“Reputation disaster” appears to be a weekly headline as yet another great organisation is humbled by the revelation of some misdeed or other.
Is this seasonal? Is it because the new age of transparency and citizen journalism means we are simply discovering malpractice that always went on? Or is it because the super VUCA (volatile, uncertain, complex and ambiguous) world is driving previously rational organisations into a frenzied race to the bottom?
Firstly, most of these “events” are not “PR disasters” if that means the problem was caused by poor or clumsy communication. The Corporate Affairs team may struggle in the face of a media (social and otherwise) onslaught, but they aren’t usually the ones falsifying test results, setting up secret cartels or applying creative accounting.
“You can’t talk your way out of something you behave your way into,” Zita McMillan, the former communications director at the Financial Conduct Authority, wisely said.
Leaders often say reputation is their most valuable asset, yet very few have a coherent plan to uphold and build it. Too often that “plan” is a loose jumble of CSR initiatives, cause marketing and a vague vision to be “the most admired”, all wrapped up in a snappy narrative.
These catastrophes occur when an organisation’s behaviour goes beneath society’s most basic expectations . A good starting point would be - be honest, admit your mistakes in a timely way, don’t cheat, show compassion in the face of human tragedy. I doubt any organisation has those carefully crafted values pinned up in their lobby. But clearly, some should have.
I believe that the core reason for this “race to the bottom” is too many organisations have ambitious performance goals with too few breakthrough ideas to achieve them.
In an environment of “marginal gains” the intense pressure on operators means that bending the rules, cutting corners, bullying the supply chain - or simply, "asking no questions" – too readily becomes institutionalised and very few business schools have bothered to teach today’s business leaders anything about reputation. Yet when it goes wrong, the gains are tiny compared to the colossal cost of a breach of trust.
Disruptive, rapid growth companies aren’t immune, either. If they make a positive impact on quality of life, then they will be rewarded. But as they become part of the business establishment they need to grow up quick, and remember that basic stuff like treating people fairly and paying taxes are not optional.
If "culture eats strategy for lunch,” as Peter Drucker famously said, then a discordant culture will have eaten reputation before you’ve arrived at the restaurant.
Given all this, what should organisations do?
Firstly, they need to grasp that reputation is not another term for PR or brand … it is shaped ALL the interactions an organisation has with society, commercial and otherwise. The reputation plan IS the business plan, and vice versa.
There may need to be some adjustments, however, to the concept of a business plan – if it takes a short term view and only focuses on commercial stakeholders.
There are some far-sighted companies that have worked out that you can only progress if you build society – and importantly, where it’s headed - into the heart of the business strategy. This is not solely the domain of just start-ups with a social mission – increasingly, there are multi-nationals with ambitious profit targets that recognise this too.
Secondly, you need to have a deep understanding of your current reputation and what drives it, both among direct and indirect stakeholders. Then, forecast what you think it should be in 3, 5 and 10 years time, and why. Reputation metrics are readily available but rarely used in forecasting and scenario planning.
There's a high probability that during the plan period technology will change the way you operate and an equally high likelihood that you will face unusual or unexpected competition.
Map it out, speculate, imagine. Then apply rigour to test the assumptions. It’s important to look at the weak signals....pockets of unrest or annoyance. Competition comes in many sizes and isn’t necessarily high-tech. The emergent challenge of craft beers from thousands of micro-breweries might have been dismissed at one point by the majors, but no more.
Next, build a reputation-proofed business plan that embraces these insights and foresights. This is not a vanity exercise with a vague ambition to be the most loved, the greenest or most generous- unless that’s what will deliver the necessary return. It is about achieving and sustaining leadership. You want to achieve competitive advantage and retain it – building on opportunities where you can establish true distinction (and profitable growth). In some areas of business you will seek only incremental advantage and there will be others where parity with peers is the acceptable choice.
Finally, establish a culture where people think and act as though they are indeed part of society, not plundering from it. Coach the knowledge and skills that are needed to navigate the VUCA world so that everybody nurtures and protects the true value of the trust enshrined in your brand. This would apply equally to a small guest house as it would to a global hotel chain.
The “trust bank” is running low with business. Do we really don’t need to hear another testimony such as :”We have broken the trust of our customers, dealerships and employees, as well as the public and regulators” to nail the idea that business will only succeed, long term, if it commits to make the world “a little bit better” and meet our basic expectations en route?
Being a reputation soothsayer is by nature imprecise and doesn’t make you popular. I advised one of Europe’s most consistently admired companies several years ago that they were heading for a reputation demise if they didn't alter certain practices. I dared to plot the timing and the extent of the fall, and indeed, how they could begin to avert it. My estimates were inaccurate - - it took a couple of years longer for them to fall from their throne, and the depth of the fall was more hideous and twice as costly, as I’d predicted.
The VUCA world isn’t new, it’s just accelerated. The Gannet is a Victorian Royal Navy ship resting at Chatham Historic Dockyard that served with distinction worldwide in the fight against the still thriving slave trade in the 1870s. Above its wheel reads the inscription “Deeds Not Words.” A lesson every leader ought to heed.