It has been a crazy few weeks — traveling to Berlin, San Francisco and Istanbul. But I am back in the USA. So here are a few observations about things I’ve read and learned that I wanted to share:
1. Deloitte Touche Tohmatsu just issued a new report on reputation risk. Reputation risk was the top strategic risk among 300 global C-suite executives surveyed. The survey found 40% of respondents listed reputation as their top risk concern today, with their business model second at 32% and economic trends/competition third at 27%. In 2010, reputation risk was at 26% so we can see that it has moved to the very top of the C-suite agenda. Henry Ristuccia, global leader of governance, risk and compliance at Deloitte had this to say (love this quote): “Reputation risk is going to always be the meta of all risks…how you manage the underlying factors that could affect the organization’s reputation or brand…how resilient are the people, the culture?” The meta of all risks!
2. In Istanbul, I spoke about Reputation Warfare, the theme of my Harvard Business Review article. The occasion was the 2nd International Reputation Management Conference at Kadir Has University. It was very impressive because there are not many reputation management conferences in this world (Reputation Institute holds one annually) and here I was in Istanbul. Very forward-looking of the university. The summer protests in Turkey at Gezi Park was an interesting backdrop to my discussion on using social media as an opportunity to defend one’s reputation in addition to the risk. Additionally, there was discussion about how the protests had affected the reputation of the country. Tourism took a hit in July but from the looks of it, it was pretty healthy this week. I am going to keep a watch out for how Turkey repairs its reputation and what types of reputation recovery strategies are employed. All very interesting and doable. I also experienced some of the Turkish hospitality that they are so well-known for.
3. Just this past week, I read two articles on how Goldman Sachs and JPMorgan are repairing their reputations. All in one week. Clearly this is a topic that has grown exponentially and particularly in the financial sector. The Economist article on Goldman Sachs was fascinating because it described the scenario setting that is being used to train vice presidents to better understand their responsibilities to the firm when faced with ambiguous and complex challenges to doing business today. The case study is preceded by a film that is described this way: “…an emotive documentary on the history of Goldman Sachs, filled with interviews of luminaries and former executives, each hammering home the virtues that supposedly make the firm distinctive—teamwork, personal accountability and the legendary exhortation by Gus Levy, a former leader of the firm, to be ‘long-term greedy’, by which he meant it should forgo short-term profits if they came at the expense of client relationships.” I mentioned in a previous post how Goldman Sachs is super-engaging in training which included their CEO from the start. In addition, incentives have been revampedd and tied more to collaboration and teamwork. The WSJ article on JPMorgan’s CEO Jamie Dimon focuses on how he is converying “business as usual” as he faces an imminent federal lawsuit, another revealing reputation recovery strategy. He has been touring midsize cities such as Cleveland, Oklahoma City and St. Louis meeting with local businesses and community leaders that are supported by JPMorgan’s philantrophy. According to the article, Dimon’s message are fine-tuned, upbeat and focused on the customer.
Fake commentary. This weekend I received constant fake commentary to my blog — every minute. I deleted over 1000 or more in the end. I just could not believe that anyone cares enough to assault my blog like that but apparently wordpress has been having these robo-attacks which affects its users. Very annoying.
On the subject of fakery and forging online reviews, this morning I read about the proliferation of fake reviews online. It is estimated that by 2014, nearly 10 to 15% of social media reviews will be fake. The problem with this is obvious to all — reputations are won and lost by such phony reviews. How many times have you turned away from a product because a review was scathing or negative? And how often has that bad review made you think less of the company behind the brand or anything else that company sells? This causes reputation doubt.
Some of our research at Weber Shandwick has found that online reviews were becoming nearly as important as professional reviews. For example,by more than a margin, consumers pay attention to consumer reviews over professional reviews for consumer electronics products (77% to 23%). They read 11 online reviews on average before purchasing products. Online reviews surely affect the bottom line. New York’s Attorney General Eric Schneiderman, who is leading a crackdown on companies in the business of creating false online reviews, gives good reasons as to why this is more than an annoyance: ”Harvard Business School found that increasing a restaurant’s review score by one star on Yelp.com could boost business up to 8 percent. Cornell researchers found an extra star on Travelocity or TripAdvisor could translate into an 11 percent increase in a room rate.” So there you go. Fake reviews destroy reputations and profitabilty.
