational risk. They can emerge from something as specific as compliance (or non-compliance) with a particular regulation, to something as broad as the way in which an organisation responds to changing stakeholder perceptions and societal trends.

In the aftermath of the BP, Toyota and Hewlett-Packard reputational crises of 2010, an article in the Wall Street Journal astutely observed that:

Reputational risk is…one of the most potent dangers that any company faces. It is also, unfortunately, one of the most elusive…Of those who took part in [a recent] poll, 80% claimed that reputational risk is their top concern. However, only 43% believed that they have formal and well-managed plans in place to tackle it.

The problem is clear: It is easy to identify and measure the impact of the damage wrought to a reputation after a crisis. But it is far more difficult to predict when and – more importantly – how a reputation might be tarnished in the future.

Reputational risk is certainly important, but is it really that intractable or difficult to mitigate? As the article in the Wall Street Journal reminds us, it is impossible to predict the future. It is, however, possible for organisations to equip themselves to better manage reputational risks (and on the flipside, to seize reputational opportunities) by thinking more intelligently about the future.

Thinking Intelligently About the Future

Rapidly changing business (and wider) environments continuously bring about new challenges to surmount, and new opportunities to seize. While these emerging issues will differ in scope (e.g. global vs. industry or place specific), level of certainty, and impact (to name but a few variables), they are not insurmountable, and can, to a lesser or greater extent, be taken into account, planned for, and even altered.

Emerging global issues which we are facing now include:
• Growing number of consumers in emerging economies
• Changing consumer tastes and expectations
• The rise of China and India
• Shifts in the economic balance of power
• Increasing regulatory zeal
• Increasing scrutiny on businesses
• Faster and easier access to information
• Rapid technological changes
• The rise of social media
• Changes in interdependence and competition between and within industries
• Competition for scarce resources
• Global warming

The key to maintaining, protecting, and even enhancing a company’s reputation in such a dynamic, uncertain and unpredictable context lies in:
• Placing reputation, which stems from a multiplicity of behaviours, perceptions and attitudes, at the heart of the business (and not in the hands of one individual or department)
• Understanding evolving reputational risks and opportunities, and envisaging multiple possible futures, such that the business is well placed to deal with a variety of future scenarios and uncertainties, no matter how good or bad.

There exist a number of robust methods and tools enabling organisations to do just this. They range from simple one day workshops (using, for example, creative ‘backcasting’ and ‘visioning’ techniques) to longer term scenario planning and simulation exercises. And at the more complex, expert-led end of the spectrum, tools such as the Delphi method and morphological analysis often prove useful in solving complex and seemingly intractable problems.

What is needed at the outset is a commitment to “future proof” an organisation in an integrated, sustained manner, as well as a willingness to “think outside the box” and challenge official, taken for granted versions of what the future may hold. Organisations which equip themselves to think ahead of the curve in this way are better placed to maximise opportunities and mimimise risks, enhancing their reputational assets in the process.

By Gauri Mahtani, Consultant, ReputationInc

Friday, 12 August 2011

Defining behaviour

There will be quite a few people being hauled before the courts in the coming days off the back of their action during the riots and what they posted online. I’m sure many of them would appreciate some “online reputation management” to delete the story, their picture and details swiftly after the court appearance.

The internet is great for sharing info but also for finding out information too. Stuff hangs around. The easily googled providers of so called “online reputation management” may feel like the right choice for some of rioters.

However, these online reputation management solutions are nothing to do with reputation management and won’t improve a reputation. They seek to hide, confuse and potently deceive stakeholders about previous action and behaviour. Hiding what they did doesn’t make it go away. Consumers and companies are smarter at finding things out now and it gets easier to find too. So, the likelihood is that at some point the truth will come out and no efforts to confuse, deceive or smokescreen will prevent that.

Hindsight is a great thing but really people need more foresight to avoid disastrous reputation problems. These looters and rioters have done their reputations considerable damage. And they may not realise just how much yet.

There may well be the temptation to cover things up or bury bad news but the reality now more than ever is that your best attempts to conceal a bad story, poor business decision, embarrassing photo or whatever will backfire. The internet and social media has given disclosure tools to the masses. Celebrities seeking super injunctions have seen their attempts to hide their misdemeanours spectacularly backfire.

Reputation is built or destroyed based on behaviour and transparency. No amount of communications or hiding will change that unless there is tangible behaviour change too. Communications alone will not define a reputation. Equally, active efforts to conceal unsavoury or bad news or past events can actually cause more reputational damage than honesty in the first instance.

Obviously if something online is false or incorrect there are channels and routes to tackle that, though some are slow and costly, but they do allow for correcting false information. It’s always worth remembering what you do is what defines you or an organisation, not just what yo say.

By Ian O'Doherty, Director, ReputationInc

Friday, 5 August 2011

Social media’s political side: Is microblogging the new platform for exposing discontent in China?

By Eileen Lin

Compared to the tens of thousands of lives claimed by recent natural disasters in the country, the 39 casualties sustained in China’s high speed train crash must have felt like a small incident to the officials at the Ministry of Railways, especially given that train accidents routinely prove much more deadly.

However, that was in a world before the microblog.

The Ministry’s decision to bury the wreckage on site reflected the priority of the authority: to return to normal service as soon as possible, and not to dwell on the cause and consequences of the incident. However, what was initially branded a ‘local’ incident created a social media frenzy and quickly grew momentum before eventually drawing Premier Wen to the scene. Given the surge in public outrage at the Ministry’s handling of the crash, the Premier was forced to declare a thorough investigation and compensate victim’s families.

Weibo, the Chinese equivalent of Twitter, played an as yet unprecedented role in exposing the government response to the tragedy with the kind of transparency and speed that officials proved too inexperienced to handle.

Unlike blog posts and forums, Chinese internet police have to now omitted microblog posts from their stringent censorship, both due to the posts’ short life span on net, and to the sheer volumes of content that require monitoring. This ‘oversight’ meant that near real-time messages calling for help at the crash site, and also video footage of the clean-up operation, were amongst the material shared simultaneously across the country.

Remarkably, the government was left completely wrong-footed and perceived as out-of-touch when over 2 million posts relating to the topic were posted within two hours of the accident.
During the week that followed, more posts questioning the handling of the situation flooded the internet, inspiring even the mainstream media to take an openly critical line. Surprisingly, this included CCTV and People’s Daily, traditionally the principle government mouthpieces. And, all of this despite an official gag order preventing media from reporting on the story.

When magazines were ordered to remove the incident from their covers, journalists again went online to publish their articles, apparently undeterred by the pressure from the state. This was certainly a rare occurrence in a country that regards the ability to suppress popular discontent as vital to social stability, especially through its extensive control over media.

What this episode underlines is that, in the era of social media, news reporting is no longer the exclusive preserve of a select few. On the contrary, more and more mainstream media is drawing its reports from the net, using this medium as a litmus test of popular opinion.
In the business world, the most forward-thinking political and corporate leaders have long understood that finding an effective strategy for handling social media is a top priority in managing the reputation of their governments, countries and companies.

However, it is not until relatively recently that the full potential social media holds for destabilising power has come into view. For example, Facebook kicked-off the Arab Spring, while microbloggers have given voice to millions of Chinese who have otherwise been silenced in the name of preserving the country’s unity and stability.

I believe that what we are witnessing is nothing less than a popular revolution being brought about by social media. The unpredictability that this will continue to bring to the global social, political and economic order makes it a mega trend of crucial importance not only for reputation management professionals to observe, but also to understand, in order to give best counsel to clients.