Archive for January, 2013

How much do I love this quote….A lot. It was in an article on Davos. Amen.

“If leadership has a secret sauce, it may well be humility. A humble boss understands that there are things he doesn’t know. He listens: not only to the other bigwigs in Davos, but also to the kind of people who don’t get invited, such as his customers.”

I mentioned this new survey on reputation from McKinsey on my blog a few weeks back but what I did not mention was how perplexed I was by the artwork they chose in the report. This is not to knock the great work they do but to raise the question about why they would not question artwork of men saluting each other when it comes to a serious business topic. I know that they regularly use this artist and look in their reports but I flipped through the pages to see if there was a mirror image with a woman or two in it. There was none. And I realize that this harkens back to an earlier style when men ruled the business suite. I understand the style because I saw plenty of it while at Fortune and still love the look. Yet, all in all, I was surprised that they chose this image when we have a paucity of female CEOs and women at the top.  Women are getting ahead but glacially so. And in defense of women, women are already adding value to the reputations of some of our largest, most prestigious corporations.

A new study was just released called the Champion Brand Index from APCO, another PR Firm. It caught my interest because it ties corporate reputation to sales which we all know to be true. The survey was conducted among 10,000 consumers around the world. If you follow my work, you know that we also examined the link between corporate and brand reputation in our Company behind the Brand research. The Champion Brand Index found similar strong ties between the two and I am happy to report them here in defense of the indivisibility today between the corporate and brand reputation:

• 40% of respondents say they decided not to buy a company’s products or service because they did not agree with the company’s practices, policies or activities
• 77% of respondents believe that corporations have a greater impact on their lives today than 10 years ago
• Nearly half say that global companies have a bigger impact on their lives than the government
• 67% say that it is as important to know how a company operates as it is to know what it sells

Good stats for continuing to make the case that corporate and product brand reputation are increasingly one and the same today with the vast penetration of the Internet and globalization shrinking the world. The fact that over three-quarters of consumers notice how corporations have become tabletalk in our lives is a good one to save.

A former colleague sent me an engaging article from Gawker about CEOs and hubris. The first half of the article was actually about powerful CEOs sock exposure when their legs were crossed on stage. But the article hit the nail on the head when it comes to CEOs.  “A Wall Street CEO primarily serves as the human embodiment of the firm—the competent, reassuring face that the many-tentacled monster projects to the world. As Nassim Nicholas Taleb once said, ‘A C.E.O.’s incentive is not to learn, because he’s not paid on real value. He’s paid on cosmetic value.’ This is not to say that these wildly successful men are dumb; it is simply to say that their job is not about muddling in the details, or tinkering with the gears of the machine. The CEO’s job, in public, is to frame the perception of what his company does, to cast the company’s activities in the proper terms, so that it sits in the public’s mind in an acceptable way.”

I thought that this quote and the part that I bolded sums up well the role of the public CEO — positioning the reputation of the company to its many publics in the most effective way. Of course, I could go on about how important the narrative is and how it should be distributed to maximum effect. But it does go to the central core of the CEO’s external job today. Internally, the CEO’s job is vastly different — modeling the values of the company, inspiring and motivating employees, building a top team, and communicating its mission and purpose. Creating meaning for the workforce and making sense of it all. A massive job.

We just issued our study on Socializing Your CEO II. It is a sequel to the audit we did in 2010 on how CEOs were using social media. It was one of the earliest explorations of social CEOs and we found that two-thirds of the largest revenue producing company CEOs were bascially UNsocial. Two years is a long time in Internet time so we were curious how  these chieftains were faring in the social dimension now.

We learned that CEOs are more social — hurrah! Good news. In 2012, 66% of CEOs of the world’s top 50 companies engaged online compared to 36% in 2010.  There was heightened visibility on corporate websites and usage of video such as corporate YouTube channels. Where they failed to show a surge like we saw in other social activities was in their usage of social media platforms such as Twitter, Facebook, Google+, Pinterest and LinkedIn.  In fact, in 2010, 16% of CEOs of the largest companies in the world used social media compared to 2012 where the incidence was 18%.  Interestingly to me, the current usage of social media platforms at 18% is similar to what the IBM CEO survey found in 2012 (16% of CEOs participate in social media). However, when IBM asked CEOs whether they’d be using social media three to five years from now, a whopping 57% said yes. They may be over exuberant here but let’s just say that they are acknowledging its importance and their commitment to get the hang of it.

What do I think about all our results? I think that CEOs are still dipping their toes in the social media waters but for the most part, I’d have to say they are decidedly taking their jobs as social storytellers to heart, whether on their About Us/home pages, in video, and to some extent on social media. They are covering all their bases, trying out different channels to find out what suits them and reaching out to stakeholders in the many places they may be — be it prospective talent visiting their career pages, investors checking out their credibility quotient on YouTube or customers visiting their Facebook pages. Of all the social media we examined, the greatest increase over the past two years was for CEOs on Facebook. Usage of Twitter declined which is curious. Perhaps Twitter appears to pose more risk than most. Mind you, these are the largest companies in the world in mammouth sectors – oil, automotive, telecom, financial — and not the usual Internet technology companies that feed off of social media. Also, those of us in the U.S. do not quite realize that CEOs in other regions consider being on a home page to be a big giant social step and in some regions, there are security issues about plastering your information or picture widely. I should add that U.S. CEOs are more social on social networks than their peers in Europe, Asia and Latin America — 26% vs. 18%, respectively.

I thought, however, that I would use this post to talk about social CEOs and reputation since that is what my blog is about. I will return to our Social CEO study often so keep a watch. Not only will I continue to observe social CEOs because I am interested in reputation but because I firmly believe that being social will be a prime driver of reputation in years to come.

