I read this quote attributed to Michael Porter, the economist, researcher, author, advisor, speaker and teacher at Harvard Business School and very renown. It is so true and yet so disheartening about what once was. “Michael Porter used to talk about ‘sustainable competitive advantage’. There is no ‘sustainable’ any more.” Companies are no longer guaranteed to last. Almost half the companies on the Fortune 500 list in 1999 have fallen off since. The future is clearly not written on the past. Companies now have half-lives and reputations will come and go depending on what disruptive competitors appear and how well they innovate and are led.
I love to tell people my title because it is fairly unusual -- chief reputation strategist. At least it was nearly 10 years ago when I was hired at Weber Shandwick. Today I was reading an article about the rebranding of Hillary Clinton which is definitely worth a read and it described how she had hired consumer marketing specialists to help shape her reputation for the presidential election in 2016. There are references to how a variety of brands have had to reinvent themselves over time such as JCPenney, Coca-Cola and Budweiser.
But back to my opener about titles and a new one that just came across in the above article -- chief purposologist. The owner of this title is Haley Rushing at the Purpose Institute. Here is how she describes what she does: "As Chief Purposologist, Haley leads a team of people who act as organizational therapists, anthropologists and investigators dogged in their pursuit of uncovering the purpose at the heart of an organization." When it comes to Hillary, Rushing's partner and co-founder Roy Spence says that they are looking for that one word that describes Hillary's promise. The big question in rebranding or reinventing Hillary for the campaign is What is her promise to the world? "With Mercedes, it’s quality. With Volvo, it’s safety. With Coca-Cola, it’s refreshment. If you can get her promise down to one word, that’s the key.” President Obama had Hope and also Change. A few words. Once Hillary and her branding wizards figure out that one word that will sum it all up, they should be on their way. Maybe it is not so complicated and the one word is Hillary!
Instead of Purposologist, why not Promisologist?
The Reputation Institute (RI) has built an entire franchise around how the reputation of the world's largest companies are perceived by consumers around the world. When RI was asked to take a look at the CEOs ranked by Harvard Business Review for providing the greatest contribution to shareholder performance and market capitalization and re-rank them according to non-financial measures, RI decided to develop a non-financial performance reputation index. The HBR blog post where I found this was written by RI chairman Charles Fombrun, someone I have known for many years and respect. It used to be that financial performance was thought to contribute nearly 80% to reputation and maybe 20% to non-financial metrics. Non-financial metrics include willingness to recommend the company as a good place to work or recommend a company's products/services, give the company the benefit of a doubt in crisis or buy the company's stock. Yet today it is growing increasingly obvious that this 80/20 rule is not the case. Many of the non-financial measures matter and in fact, matter a lot.
RI asked some solid questions while compiling their intangibles index. For example, how do you arrive at a "net" effect of a CEO's tenure? What does Mr. or Ms. CEO leave reputation-wise when they depart or what is the sum of all that they did while in charge? Did they build a company that is renown as a good corporate citizen, having the best talent, innovation at its heart or top flight management training? What carries more weight ultimately--financial or non-financial--when it comes to building reputation? Is it possible to strike the right balance now and for the future?
What did they learn:
- RI found that there is not a direct correlation between financial and non-financial performance measures. You can be a fantastic bottom-line performer but that does not mean that you as a leader impart a positive corporate reputation with the public. Equally so, you can have a great CEO reputation according to HBR's ranking but not such a great a one when it comes to public support and people's willingness to go out of their way for you. Financial performance is necessary but not sufficient to build a good reputation.
- RI posits the true measure of a CEO's reputation "is the amount of public support they helped to create for their companies during their tenures." A noble idea that I heartily endorse. Companies and their leaders need to be in the public's good graces to operate and survive these days.
- And here is the drumbeat.....RI's statistical analysis revealed that 35% of a CEO's legacy can be attributed to financial performance and 65% to non-financial performance. Be mindful that this index is based on public support. With this weighting, the HBR rankings ended up getting re-ordered and a different picture emerged as to which CEOs and their companies are doing the right things for their companies' destinies.
