Reputation Stumble Rate in U.S. Soars
At Weber Shandwick, we first introduced the concept of the “Stumble Rate” in January when my book was released. The stumble rate measures the percent of companies that are in top place on Fortune’s World’s Most Admired Companies list in their industries five years ago vs. their standing today. Any company that was top-ranked five years ago and is no longer is considered a “stumbler.”
Despite a declining stumble rate in the global market, the Stumble Rate for U.S. Fortune 500 companies has risen in the past year (2007). A year ago, approximately half (52 percent) of companies that were their industries’ most admired lost their crowns and this year nearly three-quarters (72 percent) have been dethroned. That is approximately a 38 percent jump year over year. Three out of four U.S. largest-revenue companies losing their reputation thrones is astonishing. Not surprisingly, the industries whose churn increased are associated with current U.S. economic challenges. Sectors such as building/real estate, energy, and automotive all included companies that newly stumbled this year. No surprises there. I imagine that the stumble rate for next year will be just as dramatic.
When I was in Asia Pacific, someone asked me whether these companies had actually stumbled or another company had lept forward in the reputation race. A good question. I think that losing reputational equity because an up-and-comer has leap-frogged over you to the number one perch is the same thing as a stumble. Someone (usually those at the top) was not watching well enough.
All in all, Weber Shandwick’s stumble rate is a stark reminder that reputation recovery is as much a part of the reputation continuum as reputation building and reputation sustainability. In fact, it is the hardest part of reputation management equation