On the minds of boards...

EisnerAmper's survey among 250 board members found reputational risk at the top of board concerns like last year. The survey was conducted in early 2014. What is surprising about the findings is the big jump in cybersecurity/IT risk and the decline in concern over crisis management and disaster recovery. Clearly, the Target data breach was very much on the minds of board members at the start of the year. And for good reason--Target even lost their CEO over the breach. In addition, the focus on hacking and Edward Snowden's disclosures of top secret information from NSA had to be of great concern about the damage to reputation from IT failures. Interestingly, board members may be worried about cyber-risk but the American public does not see these cyber-attacks as particularly threatening dangers and are actually fairly complacent about them says a report mentioned in the WSJ today from the commission members who worked on the 2001 terrorist attacks. 

CEO succession planning seems to be a middling concern to reputation-mindful companies according to board members. Apparently, nearly one out of every two board members surveyed think they have a heir in waiting. However, the other one out of two realize that they might not have the right candidate or one that is groomed and seasoned enough for the top job. As we have seen with Target, a CEO-elect was not in place. My bet is that they are looking for a wholesale change and the opportunity is right now to change the culture and get Target back on top. It can happen to the best of companies.

Partnering on reputation

I am still technically on vacation but catching up on a few things so I can face Monday. You know how that is. Now back to reputation.

A payoff of a good reputation that gets little attention is how good reputation attracts better business partners. When you think about all those mergers and acquisitions that steam up the marketplace, people forget to mention that likes attract (good reputation + good reputation = consolidation). A recent survey from Fortune Knowledge Group and Gyro:, an ad agency, found that 70% of business executives cite reputation as the most influential factor in choosing business partnerships. I liked how Business Insider spoke about a good reputation as a "validation stamp" that makes buyers feel more comfortable about coming together. Everyone uses those validation stamps today whether it is to help in purchasing products or finding a great new place to work. There is an entirely new industry built on validation stamps when you think about Yelp, TripAdvisor, Better Business Bureau and Amazon. 

When talking about choosing a business partner with a good reputation, senior executives who were surveyed say they focus on companies that have strong cultures (52%), respect for employees by management (50%), employee pride in the company's reputation (41%),  and management credibility among employees (39%).  Again and again, we see that the intangibles are becoming as important as the tangibles. In fact, the research found that senior executives are finding it hard to just depend on the tangibles today. About two-thirds (65%) of executives agree that an increasingly complex business environment has made it more difficult to base decisions on purely “functional” factors (for example, cost, quality, or efficiency). Instead, they are taking deeper looks at culture, reputation and values. Interesting to me that these latter three factors are fast-becoming the distinguishing competitive advantage that companies are seeking to meet their reputation-building and success goals. The world is changing before our eyes.

Last year, I recall looking at a few companies in an industry to compare and contrast how they communicated about themselves on their web sites. I remember how one company distinguished itself by having a tab devoted to its partners. The company told you all the universities they collaborate with, non-profits, NGOs, scientific councils, associations, etc.  It's a smart idea for adding even greater credibility to those validation stamps we all look for today when making a business decision. 

Sticking up for brands and reputation

An interesting thought for this hot summer day while supposedly chillin' on vacation. I was reading through some of Andrew Hill's articles in the Financial Times and landed on this one because of its close association with reputation. After reviewing a recent brand ranking that came out, Hill says that he expects more ups and downs in brand ratings in the near future compared to the recent past where companies were mostly concerned about survival as the global recession hurt nearly everyone. When it comes to reputation, I have to chime in and say that the entire past decade has been one big volatility cycle, starting with Enron, WorldCom, Arthur Andersen, and it only got worse. Sector by sector fell down and have been killing themselves to climb out of a monstrous hole of distrust and uncertainty. It's been a bloodbath.