The last line of the blog post by Charles is this: "A great CEO's legacy is never as one-dimensional as the ledger." Well said. And thanks for giving us the yardstick that reflects today's realities, not yesteryear's.
In our study on Civility in America this year, we asked about opinions on the "right to be forgotten" law. The what law? The easiest way to explain it comes from Wikipedia: The right to be forgotten "reflects the claim of an individual to have certain data deleted so that third persons can no longer trace them. It has been defined as 'the right to silence on past events in life that are no longer occurring.' The right to be forgotten leads to allowing individuals to have information, videos or photographs about themselves deleted from certain internet records so that they cannot be found by search engines." A law like this exists in the EU. Of course, it is a lot more complex than I am making this out to be and I am simplifying the discussion and ongoing debate in this post.
What I want to share is the results when we asked Americans "if search engines such as Google were required to erase negative commentary or pictures that appeared online upon request, would you take advantage of the opportunity to erase things about yourself?" We were curious what Americans would choose to do if given the opportunity to clean up their digital profiles. One out of two (50%) say they would take advantage of a reputation eraser but a sizeable 3 out of 10 are not sure (hmmmm) and 2 out of 10 say they would not take advantage (they either have nothing to hide or don't mind airing their dirty laundry). As expected, younger people are significantly more likely to say they would opt for deleting foolish things they've done to reshape their personal brands. That makes sense because Millennials and GenXers grew up with the Internet for the most part. The older generations have less digital footprints to worry about.
When we asked who should be given the right to be forgotten, Americans were most likely to say that those under 18 years of age should be given the right to erase parts of their digital identities (68% said so). Those naughty high school pictures would all but evaporate online if this were the case. Less than one-third of Americans think that school teachers (33%), doctors (26%) and religious leaders (25%) should be allowed to airbrush their digital footprints. The group with the least right to eradicate what they have done wrong or where they have acted uncivilly are politicians (only 18% felt they had the right to undo their past). Americans clearly demand to know as much as possible about the character of our politicians. From what we learn every day in the headlines about corruption and wrongdoing on Capitol Hill, it is a good thing that our political representatives cannot delete their pasts from us.
The reason that this law has not taken hold in America has to do with our constitutional rights to freedom of expression and freedom of speech. We do not believe in keeping useful information out of the public domain. Ultimately, when it comes to reputation in the age of the Internet, we are never forgotten. We have to get used to it.
Pretty surprising to learn how the convention of naming hurricanes impact death rates. Hurricanes named after women result in more deaths. A study by the National Academy of Sciences found that feminine-named hurricanes cause people to take them less seriously than masculine-named hurricanes. People are less prepared when they hear a hurricane is named Eloise than if named Henry. For severe storms, feminine-named storms were three times as deadly as masculine-named storms. People apparently think of male-named storms as more aggressive and powerful and female-named storms make people take it less seriously.
The research was conducted using six decades of metrics and taking into account that hurricanes were only named after women after the 1970s when male names were added. In fact, in an article in the Smithsonian on the topic, when men and women were given fake information and maps about storms heading their way, both said that they were more likely to leave the area when the storm was named Christopher than when named Christina. And even more disappointingly, they were more likely to say they’d follow an order telling them to evacuate because Danny was barreling in their direction than if the storm was named Kate.
The findings are surprising and demonstrate how ingrained gender bias is and how the reputation of women as the weaker sex impacts safety. We've all read those examples about how the same resume from Christian or Christina impacts who gets called for an interview (Answer: Christian). We know that gender bias impacts pay. I just never thought of gender bias in relation to hurricanes and storms but here we have it.
Reputation never ceases to amaze me.
What’s on the docket for reputation watchers? Here are my predictions, reflections and thoughts on what’s ahead in 2015 and beyond. This was just posted today on HuffingtonPost.
