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. 


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. 

When qualitative reputation is just as good

There is an intriguing blog post on the HBR Blog Network titled "Don't Trust Your Company's Reputation to the Quants." Considering all the hoopla around Big Data, I was immediately curious about how they would frame an argument about also relying on non-quantitative data when the world seems so enamored of stats and scores. Of course, companies are right to care about making their numbers and the bottom line but there is another side to the story when it comes to reputation risk. "Reputation will always be too impressionistic, and too long-term in its impact, to be left to your Quants. Indeed, if you do leave it to the Quants, it will most likely be neglected, along with other risks that involve intangibles." Quants can often neglect the commonsense solution that protects reputation or overlook how the public might react to and protest a company action. Qualitative insights and experience often adds a dimension to corporate behavior that is not only sufficient but imperative to safeguard reputation. Their advice is for boards and senior executives to listen to the Qualts as much as the Quants. Qualts are defined as those in the organization who "have internalized the values and larger purpose of the organization, and grasp how powerful these are in maintaining healthy connections between the company, its customers, employees, and other stakeholders." This reminds me of an article I just read by BP's CEO Bob Dudley on the BP oil spill in the Gulf of Mexico. Quantitatively, you could say they should have negotiated settlements through the courts but instead they waived the $75 million statutory liability cap and agreed publicly to pay all legitimate claims. They listened to their qualitative side by not delaying acceptance of responsibility and creating long delays before people affected by the disaster received payment. The qualitative side of their character and their focus on reputation came before strenuously litigating from the start of the crisis.

The authors have a good close to their post: "But Qualts appreciate more than anyone else how succumbing to immediate financial temptations can mortgage a reputation, creating reputational debt. They maintain and evolve decision-making models that guide those decisions with clear reputational standards that remain inviolate up, down, and across the extended enterprise." This is where understanding what your company stands for, how it behaves and the value of reputation for the long-term comes into play.

No one is arguing that quantitative inspection is not important. It is just that reputation is not black and white but as someone once told me, plaid. It is very complex and the fabric of reputation is made up of many patterns, colors, threads and how well its owner takes care of it. 

The R-factor when it comes to sustainability

In a recent report from McKinsey on the business value of sustainability, the management consultancy asked nearly 2,000 global business executives several questions related to reputation management. And year after year, global executives report back that enhancing reputation is a top factor as to why companies spend time and resources devoted to sustainable initiatives. Executives also say that reputation has the "highest value-creation potential for their industries over the next five years." That's quite an endorsement of the ROI of reputation management. And when asked what are the activities they do the most to arrive at these reputation-inducing sustainability perceptions, executives mention communicating their sustainability to customers and continuing to build and safeguard relations with stakeholders. This makes sense because if customers and other stakeholders do not know what a company's sustainable practices are, they can only guess or most probably assume they don't exist. On the other hand, I would also assume that sustainability is table stakes for most companies and most consumers expect companies to care about sustainability. Unless they are told otherwise, they would be surprised if a company was not pursuing sustainable activities aggressively. I recall my shock several years ago when Apple received the lowest scores from Climate Counts for its environmental actions and position. That has been reversed in recent years. Bottom line -- it pays to communicate.

Lower on the reputation-building front for having a sustainable image are having company leaders join the external dialogue on environmental, social and economic issues. Understandably, having your CEO take a public stance carries all sorts of risks when it comes to environmental practices, particularly if it is not aligned with your business strategy. Even when it is aligned, CEOs remain cautious because of the scrutiny and spotlight they place themselves under when they are out in front. As they say, risky business. I presume that longer-tenured CEOs have less to risk for taking environmental stands externally because they already have a decent track record for leading a well-managed company and have a bank of credibility built up. 

Despite their reluctance to go hyper-public with their views on sustainability, McKinsey found that more CEOs today versus two years ago consider sustainability a top strategic priority and it is among their top three priorities overall. It is definitely at the top of CEOs' agendas and a solid reputation-builder that drives value.  (Chart from McKinsey report)

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.