Hill makes a good point when he reminds us that in the future "companies will place greater emphasis on how to make customers – and non-customers – trust their overall brand and speak up for it, to mitigate the risk of infidelity." This is where social media comes in and all the new intermediaries that customers are channeling with recommendations on Amazon, Yelp, Google, Twitter, Pinterest and so forth. These are perhaps the newest of new stakeholders, almost like a Seventh Estate.

And let's not bypass employees which Hill did not mention. Customers are indeed important to brands but employees are a whole other segment that can speak up and stick up for brands. They can help inoculate a brand or reputation and they are supremely trusted. Don't forget to read our survey on employee activists which lays out this whole new activist segment that can be mobilized on corporate reputations' behalf.  

I agree with Andrew Hill that brand (or in my case, reputation) is a discipline that will never again "be a low-priority 'afterthought' for their bosses." Our work is cut out for us because as I see it, the volatility ain't nothing yet. There's a firestorm ahead.

Reputation at the speed of light

Nick Carr's article in The New York Times did a number on me. He wrote about how information overload and social media frenzy makes us unable to concentrate, remember, focus and understand. I thought it was only me who was having trouble reading to the end of an article and remembering what I had just read because I'm multi-tasking and multi-thinking like crazy. Carr says he has the same malady as me. He cites a study conducted by the Victoria University of Wellington in New Zealand where these symptoms appear to be common. The researchers, Val Hooper and Channa Herath, conclude: "The findings indicated that there were definite differences between people’s online and offline reading behaviours. In general, online reading has had a negative impact on people’s cognition. Concentration, comprehension, absorption and recall rates were all much lower while reading online than offline." The authors were so intrigued by Carr's article in 2008, "Is Google Making Us Stupid?," that they did some exploratory work. For a while there, I thought I was just growing stupider. But apparently Nick Carr and others have the same case of Internet brain-eating virus that I have. 

A quick synopsis of the research: People reading offline usually read from beginning to end while those reading online tend to skim, skip words, cross-reference, jump around to different links, read in chunks, speed-read, and multi-task. As for offline reading, people read every word, read more slowly, annotate as they go along, and generally retain more of what they read. Online reading is more often happening for work and gathering information while offline reading is more for pleasure at the end of the day or early morning.

Why did this article hit me so hard? This made me think about the extreme difficulties facing many of the companies we work with who are trying to build reputation or protect reputation or repair reputation when their customers and prospects are only one inch deep on their web site. They may be on the company home page or reading an article about best smartphones while simultaneously checking the news, answering email, sending a text, or downloading a document. If you have only 60 seconds at the most to say who you are, what you stand for and why your product is the best or you are a great place to work, how do you do that in skim-able fashion? We are entering an era of reputation at the speed of light. What types of cues, symbols and signs can a company provide that leaves a memorable thumbprint? Are long-form treatises just too much? Maybe Vine and Instagram have it right? Short and sweet but disposable? Or should we be resorting to six-word-stories or hiaku? The findings tell us that not much is going to be remembered if it is absorbed online so the challenge of this new Internet era is getting through to people in a memorable, emotional, story-telling way that sticks. 

This article made me think I have some hard thinking to do on shaping reputation in this nano second, evaporable world. After all, who has time to think online or read offline? I think at the core, companies are going to have to focus focus focus on one message that they want the world to know and figure out how to get that embedded into people's consciousness. They are going to have to apply all the energy and muscle they have to make this one message synonymous with them. It reminds me of how well BP was able to hammer home Beyond Petroleum and solar energy. Not the best example I know but one that is emblematic of what I am thinking. IBM's smarter planet is another. What is the one signature idea or product that solves a common problem and says it all. Like a song in your head that repeats and repeats.

I do have to share one line from Carr's article that made me really really laugh today. He said, "Sometimes when people ask what I do for a living, I am tempted to say that I write emails." Ditto.