The Reputation of Things. This year the term reputation was everywhere. It was no longer primarily reserved for corporations and the corporate domain. The reputation of things extended far and wide, from TV stars (Bill Cosby), universities (University of Virginia), suburbs (Ferguson), companies (Sony Pictures), food (gluten), countries (Russia), sports leagues (NFL), CEOs (Market Basket’s Arthur T. Demoulas), and on and on. All of which leads us to one single truth: reputation is everywhere and encompasses everything. As Warren Buffett, CEO of Berkshire Hathaway, reminded his top manager All-Stars in a memo this month, their top priority is to “zealously guard Berkshire’s reputation.” He continued, “As I’ve said in these memos for more than 25 years, we can afford to lose money–even a lot of money. But we can’t afford to lose reputation–even a shred of reputation.” Amen.
Thought Leadership Frenzy. This year, a long dormant agenda item burst onto the reputation scene. It spilled into nearly every discussion on reputation management – “thought leadership.” Nearly overnight, every company wanted a thought leadership platform, and every CEO wanted to be a thought leader. The term’s presence on the Internet grew 65% from one year ago and a whopping 707% since 2011. Thought leadership is not a new concept. Indeed, I devoted an entire chapter to it in my book on building CEO reputation back in 2002. But now companies seem to have awoken from their recession slumbers and want their own versions of Smarter Planet, Ecomagination and Sustainable Living. That’s good news for the planet and society at large but not an easy or instantaneous goal to achieve. Thought leadership requires having a point of view on the future, the ability to inspire and awe, the knack for identifying business problems that cross sectors and generations, and of course, the capacity to develop a credible solution. Good thought leadership must be rooted in the company’s culture and embraced internally. As if these criteria were not hard enough to meet, thought leadership must also be simple, memorable and able to travel fast. Only in that way will it succeed in differentiating a corporate reputation from its peers. One of the reasons for this dramatic proliferation of thought leadership is the explosion in content marketing, native advertising or brand publishing (whatever you call it). Thought leadership helps satiate this ferocious appetite for meaningful content that companies need to attract customers. No doubt about it, thought leadership has returned with a vengeance.
The CEO Citizenship Brand. The CEO as Brand comes in and out of favor every few years. There was a time when the CEO as Brand movement got tangled up with CEO as Celebrity, the big no-no of the early 2000s. Let’s be clear. CEOs have never liked being handled as brands that can be packaged and pitched as “new and improved.” As we tilt towards 2020 and Gen Ys begin taking the reins, the CEO Brand as we know it will be redefined. We will see the emergence of the CEO Citizenship Brand where purpose and contribution to the collective good will reign supreme. CEO reputations will be shaped by the good deeds that companies do, not just by what they say and how much profit they make. The CEO Citizenship Brand will be about the collective, not the individual. When London Business School CEO wannabes were asked what they would do if they were in charge, the top answer they gave was aligning strategy and activity with purpose (43%). Only 1% checked off maximizing return to shareholders. There you have it.
Exporting Reputation Still A Challenge. A great reputation in one country does not necessarily translate into an equally good one in another country. It remains fairly unusual for a company to successfully export its reputation. According to research by Reputation Institute, only a handful of companies have managed to transfer their most admired status to more than a few countries. Only 10% of 100 companies made the Top 10 most reputable list in six or more of 15 markets surveyed. This is unfortunate since the demand for global brand building is only going to grow in 2015 as brands saturate their own markets and more people are connected to the Internet. One way some companies have built their transnational reputation is by creating a culture that looks and feels the same regardless of whether or not their headquarters are in Bombay, Bogota or Boston. It is not too hard to imagine that sometime in the future, multinationals will compete on their employer reputations and less so on their products and services. The CEO of a Fortune 10 company once said, “For one thing, people—rather than products—will become our brand.” That might just be the case.
