Corporate brand

Beautiful morning here in New York. I even hear the birds chirping, almost like Spring. However, for me, it is a sit-down day. I am working on an article which I will tell you more about later but I am looking at many hours in front of my laptop as I draft away. I already started my list of what I want to do when it gets done in a few short weeks. When I wrote my books and other articles, I started a similar list that contains all the things I want to do on an ordinary Saturday or Sunday like see a movie, go out for dinner or lazily walk in the park.  Anyhow, back to my blog post. I have my own reputation and risk to manage with this article looming before me.

I kept an advertising insert from a few weeks ago because it had a few good stats on reputation. It was on Risk Management, a favorite of mine because reputation often comes up.  It was written by Joe Mullich. I am unable to find the link, apologies. A few interesting facts:

1. Accenture found that 44 percent of companies do not gauge reputational risk
2. The Federational of European Risk Management Associations (FERMA) along with the Institute of Risk Management (IRM) found that reputation risk from social media is cited as a “material risk” by nearly 50 percent of European companies, making it one of the greatest threats that companies face.
3. Corporate responsibility or CSR is having a large impact on consumers’ buying habits.
4. Reputation is seriously affected by missteps. Mullich’s section cites a 2010 study of the world’s largest 1000 companies and found that 80 percent of those firms have a major “reputational” event every five years that causes them to lose one fifth of their value.

I particularly liked #3 above because we found a similar trend in our recent study on the importance of the corporate brand behind the product brand. And this quote intrigued me….”The higher the cost of the purchase and the more that translates into a long term relationship, the important reputation becomes.” I think that is exactly right. When consumers are buying big ticket items or even medium sized ticket ones, the relationship is deeper and the consumer wants to get it right. They want to invest their dollars with a nod to doing right and supporting companies that treat employees right. The big shift however is that consumers feel this way about the company behind the brand for smaller, everyday purchases.

The article also mentions how insurance companies are introducing reputational risk or crisis management insurance policies (something we know about) and interestingly, that there is a new data terminal that incorporates a reputational risk indicator “which allows investors to identify the severity of criticism and negative press coverage directed toward individual companies and market sectors.” That’s new to me and quite interesting. Perhaps it is one of those predictive systems that advise companies on emerging threats that we have seen as more clients are being proactive vs. reactive.

While I am on the subject of the corporate brand, I thought I would mention another interesting group of findings from our research. We asked consumers several questions on what influences them when it comes to company perceptions. They report that among other things, the importance of awards/recognition (63% of consumers mention) as well as leadership communications (59% of consumers mention) are influential.  As expected, word of mouth ranks at the top of the influence list, regardless of region.  Clearly, despite the fire hose of information aimed at us every day, some things are getting across when it comes to distinguishing companies from one another and influencing our decisions to buy some products over others easier. Recognition of companies for doing good or just simply doing well is making a dent after all these years. And leadership communications seems to matter to consumers if CEOs are talking about something that matters. Figuring out what resonates with the public is the hard part for communicators although jobs and education would be two good starts.  And a third good start would be the safety of our natural resources.  One additional factoid to add for a Sunday in January: In Brazil, awards and leadership communications are even more influential than what consumers in the U.S., U.K. and China say in our study. Brazilian consumers seem to be more receptive to what leaders say in Brazil. Will have to figure out why. Perhaps the connection between the economy and business is more direct than in the U.S. and U.K and China while we are at it.  More to come on this challenging subject of the interdependence between the corporate brand and product brand.

Weber Shandwick, The Company Behind the Brand: In Reputation We Trust

What do CEOs think about the importance of the corporate vs. product brand? Luckily we were able to discern the answer when we looked at this group in our recent survey on The Company Behind the Brand: In Reputation We Trust.  96% of CEOs said that the corporate or parent brand is as important as the product brand. That is nearly 100% agreement.  Basically, they have little doubt of the corporate brands’ importance in this new age. Why would that be? Executives –across all four markets in our study– agreed that the primary impetus for the rising equality between corporate  brand and product brand is the reputation halo that the parent company brings to its products. Some might call it the reputation premium. Notably, the CEOs in our study cite the bottom-line as their number one reason for equalizing corporate and product brand. They essentially say that there is greater efficiency in marketing and communicating one overall corporate brand rather than several different brands. The concept of an “enterprise” brand that communicates the company’s reputation and product brands’ reputation all at once gets underscored in our new study.