Many of these firms hire people in other countries who get paid $1 up to $10 to write one negative review. Luckily, our attorney general in New York is trying to get rid of them and is giving out large fines to keep them from continuing this bad behavior. Reputations deserve better than this.
The news story about the CEO held hostage in China by employees has me thinking about the potential next new uprising — employees. We’ve seen leaderless revolutions spring up everywhere around the world recently but we have not really seen employees take matters into their own hands like this. Of course we have labor unions that strike and protest but they usually have contracts with employers and have set rules for negotiations. Employee preceptions are such an important driver of reputation that any mishandling or media attention (offline and online) related to dissatisfaction can seriously damage a company’s reputation.
Going back to the hostage American CEO, Chip Starnes, of the specialty medical supply company based in Florida — he was held hostage in his office for several days because employees were worried he would not pay severance as the company laid off some workers to move their functions to India where labor is less expensive. The CEO bought the factory 10 years ago so this was not a new relationship although it is hard to tell what the relationship between employer and employee actually was. As hostage, Starnes spent some time being kept awake and hungry, all under less than ideal conditions. Starnes sent an alarming cellphone video of the situation to his brother showing employees gathered around an executive-like chair in the middle of a hand-drawn circle on the pavement outside his office cell. Once compensation for employees was properly negotiated, he was set free although he has not left China as employees await a check clearing for their employment packages.
On one hand, the CEO and his company’s reputation for doing business in China was damaged (perhaps not damaged but certainly placed in doubt) but I’d add that the reputation of the business environment in China was also placed in harm’s way. And all of this was inflicted by employees who rose up and took matters in their own hands. We’ve seen other employee-instigated anger at employers such as confidential leaks, badmouthing online and boycotts but rarely something this drastic. Employee as activist could unfortunately be the next reputation-damaging trend.
I wanted to mention an example of a new movie about fracking with Matt Damon that is soon to be released, Promised Land. The reason I want to post about it is that I predicted a few years back that this would become a trend in the reputation landscape and it has. I also like to use my blog as an archive on all things reputation. Lately I have found that when I have a presentation or speech coming up, I can find good examples to use to make my case. So this blog comes in handy in many ways.
Promised Land is about a natural gas company salesman, Matt Damon, in rural Pennsylvania and his plan to lease natural gas drilling rights there. The movie, to be released at the end of December, is already raising concerns in the energy industry (according to this article) and they are reportedly distributing research, information about fracking on social media and preparing brochures about fracking to educate the public. It is not clear if the movie takes a stand on fracking but sides seem to be lining up.
All of this is on my mind because of the article I wrote on Reputation Warfare for HBR and how companies can imitate adversaries’ reputational assaults and need not remain defenseless.
I wanted to keep this blog as a bookmark for how reputation strategies are changing over time as companies increasingly take on their opponents. My, how the world of business is changing.
Some good points on how to protect reputation from Bloomberg BusinessWeek. The article reminded me of the piece I wrote for HBR, Reputation Warfare. My article made the point that companies no longer have to just sit there as their reputations get pummeled. There are strategies that can be deployed to get your side of the story on the record. Plus it always helps to respond in the same format (YouTube, Facebook, blogs, etc) as your opponents. This BusinessWeek article by Felix Gillette says: “If there’s any solace to shareholders, in the endless push-and-pull between company critics and corporate defenders, the media environment seems lately to have handed an unlikely advantage to brands.” Gillette makes the point that brands can create their own messages now and get them out in defense. So what can a company do to protect its reputation and get its point of view across as swiftly as their biggest critics. Here are a few pointers that are discussed in the article:
1. Craft Your Brand Image in Peace Time. Get your content ready to go during quiet times and push it out aggressively when the spotlight is on your company. “The idea of producing a bank of preemptive content—about how we produce our food, how we pay our employees, how we run our diversity policies—and then activating them with paid media at the moment that the controversy arrives is almost a prerequisite strategy for everyone now,” says a media buyer CEO.
