Posts Tagged ‘scenario planning’

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.

I have posted about scenario planning before and wrote about it in my last book as well.  Scenario planning is a good way to plot what your leadership might do when their reputation falls off a cliff. I have always been fascinated by the process, especially when it works.  In fact, I have a recent Royal Dutch Shell Scenario Planning book that I bought from Amazon about three years ago. I keep it out on my desk as a reminder of a smart way to plan. It was amazing to me that it sold commercially.
Today’s WSJ had an article on the return of scenario planning. It was very popular after 9-11 when companies felt the urgent need to prepare for such sudden disasters. Apparently it lost some favor as the economy became bullish and everyone lost their senses. A study by Bain & Co. which I have used in presentations showed that  scenario planning had soared from 1999 to 2002 as a risk management tool (up 30%) among senior executives.  Now it is back on the upswing as we face unprecedented economic challenges.

I did not realize that scenario planning first surfaced in the US Military in the 1950s and became popular with companies such as GE and Shell in the 1970s. My mistake for believing that Royal Dutch Shell was the source.

Peter Schwartz, a partner at the Monitor Group and former head of the Global Business Network where I first learned about him, says that scenario planning is a learning tool and for making informed decisions. Not just a tool for the worst case scenario but a process for learning how to make the right and avoid the wrong decisions. The article ends on an upbeat note – that perhaps scenario planning can be used to plot possible responses to a business upturn.

Same could be said about reputation recovery. Time to start. Never too early. Only too late.

    Recently reread GE Jeff Immelt’s Letter to Shareholders in its 2008 Annual Report.  A few comments.  I like how GE has a picture of its senior team in the introduction.  It is not the first time but it goes a long way in honoring the team.  I always find GE’s CEO Letters revealing.  The general theme is that GE along with the global economy and business in general have to be “reset” for the long-term and perhaps forever.  “The interaction between government and business will change forever.  In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner.”  Immelt calls it a reset world. The CEO is resetting the company to focus on three big themes – emerging market growth, clean energy and sustainable healthcare.

One of my favorite parts, of course, came when Immelt discusses GE’s reputation.  Immelt has often mentioned “reputation” in his CEO Shareholder Letters and clearly considers reputation a metric of success.  He said in an earlier CEO Letter (2002): “My own role on the GE Board is clear. I have two functions: lead the company as CEO with integrity, clarity and purpose, as measured by financial performance and reputation.”  This time he said, “Let’s face it: our Company’s reputation was tarnished because we weren’t the ‘safe and reliable’ growth company that is our aspiration. I accept responsibility for this. But, I think this environment presents an opportunity of a lifetime. We get a chance to reset the core of GE and focus on what we do best.”  

When I wrote my book on Reputation Recovery, I had a section on Resetting the Company Clock which came from a statement made by Nissan CEO Carlos Ghosn.  It is the role of the CEO to not only be the company’s reputation guardian but to reset the company clock when crisis strikes, winds shift or people do not recognize the urgency of the day.  The word reset is a good one.

Interestingly, Immelt notes that GE has instituted more scenario planning, presumably to see around corners and a new process to identify what he calls industry “naysayers” who might have something important to tell his unit heads. We call these people “badvocates” but either way, GE intends to listen more carefully than before.

In the last paragraph, Immelt says “GE will be a better company winning through this crisis.” I underlined the word winning.  In recent weeks, I have heard several CEOs use “winning.” Maybe something’s changing.