Country reputation

Just read an article in The Economist (which I love) that questions the business of reputation management. The columnist attended a recent meeting in London held by the Reputation Institute (RI) on their new RepTrak results for British companies. The writer rightfully acknowledges that we are living in a "reputation economy" where institutions and individuals literally trade on the currency of reputation and this type of exchange makes "intuitive sense" in a society where Facebook is worth more than many Fortune 100 companies. Reputation Economy is the term used by RI and its professionals, led by Charles Fombrun, and continue to provide valuable, far-reaching insights to companies around the world. The writer, however, raises several interesting objections to the effectiveness of the reputation management industry as it stands today. First, he/she (have no clue) objects to the idea that many different factors as disparate as product quality and corporate citizenship are all rolled up into one understanding of what reputation means. That may be true, but I am not sure why that is bad in such a complex and fragmented world where every individual becomes an interest group. For us reputologists (I just made that up), the factors contributing to corporate reputation vary depending on the company’s history, industry and situation they are facing. For example, in the financial industry, unlike say the automotive industry, it is often difficult to distinguish one company from another by focusing only on their products and services. Their reputations are far more likely to be built on sheer trust in the perceived integrity of their leadership and governance.   The columnist’s second objection to reputation management today is the assumption that companies with positive reputations will find it easier to attract customers and withstand crises.  As evidence of the supposed weakness of this assumption, the columnist cites many companies with strong bottom lines despite terrible reputations: e.g., tobacco companies (harmful product), Ryanair (poor service) and Daily Mail (mean spirit). Yes, there are always companies that will make gobs of money despite wrong-doing and poor service. Nevertheless, these companies have and will continue to have a hard time attracting and retaining the best talent. But in this online world where advocates and fans matter more than ever, it will be harder to keep that bottom line as stable as it once was. But the greatest objection to the reputation industry, according to the columnist, is and I quote… "its central conceit: that the way to deal with potential threats to your reputation is to work harder at managing your reputation.” He/she continues with… “The opposite is more likely: the best strategy may be to think less about managing your reputation and concentrate more on producing the best products and services you can."  Here I agree at least in part with the columnist’s thinking.  The best way to build reputation is to “have a customer” as Peter Drucker always said. Without customers, there is no business to have a reputation worth building. The reputation industry, however, does not urge industries to ignore producing the best products and services in favor of managing reputation.  To the contrary, building the best products and services is part and parcel of a good reputation.   Also, however, today’s society is much more complicated and often it behooves a corporation to do more than just having great products and services. Apple, for example, may have the best products but if it does not give a damn about how it treats employees or contributes to society, it will face problems that if allowed to accumulate may well threaten its bottom line. We see that now with regard to questions about their handling of factories in China. I think that the columnist should rename the article to Why companies should worry MORE about their reputations or else.

I am in Florida now about to speak on a panel about Corporate America and how it can restore its reputation. The panel is being convened at the annual summit of National Association of Manufacturers (NAM).  Getting ready to talk about reputation and how we can repair America's reputation for good business.  A few things are on my mind right now as I was preparing for my remarks. First, has anyone noticed that all the candidates for president this year are always speaking in front of large machinery at manufacturing sites? The manufacturing industry definitely has the wind at its back and should capitalize on this momentum of favorability (and free publicity from the candidates).  Also, in a Harris Interactive survey this year, when Americans were asked about the reputation of corporate America, understandably the numbers were not great. Only about one quarter had a positive perception (with only 2% saying very good, UGH) and barely 10% saying it had improved since 2011. What I found particularly interesting was that when Americans were asked which industries would be part of the solution to the problem of a poor corporate America reputation....they answered that the technology, manufacturing and retail industries were most likely to help improve perceptions. Least likely places to expect help were the governmental and the financial sectors, not surprising. Anyhow, thought I would share these reputation findings as I figure out how to talk about combating the reputation of corporate greed that seems to follow us around these days.

