Archive for July, 2007
Paul Holmes, author of The Holmes Report, recently wrote about the global pr agency business. It appeared in his July 23rd issue. The report was a roundup on how the pr business was faring and prognosis for the future. Luckily for those of us in the business, the news was very good. The business is growing. According to Holmes, “What emerged was robust evidence of an important global business, one generating at least $7 billion in fee income annually, employing in excess of 50,000 people, and growing by at least 8.5 percent a year.”
An article appeared in Global Business News Online on Rollercoaster Reputations. The main point of the article is that CEOs should take their careers into their own hands. The authors report that CEOs initially enjoy a honeymoon period but the freedom ride is soon followed by a “climb to glory” that “leads to a plateau and an inevitable slide down the other side.” I have to agree. Many CEOs do not leave when the going is good. In time, nearly all lose favor with the street, the board and other important constituencies. In time, they all succumb to thinking they are infallible. Of the many good examples given are British Airways Sir CEO Rod Eddington who left after five years with his reputation intact vs. BP’s Lord John Browne who could have retired as one of the most admired CEOs ever if he had only timed it better.
Although I am on vacation (technically), I cannot keep myself away from recent CEO events. I have been following the Whole Foods’ CEO John Mackey episode with great interest. As you probably heard by now, he was discovered to have been posting on a discussion board using a fake name. For eight years, no less! I went to the web site to see the latest press release. I found this:
AUSTIN, Texas (July 17, 2007). Whole Foods Market today released the following statement from Co-founder, Chairman and CEO, John Mackey: “I sincerely apologize to all Whole Foods Market stakeholders for my error in judgment in anonymously participating on online financial message boards. I am very sorry and I ask our stakeholders to please forgive me.”
The press release is all of 50 words. I don’t recall reading something this short from a corporation.
A friend of mine emailed me at the start of this week about a cnn.com article on how prescription drugs are the new campus marijuana or weed. Since former vice president Al Gore’s son Al Gore III was caught driving over the speed limit with a pharmacy in his back seat (Vicodin, Xanax, Valium and Adderall), the coverage on young adult prescription usage has become red hot. My friend, a reputation expert like myself, read the article and quickly knew that this heightened media attention spelled t-r-o-u-b-l-e for the pharmaceutical industry. To quote from the article, “According to a CASA report, between 1993 and 2005, the proportion of college students abusing Vicodin and other opiods went up 343 percent, about 240,000 individuals. The numbers increased 450 percent, or by 170,000 students, for tranquilizers such as Xanax and Valium, and 93 percent, or 225,000 students.” (CASA= National Center on Alcohol and Substance Abuse)
The Gore III episode is a classic early warning sign that prescription drug abuse and an overmedicated young adult population is about to crash and land on the doorstep of the pharma industry like a burning meteorite. Reputation…beware.
Al Gore III, pharmaceutical industry reputation, reputation expert, drug prescription abuse, public perception, college campuses, marijuana, weed, pharmacy, obesity, marketing, food companies, early warning sign
Portfolio.com has an interesting interview with Ogilvy & Mather’s CEO, Shelly Lazarus. She has been CEO of the much admired advertising/marketing firm since 1996. That’s a long time in CEO history. The question about whether CEO reputation matters was posed to her and she replied: “Everything a CEO says and does is no longer personal. It is attributed to the company. Ultimately, the leader bears the responsibility for everything that happens.” For better or worse as the marriage vows say.
We all feast on reputation coverage and the recent article in BusinessWeek, “What Price Reputation?” by Pete Engardio and Michael Arndt was filling. I knew about the article since Pete Engardio had called me weeks earlier. Congrats to all those quoted and particularly to my friends’ Jon Low and Pam Cohen. Jon and I met years ago when he was at Ernst & Young’s Center for Business Innovation. While he was writing his book with Pam on intangible assets, I was busy with mine on CEO reputation. In fact, we gave them some of our data on CEO reputation for their model building. At about that time I wrote an article for Ernst & Young’s CBI journal describing Communications Capital –the importance of knowing what, when and how to disclose information.
I wholeheartedly agree with the writers that reputation is a company’s most competitive asset. My entire career has been based on this simple fact. Engardio and Arndt are also right in saying that reputation management is now becoming more science than art.
What Price Reputation?, BusinessWeek, Pete Engardio and Michael Arndt, Jon Low, Pam Cohen, Ernst & Young, Center for Business Innovation, reputation building, financial performance, share price, green reputation, GE, Jeff Immelt, enduring reputations, CEOs, Communications Capital, Phil Rosenzweig, halo effect, McKinsey Quarterly, intangible assets
The recent Institute for Crisis Management report on 2006′s business crises found that when leaders think of crises, they think of a fiery explosion, plane crash or natural disaster such as Hurricane Katrina. Instead, the ICM fround that “smoldering” crises are the ones that take companies by surprise and harm their reputations. In fact, ICM reports that two-thirds of all business crises over the past 10 years can be classified as of the smoldering type. Makes sense. Companies rally behind the red hot crises but overlook the simmering ones.
The top five most crisis prone industries in 2006 are airlines, software manufacturers, pharmaceutical companies, natural gas companies and petroleum companies.
Time for companies to manage their reputations better by establishing some form of crisis alerts or warning signals.
Institute for Crisis Management, ICM, 2006 crises, smoldering crises, crisis categories, most crisis-prone industries, harm to reputation, crisis surprises, early warning signs, crisis alerts