 

 

Brand America...steady but strained

The American Brand is doing okay. Are you surprised? I was and wasn't.  Pew Research just issued new research on perceptions of the international balance of power among over 48,000 people in 44 countries from March 17 to June 5, 2014. The research revealed that America's image is similar to what it was nearly one year ago despite recent image problems from spying on other country leaders, negativity over drones, Middle East flareups and unrest.  65% (median) voice a positive image of the United States. This positive reputation extends to perceptions about America in Africa, Europe, Asia, and Latin America. Only in the Middle East are perceptions far below the global median (30% median). Thirty of the 43 countries surveyed contain majorities that view America positively. 

No surprise here. The biggest declines in perceptions of America surfaced in Russia (51% positive in 2013 to 23% today). With the turbulence in the Ukraine today and the recent downing of MH17, the numbers have probably slid further downward.  Other spots where anti-American sentiment exists are Greece, Pakistan and Argentina. The Middle East is decidedly unfavorable in their perceptions of America, particularly Turkey, Egypt and Jordan. Israel is the only country in that region that has a favorable view of the American brand. Palestine's view of America, although poor, saw a rise in favorability from 16% to 30% (those figures have probably changed too).  Interestingly, younger people between 18 and 29 are far more positive towards the American brand than those 50 years old and higher.

The reputation of President Obama has played into this rise in favorability for America relative to years ago when America was vastly unpopular for the war in Iraq and its foreign policy initiatives, according to the research. With the exception of the Middle East, Obama has a favorable reputation. Half or more of those surveyed in 28 of the 44 countries in the Pew Research sample believe that when it comes to world affairs, he will do the right thing.  See the chart below (sorry for the poor reproduction). This assessment has not changed much from one year ago. However, there are five countries where his standing has dropped significantly -- Brazil, Germany, Argentina, Russia and Japan. Clearly, the tapped telephone conversations of German leadership by the U.S. government significantly hurt Obama's reputation. His image has risen substantially in two nations -- Israel and China.  Overall, is important to note,  that compared to 2009 when Obama took office, his ratings have dropped. The bloom is off the rose although Obama's reputation has remained steady over what I would contend has been a very tough year. 


Saving your reputation

I am always looking for quotes and just found two today. They appeared in an article in The Guardian about how charities or non-profits can manage crises. Here they are:

"The 17th century bishop Joseph Hall shrewdly noted that 'a reputation once broken may be repaired, but the world will always keep their eyes on where the cracks were.'"

"Brand is a promise to your stakeholders. It embodies what you want them to believe about you. Reputation, on the other hand, belongs to them. In short: brand is how you talk to the world, reputation is how the world hears you."  Vicky Browning, director of CharityComms

The article was based on a panel held in London and the key advice about managing a media crisis for charities who are caught up in the public glare when crisis strikes:

  1. Understand your risks
  2. Respond proportionally to the intensity of the crisis
  3. Be prepared
  4. Know what you can control and what you can't 
  5. Monitor and measure perceptions
  6. Become the expert and authoritative source on the issue 
  7. Respond quickly and with sensitivity (empathy!)
  8. Involve your employees, keep them informed
  9. Invest in reputation before you need it
  10. Stick to your messages

These reputation remedies could apply to any crisis -- be it a for-profit or non-profit. The one that struck me as an interesting nuance which I had not thought about in a while was reacting in proportion to the crisis event. Sometimes just a statement on a website will suffice whereas sometimes the CEO needs to call a press conference and provide regular updates. Knowing when the CEO should visit the site of a crisis and when not to requires good judgement and good counsel from crisis experts. Over-reaction can intensify a problem.

The nature of the response reminds me of an incident that occurred this week. Chairman Rupert Murdoch of 21st Century Fox made an $80 billion takeover bid for Time Warner and Time Warner's CEO Jeffrey Bewkes responded. Instead of a media statement, no comment, CEO email or other response, he chose to produce a three minute video directed at his employees using the medium that the company has excelled in during the past few years -- digital media. The video begins with “Hi everyone. I wanted to speak directly to you about the news you’ve been hearing today about our company.” Short and simple and appropriate to the situation. Here's an example of taking control of what you can when your company is in the public eye. Bewkes got his points across, took little time out of employees and other stakeholders' time and was personal, conversational and direct. In a way, he discounted (dissed?) the takeover bid by appearing on the small screen. Good choice. 


