Hard to ignore Warren Buffett quotes. They are always so “right on.” Have been meaning to write this one down for the record and here goes:

“I don’t want an easy business for competitors. I want a business with a moat around it. I want a very valuable castle in the middle, and then I want a duke who is in charge of that castle to be very honest, hardworking, and able. Then I want a moat around that castle.”

Buffett is making the point that differentiation and the right leader make all the difference between a successful company and one doomed to fail. Our stumble rate (over three-quarters –79 percent– of the world’s number-one most admired companies lost their crowns over the past five years in their respective industries) makes it increasingly clear how hard it is for companies today to maintain a castle, moat and duke that keeps a good reputation afloat.

 This is not at all profound but it seems to me that the group losing out during the Democratic presidential nominee process is not Obama or Hillary or even Bush. In my view, the media is the organization that is suffering the most damage. Over the past several years, several studies have indicated that there is waning trust in the fifth estate. After several scandals and declining revenues, the media is front and center again during this electoral process and getting poor reviews.  Some critics are claiming that the media is too easy on Obama (possibly not the case lately). Other critics are blaming the televised debate in Philadelphia between the two democratic candidates on the questions asked by ABC News’ Charlie Gibson and George Stephanopoulos. The endless nighttime chatter about the candidates’ war of words continues to hash the same information over and over and are engaged in a he-said, she-said stream of consciousness.

We have many more months ahead as the election race heats up and it might be the right time for the media to consider how it can reclaim its status at the top of the most admired professions. 

In my new book, I mention the importance of “rewinding.” This is one of the four stages of reputation recovery that I describe as a means to restore reputation for the long-term. It basically means looking backwards at what went wrong (and right) to prevent wrongdoing from ever happening again. It sounds so basic but I am always surprised at how many companies and leaders do not look back at the root cause of their undoing as they try to repair their reputations.

Today I was reading The Economist  an article on Internet communities (3/22/08) when I came across a quote from Winston Churchill that resonated with my thinking on restoring reputation: “The farther back you can look, the farther forward you are likely to see.” A good example was also cited. Philp Rosedale, the founder of Second Life (the virtual community), is said to review old media coverage of AOL’s life history to make sure that Second Life does not make the same mistakes as AOL in not adapting to the web’s open standards.

This got me to thinking about my friend, social psychologist and reputation expert, Joy Sever. She started a business (Tell Me O Muse) a few years ago on the timeless wisdom of Homer’s Odyssey, the ultimate literary story.  There is so much to be learned from the past as she has shown me. Listed below are 18 themes that Joy has culled from her tireless reading of that ancient journey back home.

The 18 Themes of Timeless Wisdom

1~Think carefully about what you’re pursuing … and how you’re pursuing it.
2~There is a right and a wrong time for modesty, but never a good
time for hubris. 3~Fear less. 4~Leaders need strategies. 5~Stay awake or
you may pay dearly. 6~ Use power to empower. 7~ Honor the guest-host relationship. 8~ Do not be fooled by disguises, beggars can be heroes.
9~Treat all people with dignity 10~ Accept the guidance of wise women and
the advice of wise men. 11~Honor solemn oaths. 12~Realize the potential
for enemies to become friends. 13~Maintain your vision, even in the face of temptation and despair. 14~When between a rock and a hard place,
select the path that minimizes loss. 15~When in doubt, test
before acting. 16~Take personal responsibility for your actions. 17~You’re
not home, until you’re home. 18~There comes a time when the
fighting must stop.

Unfortunately we are witnessing too many crises and fallen reputations today. Weber Shandwick’s stumble rate of most admired companies only continues to climb. Business schools need to include courses on the most colossal business mistakes of the past decade and on lessons from the classics (contact Joy!) to make sure that our next generation of business leaders realize the power of the past.

Thought you might want to hear about a new book on managing your reputation online. The book written by Andy Beal and Judy Strauss is titled Radically Transparent and here is their seven point guide on online reputation management. I made it my business to read the book (I just received a hard copy in the mail yesterday from amazon). The authors sent me a pre-copy weeks ago which I read with gusto. Lots of great information which got me up-to-speed quickly and smartly. I liked it so much that I was happy to give them a testimonial on the back cover. You might want to get a copy too. As I have said before (and everyone else), online reputation management is the new black.

Reputation erodes in many ways. One sure-fire way is when employees spill the beans. A working paper from the National Bureau of Economic Research found that employees lead the list of corporate whistleblowers when it comes to fraud.  Companies often wonder how they get themselves into these jams. It is actually pretty simple. Perhaps if they kept the lines of communications wide open or just a little open, employees would not have to resort to tattle-telling. Remember Sharon Watkins and Enron’s Kenneth Lay. If he had only listened and acted sooner.  We continually see reputations dashed as negative things come to light. The worse is when it surfaces little by little.  I wait every day to hear the Societe Generale story continue to unfold. Now we hear that another person may have been involved with rogue trader Jerome Kerviel. This week we heard that there were early warning signals alerting Societe Generale officers about the fuzzy transactions. Employee fraud is usually suspected by other employees but no one says anything out of fear. The article in BusinessWeek (January 28, 2008) where I learned about the corporate whistleblowers reports that 82% of them are ostracized, fired or demoted. Not much incentive for telling the truth.  

