Вы находитесь на странице: 1из 24

ReputationIntelligence

Volume 3 Issue 2 Summer 2011

Special Post-Conference Issue Reputation Lessons Learned in New Orleans: Looking Forward

ReputationIntelligence
Volume 3 Issue 2 Summer 2011 Editor-in-Chief Dr. Charles Fombrun Chairman Editor at Large Kasper Ulf Nielsen Executive Partner Managing Editor Seth Kerker Managing Director Contributors John Patterson Senior Advisor Joan Walker Executive Vice President, Allstate Insurance Company Sally Susman Executive Vice President Policy, External Affairs & Communications Pzer Jesse Deutsch Analyst Advisory Board Dr. Cees van Riel Vice Chairman Nicolas Georges Trad Executive Partner Anthony Johndrow Managing Partner, United States Dr. Leonard Ponzi Managing Partner, Research & Analytics Dr. Matthew Pan Managing Director, China Dr. Ana Luisa Almeida Managing Director, Brazil William Pullen Managing Director, Chile Henrik Strier Managing Director, Denmark Dr. Dominik Heil Managing Director, South Africa Fernando Prado Managing Director, Spain Spencer Fox Managing Director, United Kingdom
2011 Reputation Institute

Reputation Institute Knowledge Center Reputation Intelligence is published by Reputation Institutes Knowledge Center. The Knowledge Centers mission is to bring together a global network of practitioners and academics to leverage extensive research, sophisticated analysis, and rigorous methodologies that strengthen relationships with key stakeholders and add tangible value through management, growth, and protection of corporate reputation. The Knowledge Center addresses the proliferating demands by practitioners for answers to questions about how reputations affect competitive positioning, how to examine and value corporate reputations, and how to build, maintain, and defend those reputations. For more information on becoming a member of Reputation Institute, please visit the Knowledge Center at www.reputationinstitute.com.

About Reputation Institute Reputation Institute is the worlds leading reputation consulting rm. As a pioneer in the eld of brand and reputation management, Reputation Institute helps companies unlock the power of reputation. With a presence in 30 countries, Reputation Institute is dedicated to advancing knowledge about reputation and shares best practices and current research through client engagement, memberships, seminars, conferences, and publications such as Corporate Reputation Review and Reputation Intelligence.

Dear Colleagues,
Welcome back to Reputation Intelligence, Reputation Institutes quarterly thought leadership publication. This issues theme is largely powered by the content and conversations that resulted from three days that 350 leaders of the reputation economy spent together at RIs annual conference in New Orleans in May 2011: Reputation as a Leading Driver of Business Value. The 15 years of RIs existence have seen a sea change in how companies approach both the historic art and emerging science of reputation management. Most of the largest companies in the world have been exposed to the concept and importance of corporate reputation by now, but it still takes an act of God, industry risk, or self-inicted crisis for most companies to get religion and take a systematic approach to understanding what stakeholders expect from them. The reputation management journey breaks down into ve phases:

Phase I: Exploration and discovery (50-60 percent of Forbes Global 2000 marketplace) Phase II: Reputation metrics linked to core business metrics (e.g. Net Promoter Score, Brand Equity, Employee Engagement, Loyalty)20-25 percent of market Phase III: Reputation seen as having specic, measurable business impact and built in to business planning process10-15 percent of market Phase IV: Company leaders are responsible for specic reputation goals5-10 percent of market Phase V: Reputation fully integrated into enterprise strategy and operationsthe elusive Holy Grail where no organization anywhere in the world truly is today

With a nod to RIs academic roots and thriving network of educators and students around the world, think of Phases I and II as undergraduate coursework (Reputation Management 101 and 201), Phases III and IV as graduate study (Reputation MBA), and Phase V as post-doctoral work where only a handful of companies are in the early stages of writing their reputation theses. This issue of Reputation Intelligence chronicles the journey from Phases II through IV for companies like: Allstate in the wake of Hurricane Katrina; Pzer and the pharmaceutical industrys ongoing reputational challenge; BBVA Compass and Itau after the global nancial crisis; and Vestas in the aftermath of COP15 climate change disappointment and $100 oil. Each article and sidebar also plays off the three key takeaways from the New Orleans conference:

Employees are emerging as the most important stakeholder group in the reputation economy Stakeholders know more about you than ever before. What do you know about their expectations of you, and what are you doing about it? The best Chief Reputation Ocers are CEOs

In closing, let me invite you to share your thoughts about these issues with our growing reputation community through our online discussion group on LinkedIn. If you are not yet a member of our group, please visit http://www.reputationinstitute.com and navigate to the Community tab for quick and direct access. You can also e-mail us any comments you have at intelligence@reputationinstitute.com. Thanks for your support for RI onsite in New Orleans and every day through our client and membership networkit means the world to us. Best regards,

Anthony Johndrow Managing Partner, RI North America Issue Editor, Reputation Intelligence