Leadership presence in 3D

Sylvia Ann Hewlett has written a new book on executive presence. I've always been very impressed with her work and how in-depth and comprehensive it is. As an economist, she has written about female talent, finding sponsors or mentors for your work, career on- and off-ramps and mixing motherhood and work. Her new book is titled Executive Presence: The Missing Link Between Merit and Success.  There's a good interview with her in Forbes written by Moira Forbes where I read what she had to say on the topic of what leadership material is. Hewlett's research among senior executives, particularly women, found that executive presence is critical to success and the three factors driving that climb up the ladder are appearance, communications and gravitas. This makes perfect sense although I believe that a great deal more goes into earning the top spot, the CEO position. I have met a CEO or two that does not have executive presence in the full sense but runs their company famously well. All three drivers, whether we like it or not, do matter today for executives because we are all now public figures. 

Nearly two-thirds of executives say that gravitas (love this word) is critical because it causes others to follow you and trust your vision and leadership. This is why there is an entire industry of executive coaches.  Gravitas can be learned I suppose.

I spend a lot of time thinking about what it takes to drive an excellent CEO reputation. I think it is a combination of strategic smarts, ethical conduct, ability to inspire and motivate others, solid communications skills and an eye on the future. A sense of optimism and humility also go a long way because it is a job with lots of twists and turns that can easily derail confidence. 

Talking about executive presence, here's one for the books. Narendra Modi, the new prime minister of India, used quite the new channel to communicate with the world's largest electorate and rally support. He sent a 3D-hologram to nearly 1,500 remote locations in India to earn their votes at election time and get his messages across without being physically present. His presence was "greeted with a mix of awe and disbelief. Many poorly educated voters had stayed behind after rallies to check behind the dais to see if he was really there, officials said." You could say this is the opposite of gravitas, it is pure lightness. 

Saying goodbye to Twitter

"I will be closing down my Twitter account today. As I said, wait till QPR gets promoted and I reach 50. I may restart dedicated accounts. Goodbye all. Maybe I return. Been fun. And damn useful. Speak the truth be brave," said the Malaysian CEO of AirAsia (@tonyfernandes) in his last tweet. “Stand up for what you believe, fight oppression and most importantly, enjoy life. Bye bye all!” [QPR is the Queens Park Rangers, the English Premier League Team, that he owns].

Tony Fernandes was well known for his very active Twitter account. He started in December 2008 and had nearly 900,000 people following him. In his 11,900 Tweets, he made major announcements about the airline, offers, discussion on the industry, sports activities, industry news, birthday wishes, work out in gyms, investor road shows and everything else. He always came up in lists on top 50 socially engaged CEOs and his disappearance from Twitter shocked his fans as this Tweet attests to: “So @tonyfernandes is leaving twitter! It’s been good to have an open engaging chairman with fans. Maybe see you back here someday!!!”

I always loved this story I read about him. When he was 6 years old, he told his dad that he would start an airline on day and his physician father replied: 'if you make past the doorman of Hilton Hotel, I will be happy." And boy did he make it to the top.

It is hard to figure out why he deactivated his account and I am not sure why turning 50 makes a difference except that this entrepreneur must be incredibly busy and decided to use his time more efficiently. This departure made me wonder why he did not just say he was limiting himself to fewer tweets so expect less in the future. But it sounds like he made up his mind and Twitter helped get his airline off the ground (so to speak). I am sure his reputation for being a trailblazing social media CEO will continue as he turns to other outlets. Word is that he is using Instagram. Always hate to see a Social CEO bite the dust.