Cybersecurity reputational risk

Just recently heard that our first US homeland security chief Tom Ridge is helping to launch an insurance product that specializes in corporate cyber security policies. In the article, I read that the global economy has lost more than $400 billion annually due to these cyber breaches that seem to be coming at us like a tsunami. Moreover, only one in four companies, if that much, have some form of cyber attack coverage.

I also learned awhile back when we did our Employees Rising survey on how employees were using social media to champion and possibly sabotage their companies, that one of the reasons that companies have chosen to train their work forces about being responsible social citizens was to caution them about how cyber hacking often occurs. And that is from employees themselves who can be unintentionally loose with passwords, clicking on errant links or not understanding well enough the safeguards of protecting confidential documents. Again, another reason for formal social media training at work and recognizing the importance of internal employee communications. 

Cyber breaches are clearly hurting the reputations of companies that find their customer data let loose online from hacking. This has become a major reputational issue and one that companies have to get smart about or they will be joining the ever growing long list of the largest data breaches. Plus the background stories in the media often reveal that companies and their leaders had some forewarning or were lax about privacy controls which only makes matters worse. Need I even add that CEOs have lost their jobs over cyber breaches! This is becoming a reputational issue of epic proportions.

Company behind the Brand

The Company behind the Brand. There has been a great deal of interest in the concept of the parent or master brand and its relationship to its product brands over the past few years. The research we did recently on this topic put a stake in the ground by declaring that the two are interdependent and the parent brand was no longer the stepchild of the product brand. A recent article in Hindu BusinessLine asked the question of how companies would know if they were over-investing in the corporate brand at the expense of the product brand. The author Rajeev Batra, professor of Marketing at the Stephen M Ross School of Business at the University of Michigan, says there are six situations where it makes sense to invest more in the parent than the product brand and four situations when it makes less sense.

Makes Sense to Invest in the Corporate Brand

1. When it comes to cross-selling -- it makes sense if you want the consumer to buy another one of your products and the parent brand provides assurance that it is a wise choice. Using a P&G example, the author says: "The logic is that if the average US household which currently buys five P&G products can be induced to buying a sixth by virtue of it being a P&G product, it will lead to a 16 per cent increase in sales."

2. When it comes to high risk -- your consumer might not know who you are and they wonder if they are taking a risk by selecting your product or service? The parent brand acts as a guarantee that they they are in good hands by selecting your product. High risk selections might occur when selecting an airline, a bank, pharmaceutical or medical procedure. 

3. When it comes to social issues -- your company wants to attract a segment of customers who already care about particular social issues such as sustainability, obesity, etc. and you want to guarantee that your parent brand is having a decided impact on society and the environment. What your company says and does about social issues matters increasingly today in product consideration.

4. When it comes to brand extensions -- if your company wants to introduce a new product or extend the products it already has, the parent company can make that happen more easily by adding its reputational luster to the extension.

5. When it comes to having a positive rub-off -- the halo from the parent brand can often work magic on a product brand.  Consumers who see a corporate brand as standing for high quality, integrity and transparency make the leap in their heads that the products are made with the same attention to intangibles.

6. When it comes to reputation overall -- having a good reputation can help a company recover faster after a crisis or mishap. Investing in a company's good name now has tangible benefits, especially when you might need it tomorrow.

Batra also lists four situations where it might not make sense to spend your dollars on the corporate brand at the expense of the product brand.

Makes Less Sense to Invest in the Corporate Brand

1. When it comes to appealing to many diverse consumer segments that sometimes clash or conflict with each other. As he says, this is the House of Brands concept where each product brand might do better standing alone. For example, If a company's product brand appeals to less healthy eating behavior for teens and another company product appeals to an organic ingredients offering, it might not make sense to overinvest in the corporate brand. Let's just say it is hard to imagine Disney having a high risk theme park in addition to its parent-friendly ones and trying to position the Disney brand well under those circumstances.

2. When the corporate brand image is too broad and diffuse that it is not distinctive enough. We have all seen examples of companies that communicate empty and meaningless promises. The intense focus on innovation in recent years where many companies are calling themselves the most innovative ones in the world has baffled me.

3. When the meaning given to the parent brand is not relevant to the consumers it is trying to capture. Yes, sometimes companies miss the mark.

4.. When the corporate brand positioning is not believable and invites skepticism. This is the example we are all familiar with when a company says one thing (i.e., societal- or environmentally-wise) and behaves to the contrary. Do I dare say BP.