I.
LESSONS LEARNED FROM NOLA: IN THE REPUTATION ECONOMY, ITS THE ENTERPRISE THAT MATTERS MOST
Horric images of the crippled Fukushima Daiichi nuclear reactor in Japan. The shuttering of News of The World, the largest English language circulation newspaper in the world, in London. Hackers stealing personal and nancial information from millions of PlayStation 3 consumers in North America and Europe. These recent events are perhaps the most obvious signal that we no longer live in a world where brand promises and product-centric marketing alone can weather the storms of the reputation economy. In each case, Tokyo Electric Power, News Corporation, and Sony respectively failed to convince internal and external stakeholders they could be trusted at the enterprise level when faced with governance and leadership crises. At the end of the day, perhaps a 1980s rock song says it best: youve got to stand for something/or youre gonna fall for anything. 1
In this brave new world, marketersstewards of the customer experience and a tight link to sales in most organizationsare up against it to a greater extent than communicators, who have traditionally been the default corporate storytellers and crisis responders, though with much smaller armies and investments than their marketing brethren. On one hand, there is the new normal that digital media, 9/11, and the nancial crisis have brought to marketersincreasing the degree of difculty of a Chief Marketing Ofcers day job to levels unseen in the pre-Y2K world. Think democratization of choice, the near-commoditization of many product/service categories, todays interconnected universe where we can access friend and neighbor opinion without leaving our homes, the rise of green, an alarming lack of faith in big companies and institutions, a precipitous decline of trust in advertising messages, etc. Its pretty complicated for the 99 percent of todays underpaid, overworked marketing professionals who dont have a World Cup or Olympics silver bullet ad in their budget. Marketers Coming to Grips with Product versus Enterprise Lets see if we can simplify things a bit for these beleaguered souls. Our marketplace behavior is really only governed by two factors: our perceptions of the products or services in question and our perceptions of the enterprise behind them. Marketers have spent their careers (and virtually all of their ad budgets since World War II) trying to inuence the former, but evidence is mounting that the latter is not only virgin territory, but also may actually be more inuential than anyone thought. In our annual study of the reputation of the largest 150 U.S. companies with the general public that Forbes published in spring 2011, Reputation Institute isolated these two inuences using the RepTrakTM model. Perceptions of products/services and innovation belonged to product inuence and perceptions of workplace (nancial performance, citizenship, governance, and leadership) covered the enterprise category. RIs statisticians factored these variables (to ensure ve versus

Stand for Something, John Cougar Mellencamp. Scarecrow. Columbia Records, 1984

2011 Reputation Institute

two didnt give enterprise an undue advantage) so the unique inuence of each of these two variables on two kinds of supportive behavior could be isolated:

Purchase Considerationgetting commercialonly 39 percent of the decision is based on product perceptions, while 61 percent is based on perceptions of the company behind that product. Advocacy/Recommendationsecuring advocacy in an interconnected worldonly 42 percent of this critical behavior can be explained by product perceptions, while 58 percent is explained by what they think of the enterprisewhat they think the company stands for beyond the features and benets of its products.

This isnt only true at the macro level. In the pharmaceutical industry, a key stakeholder group is the physicians who prescribe products to patients. In this highly innovative and regulated industry across multiple client-specic deep-dive research projects worldwide, ample evidence exists that enterprise perceptions drive physician behavior much more than their perceptions of the products. Another industry example of this phenomenon at work is nancial services. While BBVA Compass in the U.S. and Ita in Brazil are deploying different tactics to reach skeptical stakeholders, both companies are competing on their internal cultures and community-driven orientation. Product-centric marketing collateral is not the key to banks regaining public trust, a fact not lost on either banks top management. The key to post-nancial crisis value creation for banks? Competing on values, which comes down to making governance, leadership, citizenship, workplace, and nancial performance relevant to audiences who expect more than free checking accounts and the toaster oven promotions of the last century to stay loyal in the reputation economy. In terms of visual, top-of-mind marketplace examples to drive this point home, take P&Gs decision last year to launch the P&G corporate brand through its Vancouver Winter Olympics sponsorship advertising and point-of-sale campaigns. The overwhelming positive reaction from multiple stakeholders (moms to opinion elites) to the unleashing of this enterprise-wide narrative helped P&G dial it up again around the Special Olympics in the fall of 2010. If the ultimate product brand marketers are looking at using their enterprise story commercially, shouldnt you consider investing in your corporate brand too? Building Reputation Equity at a Time of Scarcity The following organizations discussed how they are taking this new reality to heart and shifting the conversation at RIs annual conference in New Orleans in May 2011:

Nancy Lintner, SVP Strategic Communications, PepsiCo gave an update on year two of the Pepsi Refresh project, which provides grassroots funding for up to 60 ideas each month that cluster around four categories (arts and music, education, communities, and monthly Pepsi Challenge) at four grant sizes (ranging from $5,000 to $50,000) following a simple four-step process (idea generation, idea submission, idea promotion/voting, and idea funding)

Many of the early leaders of the Internet-fueled innovation economy of the mid-1990s and the scandal-driven governance revolution of the early 2000s were not always the last ones standing in their peer group as the global nancial crisis changed the rules of business forever. So, it is premature to declare victory or anoint the winners of the nascent reputation economy. Nonetheless, it is encouraging to see so many organizations building reputational endurance through multistakeholder platforms that are built to last.
5

through social media. Under the stewardship of CEO Indra Nooyi, Pepsi Refresh goes beyond branding to put some skin in the game when it comes to renewing American communities and simultaneously building reputation capital.