I have thought about the company behind the brand for at least a decade (maybe more?). Years ago, I was involved in a pilot test where we placed corporate and product ads for several companies from different sectors in a business publication to try to determine the right balance of corporate to product messages to generate awareness and interest to buy. Should a company run one corporate advertisement and 1, 2, 3, 6, or 10 product ads to gain notice? Should they alternate the order — three product ads, one corporate ad, three product ads in that order? Do they even need corporate ads? Over how many months would it take to generate the most interest for the company and the products being sold? This was in the days when companies were wondering if they should communicate what they stood for, who they were and if it really mattered. Obviously pre-Internet days. It was a huge research undertaking that involved printing presses and hand-inserted advertisements. I learned alot about rubber glue and washing sticky hands. But my interest in the company behind the brand has always remained with me and kept me wondering how important it was to consumers (and executives). Do they really care? Does anyone notice the face of a company and its character, its values, its narrative? What do people do if they don’t like the parent company but still want the product? 

Luckily, we now have research on how important the corporate brand or parent company really is and why it matters to consumers and executives alike. We released the research today, The Company Behind the Brand: In Reputation We Trust, conducted with KRC Research. Some of the key findings are:

• 70 percent avoid buying a product if they don’t like the company behind the product (consumers)
• 67 percent are increasingly checking product labels to see what company is behind the product (consumers)
• 61 percent get annoyed when they can’t tell what company is behind a product (consumers)
• 56 percent do research to learn about the companies that make what they buy (consumers)
• 56 percent hesitate to buy products if they can’t tell who makes them (consumers)
• Executives estimate that, on average, 60 percent of their firms’ market value is attributable to its reputation. 
• 86 percent of executives report that their companies increased their efforts to build reputation over the past few years

More to come. And it’s been a busy day getting the research out so will return shortly.

Have been reading about corporate brands and went back to my stash of articles. The IBM CMO C-Suite studies has solid information in their report, “From Stretched to Strengthened” which was conducted among the nearly 2,000 CMOs worldwide.  Not the main focus of the research but they do report that it is no longer enough for a company to just markets its products and services. In fact, the report talks about how the character of the company is now on full display as “social media has exposed the bones beneath the skin.”  Only 53% of CMOs report that their corporate character is understood in the marketplace and 57% say they have significant work ahead to get employees on board.

Here is the  part that I liked best because it speaks to corporate reputation today. “For many decades, the CMO’s job was to market an organization’s products and services. Today, it begins with the marketing of the organization itself.”  A fairly sizeable 61% said that one of the initiatives they have set for themselves ahead is to orchestrate a single view of the brand, something we call enterprise branding.

When people ask me what reputation means, I always say it is all about a company’s character. Glad CMOs agree.

Same goes for reputation.

“The value of things is largely determined by their rarity.”

The more that companies lose reputation, the ones that keep it and build it and enhance it will be the ones that are most esteemed. For that reason, reputation will be one of the holy grails that the best leaders vie for.

Good reputation is becoming one of those rarities.

I went to the Thesaurus today to get a sense of synonyms and antonyms for “reputation.” I was just curious. They are listed below. I thought it was interesting that the word “image” was not a top synonym for reputation. Perhaps it is an old-time word that is not used much these days. I also was surprised that “credibility” was not among the selected few. However, some standbys such as esteem, trustworthiness and character are there. As an antonym, the word “disreputableness” does not exactly roll off one’s tongue.

The note about reputation is not terribly illuminating. I agree that reputation is how you are perceived by others but I think that reputation shines a light on a company’s or individual’s reputation and reveals how they are perceived. Not sure I get the distinction. Reputation is character. Either way, how you behave reflects on reputation.

I love the voice when you click on the megaphone.

Main Entry:	reputation [rep-yuh-tey-shuhn]  Show IPA
Part of Speech:	noun
Definition:	commonly held opinion of person’s character
Synonyms:	acceptability, account, approval, authority,character, credit, dependability, distinction,eminence, esteem, estimation,  fame, favor,honor, influence, mark*, name*, notoriety,opinion, position, prestige, privilege, prominence,rank, regard, reliability, renown, rep, report,repute, respectability, standing, stature,trustworthiness, weight, éclat
Notes:	character is what one is; reputation is what one is thought to be by others
Antonyms:	disreputableness, ill repute, notoriety

I met Howard Schultz at a luncheon years ago when I was at Fortune. His company was pretty much in its infancy and we talked about Brooklyn.  Needless to say, he’s a great one to follow when it comes to reputation-building, engagement and reputation recovery. In an article I read about him recently where he was named businessperson of the year, Bill Bradley, the senator, basketball star and board member of the coffee company, noted how reputation was central to their success. Bradley said, “You don’t get millions to support your social networks just by selling coffee. People have to admire the company.” 