The four examples Batra gives as to why investing in the corporate brand might not be an efficient use of resources are quite valid.  However, my belief is that if investment in the corporate brand is done right, it nearly always pays off and can actually provide the necessary filter for leaders to make better decisions about what products should be invested in or what acquisitions to make. There is no reason why companies should not be able to identify their relevance to all customers, even if their products vary. Narrowing down that corporate positioning to its core essence is what companies are supposed to do to build enduring reputations that last. Understanding what your company stands for is more critical than ever and the corporate brand reputation should serve for something all encompassing that guides customers and inspires employees. Research is important in helping deter companies from marching off in the wrong direction.  In a world where the Internet is at everyone's finger tips and word of mouth is all around us, it makes perfect sense to build the corporate brand so that it is infused with meaning that matters to all its brands. 

 

Facing up to reputation imperfections

Ain't it the truth. Mark Borkowski writes on his blog

"We need to get used to the fact that these days there is no fixed mark on reputation.  Along with the Buzzfeed generation comes the hint that the old media traditions fail, with short form memes feeding the wires, and less emphasis on the elongated and researched story.  Brands and individuals must become comfortable with their imperfections and vulnerabilities because we have a crowd and a ‘can know anything’ psyche, where reputations are savaged in an instant and often with no grounding in reality.  The emotion of the crowd gathers momentum and careers along gathering falsehoods before the accused has even woken up to the storm."

It is very hard for companies to accept their imperfections. Transparency is one thing. Hanging out the dirty laundry is another. We are all going to have to develop thick skins and get better bleach. 

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Reputation building in an upside down world

Building reputation in this upside down world is very much on my mind these days. As I mentioned in an earlier blog post, the time has surely come to think about how reputations get built when no one is paying attention or remembers anything beyond headlines or wrongdoing. Plus I have to ask myself if the world really wants to remember anything when it seems to be catching on fire and exploding all the time. Everyone seems so bone weary or as a shopkeeper told me yesterday, "It's the dog days of August, what do you expect?"  

Luckily I found this article in Wired which gave me something to think about -- "Branding is About Creating Patterns, Not Repeating Messages," written by Marc Shillum of Method. His smart thoughts on branding apply well to those trying to build reputations caught in the vortex of news, information, misinformation, hearsay and rumors. Here are three thoughts that I pulled out from his article for my blog: 

  • "The media brands inhabit is iterative, with no beginning, no end, and little permanency. In that context, adherence to a big idea and endless repetition of centralized, fixed rules can make a brand seem unresponsive and out of step with its audience."  Like brands, reputations need to be relevant and in step with external audiences and the marketplace. Reputations have to be continuously evolving (there is no permanency anymore) and not just stuck on one big idea or three message points that are meant to last for 12 to 18 months without adaptation. I've always thought that incremental change adds more to reputation than monumental change. The latter is too hard to absorb and builds distrust and dissonance with what we thought was the truth. Smaller ideas that go step-wise into the marketplace are the best way to build and cultivate reputation. 
  • "Through this iterative interaction, the brand becomes a constantly shifting relationship between the company and its customers. Through the interface, the customer assumes the right to some control, ownership, and authorship of the brand."  This idea is power-packed. Company reputation, like the brand he refers to, has to constantly shift as its customers shift. Stakeholders have the control and are now the genuine authors of reputation. Afterall, reputation is how you are perceived by your stakeholders, not what you dictate. It is a back-and-forth negotiation which has to find a common core at the center. 
  • "To succeed in a more agile world, a brand needs to think less about defining a fixed identity and more about creating coherent and flexible patterns."  I agree. Reputation is built on patterns that resonate and clarify and re-calibrate our thinking. Patterns bring things to life because they are nuanced and interesting. For example, it's been helpful to watch IBM's big idea surrounding Smarter Planet build its patterns over the years. If you go back in time, it started out as Solutions for a Smaller Planet and then turned to Decade of Smart and Smarter Planet and onto Smarter Cities and much more. All of these central themes have formed patterns of ways to think about IBM and connect them with solving the world's largest problems. I can barely think of IBM without seeing the arresting visual smarter planet icon and all the associated ones that have accumulated over the years. It forms a quilt of thoughts in my mind that add up to one big idea that keeps me interested, delighted and wanting to learn more. 

All good ideas for thinking about reputation today. 

 

 

 

CEO selfies....really!

I was reading a post this morning about social CEOs, a favorite topic of mine and came across this one on AllFacebook by Mary Long. It is about the five things that CEOs should not do. This one stands out because I can hardly imagine a CEO considering this seriously but then again, we've seen the unimaginable happen time and time again. And when I googled CEO and selfies, just now, there seems to be long line of tech company executive selfies making history. Long recommends that CEOs refrain from taking selfies. Here is her advice and I quote:

"2) Daily selfies

If you take daily selfies and you are a CEO, you might as well write your resignation letter and post that along with your selfie. As a CEO you have a professional image to maintain, and those selfies taken on your iPhone camera are far from professional, at worst – and show an unseemly narcissistic streak, at best. Invest in a professional photographer to help you capture the perfect head shot, if the former – and a professional therapist, if the latter!"