Ray Jordan, Corporate Vice President Public Affairs and Corporate Communications, Johnson & Johnson discussed the implementation of reputation management best practices throughout the organization. However, it is J&Js more recent decision to sign up as a global sponsor of the 2014 FIFA World Cup in Rio de Janeiro, Brazil, that perhaps speaks to the worlds most respected health care product and pharmaceutical manufacturers desire to export its strong reputation in emerging markets by promoting its corporate brand as a whole, which is greater than the sum of its hundreds of product brand parts. Helen Clark from ChevronTexacos Corporate Marketing group chronicled how ChevronTexacos We Agree branding campaign has given the oil giant white space in the aftermath of the BP Deepwater Horizon spill in the Gulf of Mexico around societal issues once taboo to the energy industry. With bold call-to-action statements like Oil companies should put their prots to good use,Oil companies should support small business,Fighting AIDS should be corporate policy, and Its time oil companies get behind the development of renewable energy, its easy to see why stakeholders are responding positively to candid dialogue, rather than status quo rationale, from one of the super majors. Christa Carone, Xeroxs Chief Marketing Ofcer detailed how Xeroxs Ready for Real Business campaign helped transform the legendary document management company in the wake of its largest acquisition ever (Afliated Computer Systems) in 2010. Through its commitments to innovation, citizenship, and the environment, Xerox is walking the walk and talking the talk with stakeholders who are now taking another look at the iconic company. Blair Christie, Ciscos Chief Marketing and Communications Ofcer explained how Ciscos founder and CEO John Chambers drives the companys reputation agenda and pushes internal and external stakeholders alike to think differently about long-term value creation. By focusing on employee, environmental, and social investments, Cisco is able to make the Human Network campaign more tangible to more people than pure product or service-centric programming ever would. Refuting the Milton Friedman axiom that the only purpose of business is to make a prot, Cisco believes in doing good for business and society, and its Transforming Education initiatives as well as its innovative partnerships with NGOs like One Economy, Digital Opportunity Trust, and Inveneo are the proof in the pudding.

Reputation Management is a Decathlon, not a Marathon or a Sprint! At the end of the day, it is not about dropping your product or service focus entirelybut those leaders of the reputation economy who are leading by example have found a way to deepen those connections with their customers by letting them know whos behind the curtain. You have to give them faith that your company is and will continue to behave in ways that make them feel okay about continuing to do business with you. Many of the early leaders of the Internet-fueled innovation economy of the mid-1990s and the scandal-driven governance revolution of the early 2000s were not always the last ones standing in their peer group as the global nancial crisis changed the rules of business forever. So, it is premature to declare victory or anoint the winners of the nascent reputation economy. Nonetheless, it is encouraging to see so many organizations building reputational endurance through multistakeholder platforms that are built to last. Succeeding in the reputation economy is more like training and competing in the 10 events that make up the Olympic decathlon, than a marathonor a sprint! Think of the seven dimensions of corporate reputation (products and services, nancial performance, innovation, citizenship, leadership, governance, and workplace)

2011 Reputation Institute

the way decathletes have trained for the 100 meters, long jump, shot put, high jump, 400 meters, 110 meter hurdles, discus throw, pole vault, javelin throw, and 1500 meters since the ancient Greeks. You cannot get on the podium by being world-class at just the four running events or three jumping events or three throwing events any more than you can build a strong reputation by spending most of your companys time, talent, and treasure telling the world a lot about your products and too little about whats behind them.

The 2011 Global RepTrak 100 Results Dr. Peter Drucker famously said,What gets measured gets managed. No truer (and more important) has this been than now. We live in a Reputation Economya market in which corporate reputations are, more than ever, linked to stakeholder behavior. Trust, esteem, good feeling, and admiration for a company are now primary drivers of supportive and ultimately purchasing behavior. Reputation Institutes Global RepTrak studya cross-stakeholder survey conducted in 15 markets globallyis the largest corporate reputation study worldwide. Through rigorously tested quantitative and qualitative methods, the study measures the trust, esteem, good feeling, and admiration relevant stakeholders have for companies around the world.2 On an industry level, the best performers were Consumer Products (74.83), Electronics (73.15), and Computers (70.28), all signicantly above the 64.2 industry average. The worst performers were the usual suspects: Tobacco (50.10), Utilities (59.04), and Telecommunications (59.77), all of which face deep-seated negative stigmas. The best-of-the-best on a company level were those that managed to export their reputations both home and abroadcaptured in a specialized study called the RepTrak 100. Google came out on top (79.99), followed by Apple (79.77), The Walt Disney Company (79.51), BMW (79.42), LEGO (79.26), Sony (79.05)3, Daimler (79.03), Canon (78.07), Intel (77.56), and Volkswagen (77.33). Google drew strength from strong positive perceptions about their workplace (77.82), governance (74.23), and citizenship (74.42), while Apples scores were driven primarily by innovation (83.91), performance (82.25), and leadership (80.56). That the top two performing companies were driven by perceptions of their enterprises rather than their products/services signals a shift in the Reputation Economy. To build and maintain robust reputations both home and abroad, companies must respond to the changing tides of reputation measurement with strategic management. To neglect the data is a risk not to be taken lightly.
2

Companies are rated on a scale of 100 and are adjusted across markets for bias. Scores above 80 are considered excellent/top tier, from 70-79 strong/robust, from 60-69 average/moderate, from 40-59 weak/vulnerable, and below 40 poor/bottom tier. Year to year, changes in score of +/- .5 are considered signicant and cause for attention. 3 The rst wave of survey data indicated that Sony, rather than Google, took rst place. However, concerns about the companys post-tsunami supply chain and negative attention surrounding its security practices after the recent PlayStation Network hacker breach hurt its score in the second wave of collection. Cumulatively, the company dropped to 6th placea signicant drop but still very strong placement. This was a testament to the brands resilience in difcult times.

