When reputation takes a hit – knowing what you stand for is the first step to recovery

Reputation, image and identity are different concepts. Much confusion exists between the three because we use them synonymously.

A reputation is a distillation… it is the sum total of the experience, knowledge, feelings and emotions people have when interacting with an organisation or brand. Whether it is ‘good’ or not depends on the extent to which the public views the organisation (or brand) as delivering on the organization/brand promise.

Image is different.  It is how an organisation choses to represent itself to its various stakeholders. It tells people what it stands for and why that has benefit for customers through promotion of its products and services.  It advertises those benefits in communication which is rich is symbolism (think the Nike ‘Swoosh’ or the Mercedes ‘bangle’) and ‘success by association’ (Breitling and Rolex watches).

Identity on the other hand speaks to how an organisation sees itself. An identity is inward looking. It concerns itself with values and value systems in a complex network of stakeholder relationships. It is intended to appeal to employees and shareholders.

If reputation, identity and image are different, then it follows that by damaging one you don’t necessarily damage the other.

So an organisation that does something to damage its reputation (what others think of it) and image (the way it promotes itself) it can recover if its identity is sound.  When reputation takes a hit knowing what you stand for is the first step to recovery.

Reputation and competitive advantage

How does reputation lead to competitive advantage?

I reckon in two ways: Reputation, or let’s say the net effect of all one’s interactions with a brand, provides an identity that becomes a rallying point for employees and makes customers proud to be associated with a company or brand. They have a clear understanding of what a brand is about and identify with the vision and value system associated with that brand. Abraham Lincoln would call this the ’tree’. It’s the real thing and cannot be faked … at least not for long.

Secondly, reputation affects image, or the way others view you – this is Abraham Lincoln’s ‘shadow’ analogy. A positive image attracts people to you – like prospective employees so you get to choose the best of the bunch, but the same may be said for attracting customers and shareholders. Image is good for share price; good for attracting people to your cause.

So a positive reputation helps a company keep its best people, attract and retain good customers, and adds value to the share price as the share takes on an intrinsic value of its own.

Where is the competitive advantage? Sustainability is key across the triple bottom line – people, planet and profit. Now if sustainability is important it means that experiential gains from employees, and their interactions with customers, become the means by which service levels soar, input costs are kept low and where one facilitates a premium on pricing.

Sound easy?  Not a chance.  A reputation is hard earned and easily lost.

Why do some companies get away with reputational damage and yet go on to even greater success?  More about that next post.

Can 140 letters constitute the most boring conversation ever?

Ok I admit it: I don’t get twitter. Unless you are mega famous who cares what you are doing anyway? And as for business executives using this ‘next best thing’ to communicate with colleagues, even 140 letters can constitute the most boring conversation ever. Is this just another social networking fad that finds it difficult to appeal to anyone other than the chronically idle or have I missed the plot?  Kind of got a kick out of Julia Gillard following me though – yes I started following her first…….funny how something that would get me arrested in the world of atoms is ok in the world of bytes.

Has Qantas damaged Brand Australia?

The idea of grounding an airline in today’s world of interconnectedness sounds like the stuff a Jeffrey Archer or Ken Follett block buster is made of.  If this was a case study you would probably be critical of its authenticity.  But that’s exactly what Alan Joyce (CEO) did with Qantas and the debate now is whether his actions have damaged Brand Australia?

In asking the question I wonder if we aren’t confusing two things here: brand identity and brand image?

The ‘problem’ for Qantas is an identity one – a fight for the soul of the airline.

Either it is a commercial enterprise run along commercial principles or it is a national airline with nationalist tendencies …. including a staff cost irreconcilable to a competitive environment.

Fix the identity problem and the image will be fixable.

Leave the identity issue unresolved and no amount of money or spin will pull a brand out of a death spiral that will end with a hard landing (ok weak pun but you get the point?).

I think Qantas will become a classic case study of how a CEO (with the unqualified support of his Board) can wrestle back the identity of a brand and go on to fix the fall out and crisis in image that Qantas no doubt feels right now.

Although$20m in free flights, and a no nonsense refund of costs associated with the decision to ground the airline, will go a long way to resolving an image problem even of this magnitude.

And as for those customers who swear they will never fly Qantas again?

They will be at the head of the queue for one of those freebies.

Integrity and brand building

Just as reputation plays an important role in the creation of a brand so too is it foundational to the development of a personal reputation an individual can be proud of. 

Benjamin Franklin reckons that ‘if you would not be forgotten as soon as you are dead, either write something worth reading or do something worth writing’.  

As with a brand then, and assuming you want to leave some sort of legacy, a personal reputation is just as important for individuals.  

I reckon reputation has one foundational personality trait:  Integrity. 

Integrity is an often misused word.  It means doing what you say you are going to do with honesty and truthfulness. 

A good reputation must enjoy public trust and strong equivalence between appearance and reality.  

How often have you met someone who can talk-the-talk but when it comes to delivery … well that’s another matter?

Make a decision today to walk-the-talk, not just talk it. 

To help you do that ask yourself two questions: What are you reading? and Who are you associating with? 

The idea here is that both influence who you are – this is something a parent readily recognises as they seek to protect their children from the influences of peer pressure and yet how few adults follow their own advice.  Where you will be in 5 years depends on both these factors – What are you reading? and Who you are associating with? – something obvious to Benjamin Franklin and critical to establishing your own personal reputation based on integrity. 

