Archive for July, 2011
A few comments on things that caught my eye while I took some time off this past week.
1. Today’s New York Times has an opinion piece by well-known pollster Stanley Greenberg on the state of affairs in Washington DC. As he is describing the problem with Democrats, he says, “They can recite their good plans as a mantra and raise their voices as if they had not been heard, but voters will not listen to them if government is disreputable.” The same goes for corporate reputation. If a company is considered disreputable by consumers, its voters so to speak, no one will listen to them, recommend them or buy their products. Disreputable can be a killer app.
2. Discouraging to see that the world’s top 10 best-selling business books, as noted on Amazon over the past three months, are all authored by men with the exception of Suze Orman. Makes me worry more about the reputation of female business book authors and worry less about the reputation of male business book authors. As an author of two business books on reputation, I found this factoid disturbing although not surprising. When I looked at the best sellers on business and investing for the past month in the US alone, New York Times’ business writer Gretchen Morgenson’s book Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon was among the top 10 with the other 9 authors not surprisingly being men. So maybe it’s the 10% rule for female business writers. I guess we’ll take what we can get.
3. Data deluge. An article on data overload made me wince since I think about it a lot, especially all the information I try to process every day (even on vacation) with regard to “reputation.” I keep asking myself how a company can build its reputation when there is so much data and everyone feels overwhelmed by all the additional work they’ve taken on as the recession slowly creeps along? What can a company do to set itself apart and convey to stakeholders that there is something new to be heard? How long does it take for reputations to turn over, to go from bad to good, good to great and great to the best? These are questions that I am keeping on my list of topics to explore. If you have an inkling, let me know. I do know one or two things — what you say about your corporate reputation must be simple, memorable, transmissable and distinctive. And I guess I could add relevant. And maybe “social.”
4. If you have not read The Checklist Manifesto written by Atul Gawande, it is worth reading. (I realize he is a male business book author!) I am now a bigger believer in Checklists than I was before. One of the best take-aways was the importance of preventing communications failures when dealing with complexity. In fact, it is so important that it has to be added to the critical steps of a checklist. In recent months, I have learned more about how hospitals operate and the importance of introducing oneself. At first, I thought this “Hello, I am ___”) was a curious thing because in business, we hand over business cards and explain what we do all the time. But in extremely complex, life-altering situations such as flying a plane, operating on a patient or building a building that stays up, it makes a tremendous difference to establish communications by introducing oneself by name and title and acknowledging the other members of the team. As Gawande says, it is important to “ensure stupid stuff isn’t missed (antibiotics, allergies, the wrong patient) and a few communications checks to ensure people work as a team to recognize the many other potential traps and subtleties.” Since so much of business today is built on specialties and not just general know-how, business reputations can come down to something as simple as communications and introductions and getting everyone on the same page. Definitely worth my time.
Although I am addicted to reputation-related matters and to the word “reputation” itself, I am getting the strange feeling that reputation is the new green, as they say. Everywhere I turn and on everybody’s lips is that one word. It is only 10 letters but carries much more heft than a $10 bill, $100 or otherwise. It is not easy to type quickly and I would not say that it rolls off the tongue. It has been around for a long time although it suddenly seems new. It certainly is the word for our new tumultuous decade that sees reputations toppled overnight. So just to see if it’s me who thinks reputation has become ubiquitious because I have reputation-antenna, I went to do a simple search. (As you know, one of my favorite quotes is that Google or Bing are not search engines but reputation management systems.) Guess what, is not just me who sees “reputation” everywhere I turn.
In the first 7 months of 2011 (up to today’s date, reputation surfaced 458,000,000 hits when searched. During the same time period in 2010, one year ago, reputation yielded 55,300,000 hits. That’s a 728% increase.
Reputation is red hot. I think it will only continue to be on fire.