Media-Tested CEOs A Must. CEO turnover continues at a fast clip today. Depending on which study you look at, turnover rates for chief executives hover around 15%. With the recession hopefully behind us, boards are anxious to get the next generation of CEOs in place. They not only need to identify the right leaders that can succeed today but also those who will prevail five years from now. I have no doubt that in 2015 and beyond, CEO search committees will seek out candidates that can take a more public role without breaking a sweat. When times are tough (which seems to be all the time), no company can afford a media-challenged CEO. NextGen CEOs will need to ooze credibility, be fully media-vetted, comfortable with transparency and able to reduce complexity into tweet-sized statements. I know of one board that required one CEO contender to play CEO-for-the-day as a final test for the corner office. The candidate had to give a webcast presentation and get ambushed by actors dressed as television and media journalists to pass muster. The Board was not going to take any chances given our media-saturated environment with their company’s reputation.
CEO Civility Guards Could Be Next. As the year closes, the news has been woefully unkind to Sony Pictures’ executives whose internal emails were hacked and publicly leaked. Forget about the past trend of hiring digital sherpas for CEOs. Soon we will hear about hiring civility guards for top executives. Their jobs will be to obliterate any evidence of uncivil email exchanges that might wreak havoc if disclosed. One way to sensitize executives worried about their civil reputations maybe to follow the example set by Facebook’s CEO Mark Zuckerberg. For his 2014 new year’s resolution, he promised to write “well-considered” thank you notes every day, whether by e-mail or hand. As taught in grade school, civility becomes a habit and practice makes CEO future-proofed and civilly-perfect.
The New X Factor in Reputation. Many of the drivers of reputation remain the same year in and year out. They are lasting and enduring and ultimately, I think that’s a good thing. Some things shouldn’t change. Drivers such as quality of products/services, management quality, innovativeness, financial performance, corporate responsibility and talent pool should all continue to create long-lasting reputation. But I do foresee an emerging new X factor -- how well companies communicate and go-to-market so as to distinguish themselves from the rest of the pack. We all know that companies can reproduce competitive products or services overnight and sell them less expensively. What is much harder to replicate is a brilliant marketing communications campaign that touches consumers emotionally and gives them an unquestionable reason to buy their products or services.
Women are the new Digital. Everywhere I turn, there is a new newsletter, piece of content, conference or research study about women. Women and their reputation as women have taken up as much bandwidth as digital did the past year or two. I do not know why the interest in women is sizzling hot but anything to do with the reputation of women in this world is now radioactive. Could it be the Hillary effect, the greater exposure on violence towards women or the dismal news about gender inequality the world over? Whatever it is, women are trending, and their place in the world is shifting, hopefully for the better.
On a closing note, I looked back at my previous reputation forecasts and am pleased to report that some of my predictions came true. The one that I wrote about in 2012 on reputation blackmail sadly reared its ugly head just a few weeks ago as corporate secrets and private conversations were irresponsibly revealed to create great reputational damage. Let’s hope that 2015 does not see anymore ransom “notes.”
May your 2015 be reputation-rich.
At Weber Shandwick, we just issued a report on Generation X (Gen Xers) and their concerns about retirement. This is a segment of the population that is far too overlooked. Their reputation needs management. Why is it that they are so neglected by the media and many Fortune 500 companies? An audit we did of leading U.S. financial company websites found that only half segmented their messaging by generation, and those that did focused mainly on the favored Boomers and Millennials. None focused on Gen X. Even more startling to us was that the oldest Gen Xers are turning 50 in 2015. Their AARP notices are probably in the mail now.
What do we know about them? The Gen Xers' formative years were shaped by Madonna, John Hughes films and the presidencies of Ronald Reagan through Bill Clinton. This group, ranging from their late 30s to late 40s, were initially characterized as the “slacker” and “grunge” generation, yet went on to shape the dot-com and Web 2.0 eras, unleashing their far-reaching entrepreneurial talents. As a result of skyrocketing divorce rates among their Boomer parents, Gen Xers are known for their focus on family, striving for work-life balance and career-postponement in favor of stay-at-home, sustainable lifestyles.