How BBVA Compass Competes on Reputation in the Banking Industry BBVA Compass ranks among the top 20 largest U.S. commercial banks based on deposit market share, operating 716 branches in Alabama, Arizona, California, Colorado, Florida, New Mexico, and Texas. From a consumer awareness standpoint, it is probably best known as the U.S. subsidiary of Grupo BBVA, one of the largest global nancial services groups and a leader throughout the Spanish speaking world, or because of its 2010 sponsorship of the National Basketball Association as the ofcial bank of the NBA. However, from a differentiation standpoint, the global nancial crisis of 2008-09 certainly made banks rethink the bigger is better axiom, and sports sponsorships were hardly a game changer for AIG (English Premiere League soccer), RBS (long-time association with golng legend Jack Nicklaus) or UBS (Formula One auto racing) during their respective fall from graces, reputationally speaking. How is BBVA Compass bucking the trend and improving its reputation score with the U.S. general public over the last two years? By promoting what they stand for (their enterprise story) instead of just what they sell (the product marketing view of the world). One way they have accomplished this is through the formation of the BBVA Compass Corporate Responsibility and Reputation (CRR) department, which reects the comprehensive way the BBVA Group views its relationships with the communities in which it has a presence. This holistic approach involves many aspects, including charitable giving, volunteerism, environmental management, diversity and inclusion, and other areas that promote the well-being of people where they live, work, and play. All of this activity is reported annually in both the BBVA Group and the BBVA Compass Corporate Responsibility Reports, but this is more than report writingit is a Program Management Ofce (PMO) approach that industrializes reputation management in everything BBVA does in the U.S. Six ofces exist within CRReach with specic goals and lines of delivery: Community Giving Employee Involvement Financial Education Diversity and Inclusion Environmental and Natural Resource Responsible Practices Take one example from the Responsible Practices CRR ofce, which monitors compliance with BBVA Group policies and protocols, including those governing transparency, ethics, and responsible products and reports out on these behaviors as an organization to promote transparency. BBVA says that its product development teams ensure that our reputation as a good corporate citizen is considered in all that we do. This includes the First Time Home Buyer Mortgage, which requires applicants to complete a module of the FDIC Money Smart curriculum, BBVA Compass nancial education program, in order to qualify for the loan. CRRs ofces serve to focus BBVA Compass efforts in the U.S. where they can make the most impact in order to excel as a corporate citizen and fulll the Groups mission of working for a better future for people ... for all people. One global program that also resonates locally in the U.S. is the BBVA Foundation Frontiers of Knowledge Awards, which seek to recognize and encourage world-class research and artistic creation, prizing contributions of lasting impact for their originality, theoretical signicance, and ability to push back the frontiers of the known world. These international awards span eight categories: Basic Sciences; Biomedicine; Ecology and Conservation Biology; Information and Communication Technologies; Economics; Finance and Management; Contemporary Music; and Climate Change and Development Cooperation. It is for these reasons that BBVA Compass is standing out in the crowded and competitive U.S. banking marketplace in the reputation economy of the 2010s.

2011 Reputation Institute

II.
REPUTATION: FROM FIRE-FIGHTING TO FIRE-PROOFING
By Joan Walker, Executive Vice President, Corporate Relations Allstate Insurance Company

Joan H. Walker is executive vice president, Corporate Relations, for Allstate Insurance Company and a member of the Allstate senior leadership team. She is responsible for external and internal communications for The Allstate Corporation and its subsidiaries. Prior to joining Allstate in November 2005, Walker was executive vice president of Marketing and Communications for Qwest Communications International. She was responsible for all external and internal communications and corporate marketing. Her marketing responsibilities included advertising, brand management, market research, database management, web marketing, and sales communications.
I would say this is probably the worst catastrophe or set of catastrophes certainly that Im aware of in the history of the country. Michael Chertoff, Homeland Security Secretary, September 3, 2005. On Monday, August 29, 2005, at 6:10 a.m., one of the strongest hurricanes in history slammed into the Louisiana coastline. Over the next 48 hours, Katrina pushed water 12 miles inland in Mississippi. Her peak winds of 150 mph tossed cars, boats, and houses aside like plastic toys. In New Orleans, the overloaded levees broke in more than 50 places, ooding 80 percent of the city and neighboring parishes, and causing the horric scenes we saw on our television screens for weeks to come. In ve short days, Katrina killed 1,836 people in seven states and caused more than $80 billion in damages. Hurricane Katrina was a devastating event for the people of the Caribbean and southern United States. It was also a very difcult event for us and our industry. Our business is to help people prepare for the unexpected. Insurance agents choose their careers because they love interacting with people and helping them. They are people-people, and deeply committed to the communities in which they live. But the devastation caused by Katrina was so enormous and so profound that they wished they could do more. Standard homeowner policies typically cover wind damage but not oods. Flood insurance is a separate type of insurance policy that is underwritten by the federal government. Much of the damage caused by Katrina was due to ooding. Imagine the pain of having your home destroyed with all your belongings, of having your photos and memories washed away, and then being told that your homeowners insurance does not cover it. Imagine if it is your best friends home and you are the agent delivering the message. The devastation caused by Katrina went far beyond dollars and cents. On the business front, not only was Katrina the costliest natural disaster in U.S. history, but also it generated unprecedented levels of unfavorable press and