One of the reasons that reputation has become so complex has to do with the vast portfolio of stakeholders that companies are asked to engage with. Years ago, companies primarily worried about financial analysts and labor unions. Today the stakeholder audience is deep and wide, ranging from one to many. Some companies have to consider the entire general public and others only 25 people whose opinions and perceptions count. The question that often arises is what’s external engagement worth? For that reason, I like what I read in some research by Witold Henisz at Wharton, Sinziana Dorobantu, senior research fellow at Wharton, and Lite Nartey at University of South Carolina (“Spinning Gold: The Financial Returns to External Stakeholder Engagement”) As they said, external engagement pays. “The researchers’ goal was to figure out what role these stakeholder events played in companies’ efforts to maximize profits. The answer: a very large role.”
The researchers looked at 26 gold mines over a 15 year period and coded over 50,000 stakeholder events covered in the media. Stakeholder events included actions or expressions about cooperation or conflict with mine owners. As for stakeholders, they included just about everyone…”local and national politicians and community leaders to priests, war lords, paramilitary groups, NGOs and international bodies like the World Bank.” The researchers designed a stakeholder index that revealed the level of stakeholder cooperation or conflict. Communicating and building bridges with their stakeholders led to profitability according to the researchers’ anlaysis.
“We found in our research that the value of the relationship with politicians and community members is worth twice as much as the value of the gold that the 26 mines ostensibly control.”
Stakeholder engagement and cooperation helped companies deliver on budget and in a timely manner leading to competitive advantage and profitability. When cooperation was blocked, they found that mines were are open to delays, unrest and additional costs that led to closure or suspension.
“It used to be the case that the value of a gold mine was based on three variables; the amount of gold in the ground, the cost of extraction and the world price of gold,” he states. “Today, I can show you two mines identical on these three variables that differ in their valuation by an order of magnitude. Why? Because one has local support and the other doesn’t.”
This research can be applied to other industries and does a fine job of making the case for engagement and dialogue.
A reputation for cooperation and meeting stakeholders half way at least is critical. It is good to have data to back up the importance of minimizing conflict and its link to financial performance but I agree with the authors who say “it is not just corporate social responsibility, but enlightened self-interest.”
A lot interests me about the Rupert Murdoch and News Corp unfolding crisis. But two things are on my mind. One is a quote that I have used from Murdoch in articles or such: ” Reputation’s worth more than the last hundred million dollars.” The second is that Murdoch has not used the “reputation” word in his comments although the only female in this drama, Rebekah Brooks, has. She said the following in her resignation letter: ”The reputation of the company we love so much, as well as the press freedoms we value so highly, are all at risk.” Let’s see who uses it next.
7-16 Just read that Murdoch said that the da mage to News Corp’ reputation is “nothing that will not be recovered” and that “We have a reputation of great good works in this country.” More to come.
“Your reputation is all you have in life – your personal reputation and the reputation of your brand. And if you do anything that damages that reputation, you can destroy your company,” Richard Branson said.
“…and it’s going to be very difficult for that brand to ever recover.”
“Misbehaving in front of others can ruin your reputation even if you are a fish, according to an international study that has shown for the first time an audience can influence levels of cooperation in non-human animals.
Scientists from The University of Queensland (UQ), University of Cambridge, and the University of Neuchatel have found that cleaner fish that remove parasites from larger ‘client’ fish – providing a type of cleaning service – are less likely to bite their client if they have an audience of other fish (eavesdropping bystanders).
These cleaner fish sometimes get greedy and bite clients rather than sticking to parasites. This bad behaviour brings mealtimes to an abrupt end as the disgruntled larger fish swims off.
The study, which was published in Current Biology today, showed that other large reef fish that observe this behavior avoid the cleaner fish that have a reputation for biting.
Study co-author, UQ’s Dr Lexa Grutter, said the group’s research has demonstrated for the first time that having an audience can influence levels of cooperation in a non-human animal.
“Having an audience makes cleaner fish work to improve their reputation by behaving more
cooperatively,” Dr Grutter said.
“The fish in the audience – what we call ‘eavesdropping bystanders’ – used image scoring to decide which cleaner fish to avoid.”