2. Buy Ads & Keywords on Google that counteract boycotts or protests. If you search for BP oil spill on Google, you will come across a site from BP on their preparedness. Get those sites up and ready before you need them.
3. Do a vulnerability audit before crisis strikes. Plan ahead of time for your deficits and what you need to do to defuse the situation when it happens. Vet yourself. Most crises are self-inflicted and companies know ahead of time what their weak links are. There really should be no surprises.
4. Get your Advocates in order. This again is good old common sense. Make sure that you know who is likely to defend you in time of need. Keep in touch with your supporters. Today I saw the CEO of TDAmeritrade quoted saying a few good things about trading group Knight Capital who practically melted down this week when their computer system went amok executing trades.
5. Get your monitoring software in place. The article points out that having the right monitoring software in place can now help companies know how many people are actually expressing outrage over an event and whether the anger is rising or falling. As we all know, the news cycle is less than 12 hours today so maybe those 10 critics are going to move on to the next fiasco. If you can measure it, you can manage it.
P&G is announcing its new corporate campaign that is a “global serenade to mothers.” It is covered in an article today. The reason this is big news to me (and I am not an Olympian’s mother) is that it is part of the P&G initiative to focus on the corporate brand behind the products they sell. Our research on The Company behind the Brand: In Reputation We Trust is all about the increasing interdependence between corporate and product brand reputation. As the global CMO says, “P&G is in the business of helping moms.” Or he could have said that P&G is in the business of building its corporate brand reputation. The new campaign is focused on the moms of athletes, particularly Olympians. Right on. As we learned in our recent survey, 87% of executives report that the corporate brand is as important as the product brand. And consumers also agree — 70% of consumers in markets around the world say that they avoid buying products if they do not like the company behind the brand. We are releasing some more information shortly from the study on the link between CEO and reputation as well as the impact of leadership communications so check here soon.
In a piece I wrote for The HuffingtonPost for 2012, I forecasted that reputation blackmail would show its hand this year. Lo and behold, a front page article in yesterday’s paper headlined “Hackers-For-Hire Are Easy to Find.” The article had to do with two feuding brothers from Kuwaiti who were suing one another over business they held. One of the billionaire brothers found someone to hack into his brother’s account and post online all his brother’s personal emails including finances, legal affairs, pharmacy bills and everything else that you can imagine gets sent and received from one’s personal account. The cost: $400. Hackers to hire are that cheap and apparently easy to find. One of the reasons there has not been much on this topic where reputations can be easily lost is that people do not want to report this type of reputation blackmail and generate even more attention.
In this instance, the one brother hired Invisible Hacking Group located in China and here is how it works:
“It requested the target person’s email address, the names of friends or colleagues, and examples of topics that interest them. The hackers would then send an email to the target that sounded as if it came from an acquaintance, but which actually installed malicious software on the target’s computer. The software would let the hackers capture the target’s email password.”
You get the picture.
Reputation blackmail presents a very scary scenario. Not only is privacy damaged but reputations which take a long time to rebuild get decimated. Reputation protection can only go so far. Risk management and reputation warfare gets more complicated by the day.
Whatever the merits on both sides, I wanted to point out here that what I thought was happening in the reputation warfare field is actually coming to pass. Increasingly more companies are fighting back when they believe their reputations are at stake. Perhaps companies recognize that public opinion might be on their side as the general public loses trust in institutions. But without a doubt, companies are not necessarily turning the other cheek when they think their reputations have been unfairly damaged. In this blog, I have mentioned the increasing frequency of company documentaries that serve to tell their side of the story. Today’s article about Del Monte’s public spat with food regulators over restrictions on its cantalope imports underscores the trend. To quote from the article,
“The company, which is one of the country’s largest produce marketers, says the restrictions could damage its reputation, and it has sued the Food and Drug Administration to lift them.”