Source: National Bureau of Economic Research

I was reading through the many reasons that Fortune gives for why it chooses its 100 Best Places to Work For in its recent issue (February 4, 2008). In addition to the company ranking, number of employees, job growth, job number of applicants, average annual pay, and 2008 revenues, Fortune has a box for “what makes this company so great?” They do this every year. The reasons cited include a litany of reasons such as best credit union, generous time off,  best 401k, best cafeteria, best child care site, rent breaks, on site health clubs, autism benefits, and so on. Then I came to company #70 — Mattel.* The toy manufacturer was cited for how its CEO handled the recent toy recall crisis. Fortune said ”…with CEO Bob Eckhert getting kudos for quick and responsible actions in recalling defective toys from China.” I thought that Fortune deserved a pat on the back for awarding a company as high an honor as Best Place to Work because of its CEO’s actions during crisis. Worth sharing with you. I always like when CEOs are recognized for rightdoing over wrongdoing.

* Full Disclosue: My company worked for Mattel during the recent toy crisis. I did not however.

I thought this was an insightful statement about online reputation. It was mentioned in a post by Chris Abraham who was quoting Forget Publicists, All the Cool Kids Have Online Reputation Managers. Abraham says that “online reputation management is apparently the new black.” Sure seems that way to me too.

Goes back to that wonderful article in Wired by Clive Thompson about Google being a reputation management system, not a search engine. 

To digress, I read in another article somewhere that corporate responsibility is the new India. I guess this phraseology is catchy. Perhaps I should say something clever like reputation recovery is the new green. Doesn’t have the same ring to it. Worth a try.

My new book is out officially today (as I hinted last night).  It is titled Corporate Reputation: 12 Steps to Safeguarding and Recovering Reputation.

There is more information on a dedicated site — www.corporatereputation12steps.com. It is based on our discovery that the corporate reputation “stumble rate” continues to rise.  Over three-quarters (79 percent) of the world’s number-one most admired companies lost their crowns over the past five years in their respective industries. While reputation loss may now be inevitable, my new book offers a realistic roadmap to reputation recovery that can help any leader stabilize and regenerate a company’s most competitive asset.

It is pretty simple: recent corporate crises have demonstrated that a company’s reputation can be destroyed in seconds. A mishandled response, inappropriate act, product tampering, or poorly timed financial disclosure all have the power to instantly tarnish a respected reputation. As I see it, the well-managed and reputation-conscious company need not stand defenseless when faced with a damaged reputation.

We just released a report on Corporate Communications Officers AKA CCOs. The survey, The Rising CCO, which was conducted with partners’ Spencer Stuart and KRC Research examined the changing role of today’s CCO. Anyone who knows me is well aware that I firmly believe in the contributions made by corporate communications departments. Perhaps because I came into the public relations world late in my career and was basically clueless about what public relations/corporate communications people did, I now have the deepest respect for CCOs. Perhaps because I felt like an outsider for so long. They used to call me a “non-traditional” hire. 

This is all to say that I am particularly proud of this research. Our intent was to quantify the hunches most of us have about this evolving and rising position in the corporate hierarchy. To focus on one aspect of what we learned from Fortune 500 CCOs themselves, we uncovered a strong correlation between a company’s corporate communications organization and the company’s ranking on Fortune’s “World’s Most Admired Companies” list. Most admired company CCOs, compared to those in “contender” companies, stay in their jobs longer, have fewer internal rivals and are more likely to report straight to the top (the CEO). See below.

HOW CCOs IN MOST ADMIRED COMPANIES DIFFER FROM CCOs

IN CONTENDER COMPANIES

Other interesting reputation-related findings include:

• The CCO focus is shifting from financial communications, media relations and internal communications to the broader strategic issues of environmental/social responsibility and corporate reputation. Reputation just continues to grow in importance every year and capture top management attention. I cannot say that I was disappointed to learn this.
• Nearly one-half of elite CCOs report directly to the CEO (48 percent).  Again, this finding underscores the COO-CEO partnership in protecting a company’s reputation. If the CCO and CEO are not in sync, reputation risks can easily multiply.

[The Arthur Page Society recently released research on the changing role of public relations officers too.]  

Another great fact about how companies that are “best places to work” pay off in terms of financial performance. This finding comes from Wharton finance professor Alex Edmans who wrote a paper titled, “Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices,” also from the Wharton newsletter I get. Edmans examined the stock returns of companies scoring high on Fortune magazine’s annual list of the “100 Best Companies to Work for in America” between 1998 and 2005 and found that they returned 14% compared to 6% annually for the overall market. Nice fact for those of us who are obsessed with the Fortune Best Places to Work list which is due out real soon–January 28th. There is no doubt about it — happy employees —> good bottom lines + favorable reputations.

Where I work at Weber Shandwick, we just got a coffee bar. Its been a terrific “watering hole.” Employees gather at different times during the day for expressos, cafe lattes, chai teas, homebaked chocolate muffins, jelly beans, candied nuts, croissants, fruit, etc. Professional barristers serve us while CNN is broadcast on two screens. It feels like such a perk. I love taking a walk and happening on fellow colleagues and chatting about this and that. For me, happiness is a coffee bar. It is also a great reputation boost.