Future research will investigate whether cleaner fish care about their reputation more if the bystanders are more valuable clients.
The paper ‘Cleaner wrasses Labroides dimidiatus are more cooperative in the presence of an audience’ is available online.
The bluestreak cleaner wrasse (Labroides dimidiatus) is one of several species of cleaner wrasse found on coral reefs in much of the Pacific Ocean and the Indian Ocean, as well as many seas, including the Red Sea and those around Southeast Asia. Like other cleaner wrasses, it eats parasites and dead tissue off the surface of larger fish in a mutualistic relationship that provides food and protection from predation for the wrasse, and considerable health benefits for the other fish.”
It seems that Checklists are all the rage. Everyone seems to mention the Checklist Manifesto by Atul Gawande which I now have on my vacation reading list. Along these lines, Michael Useem, Wharton management professor, has written The Leader’s Checklist which is out now. I think I will have to read that too because it is a subject that I follow regularly and I’ve always liked his work. Useem provides the 15 mission critical principles that help leaders navigate the stormy waters of crisis and personal success. In an interview with Useem, he talks about the need for a checklist to avoid “unforced errors.” I was not sure what that meant so I looked it up and quickly found that “unforced error” is a sports term (which is why I had not heard it).
Forced Error- A forced error is when your opponent hits a really good shot (powerful groundstroke, angled volley, drop shot, lob, etc), that you have to run, stretch, dive or scramble to get. Once you get there you are unable to put it back into the court or you hit the net. Technically, you made a mistake but since the your opponents hit a superior shot, they “forced” that error. Basically, if you hit a shot on the run and it doesn’t go in, it’s a forced error.
Unforced Error- An unforced error is a mistake that you make due to simply hitting the ball incorrectly (shanks, mishits) or using improper positioning, lack of precision or just bad luck (such as hitting the let cord and having it drop back on your side). In other words, if you are playing a neutral rally and your shot goes out of bounds or hits the net, that is an unforced error.
The point is that Useem is telling leaders to keep a checklist so that they don’t make a mistake such as forgetting to remind employees about following ethical guidelines or how to treat a customer everytime they walk into a room. When it comes to a Reputation Checklist, we actually have one — 99 Tips to Safekeeping Reputation. Although there are 99 of them, they are all worth reading and takes about four minutes. Take a read. I keep mine on my bulletin board behind my desktop at work as a reminder that reputation needs to be managed daily, if not hourly.
Interesting article on what boards talk about when they talk about sustainability. The interview was in MIT’s Sloan Management Review with Christoph Lueneburger, head of Egon Zehnder’s sustainability practice. He tells a wonderful story about something that was said by the founder of Patagonia that is worth repeating.
“I think Patagonia is a leader. I had a conversation with Rick Ridgeway the other day, who leads sustainability at the company, and he said something fascinating. They were doing their Christmas catalogue, and Rick was down there, looking at the always-beautiful pictures and so forth. And Yvon Chouinard, the founder, says in the meeting, “That’s a nice catalogue, but tell me how it is that we’re not just incenting people to buy more stuff they don’t need?”
As Lueneburger says, Patagonia is not saying that its all about growth but instead saying, “It is not growth that will ensure our sustainability, but values.” Yes, Patagonia is exceptional and privately-held but this is where the intersection between value and values happens in the right way.
Twitterologies. Is there such a word? I doubt it. The CEO of Vodacom, Pieter Uys, apologized for outages via Twitter (@uyspj). Despite the inconvenience to Vodacom subscribers, the CEO is getting good marks for his simple apology. While it was happening, Uys was tweeting to customers about what he could do for them and kept in continuous contact. He tweeted the following:
“I do care for every one of our customers. What happened today was not acceptable. I’ll work hard to make you smile again.”
“Words can’t express how sorry I am about today’s problem. Flat out working at making sure all is 100%. Pieter.”
“At the network switch with the engineers. All looks OK now. If you still have a problem, please switch phone off and on.”
Fairly simple way to tell your customers you care. And that you are there. Helps to keep your company reputation intact.