For many years, like countless other companies, Allstate focused on strategically managing our reputation through traditional issues management, corporate citizenship, and thought leadership programs. We thought about reputation as something that would take care of itself as long as we took care of our business in a responsible and honest way. However, Katrina showed us that our reputation could be adversely affected by events completely beyond our control. It led us to ask ourselves if a more strategic, focused, and proactive approach to building reputation leadership could make our company stronger.

unwarranted litigation. The insurance industry became a target of the media, some politicians, and consumer advocacy groups. Responding to that challenge made us step back and think about Allstates reputation in a new light. For many years, like countless other companies, Allstate focused on strategically managing our reputation through traditional issues management, corporate citizenship, and thought leadership programs. We thought about reputation as something that would take care of itself as long as we took care of our business in a responsible and honest way. However, Katrina showed us that our reputation could be adversely affected by events completely beyond our control. It led us to ask ourselves if a more strategic, focused and proactive approach to building reputation leadership could make our company stronger. Our Reputation Journey: Step One Our reputation journey began in the fall of 2005. We started by asking three strategic questions:

Allstate Ambassadors are a diverse group of 6,500 employees from around the company who actively serve as champions for the Good Hands brand. This successful grassroots movement was launched nearly two years ago as a way to engage employees in Allstates reputation efforts. The Ambassador movement has grown organically and enabled Allstate to tap into some of its most engaged, informed, and passionate employees to help build Allstates reputation. For Ambassadors, the movement is an opportunity to demonstrate leadership skills, network, and help reinvent Allstate. The role of Allstate Ambassadors includes the following: REFER colleagues, family, and friends to Allstate and help grow Allstates business. ADVOCATE for Allstate with customers and other stakeholders. VOLUNTEER in community events to support Allstate and local agency owner initiatives. IMPROVE processes to enhance Allstates reputation, drive innovation, and support growth. RECRUIT new Ambassadors to engage employees in improving Allstates reputation.

Is it possible to manage reputation proactively? What is the value of reputation to the business, and is the investment justied in terms of dollars and effort? How can a reputation strategy be operationalized so that it complements and builds on other strategic efforts, such as branding, culture, and employee engagement?

We then undertook a rigorous and structured program of research and analysis to answer those questions. In a few months, we had completed the initial fact-nding phase. The analysis proved it is indeed possible to manage the value of reputation proactively; that the value created by a strong reputation is signicant and many times the investment required; and that a reputation strategy can not only work in concert with other programs, but also it can magnify the impact of those programs. The team was excited and encouraged by the results. But like all large companies, Allstate has many good ideas competing for resources. To be successful in putting in place an effective reputation leadership program, we had to make the case not just to the senior leadership team, but to a broad constituency of employees and agency owners across the company. As we were completing the research, a milestone in our journey occurred. Tom Wilson became our new CEO. Tom was more than receptive to the idea of reputation leadership. Intuitively he understood that reputation is important to all businesses, but it is particularly important to a business like ours where trust is so integral to the value proposition. After all, the product we sell is a promise. Tom made two vital contributions to our reputation effort during those critical early days.

10

2011 Reputation Institute

Repetition makes reputation and reputation makes customers.


Elizabeth Arden

First, he made sure reputation leadership received a thorough hearing across the senior leadership team. Having the opportunity to make the case and making the most of that opportunity was key. By proving the role reputation plays in the purchase cycle at both the top of the sales funnel by driving consideration and the bottom of the funnel in retaining and cross-selling customers, we made the business case for reputation leadership. We were then able to build broad internal support for the strategy and justify the investment by quantifying the upside. But another effort led by Tom made an even greater contribution to the reputation effort. As one of his rst initiatives as CEO, Tom engaged the senior leadership team in developing Our Shared Visiona roadmap for making the essence of our brand come to life through our employees and agency owners. Our Shared Vision provided both a touchstone for the reputation strategy in terms of dening what we wanted our reputation to be, as well as providing the overall context for where reputation ts within the corporate purpose and operating principles. Once we built support among the senior leadership team, we laid out a program focused on protecting our reputation with customers and consumers. (We dene consumers as those people who should be our customers, but arent yet.) Our notion was that every Allstater from the CEO to the front-line employee to the agency owner should have the knowledge and tools to make better decisions on behalf of our customers and consumers. And, we wanted to instill clear accountability for keeping and improving our corporate reputation. To help accomplish this, we developed Conscious Choice a decision-making model that helps employees at every level of the company evaluate both the intended and unintended consequences of our decisions and actions.

It takes many good deeds to build a good reputation, and only one bad one to lose it.
Benjamin Franklin

We then created metrics to measure the satisfaction of our customers and tied the results to our 401K contribution. It is an incentive model that rewards every employee and holds them accountable for our reputation with customers and consumers. With the initial program a success, we knew we had the commitment of our employees and agency owners to broaden the way we viewed reputation and become more ambitious with the outcomes we wanted to achieve. Our Reputation Journey: Step Two We needed to do more than just protect our existing reputation; we wanted to build a stronger reputation. This required addressing a broader set of stakeholders and thinking of reputation leadership not as a program, but rather as an organizational capability that we could deploy to create a competitive advantage in the marketplace. We started with governance, establishing the Reputation Leadership Council (RLC) to govern and oversee our reputation strategy. The RLC is a team of our most senior executives focused on embedding a reputation focus