Unfortunately for them, the Great Recession marred the Gen X experience. Not only did Gen Xers face difficulty in securing jobs upon graduation in the early ‘90s, subsequent economic downturns contributed to an unstable financial footing for this market segment. In fact, according to the Pew Charitable Trusts, Gen X took the largest hit in our most recent recession, losing nearly half (45%) of their wealth totals, an average of about $33,000, in just four years. Impacted by a slump in stocks, bonds and property values, the damage to Gen X portfolios exceeded all other age groups by at least five percentage points, Bloomberg recently reported. For these reasons, the Gen Xers in our study reported being intensely worried about how their retirement plans will intersect with their healthcare needs in the future. As one Gen Xer said: “Staying healthy — I think about this all the time. It’s a constant concern. If something happens to me, I have a few savings accounts to assist my children, but I worry about doing the right thing for my health and seek out help where I can to address my concerns.”
As a market opportunity, Gen Xers are often overlooked for several reasons: they are sandwiched between two very different and attention-grabbing generations (Boomers and Millennials), have a relatively short generational span (approximately 16 years vs. roughly 20 years for other generations), and represent a smaller share of the population (65 million, vs. 77 million Boomers and 83 million Millennials). Given the financial security that this generation will require to sustain itself during its retirement, Gen Xers present an opportunity that financial services companies should not overlook. Our research found that this “middle child” cohort has financial issues and communications needs that are unique to their experiences and their place in history, and deserve a closer look.
Reputation-wise, this generation needs help figuring out what makes them distinctive. Looking at the Pew research in the chart below shows how their own perceptions of what makes them unique is already claimed by their cohorts – technological-savviness, intelligent and hard working.
Despite their hard work, our research found them to be happy amidst all the chaos and anything but slackers. You might want to call them the heads-down generation. Clearly, they need to be spoken to in language that resonates with their hopes and dreams and calms their fears. Although this is a generation whose reputation was closely tied to being slouchers and couch potatoes, the media and those companies seeking their business might want to pick up on their first-hand experience with being prepared for financial volatility.
[I posted this on LinkedIn today as well.]
Just a few bullets that caught my eye over the past few weeks on the topic of reputation.
- In a wickedly well-written and snarky article in The Economist on CEOs living in glass houses (no kidding), especially in this new social world, a few things stood out. First, a mention about research among Wharton researchers that found that the most emailed articles among 7,000 articles from The New York Times over a three month period had to do with topics that evoked fear, anger and anxiety. As the author said, perfect click bait for “evil CEOs.”
- From that same article mentioned above, a fascinating stat which I am saving for my folder on Why Crises Are Bad News? is this one: “The stock market is more sensitive to reputational disasters than ever before. In the two weeks after the 1989 Exxon Valdez oil spill in Prince William Sound, in Alaska, Exxon’s shares dropped 3.9% but quickly rebounded. In the two months after the Gulf of Mexico spill in 2010 BP’s shares fell by half (and have still to recover fully).”
- The Hay Group, who conducts the World’s Most Admired Companies (WMAC) Survey for Fortune every year, reports that internal and external reputation management is the most significant factor in consistently enabling the WMACs to outperform their peers. And to add in another good proof point, 75% of these most admired companies worldwide regularly communicate the importance of their company’s reputation to their workforce.
- Also from the Hay Group article, a statement which surprised me. They say that the world’s most admired companies now have “much greater control over their reputations” compared to five years ago. I think that this is a perception that could be easily debated and I’ve be in several of them lately. On one hand, companies might feel that they have less reputation-control due to the rise of the Internet, NGOs and the never ending media-frenzy but you could also say that with disintermediation, companies now have more tools in their arsenal to bypass the media to get their messages out and to listen early on to stakeholders before the conversation turns viral and damaging. A great topic for a debate. I might save it for a panel discussion.
Hope to add more to my collection of interesting reputation nuggets in due time.