I spent last Saturday afternoon reading the Harvard Business Review issue which has Reinventing America on the cover. The March 2012 issue. It holds alot of information about how to bring back America and make it a desirable location for businesses around the world. It is rich with information and insights. I highly recommend. In one article on what's wrong with politics in the U.S., (definitely read), you start to realize that one big problem facing the reptuation of the USA is our intractable political warfare. It is hurting America's reputation as a place to do business. The point is that there are many advantages to locating business in the U.S. but the political problems are creating barriers to consideration. One suggestion from the article is the following which falls in line with our work on Civility in America. We are hoping to conduct our third wave on Civility in America in May or June so we will be sure to look into the demand for getting civics classes back into the classroom. A call for action. America's reputation has to turn around and Congress is not going to be the stimulus. Business will.

 

Stand up for civics. Business leaders should urge public officials—and the public at large—to restore civics to its rightful place in the classroom. Data show that many schools fail to effectively teach the workings of U.S. democracy or the responsibilities that go with citizenship. Just as America cannot be globally competitive without a well-educated workforce, it cannot retain its economic edge without a well-educated electorate that is ready to meet the relentless challenges of democratic governance.

 

 

 

There is an unusual campaign afoot to adjust the reputation of Japan. It is called The Cool Japan Promotion Strategy Programme and is housed at the Ministry of Economy, Trade and Industry – METI.  The campaign is to make Japan’s reputation more creative by highlighting its fashion, music, food and animation. The concept has accelerated due to the horrific earthquake’s aftermath and the need to rebuild reputation quickly in as many ways as possible.  The basic concept is to export the cultural creativity of Japan similar to what is done with cars. Such an occurrence happened in Singapore in October where a pop up store devoted to Harajuku Street Style – Japan’s edgy fashion district--appeared featuring small lines of Japanese fashion.  Harajuki is the train station in Tokyo where many fashion stores, boutiques and used clothing outlets can be found for young people who hang out dressed as anime or manga characters.  These fashion-ables break all the rules, mix and match, and have an anything goes mindset.  Must be working since I found a line of clothes at Target when I searched. The Japanese reputation for fashion and culture is expanding as wished.

  Reputation building is walking in the front door of The White House.  A recent New Yorker article on the Navy SEAL mission to capture and obliterate Osama Bin Laden is captivating and spell-binding, to say the least.  But now there is some discussion that the The White House okayed the dramatic recounting to make them look audacious, brave and effectively taking care of the nation's big hurt (9-11). Then I learned that there is a movie under foot with apparently deep access from The White House. Oscar-winners' Kathryn Bigelow and Mark Boal of "Hurt Locker" fame are producing the big-time screen version of the killing of Bin Laden.  Due in theaters October 12, 2012.  Isn't that near election day? Duh. The White House is taking reputation-building seriously. A good thing. Everything seems pretty shaky right now. No doubt about it, there is going to be an all out assault and reputation redemption campaign for our beleaguered president.

The S&P downgraded the U.S. credit rating last night. The full report is here. What struck me in its overview are these two points (below) which directly speak to how our fiscal reputation is being managed. In other words, the ability of our governing leaders to work effectively as a management team is no longer putting the US at the head of the class.  We all know that when corporate boards do not function well, they are called to task, reputations gets tarnished and board members find themselves disinvited to serve. We now see the same reputational metric of good governance being applied to our government and the picture is not pretty. S&P is essentially saying that our ability to govern fiscally and responsibly is ineffective, less stable and more unpredictable than it was earlier. And our ability to collaborate across parties is in question.  It's not just the credit rating that's being discredited but our fiscal reputation as well.  America's reputation for fiscal safety is being downgraded as well.

More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011. Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon.

Last night I could not help but wonder how the huge decline in the Dow of 500+ points was a reflection on the perceived reputation of the U.S. government as well as the country itself. I was not at all surprised to see a poll today that expressed basically the same thing. Here is what I knew to be true as I turned in last night: almost three-quarters of the American public believe that the congressional debate over the debt ceiling agreement has harmed the worldwide image of the United States . And a whopping 82% say that the debate was all about political advantage, not what is best for the country. The reputation of the US has been severely bruised in the eyes of its own citizens and certainly around the world. We have plenty of reputation repair to do if distrust of government becomes the new normal. Whereas most companies and their leaders recognize that reputation is essential to their success today, our dueling political parties have yet to truly acknowledge how all the rancor and incivility is a vote from the daily majority about their behavior and decision-making. For more on civility in America, please click here for Weber Shandwick's recent poll. As I looked into people's somber faces last night as I subwayed home, I could not stop thinking about how the American public had given the reputation of the US a solid "thumbs down" on confidence in this country's future. You don't even need a poll to tell you what we already learned from the Dow. Reputation rules whether it's related to a company, a brand, an individual, an organization or a country. We cannot afford more reputation erosion on our country's reputation. In addition to a bipartisan committee on how to reduce the debt, I think that we should be calling for a task force on restoring our reputation for the long-term.  As more people tune out of government, as we learned in our survey, the harder it will be to build back America's reputation for getting things done.