11

Creating a reputation leadership capability is, like all enterprise-wide efforts, a challenge, but our experience is that succeeding creates real value for the enterprise; both in short-term returns and in longer term strategic capability-building.

and accountability across the enterprise. Next, we incorporated reputation risk into our enterprise risk management functionwhich reports quarterly to our Board of Directors. We now consider our reputation risk alongside nancial and legal risks. We then partnered with Reputation Institute to design a more systematic research approach to understand our position with all of our stakeholders and what drives reputation for each group. This research helped us develop a proprietary reputation metric. Our Allstate Reputation Scorecard provides a more consistent approach for every employee to understand and apply stakeholder expectations and perceptions to their work. The Scorecard informs our messaging and communications, our business strategy development and our day-to-day decision making. Most importantly, the Scorecard allows us to assign individual accountability for each stakeholder group. Members of the senior leadership team have each accepted personal responsibility for meeting reputation goals with a specic stakeholder audience. We broadened the program in terms of stakeholders, but we also broadened the program in terms of employee involvement, engaging employees from around the company to take personal accountability for Allstates reputation through a grass-roots employee movement. Today, more than 6,500 Allstate Ambassadors actively serve as champions for the Good Hands brand and these champions grow in number and impact by the day. Finally, to help ensure that reputation leadership is a capability and not just a program, we created a Reputation Leadership function, which resides in Corporate Relations. This team of strategic business advisors provides stakeholder research, best practices, and ideas to build our reputation to the enterprise. We have now built a solid foundation that is making a positive impact on how we run our business. For example, our research says that personal experience is a signicant driver of our reputation with consumers. Last year, we created the Good HandsSM Roadside Assistance program. The program provides assistance in the case of an accident, at tire, or other problem on the road and is open to anyone. It provides the opportunity to experience Allstate even if you are not a customer.

12

2011 Reputation Institute

15

Skillful pilots gain their reputation from storms and tempests.


Epictetus

Another example is around community involvement. The research says that awareness of Allstates involvement in the community has a signicant inuence on our positive reputation. Many of our employees and agency owners are already active in their communitiesserving on nonprot boards, acting as advocates for our public policy work, and serving in industry and trade organizations. We also offer incentives for employees and agency owners to volunteer for causes that matter to them. In order to expand these good works and capitalize on the goodwill they generate, Allstate has now increased community grant funding for Allstate agency owners to personally use with nonprot organizations in the communities where they live and work. (Continued)

Different Views on the Reputation Journey

Reputation management is not about a catchy slogan or waging a political campaign treating stakeholders as voters. Rather, Novo Nordisk approaches corporate reputation as a set of stakeholder behaviors that can be quantied that add up to business results. The only way we can change diabetes is to invest our reputation capital wisely. Nick Adams, Novo Nordisk

Changes in institutional reputation in business education can make the difference between employers choosing your students or somebody elses. Or alumni writing an endowment check, or nding an excuse to skip donating this year. Or faculty choosing one school versus another. It is serious business, and one that Tulane has taken seriously since Hurricane Katrina changed many peoples perceptions about New Orleans forever. Angelo DiNisi, Tulane University

We manage our reputation in a similar fashion to our market capitalization: from the top, we communicate our strategic vision, our execution against those goals, and update stakeholders on our progress on a regular basis. Our founder and CEO is a big believer in the power of corporate reputation, and invests in the programs and initiatives to build and protect Ciscos reputation as a result. Blair Christie, Cisco Systems

Competing on culture is one of the few ways to truly differentiate yourself from the pack. Corporate culture is the connective tissue between the brand image and values you project to the market and the legacy you leave behind to future generations. Like reputation, culture cant be bought or soldit must be built and earned, one relationship at a time. Bill Margaritis, FedEx

13

That is particularly true in our business, where the frequency and severity of bad weather has increased in recent years. Following particularly high levels of tornadoes across the United States and Canada, Allstate and its dedicated employees were there helping to restore the lives of our customers. Recently, though, we did make a signicant change in how we handle catastrophic weather. A key driver of our reputation with investors is transparency. So this year, for the rst time, we issued a news release announcing our estimated catastrophe losses for the month. We went further by communicating that in the future, we would report monthly estimates for catastrophe losses expected to exceed $150 million. These are things we might have done differently if not for our commitment to reputation leadership. Reputation now permeates our thinking, our strategies, and our day-to-day activities. Our Reputation Journey: Step Three What comes next? Weve made a great deal of progressweve moved from re-ghting to re-proong. Still, we believe our greatest opportunities are ahead of us. Where might those opportunities lie? One of Allstates core competencies is our ability to accumulate, manage, and mine large data sets. As our reputation data set grows, we are working on building reputation tools that will help us predict more precisely the impact of our strategy and actions and more denitively draw the line of sight between business results and reputation. In the future, we may even be able to mine the data to identify new business opportunities, e.g., new product ideas, or new strategies, e.g., new markets or businesses. Thats only one of many ideas we are working on today that will be part of our reputation story tomorrow. Of course, we realize we will never reach the end of our journey. There is always a chance to be better, and we have set a high standard for ourselves:

Dont bother to be just better than your contemporaries or predecessors. Try to be better than yourself.
William Faulkner
We continually ask ourselves what we might have done better or differently. The answer is we would not have done a great deal differently, but we constantly strive to do things better. For others who nd themselves in a similar place to where we were ve years ago, let me offer some lessons learned from our experience. Lesson 1: Align your reputation goals with your business strategy. In our case, reputation ts seamlessly with both Our Shared Vision and our business model. It is not a bolt-on effort. Lesson 2: Research, research, research. Dont just say it; prove it with facts and numbers. Lesson 3: Engage and spread accountabilities across the entire organization. Do not let reputation management become the job of just a few people. Make certain your most senior executive is carrying the torch and your leadership team is aligned. Creating a reputation leadership capability is, like all enterprise-wide efforts, a challenge, but our experience is that succeeding creates real value for the enterprise; both in short-term returns and in longer term strategic capability-building.