Here goes. We learned in our audit that CEOs of the world’s most reputable companies consistently demonstrate greater online engagement than peers at less reputable companies. 81% of CEOs from Most Admired companies (using the Fortune World’s Most Admired study) engage through company websites or in social media, compared to 50% of those from less reputable or “contender” companies worldwide.

The growth in engagement among CEOs at Most Admired companies exceeds the growth in engagement among CEOs at contender firms. While contender company CEOs are more social in 2012 than they were in 2010 (50% vs. 28%, respectively), Most Admired company CEOs essentially doubled their sociability in the past few years. I have no doubt about it. Most Admired company CEOs may more acutely recognize the relationship between social media engagement and positive reputation and the importance of having a dialogue with customers
despite the risks.

I could tell that it must have been the one year anniversary of the Costa Concordia because I started hearing about the shipliner crash in the past few days.  Reputations keep rolling along throughout the year but especially hit home one year later. Whereas they might be fleeting memories at first, they all come together on the year one anniversary to make us take notice. Today I started hearing more about the memorial service for survivors and families of those who lost their 32 dear ones in Giglio, Italy and it started to stick more than two days ago. There were 846,000 mentions on Google when I searched for Costa Concordia anniversary today.

For reputation, one year anniversaries are part of the reputation process.  It is almost like it fits into the five stages of grief. The one year anniversay is a day of reflection and return to the reputation demise that caused the loss in the first place. All the pictures of the cruise ship on its side off the shores of the little Tuscan city are back in view. Debates over raising the ship and removing it are back in the news. Anniversaries are important because they remind us that reputations should not restored overnight. The bigger the loss (especially when lives are lost),  the longer reputation takes to repair. That should be law.

I especially remember the Costa Concordia because we were launching our survey on how corporate and brand reputations have become nearly indivisible. The parent company of the cruise liner pushed media requests over to the Costa Concordia CEO — the brand leader — in an effort to disentangle the corporate reputation from the brand reputation. Due to the ease of information flow and the Internet’s reach, much of the media coverage mentioned the parent company in the coverage which only proved that corporate and brand reputations have definitely converged. Because the entire incident happened just as we launched the survey, it is forever lodged in my mind.

Talking about reputation, tomorrow’s Oprah Winfrey interview with cyclist Lance Armstrong will be another one for the record books.  I am not sure how Lance’s confession that he used drugs to help him win the Tour de France several times will go over. My sense is that an apology might not curb his rapid reputation decline and Lance’s reputation might not just keep rolling along but might face a hard stop for awhile. No telling where it will be, however, in three or four years.  I will be interested to tune in and watch.

For years I have been reading that the world has gone global. Countries and companies are all globally connected, at least that is what I thought. Globalness is a key driver of strong reputation and seriously sought after by the most admired. Well, I was wrong. According to the DHL Global Connectedness Index, we are not as connected we we thought. Connectiveness in DHL’s index is measured by both the depth of connectiveness (how internationalized a country’s economy is) and breadth (how many countries it connects with).  Breadth is now  4% lower than it was in 2005 and depth is below what it was in 2007 but 10% higher than it was in 2005, having recently rebounded.

Why would that be? Certainly the global recession has had an effect by limiting global capital flows. That makes sense. And companies are also less likely than before to place their investment dollars in foreign countries. I guess so.

Europe is the most globally connected region. This is probably good except if economies in your union are tanking. Another fascinating finding is that distance and borders still matter, even online. The researchers behind this Index note that most international capital flows stay within region and the same goes for online connections — they stay closest to home and decrease with distance.

Here are some facts on which countries were the most and not so very connected out of the 140 countries in the Index. It shows that the world is not as flat as we thought. And it shows that companies still have their work cut out for themselves in terms of building global reputations and developing markets for their goods. We are more insular than I imagined.

Netherlands (#1)

Britain (#6)

Germany (#9)

France (#17)

U.S. (#20)

Japan (#42)

India (#62)

China (#74)

Brazil (#77)

I had heard alittle about some reputation problems (tax avoidance) that Starbucks had encountered in the U.K. over the past couple of months and just read this story about how they are working to counter their dip in reputational equity with a little frothy promotional offering. Now until mid-February, they are discounting coffees on Mondays to earn back customers’ trust and show that they are sorry. I was particularly enamored of this advertising campaign which is fun, clever, positive and should definitely help. It qualifies as a reputation recovery uplift.

It seems like every year I hear that Chinese brands and their reputations will be going global. Apparently The Economist thinks that 2013 is the year that Chinese brands will truly go global. Their reasoning is that Chinese companies have grown as big as they can in their own country and now need to expand overseas markets. A second reason is that Chinese companies are now longer just B2B ones but are now competing with brands that are B2C that develop dynamic marketing campaigns and require different campaigns. Some of these brands that we will be introduced to in 2013 are Baidu, Haier, Tencent, and Metersbonwe. Other reasons that Chinese companies are finally going to go global include seriously building global cultures as Lenovo has and making sure that corporate entities include product names that are less complex and more recognizable. As the article says, Jianlibao which is an energy drink, had trouble expanding beyond Chinas because its name was hard to pronounce. Try Wanxiang.

Global Chinese company reputations won’t be easy to build regardless of how much muscle they put behind them. There is a well-entrenched perception in other regions that Chinese companies produce low quality products and are poorly governed.  William Brent, a colleague of mine who helps run our Emergent China practice, was quoted in this Economist article as saying that “2013 will mark the year when Chinese multinationals come face to face with transparency.” He is right. Corporate governance is a driver of strong reputations.

If this is the year of Chinese reputations, I look forward to it.