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Friday, 26 August 2011

Follow the Leader: Apple’s corporate reputation after Steve Jobs

By Mark Hutcheon & Jeremie Guillerme

As the world digests the news that the Apple King has left the orchard, the big issue of leadership transition is raised. Can the company’s enviable reputation be maintained with the top man, icon and founder no longer around?

When they leave an organisation, iconic leaders may not only leave big shoes to fill for their successor, but also a corporate reputation gap to catch-up with. This is why leadership transitions often require taking a look at how a company’s reputation is shaped. In this particular case, this means asking whether too much of Apple’s reputation equity was built on its previous leader Steve Jobs.

First signs of nervousness came from the stock market, with investors greeting new chief executive Tim Cook by selling shares and marking the company's value down by more than 5%. The share price of Apple recovered to near parity within 24 hours of the news, and one would expect that consumer and employee sentiment will follow the same curve. Nonetheless, Cook has the duty of protecting the precious commodity of confidence and trust in the reputation of the company.

To convince so many people that the best days for the company lie ahead is a phenomenal challenge to any leader or communicator. With his reputation of being an operations expert rather than a visionary leader, Tim Cook will need to deliver clear messages to investors, employees, and Apple enthusiasts across the world that the company will continue to bring new technology breakthroughs to market, and surprise consumers.

For the next two or three years, Cook will benefit from Apple’s legendary new product pipeline. His ability to nurture the culture of innovation and creativity will be put to a more difficult test only at the end of this transition period. This should leave him with enough time to define his CEOship as much as his personal style, while being inevitably constrained by the aura of the former leader, who will stay around in spirit and physically as Chairman.

The future of Apple will bring interesting insights on how a leadership change can affect a company’s corporate reputation. As the global economy has led multinational companies’ ownership and management structures to get more and more complex, a charismatic leader remains a strong reputation asset. However, even the world top-ranked company in terms of reputation will need to demonstrate its ability to maintain and develop its reputation when the magic of its iconic CEO has disappeared.

Friday, 19 August 2011

Thinking intelligently about the future: understanding and managing reputational risk

“It takes 20 years to build a reputation and five minutes to ruin it.” - Warren Buffett

I’ve decided to commence this post with possibly the most overused quote in the world of reputation management. But I have a good reason for doing so. As events as recent as the UK riots and the News of the World scandal testify, Buffett’s aphorism remains as relevant as ever.

‘So what?’ you may ask. We’re all well aware that reputations can crumble as quickly as the proverbial cookie. But what can be done about this, apart from putting well thought out crisis management plans in place?

Quite a lot, actually. The answer lies in a crucial but often little understood concept—that of reputational risk.

Understanding Reputational Risk

I’ve come across various definitions of reputational risk over the years, some needlessly complicated, but I often find it useful to start by thinking about reputational risk simply as a broad range of uncertainties that could have an impact, positive or negative, on an organisation’s reputation. From this simple definition, two important points can be gleaned:

(1) Reputational risk encompasses both threats AND opportunities. Reputational risk management is therefore not just about preventing disasters or crises from occurring, but also about being well positioned to leverage opportunities which may emerge in the short or long term future.

(2) Since the components that drive an organisation’s reputation are both multi-faceted and constantly shifting, so too are the sources of reputational risk. They can emerge from something as specific as compliance (or non-compliance) with a particular regulation, to something as broad as the way in which an organisation responds to changing stakeholder perceptions and societal trends.

In the aftermath of the BP, Toyota and Hewlett-Packard reputational crises of 2010, an article in the Wall Street Journal astutely observed that:

Reputational risk is…one of the most potent dangers that any company faces. It is also, unfortunately, one of the most elusive…Of those who took part in [a recent] poll, 80% claimed that reputational risk is their top concern. However, only 43% believed that they have formal and well-managed plans in place to tackle it.

The problem is clear: It is easy to identify and measure the impact of the damage wrought to a reputation after a crisis. But it is far more difficult to predict when and – more importantly – how a reputation might be tarnished in the future.

Reputational risk is certainly important, but is it really that intractable or difficult to mitigate? As the article in the Wall Street Journal reminds us, it is impossible to predict the future. It is, however, possible for organisations to equip themselves to better manage reputational risks (and on the flipside, to seize reputational opportunities) by thinking more intelligently about the future.

Thinking Intelligently About the Future

Rapidly changing business (and wider) environments continuously bring about new challenges to surmount, and new opportunities to seize. While these emerging issues will differ in scope (e.g. global vs. industry or place specific), level of certainty, and impact (to name but a few variables), they are not insurmountable, and can, to a lesser or greater extent, be taken into account, planned for, and even altered.

Emerging global issues which we are facing now include:
• Growing number of consumers in emerging economies
• Changing consumer tastes and expectations
• The rise of China and India
• Shifts in the economic balance of power
• Increasing regulatory zeal
• Increasing scrutiny on businesses
• Faster and easier access to information
• Rapid technological changes
• The rise of social media
• Changes in interdependence and competition between and within industries
• Competition for scarce resources
• Global warming

The key to maintaining, protecting, and even enhancing a company’s reputation in such a dynamic, uncertain and unpredictable context lies in:
• Placing reputation, which stems from a multiplicity of behaviours, perceptions and attitudes, at the heart of the business (and not in the hands of one individual or department)
• Understanding evolving reputational risks and opportunities, and envisaging multiple possible futures, such that the business is well placed to deal with a variety of future scenarios and uncertainties, no matter how good or bad.