14

2011 Reputation Institute

III.
WINNING THE REPUTATION CHALLENGE
By Sally Susman, Executive Vice President, Policy, External Affairs & Communications, Pzer Inc.

Sally Susman is Executive Vice President, Policy, External Affairs & Communications for Pzer Inc., the worlds largest biopharmaceutical company whose diversied health care and consumer products are sold around the world. She is a member of Pzers Executive Leadership Team, chairs Pzers Political Action Committee, and is Vice Chair of The Pzer Foundation, which promotes access to quality health care, nurtures innovation, and supports the community involvement of Pzers 100,000 employees. Susman directs Pzers global communications efforts, its interactions with external and internal audiences, and its public affairs activities, including relations with the governments of all nations in which the company has operations or markets products. She also heads the rms corporate responsibility group and plays a key role in shaping the companys policy initiatives.
In a September 1962 speech at Rice University in Houston, President John F. Kennedy challenged his country to accept the challenge of putting a man on the moon before the end of the 1960sthis at a time when the Soviets were the clear leaders in manned spaceight: We choose to go to the moon. We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too. Pzer and the pharmaceutical industry arent trying to put a man on the moon, but the challenge to improve our reputation is almost as great as NASAs challenge was in 1962. However, my company and our President and Chief Executive Ofcer Ian Read see that challenge as one that we are willing to accept, one we are unwilling to postpone, and one which we intend to winnot just for Pzer, but for people everywhere who need medicine to stay healthy and alive. Think about it this way: My company makes life-saving medicine and yet most people dont like us. Working to improve Pzers reputation is the hardest thing Ive ever done and represents the professional challenge of a lifetime.

At Pzer, measurement is everything. When it comes to science and medicine, we have to be a data-driven company. We also apply that same rigor to reputation management. Weve done a great deal of research around the world on what drives reputation and how we can manage and use our reputation as a tool to meet our business goals.

18

15

Perception versus Reality: Connecting the Dots at Pzer Each of Pzers four business imperatives for 2011 includes a reputation component:

Fix the companys innovative core. Generate medicines that profoundly impact health. Make the right capital allocation decisions that will maximize value for Pzer and create enhanced shareholder return. Be respected by society. Be a great place to work where we all give our best every day.

For Pzer and the pharmaceutical industry overall, actions must speak louder than words. Managing our reputation is about doing the right thing in the rst place. Its about doing business responsibly and with accountability and about conducting ourselves with the highest degree of integrity. Our corporate voiceand our individual onesmust be above reproach, and must exemplify good judgment and integrity so that we have the moral authority to advocate for what is right.

One of the reasons that building a better reputation is so difcult for pharmaceutical companies is that the public does not understand all that we do as a company. When asked which group makes the greatest contribution to developing important new medicines, U.S. consumers are much more likely to say universities or the National Institutes of Health than pharmaceutical companies (43 percent versus 30 percent). Yet in reality, pharmaceutical companies develop the vast majority of new medicines. Another perception gap is that Pzer is just another drug company. There is very low awareness of the vast array of programs, public health efforts, and other things Pzer does to improve health more broadly. Perhaps the hardest perception to shake with the general public is about governance and transparency. Only 29 percent of the public say Pzer is transparentvery few people are aware of our efforts to publicly disclose the details regarding our interactions with physicians and the medical community. Few people are aware that we publicly post the results of every clinical trial, good or bad. Here are a few other things people dont know about us:

Pzer has more scientic researchers on staff than the faculty at Harvard, Yale, Johns Hopkins, and Stanford combined; Over the next 25 years, pharmaceuticals will prevent nine million cases of heart disease and save more than ve million lives; On average, it takes $1 billion to develop a new medicine; Only one in 10,000 compounds is ever approved by the U.S. Food & Drug Administration; and It takes an average of 12-15 years from discovery of a promising molecule to FDA approval of a medicine.

This is tough work. Despite these challenging headlines, theres genuine excitement at Pzer about our four business imperatives. The emphasis on respect and trust right now is critical because of the increasing pressures on the health care system. Respect for medicine is critical to Pzer because we need to obtain and maintain patent protection for

16

2011 Reputation Institute

our medicines. Pzer needs a good reputation when interacting with doctors, government, and insurers. Our focus on reputation is not so much a reaction to anything negative as it is to changing circumstances. In the U.S., it is a matter of new health care legislation, new rules, and the need to maintain a license to operate for all industry players. Globally, health care systems are changing and evolving as well. In emerging markets, a rising tide of middle class consumers is engaging with Pzer for the rst time. Reputation Measurement as Part of the Cure At Pzer, measurement is everything. When it comes to science and medicine, we have to be a data-driven company. We also apply that same rigor to reputation management. Weve done a great deal of research around the world on what drives reputation and how we can manage and use our reputation as a tool to meet our business goals. Today, we have a good understanding of what works and what doesnt, and we know how to