For the second year in a row, about two-thirds, or 65% of Americans say that civility is a major problem, according to our annual Civility in America poll by Weber Shandwick and Powell Tate in partnership with KRC Research.  The timing for this survey is pretty right on. I just read that presidential candidate Jon Huntsman pledges that there will be a climate of civility in the race to the top if it is up to him.  You would think he spoke to us first!   If you read the results regarding perceptions on civility when it comes to politics, you will quickly see that the presidential race could literally depend on the civility factor. The perceived lack of civility in the United States has far-reaching implications for the reputation of the USA with 91 percent saying that incivility has negative consequences for the nation. Those polled said that incivility in government is harming America’s future; that incivility in American life is harming our standing in the world; and that incivility prevents the country from moving forward. About half of the respondents (49 percent) said that the U.S. was among the most civil countries in the world. The 2011 online survey was conducted in May among 1,000 American adults to assess attitudes towards civility online, in the workforce, in the classroom and in politics. Check out the executive summary. We have our work cut out for us.

 My colleague in Asia just sent me a link to the blog of the Prime Minister of Japan. Mr. Naoto Kan's blog had been ongoing but after the triple disaster of the earthquake, tsunami and nuclear plant problems, he stopped blogging for good reason.  He has now just begun. Since I am always interested in how leaders communicate and how CEOs or other leaders are using social media, this was a good find. The theme of his blog is Looking Squarely at the Future (a good title)  and the blog says that he does all his blogging himself.  There is an English version which is translated from the Japanese. There are also videos of the Prime Minister on TV or at different events so it is a true multi-media platform. I definitely intend to follow it because hearing from the Prime Minister as he leads his country through this cataclysmic time will be worth my time. Below is from Mr. Kan's April 13th post:

Since the Great East Japan Earthquake struck, I have held back from sending out my thoughts through my blog. This was to avoid confusion amidst the ongoing flurry of large amounts of information, while I dedicated myself entirely to responses to the disaster.  With a tense situation continuing even now, a month since the disaster toward the future while I will continue to devote my energies to responses to the earthquake disaster and the nuclear accidents, I will resume blogging little by little.

Good to be home from traveling around Asia Pacific the past couple of weeks talking about Reputation Warfare.  So am now back on the blog posting trail. Two things struck me this week although I will make sure to write more about some of my observations about reputation in Asia in the weeks to come. Just to start out, while I was away, Barron's World's Best CEO list came out.  This highly coveted and selective list usually has a theme in addition to its traditional focus on longterm financial performance.  As they say, they like to  identify corporate leaders who make a difference to their companies and deliver for investors. Barron's require that a CEO has been at the job for at least three years and prefers companies with market values of at least $5 billion. This year their advice to leaders is "Go Thee to Asia."

"Any big company looking for serious growth in the 21st century must have a plan for Asia. The region is home to half the globe's population and, increasingly, it's driving the world's economy. So, as Barron's drew up its annual list of the world's 30 best chief executives, we took a hard look at how each candidate was approaching Asia and other developing markets."

On another note, this morning while waking up super early from jet lag crazies, I read about the Warren Buffet-Berkshire Hathaway reputation bruise.  In a New York Times article, it says: 

 "In a July 2010 letter, Mr. Buffett instructed his managers to “zealously guard Berkshire’s reputation.”

“We can afford to lose money — even a lot of money,” Mr. Buffett said. “But we can’t afford to lose reputation — even a shred of reputation.”

These Buffett quotes don't surprise me and neither does the removal of Mr. Sokol. When I turn to my favorite quote of all time from the sage/oracle from Omaha, it appears he acted swiftly and deliberately. In case you have never heard me say it, it is quite appropriate today. 

"If you lose dollars for the firm by bad decisions, I will be understanding.  If you lose reputation for the firm, I will be ruthless."