There exist a number of robust methods and tools enabling organisations to do just this. They range from simple one day workshops (using, for example, creative ‘backcasting’ and ‘visioning’ techniques) to longer term scenario planning and simulation exercises. And at the more complex, expert-led end of the spectrum, tools such as the Delphi method and morphological analysis often prove useful in solving complex and seemingly intractable problems.

What is needed at the outset is a commitment to “future proof” an organisation in an integrated, sustained manner, as well as a willingness to “think outside the box” and challenge official, taken for granted versions of what the future may hold. Organisations which equip themselves to think ahead of the curve in this way are better placed to maximise opportunities and mimimise risks, enhancing their reputational assets in the process.

By Gauri Mahtani, Consultant, ReputationInc

Friday, 12 August 2011

Defining behaviour

There will be quite a few people being hauled before the courts in the coming days off the back of their action during the riots and what they posted online. I’m sure many of them would appreciate some “online reputation management” to delete the story, their picture and details swiftly after the court appearance.

The internet is great for sharing info but also for finding out information too. Stuff hangs around. The easily googled providers of so called “online reputation management” may feel like the right choice for some of rioters.

However, these online reputation management solutions are nothing to do with reputation management and won’t improve a reputation. They seek to hide, confuse and potently deceive stakeholders about previous action and behaviour. Hiding what they did doesn’t make it go away. Consumers and companies are smarter at finding things out now and it gets easier to find too. So, the likelihood is that at some point the truth will come out and no efforts to confuse, deceive or smokescreen will prevent that.

Hindsight is a great thing but really people need more foresight to avoid disastrous reputation problems. These looters and rioters have done their reputations considerable damage. And they may not realise just how much yet.

There may well be the temptation to cover things up or bury bad news but the reality now more than ever is that your best attempts to conceal a bad story, poor business decision, embarrassing photo or whatever will backfire. The internet and social media has given disclosure tools to the masses. Celebrities seeking super injunctions have seen their attempts to hide their misdemeanours spectacularly backfire.

Reputation is built or destroyed based on behaviour and transparency. No amount of communications or hiding will change that unless there is tangible behaviour change too. Communications alone will not define a reputation. Equally, active efforts to conceal unsavoury or bad news or past events can actually cause more reputational damage than honesty in the first instance.

Obviously if something online is false or incorrect there are channels and routes to tackle that, though some are slow and costly, but they do allow for correcting false information. It’s always worth remembering what you do is what defines you or an organisation, not just what yo say.

By Ian O'Doherty, Director, ReputationInc

Friday, 5 August 2011

Social media’s political side: Is microblogging the new platform for exposing discontent in China?

By Eileen Lin

Compared to the tens of thousands of lives claimed by recent natural disasters in the country, the 39 casualties sustained in China’s high speed train crash must have felt like a small incident to the officials at the Ministry of Railways, especially given that train accidents routinely prove much more deadly.

However, that was in a world before the microblog.

The Ministry’s decision to bury the wreckage on site reflected the priority of the authority: to return to normal service as soon as possible, and not to dwell on the cause and consequences of the incident. However, what was initially branded a ‘local’ incident created a social media frenzy and quickly grew momentum before eventually drawing Premier Wen to the scene. Given the surge in public outrage at the Ministry’s handling of the crash, the Premier was forced to declare a thorough investigation and compensate victim’s families.

Weibo, the Chinese equivalent of Twitter, played an as yet unprecedented role in exposing the government response to the tragedy with the kind of transparency and speed that officials proved too inexperienced to handle.

Unlike blog posts and forums, Chinese internet police have to now omitted microblog posts from their stringent censorship, both due to the posts’ short life span on net, and to the sheer volumes of content that require monitoring. This ‘oversight’ meant that near real-time messages calling for help at the crash site, and also video footage of the clean-up operation, were amongst the material shared simultaneously across the country.

Remarkably, the government was left completely wrong-footed and perceived as out-of-touch when over 2 million posts relating to the topic were posted within two hours of the accident.
During the week that followed, more posts questioning the handling of the situation flooded the internet, inspiring even the mainstream media to take an openly critical line. Surprisingly, this included CCTV and People’s Daily, traditionally the principle government mouthpieces. And, all of this despite an official gag order preventing media from reporting on the story.

When magazines were ordered to remove the incident from their covers, journalists again went online to publish their articles, apparently undeterred by the pressure from the state. This was certainly a rare occurrence in a country that regards the ability to suppress popular discontent as vital to social stability, especially through its extensive control over media.

What this episode underlines is that, in the era of social media, news reporting is no longer the exclusive preserve of a select few. On the contrary, more and more mainstream media is drawing its reports from the net, using this medium as a litmus test of popular opinion.
In the business world, the most forward-thinking political and corporate leaders have long understood that finding an effective strategy for handling social media is a top priority in managing the reputation of their governments, countries and companies.

However, it is not until relatively recently that the full potential social media holds for destabilising power has come into view. For example, Facebook kicked-off the Arab Spring, while microbloggers have given voice to millions of Chinese who have otherwise been silenced in the name of preserving the country’s unity and stability.

I believe that what we are witnessing is nothing less than a popular revolution being brought about by social media. The unpredictability that this will continue to bring to the global social, political and economic order makes it a mega trend of crucial importance not only for reputation management professionals to observe, but also to understand, in order to give best counsel to clients.