Make integrity the foundational personality trait in your life.  Integrity is inspirational.  Be inspired.

 

Building a good corporate reputation

The theory behind reputation management isn’t overly complex or difficult.

You need a vision and value system and then need a commitment to, and consistency in, upholding that vision and value system.

There is an assumption here that the vision works towards the common good and that the value system is such that in any given situation each value will be universal in its application i.e. regardless of the circumstances or context the value applies e.g. honesty.

Why then is a good corporate reputation so difficult to obtain and even harder to defend?

It comes down to the moral motivation behind the vision and value system.

A vision that requires a company to pursue a certain return on net assets; and claims profitability as one of its values must have its motivation in any and all circumstances viewed with suspicion e.g. saying you believe safety is important and believing it to the extent everything else is secondary are not the same.

Here you can see the problem – a company may not articulate the role of profitability in its endeavours but is driven by the value nonetheless.

Moral motivation in the development of a good corporate reputation is critical.

For an individual moral motivation could be determined by looking at whether their behaviour consists of ‘good action and good desires’ resulting in ‘positive moral worth’.

Positive moral worth speaks to both the action and the intention behind the action thereby enabling insight as to an individual’s moral disposition.

Can we apply the same theory to the corporation?

I think we can. More about that next post.

How do you create a good corporate reputation?

Ethical business practice makes you more competitive, not less so. 

That’s because ethical business practice gives rise to a reputation that attracts people to you:

• prospective employees want to be part of that reputation because they want to be proud of who they work for; 
• customers want to do business with a company with a good reputation because it reduces their risk;
• same for service providers. 

The more people want to do business with you the more selective you can be. 

• You can pick and choose between candidates making it more likely you will get the best possible person for the job. 
• You can focus on customers with a better risk profile than others; and
• You can discriminate between service providers which means you will get more for your money be it in delivery times, quality assurance or innovation in process, product and design.    

Ethical business practice then makes you more competitive because it makes you exceptional in a sea of mediocrity and product mimicry.

Most would agree to this point. 

Where things get tricky is how to develop that reputation. 

As with anything important in life it isn’t about one thing or a killer app. 

Rather it’s like a recipe in which there are four factors at work – the planning that goes into the process, the inputs you use, the way you put them together and external factors – similar to the heat of the oven. 

Trust me reputation takes on a whole new meaning the hotter the temperature.

One more time now …. do business ethics exist?

Do business ethics exist?

Yes business ethics exist but they are not what we think them to be.

In what way?

They are not a code of proscribed activities, ‘thou shalt nots’ or impositions that make business harder than it needs to be. They are not King III, company value systems or  regulatory affairs ‘tick boxes’.

Why is the field of business ethics so complicated.  How about a nice sound bite (or is that byte)?

The term business ethics is overly complicated because it seeks to address both the normative (interpersonal relationships) and descriptive (action driven) nature of business activity.  The term seeks to combine morality with professional codes of conduct, decision making responsibility and organisational ethics – the result being an intricate and complex way to explain human behaviour in the workplace.  

Come on, give it a try … define business ethics in one sentence….

Business ethics are a way to recognise the existence of ethical issues in business and to provide a framework for their resolution.  They also provide an opportunity to reflect on what has been decided/action taken. Was it the right course of action?  Commercially?  Ethically?  Now what are you going to do about it?  If anything?

One more time now … do business ethics exist?

They do and as moral beings we all care very much about how we, and the organisations we work for, behave in the marketplace.

What sort of person would do that?

Following on from my previous post, moral intelligence – more than just the ability to tell the difference between good and bad – is what we call a differentiating factor in an organization.

Like emotional intelligence, moral intelligence goes some way to explaining why some organisations can turn a vision and value system into a competitive advantage.

Absent from most discussions on reputation management and business ethics however is something called virtue theory.

Virtue theory is a fascinating area of conversation in that it looks at the individual, rather than the collective, and seeks to explain why people are motivated as they are.

For instance, why would a person who doesn’t need the money steal from their employer?

Why would a line manager hold back the career prospects of someone deserving of promotion?

And why would an organisation, making billions of US$ per day, skimp on the costs of drilling an under-sea oil well?

Interested?

Making a vision and value system work

Moral intelligence is an interesting concept.

Firstly it is by no means clear it exists. 

Like Emotional intelligence however I think the debate around its existence will continue for the next 20 years. 

But just as most people accept today that Emotional intelligence is a differentiating competency between those individuals capable of establishing effective relationships and those who are not, so too will Moral intelligence become the differentiator when it comes to explaining why some people are better equipped than others for telling the difference between right and wrong.

Assuming Moral intelligence does exist, we come to another sticky problem.  Is a modern day corporation capable of human agency?  By this I mean: Is it possible to extend moral intelligence beyond the employee to non-natural persons like the corporations who employ them? Take BP for example.  Can an organisation such as BP take on moral responsibility for the Gulf disaster, or are we speaking existentially about the moral culpability of those individuals who run and are employed by it? Remember morality does not concern itself with the legality of action but rather the moral permissibility or impermissibility of an act.  Criminality aside what moral responsibility does BP have for the protection of the environment within which it operates?

In my post of 3 May 2010 I linked moral intelligence with an organisation’s ability to make vision and value systems translate into sustainable competitive advantage. If you accept moral intelligence exists, and that corporations are capable of human agency, then we would have one way of explaining why some corporate vision and value systems succeed whereas others remain polite poetry on the Boardroom wall.