The Reputation Complex: Seeking Sustainability in a Liquid World

By Pascal Beucler, SVP & Chief Strategy Officer, MSLGROUP

Here are some tricky questions our clients are dealing with today, particularly at the C-Suite level:

  • What is the link between Business and Reputation today? What is the value of Corporate Reputation (the one of the firm, not just of its brands, services and products), whether in a B2C or B2B context?
  • Why and how is the Digital & Social turmoil changing the whole game?
  • Why is investing in Corporate Citizenship critical today, from a Reputation Management standpoint?
  • Why should we address reputational issues versus all stakeholders, not just shareholders but also customers of course, employees and partners, people and communities?
  • Why are silence or secrecy not sustainable options anymore?
  • Is a silent firm always defined by others?

The following analysis examines why Reputation Management is such a challenge in a world where transparency is mandatory, social engagement is required, corporate citizenship is highly expected and content is king.

Corporate Reputation is what supports Corporate Equity.

Basically, that’s what we mean with the concept of “Reputation Complex” and the way we define it:

The “Reputation Complex” is a moving combination of various reputational factors, components and drivers that are linked in a close and complicated way. This combination brings with it, for all organizations, equal risks and opportunities – the first to be managed and the second to be exploited in the right manner.

From this standpoint, Reputation Management is probably today the most demanding of our Global PR Practices, at the intersection of Corporate & Brand Citizenship, Financial Communications, Public Affairs, Digital & Social, and Employee.

As a matter of fact, Corporate Reputation protects a company’s equity, plays a growing role in investors’ eye, and strengthens customer’s confidence in a firm’s products and services. In fact, checking who’s behind the brand/the product/the service – who owns it? –  is a fast-growing trend.

Corporate Reputation also nurtures key opinion leaders’ appreciation, attracts the best partners and helps recruit and retain the best talents.

In a nutshell, Corporate Reputation is cornerstone for all businesses. And, let’s make this clear: Reputation is not fame, admiration, image or esteem – all of these can generate a positive halo, but none of them is a founding factor. Let’s not mistake the effect for the cause.

Last, contemporary Corporate Reputation is not based only on cold analysis, rationale and reason; it’s also linked to emotional attributes, perceptions and empathy, all of which are key drivers a genuine societal commitment can help create.

A fast-changing ecosystem

Key attributes such as long-term investment value, quality of products and services, and financial soundness have been utilized year after year by various rating systems asking professional panels to evaluate firms on X-point scales. That’s for sure essential, but such classical, endogamic and “coefficient-centric” approaches do not suffice anymore in a world where ethics as well as the nature and the level of engagement with people and communities are cornerstone.

Corporate Reputation needs to be seen through a different lens, with a much wider focus and mind-set.

Who doesn’t see the terrible consequences of the various scandals and crises the past decade produced, starting with the Enron earthquake and continuing today with the 2008-10 Wall Street “Big One” and post-crisis tremors? Each and every survey in the past decade has described a very unfriendly, suspicious, negative environment, with unprecedented levels of public distrust and anger.

Trust in all institutions, including corporations and governments, remains at an all-time low across the world, and this is worrying. And it’s no surprise that the “Financial Planet” continues to suffer from the poorest reputation of all business sectors.

L’air du temps: seen in a restaurant in Berlin, January 23rd, 2014
L’air du temps: seen in a restaurant in Berlin, January 23rd, 2014

The age of low predictability

Liable to change rapidly, a Corporate Reputation is a composite of diverse and highly volatile perceptions and emissions – most of which being hard to manage:

Age of low predictability

Few years ago, Reputation was a somewhat elusive intangible asset, in the hands of a small number of selected gatekeepers. Today, with the explosion of social media, reputation can be enhanced or damaged in the blink of an eye. Most corporations are in the risk zone, where a low level of public trust meets a high level of people’s empowerment. And this is exactly why every Reputation issue is potentially Global, Social, Viral.

Reputation as the #1 Risk in 2013

Changing perspectives is always a little slow, naturally, but the latest “Exploring Strategic Risk” joint study by Deloitte & Forbes Insights shows an impressive evolution over the past three years, with Reputation rising to become the #1 Risk in 2013:

Reputation as the #1 Strategic risk

Three years ago, reputation was already the top risk area in financial services – and remains so today. Now, reputation is rated as the highest impact risk area – not just overall, but for most individual sectors as well.

Why all of a sudden?

Social technologies are one of the main factors driving rising concerns about reputation. Given the speed and global reach of social media, companies today are losing control over how they are perceived in the marketplace.

