Corporate brand

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.”

Another stat to add to the many on how long it takes to recover reputation. Actually I should say...to add to the few. There really are not that many besides the one we did some research on that shows it takes about three to four years after a crisis. However, I found this one from the Ponemon Institute and Experian that says that nearly 850 executives say that it takes about one year to restore an organization's reputation after a data breach.  It also found, depending on the type of breach, that the average loss ranges from $184 million to over $330 million. Or put another way-- the minimum brand damage is a 12% loss which could increase to 25% of the brand value if the breach was horrific. Just as disturbing is the lack of data breach preparedness according to the research. A fairly large 43% had no plan in place to deal with a breach of confidential leak or theft of customer data.  Perhaps this is why there seem to be so many. Most companies are unprepared and do not think of a data breach in the same way they do another type of crisis that is more common. Either way, it is critical to be prepared since if you really want to make your customers mad, a data breach is a surefire way to make that happen.

Reed Hastings, CEO of Netflix, in response to recovering their reputation after several recent missteps:

"The focus is on bringing back our reputation and brand strength, but it won't happen through grand gestures."

 

I was quoted by Fortune's Geoff Colvin in the August 15th issue. He wrote about the Murdoch scandal and mentioned how "large ideas emerging from this story so far will influence companies of all types for years to come." One of those large ideas is that we have officially arrived at the pivotal point where reputation has an edge over financial performance. As Geoff says, this is Reputation's Moment. Companies may not have fully noticed but reputation is indeed "the new currency of corporate success." Music to my ears. In the article, Colvin makes a few points that could not be truer. I excerpt some below which includes my take on reputation as the new metric of corporate success.

"Previous major scandals were mostly financial; the numbers were lies. Not this time. The damage so far derives en­tirely from behavior—phone hacking and possible police bribery—that ap­pears to be illegal but has nothing to do with reported financial results. Wheth­er it’s illegal doesn’t matter anyway; it’s slimy, and that’s enough. News Corp. is deeply tarnished, and the financial ef­fects could be significantly bad. The company has lost about $5 bil­lion of value in the few weeks since the scandal hit. Longer-term effects could be much worse. “The greatest reputa­tional threat to News Corp., aside from criminal prosecution of Murdoch fam­ily members, lies within regulatory and policy circles,” says Rupert Younger, director of the Centre for Corporate Reputation at Oxford University’s Said Business School. News Corp.’s televi­sion businesses—TV networks, TV sta­tions, and satellite broadcasting ser­vices worldwide—are together a major source of profit, and they’re all subject to government regulation. Govern­ment leaders have treated News Corp. gingerly for years, but now “politicians who have been afraid to tackle such an important company are starting to feel that it may be possible to do so,” says Younger. “This could literally destroy News Corp.,” in the sense that the com­pany could be broken up.

Long-term damage to the company’s reputation among customers, employ­ees, communities, and others could also hurt. “In this new reputation economy, people care about whether a company shares the same values as they do,” ob­serves Leslie Gaines-Ross, chief reputa­tion strategist at the Weber Shandwick communications firm. Her reading on the scandal so far: “A clearer demon­stration of the direct relationship be­tween corporate reputation and cor­porate well-being is hard to imagine.”

 These two ideas, the one-man prob­lem and corporate reputation, are ob­viously related. At News Corp. they’re two sides of the same coin. Yet Rupert Murdoch never seemed to put them to­gether. Long before this scandal, he said, “Our reputation is more important than the last $100 million.” He was right.

 In this brave new recessionary world, we have evolved into a reputation economy where companies are trading on their reputations like never before. They are trading for better regulatory favor, more loyal customers, higher skilled talent, more positive word-of-mouth and more capital. Reputation has become an account in credit that you can draw down on or add to. In this new reputation economy, people care about how decisions are made and whether companies share the same values as they do. It is not just value, as in dollars earned, but also values, as in standards maintained, that has become a crucial element of corporate success.

  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.