“But advocates of safe food said that it was extremely rare for a major food company to take such a publicly aggressive stance, and that they suspected Del Monte Fresh Produce was trying to bully regulators into thinking twice before pursuing recalls in the future.”
Expect to see more of this in the future.
As you know from reading my blog, one of my great interests is online reputation management, particularly in times of crisis. At Weber Shandwick, we have conducted research starting way back on this topic….from Safeguarding Reputation to Risky Business: Reputations Online to Reputation Warfare and more to come. This past week I learned of some new research from Altimeter Group, authored by Jeremiah Owyang. They surveyed 144 social business program managers as well as conducting interviews with 63 corporate practitioners and providers. This included our very own David Krejci in our Digital Communications group about our social media crisis simulator Firebell. I liked David’s quote (“experience the paralysis”) which is what Firebell does – it gives you the heart attack moment when social media has your company in its sights. Since digital defense has been an important element of what we do, we were delighted to share information on this resource. Some of the facts (read the full report here) worth noting are as follows:
- Be prepared. More than three-quarters of social media crises could have been diminished or averted if companies had invested their resources internally and strategically. Of the advanced companies identified by Altimeter, 13 of the 18 have a clearly defined crisis plan with clear roles, responsibilities and action steps. But they found that 56% of all companies had no clearly defined plan (that’s when the paralysis sets in).
- Companies need social media policies. These policies guide employees on how to participate in the social universe. Left unguided, employees are uncertain or oblivious how to participate online and probably do so and go off the guard rails. Reputational risk is heightened, not lessened, when no social media policy is in place. In their survey, 83% of all companies they surveyed had a formal policy in place but among the more advanced ones, all 18 or 100% did. Interestingly, 8% had a policy specifically prohibiting employees from engaging on behalf of their companies. While I have traveled around the world, I have seen this to be true but it does not seem to deter most people and in fact, most definitely increases anonymity online.
- Ongoing education is critical to managing online crises well. I found this section of the report very helpful because there is so much more that companies can do. An example was given of a company that has a certification program with over 60 online courses. Companies could certainly do better at social media training, whether it be brown bag lunches, speaker series, internal newsletters, etc.
- Create a scalable hub and spoke system to lead the social media strategy. The more advanced companies have a center of excellence at the hub with oversight for strategy, governance, training and education, measurement and vendor identification. The centralized hub works closely with the cross-functional and cross-business unit support teams (the spokes) to support the overarching strategy and common policies. The hub is usually operated through marketing and/or corporate communications. This corporate social media team typically consists of 11 people.
There is a lot of good common sense and best practice advice in this report. Take a look. We have a lot of work ahead of us to make our companies digitally safe.
I have to take a break from work and post something. I think my mind is going to explode. So I thought I would post about something fun and different that has to do with improving your city reputation. And also about reputation retaliation. Apologies for being a few weeks behind.
Newsweek wrote a story profiling the top 10 dying American cities [I should add that Newsweek says it appeared pursuant to a content-sharing agreement with a site called Main Street, and that the magazine didn't produce it]. Grand Rapids, Michigan was included in the list of slow deaths which certainly does not do anything good for its reputation, attracting new residents or new businesses to the area. Hasn’t Michigan had enough grief? So instead of taking the criticism lying down, 1,000 residents of Grand Rapids raised about $40,000 and fought back. And fought back they did. Check out this video. It is delicious to see how cities can redeem their reputation. Nearly 4 million people have watched the music video, referred to as one big block party, that lip dubs the classic song American Pie. It is a great diversion and a smart strategy. And falls into my advice about going rogue when it comes to reputation warfare.
This made me think about the article I read awhile back about Detroit needing a statue to repair its reputation and efforts to raise funds for a Robocop statue. I loved the idea but I think it was squashed. (See picture at the start of this blog)