Sane advice for the Fortune 500 CEO set for sure. Sometimes it is best to be boring and less about me me me. I can see it making sense with some of the tech CEOs but beyond that, not so sure. Maybe with employees in the background it can work but a CEO selfie for selfie's sake, got to proceed with caution. 

Reputation convergence arrives

Convergence is here to stay. Why am I saying this? Because I just realized that I did not write about our newest study, Convergence Ahead: The Integration of Communications and Marketing. The research is very relevant to reputation which is why I want to make sure that I blog about the trend here. I wrote a LinkedIn Influencer post about this rising trend but focused less on reputation than about how the communications sphere was changing. The gist of the research is that in increasingly more companies, once traditionally siloed departments -- communications and marketing -- are coming together on behalf of the enterprise brand and all stakeholders. Instead of marketing overseeing the customer and advertising and communications focused on everyone else (the media, investors, employees, digital folk, NGOs, regulators, etc), the new world we live in requires that companies have one voice. If not, they are essentially wasting their breath. We have several proof points to support this convergence of the two functions on behalf of creating better corporate reputations:

  1. Research we conducted with Spencer Stuart this year found that the rate of global CCOs (Chief Communications Officers)  who have oversight for marketing increased from 26% in 2012 to 35% in 2014. 
  2. 84% of CCOs agree that corporate reputation and brand reputation are indivisible today (same study as above).
  3. LinkedIn search found over 300 members who are Chief Communications and Marketing Officers (CCMO) or Chief Marketing and Communications Officers (CMCO).

But reputation-wise, there is increasing evidence that companies are focusing more on their enterprise brands than just a few years ago (86% of CCOs say they are working on their reputations more vs. two to three years ago) and that consumers care a great deal about the company behind the brands they buy. As the world has become increasingly transparent with the Internet and employees online, there is no way that companies can hide what they manufacture or how they behave. For these reasons, communications and marketing are joining forces to build more transparent reputations on behalf of their product brands and not ignoring the link between the two. And this is not just B2C companies but B2B as well. The facts are in and this trend is only going to get larger. 

Crisis tips when reputation is on fire

Two perennial crisis-related questions look like they have some answers. How long does it take for a reputation to recover and when in crisis, should companies lay low or communicate aggressively and engage like mad?  

Answer to #1: In research by CoreBrand and Brunswick, it took four years for 16 crisis-stricken Fortune 500 companies to restore their reputations. CoreBrand has an extensive database that has been in existence for 24 years and looks at over 1,000 companies across 54 industries. The four year mark matches with executives' perceptions of recovery time in research we have done at Weber Shandwick. Interestingly, their research added two additional dimensions:

  • It took nearly two years to rebuild perceptions of investment potential ( :( says the stock market)
  • Average time to return to pre-crisis brand equity was somewhat over one year ( :( says CMOs)

Answer to #2: Super fascinating to me. When they looked at the 16 companies, 7 began engaging and communicating with stakeholders soon after the crisis erupted. Yet, the other 9 kept a low profile and stayed out of the news, presumably to deprive "the crisis of additional oxygen" until it subsided. So what does the research reveal about the best route to recovery? Not what you may have guessed off the bat. Here's what they learned. "The low flyer (quiet pattern) companies actually suffered slightly fewer hits to their favorability and overall reputation. And perceptions of management took only half the hit that they took among the engaged ones (classic pattern). At first blush – and ethical considerations aside – it appears that flying low is a stronger strategy. But, there’s a catch. The low flyers appear to suffer a longer downturn in their brand equity. The brand strength of those hunkering down, as measured by CoreBrand, took longer to bounce back. Whereas the engaged group actually began to repair their brand after one year, the disengaged group were still stuck in negative territory with losses in brand equity as a percentage of market cap. The “fly low” strategy has other potential drawbacks. There are greater threats of government intervention as stakeholders demand more accountability, and there are the quiet and negative impacts of corporate silence on internal morale. Even in the age of transparency, disengagement may be a valid short-term survival strategy, but it appears to pose greater challenges to the health of the brand. Silence is not always golden."

These are invaluable lessons to be learned on how to communicate after a crisis. The natural instinct is to hope it blows over, to engage as little as possible and to go radio silent. But these findings show that over the long-term, heightened communications is the best way to go. Perhaps the fact that the news is so transient today and a crisis lingers for only so long before it is displaced by someone else's crisis, the best approach is to go on the record as having spoken up, defended your side of the story and shown that you can be trusted to do the right thing. People will remember that you were not silent and could be counted on when it matters.