I have been pretty enamored by Schultz’s political action where you can buy an American-made Indivisible wristband in the stores as a thank you when you donate to the Create Jobs for USA Fund. Last week I bought one in our local Starbucks because if my $5 can make a difference for even one person, I’m in. 

As I may have mentioned before, I also met the head of Starbuck’s Ethics & Compliance several months ago at a meeting and was impressed by his thoughtfulness and mission. And a young woman I have mentored for many years and is now working her way through college works at a Starbucks in midtown. She adores it and it has introduced her a decent job that has influenced her interest in majoring in business.

There have been many touchpoints with the brand over the years and they all seem to add up.  Just like the wristband says, reputation is indivisible. The whole is greater than the parts but the parts, the touchpoints, can all add up to a halo-like shield that makes a company’s reputation harder to destroy and easier to admire. That’s reputation at its best. It takes years to build and many bumps along the way. But when it gels, it is a wondrous thing to admire.

Yesterday’s oped by Maureen Dowd in The New York Times got me thinking about how much harder it is to build reputation in this shout-marketing world. Her column was about the loss of silence which was a pleasant surprise because I was not in the mood to read about politics. She quotes Ed Schlossberg of ESI who said, “Paying attention to anything will be the missing commodity in future life. You think you’ll miss nothing, but you’ll probably miss everything.”  When everything and everyone seems to be talking, it is hard to make sense of it all.

Reputation building has reached that tipping point I fear. There are so many messages being distributed through so many channels that only bad or sensational news are getting through. Now I know that is an exaggeration. But it seems sometimes that the best way to get my attention is to tell me something awful that has happened and who it happened to (meaning which company or CEO).

Today I was on the subway on my way to work and two young men were talking about MFGlobal and Jon Corzine. Then I looked at the woman next to me and she was reading the Wall Street Journal about Olympus’s problems. Of course, someone was doing the crossword puzzle and another was reading their Kindle.  Another person had a shopping bag with Macy’s logo on it and I was thinking about JCPenny teaming up with Martha Stewart. What about Macy’s?  And all along, here I was thinking about how a company can break through and be liked enough.

Dowd’s column struck me hard. Silence is golden.

Took me a few days but finally found a chance to read a fascinating review in the Financial Times of the impact of the insider trading scandal at management consultant McKinsey & Company and its impact on their reputation. Andrew Hill did a fine job providing a historical review of McKinsey’s ups and downs over the many years of its storied existence and finding former partners and employees to offer their perspectives. As you already know from the trial of Raj Rajaratnam of Galleon Group, the hedge fund CEO is accused of insider trading using tips from former McKinsey partners’ Anil Kumar and Rajat Gupta, global managing partner who left after several terms in 2003.  What intrigued me of course was how McKinsey was recovering from this reputation catastrophe and how it fit with the best practices in my book on reputation recovery. This is not just a bruise but a serious injury to McKinsey’s reputation. Here is what they did so far:

• Communicated regularly with employees and former employees
• Initiated an independent inquiry with the help of a law firm
• Improved processes over protecting confidential client information
• Reviewed its ethics policies and standards
• Redefined what constitutes ”material non-public informtion”
• Built a formal “stop-list” of client stocks that no McKinsey person can trade (not just those assigned to the account)
• Added new training procedures
• Strengthened governance

True to its highly analytical way of attacking corporate challenges (they work for 90 of the top 100 companies in the world, among others), they looked back at how they handled prior problems. Coincidentally, the article points out that they had been putting together a comprehensive internal history of the firm which luckily offered them insights on how they have historically dealt with challenges to their reputation and livelihood. The latter best practice is one I highly recommend to others. In my book, I talk about the importance of the Rewind period where companies study their mistakes to from the past to create a better future. Lord John Browne of BP did so after the refinery fire in Texas City and asked the question of how they did not see the pattern of errors that turned deadly sooner. Looking in the rearview mirror may take time that leaders do not think they have but critical warning signs are often present. Retromining is a critical piece of recovering reputation. As the new McKinsey global managing director, Dominic Barton, also did, he studied other thriving cultures that failed. As Barton said in the article, he had been “thinking what happened with the suppression of the Jesuits in the 1700s. This may seem strange, but [it was] an organisation that was thriving and doing well and all of a sudden was severely challenged.”