Posts Tagged ‘News Corp.’

  It has been a very hectic week as we travel around to the many markets in EMEA to discuss Socializing Your Brand, our new research on what it takes to be truly social today. As always, I try to keep up with other news and events and that has been harder than usual as my laptop crashed between markets.

Caught an article citing Michael Silverleaf, legal counsel hired by News Corp., saying that it would be harmful to air information related to “a culture of illegal information access” because it would be “extremely damaging to NGN’s public reputation.”  (NGN=News Group Newspapers) I had a double take when I read the last two words of this sentence. Is there such a thing anymore as a public vs. private reputation? It seems to me that there is no longer a divide between private and public. There are no secrets and we are all public figures and public institutions. Let`s get real.

The other article that caught my eye came about while taking a train with my colleague to a mountain top village near Geneva.  Instead of day dreaming as I had hoped, this brought me back to reality. The article is terribly interesting because it is about women CEOs and how their husbands support them in their quest to the top.  James Stewart wrote it probably because he was thinking about the new female CEO of IBM who recently joined the exclusive – and small — club of women CEOs.

“Asked at a Barnard College conference what men could do to help advance women’s leadership, Rosabeth Moss Kanter, a professor at Harvard Business School and author of the landmark “Men and Women of the Corporation,” answered, “The laundry.””

Hah. If only it were that simple. Made me realize that I had to get back to the hotel and get some laundry done quickly for the next leg of the tour.

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.