One of the big changes in recent years is speed to market,” says ANZ’s Jennifer Evans (Banking & Financial Products). “As a consequence of social media, reputations built up over decades can be challenged in an instant. Customers are able to make decisions on an organization based on social media comment, potentially well before your ability to be able to defend or articulate a response.”

Warren Buffett

The “post-disintermediation” Age: Reputation Management in times of Social Guerrilla

As the Deloitte-Forbes research clearly shows, reputation risk is now the biggest concern, due in large measure to the rise of social media

Social media enables instantaneous global interactions that make it impossible for organizations to “control” the on-going conversation about them, and the impact on their reputation

This is true everywhere and for every organization, as shown in recent examples where public authorities were targeted by citizens and forced to take action.  Such viral initiatives are the “New Normal” today, and they prove to be very effective.

We clearly see a double move here:

  1. From Influence to Engagement: Influencing influencers silently, secretly, behind the scenes, has been the norm for decades, and it still works in specific contexts. But it’s far from enough today: in all industries and everywhere, disintermediation is rapidly, and profoundly, changing the rules of the game.Brokerage based businesses are all potentially under threat.  Gatekeepers and barriers are vanishing, while people use the boundless power of social media to raise their voice and be heard by the decision-makers, be they politicians or business executives.
  2. From Public Affairs to People’s Affairs: Leaders – whether politicians or business execs – are put directly under people’s heavy pressure through Twitter, Facebook or YouTube.Within days, sometimes hours, they have to cancel an initiative, abandon a controversial project or quickly act to address a pressing public demand.
Aol chief
AOL’s CEO Tim Armstrong reversed a change in policy following employee & media backlash (via washingtonpost.com)
Make the Politicians Work
Russian politicians fixed city potholes after a social guerrilla campaign by news site Ura.ru (Make the Politicians Work)
Metropole
Dutch Parliament intervenesdto ensure subsidy for the Metropole Orchestra after the popularity of the Metropole Tweetphony campaign

#TweetsFromTheDeep is another great example of Social Guerrilla in the area of public affairs.

What would you do to help defend UK fishermen, under permanent scrutiny for their alleged exploitation of the sea’s resources: classical media relations? It may not bring much attention from the audience you wish to engage with. An ad campaign in mainstream media? It will be a bit costly for a professional association and, again, it won’t be authentic, genuinely human-based, it will just be one point of view versus the other.

Here’s what the National Federation of Fishermen’s Organization did: give a fishermen access to their Twitter account and let him tell his own story himself, from deep in the ocean, with his own words and tone of voice. Much more efficient. Brilliant!

Video: The NFFO Fisherman David Warwick sends Tweets from the Deep

From low intensity controversies to high intensity crises: Reputation is at stake

Whether it is a “real world” crisis (catastrophe, sex scandal, oil spill) or a “flash mob” of activism generated online (Greenpeace vs. KitKat), the news curve and the crisis curve are closely linked, and Social Media is spreading the blame game at a very high speed. The Bank of America case is a very insightful one, as Nidhi Makhija demonstrates in this report.

Social Media’s impact on share prices is critical too, particularly since the SEC ruled in April 2013 that companies can disclose important information on social media accounts as long as they alert investors in advance of which platforms and accounts they will use. Now, in addition to spontaneous celebrity social endorsements (Oprah’s $150mn tweet), companies’ & executives’ social media posts are impacting stock price and movement.

For instance, Netflix CEO’s Facebook post sparked a 13% rally in Netflix shares, sparked an SEC investigation and resulted in a new regulation allowing companies to make announcements through social media. A hacker’s tweet from the AP account, that ‘President Obama was injured in a White House explosion,’ erased $200 billion from US stock market for six minutes in April 2013. Analysts blamed algorithm trading systems that scan news and social conversations for the temporary drop.

Oprah's tweet

The Reputation Complex: articulating Content & Engagement, to hit the sweet spot

Building and managing a reputation today is firstly building and managing a content strategy, then rightly engaging around it with all relevant audiences.

Content is King, and it all starts by defining and expressing the fundamentals of every organization’s core strategy:

  • What do you stand for as a firm? What’s your purpose?
  • Does your Corporate Governance meet today’s societal expectations:  ethics, quality of leadership, social responsibility and diversity?
  • Is your business performance sustainable?
  • What’s the social impact of your business on people, communities and society at large?
  • What does your Corporate Citizenship consist of?
  • Are you an Employer of Choice?

It’s then about rightly engaging with all stakeholders:

  • How can Communications better shape & share the story about the firm’s history, legacy and strategy – both internally and externally?
  • Beyond the Investor’s Day, the priority is to craft a narrative architecture to help larger audiences understand where the company comes from and what it stands for.
  • Why sustainability, value creation and innovation are key pillars to its success?
  • How the firm, wherever it is on Earth, is committed to developing close links with people and communities?
  • Why building a strong Employer Value Proposition is crucial for today and tomorrow?

> Over the past few years, some companies (from IBM to PwC to GE) which happened to be at stake did better than others, because they better managed what they wanted to focus on (content), and because the way they engaged with people was superior (relationship).

> IBM announced its ambition to create a Smarter Planet and involved people, innovators and local leaders in its mission (People for a Smarter Planet community, Smarter Cities Challenge)

> PwC appointed a head of reputation to mend its relationship with regulators, and is positioning itself as part of the conversation around building trust (Inspiring Trust report)

The Reputation Complex is thus a system of different levels and dimensions, as well as an on-going & iterative process with no beginning and no end, blending beliefs, perceptions and representations, all based on a firm’s global behaviour. Helping our clients navigate the blur and manage complexity is our main task today in the fast-changing world of PR – People Relations.

Before being good or bad – and moving from one state to the other doesn’t have to take very much time – a reputation firstly is:

  1. Coherent, or not, with what a firm actually is about, and stands for
  2. Consistent, or not, with its core beliefs and values
  3. Solidly grounded, or not, into a well-told story
  4. Managed, or not, properly

A firm’s resistance, and potential resilience, very much depends upon these four points, when its reputation is at stake.

From Philanthropy & CSR to Corporate Citizenship

This was – again – over-demonstrated few weeks ago at the 2014 World Economic Forum in Davos.

To “reset” the world’s economy, restore some sort of public confidence in the world of business – particularly in the Financial sector, as we see it – many top leaders highlighted the fact that corporations need to speak and act as Good Corporate Citizens.

Such a movement is here to stay, and it’s a growing concern for all stakeholders.

As Unilever CEO Paul Polman loudly claimed in Davos: You don’t get attacked for doing the right things!Polman claimed that if profits were necessary, they shouldn’t be placed above purpose. He also claimed that Unilever had a “moral obligation” to help address the world’s problems: If we don’t work in transparency, we undermine trust.” He admitted that this was not an easy transition for companies to make:  “To get these values into the company is awfully hard work and takes a long time.”

However, he used the example of Edward Snowden to highlight what can go wrong when companies come under attack in an environment where individuals can put you out of business.”

This is the dominant trend today. Philanthropy was the norm: giving back discretely and without necessary links between the business and the causes the firm was supporting. Citizenship is the new normal: it’s about putting the firm’s Citizenship engagement at the heart of its purpose and business strategy.

So, should we build walls, or windmills?

When the winds of change blow

At this point, in most markets and industries, it seems that the “protection” mind-set is more widespread than the “projection” one. It is our mission to help our clients go for the windmill option, as projection is the key for building a sustainable Reputation in the liquid age.

The windmill will create a lot of value, if corporations are genuinely purpose-led, acting as respected Corporate Citizens and being seen as proven Employers of Choice, and if they behave as well-connected and fully-engaged organizations.

And by the way, let’s remember that “Purpose” and “Propose” have the same etymology: a company with a solid Reputation is thus the one which has a relevant purpose, translating into a robust value proposition for all stakeholders.

This post is part of the People’s Insights magazine “The Future of Reputation

MSLGROUP People's Lab

6 Responses to “The Reputation Complex: Seeking Sustainability in a Liquid World”

  1. @clemencechoutet

    RT @pbeucler: Why Reputation Management is a challenge in a world where transparency, social engagement, citizenship and content a…http://t…

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  2. @OliviaAndrez

    The Reputation Complex: Seeking Sustainability in a Liquid World http://t.co/gASAjObu4M via @PeoplesLab

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  3. MSLGROUP Peoples Lab (@PeoplesLab)

    RT @OliviaAndrez: The Reputation Complex: Seeking Sustainability in a Liquid World http://t.co/gASAjObu4M via @PeoplesLab

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  4. parveez modak (@parveezmodak)

    RT @PeoplesLab: The Reputation Complex: articulating Content & Engagement to hit the sweet spot http://t.co/fBoyfDfz2C @pbeucler http://t.c…

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  5. MSLGROUP Peoples Lab (@PeoplesLab)

    The Future of Reputation is complex… Seeking Sustainability in a Liquid World by @pbeucler
    http://t.co/fBoyfDfz2C

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  6. Pascal Beucler (@pbeucler)

    RT @PeoplesLab: The Future of Reputation is complex… Seeking Sustainability in a Liquid World by @pbeucler
    http://t.co/fBoyfDfz2C

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