Telling Your Story: Best Practices at Southwest Airlines In the services world, the adage the customer is king is as much dogma as clich. Its a pervasive principle, and rightfully so. Customer experience is the crux of a strong reputation. A satised consumer is an effective emissarya source of good will and support for a companys brand. But the consumer obsession can mask the importance of satisfying an equally inuential stakeholder group; one much closer to home, but often overlooked: employees. True, consumers are timeless ambassadors for a companys products and services. But it is employees that are the true storytellers for both enterprise and brandthe subtler, but more potent drivers of corporate reputation (Reputation Institutes Global RepTrak Pulse study indicated that enterprise perceptions represented 56 percent of a companys reputation, while product perceptions represented 44 percent). Companies are slowly realizing the power of enterprise perceptions, but some are ahead of the curve. Take Southwest Airlines, for example. Certainly, theyve satised consumers. They boast the fewest customer complaints in the industry and remain Americas best-performing airline. Nevertheless, the company considers itself, rst and foremost, an employee-rst organization. Southwest rmly believes that employee satisfaction is a matter of cultivating corporate culture. A self-proclaimed quirky airline, Southwest is host to a number of innovative employee initiatives. Internal Customer Care recognizes and facilitates signicant employee life eventsranging from birthdays to funerals; senior management dons costumes on Halloween and joins employees in the cabins; ight attendants receive surprise visits from the Companys Culture Committee, who serve lunch and help clean during turnaround time; participation in CSR and community engagement programs is both encouraged and supported. All of these programs are designed to show employees that they work for a company that caresa company that lives by its values and acts on its words. But most important, they aim to nurture in their employees passionate and authentic storytellers: emissaries that will stand for their company and be proud of it.

17

navigate the daily challenges and crises. But what we really need to do differently and better is manage our reputation over the long-term, in a more holistic and sustainable way. In other words, we are moving beyond treating the symptoms to curing the disease. Our research shows common themes and some clear gaps that we need to address to improve our reputation. Pzer devotes more resources than any other entity in the world to research, develop, and provide medicines to people who need them. Our medicines help people feel better and our vaccines prevent them from getting sick in the rst place. But few people connect those dots. Thats why one of our challenges and one of our goals is to open a conversation about the value of innovative, new medicines to society and to public health. But there is good news. Our research also shows just as clearly that the more people hear about Pzer and learn about our programs and what we do, the more supportive they are. Simply put, the better people know us, the better they like us. Thats why we are recasting our approach. We are:

Activating 100,000 employees around the world as Pzers ambassadors. Our own employees are our best advocates. Engaging more and more smartly with the mediaboth traditional and social. Weve stepped out of the proverbial bunker and invited journalists to visit our locations to meet our scientists, doctors, and executives. We are also using digital and social media, once taboo for pharmaceuticals because of strong regulatory oversight. Conducting a top-to-bottom review of Pzers clinical trials process to ensure we have the highest standards of quality and compliance in clinical development. Continuing our historic focus on safety and quality.

Winning the Reputational Challenge of the 2010s for Pzer and Pharma For Pzer and the pharmaceutical industry overall, actions must speak louder than words. Managing our reputation is about doing the right thing in the rst place. Its about doing business responsibly and with accountability and about conducting ourselves with the highest degree of integrity. Our corporate voiceand our individual ones must be above reproach, and must exemplify good judgment and integrity so that we have the moral authority to advocate for what is right. As the governance dimension of reputation is now the #2 driver of reputation with the U.S. general public (and it is a top-three driver in almost every country Pzer operates in), what Pzer stands for has become as important as what we make and sell. It is Pzers hope that our focus on wellness and health and innovative products will make a difference to peoples lives, and that they will support us. Stakeholders will decide if they believe companies like Pzer are part of the problem or the solution. The reputation challenge is quite simple: Should governments legislate health care outcomes and use the pharmaceutical industry as a means to that end? Or can Pzer continue to innovate and explore the outer reaches of human knowledge in order to save and extend lives by co-creating those solutions with the concerns of civil society and regulators in mind? When the pharmaceutical industrys license to operate is moral, not nancial, and Pzers purpose is properly understood and respected by all of our stakeholders, we will have moved beyond treating the symptoms and will have found the reputational cure.

18

2011 Reputation Institute

What if a Corporation Created an NGO and Gave it Back to Civil Society?


At the 2011 World Economic Forum annual meeting in Davos, WindMade, the rst global consumer label for companies using wind energy, was launched. Pioneered by Vestas Wind Systems, the WindMade initiative was founded with cooperation between the Global Wind Energy Council, World Wildlife Federation, Vestas, LEGO, the UN Global Compact, PricewaterhouseCoopers, and Bloomberg. In the rst half of 2011, a legal entity of the non-prot organization was established in Brussels and an Executive Director (Henrik Kuffner) was recruited with extensive experience developing and operating consumer labels. In addition, a WindMade Technical Committee was formed to oversee the development of the standard, and a membership recruitment strategy was also launched to begin to engage global brands in helping nalize the standard and pioneer the label. Whats interesting about this developing story is the pioneering role of Vestas, the worlds largest wind turbine manufacturer, in the creation of WindMade. Plenty of non-governmental organizations (NGOs) have been launched since the early 20th century around the world, with the support of some aspect of civil society rst. The role of corporations as agents of social changeto do more than checkbook diplomacy when it comes to partnering or co-creating with NGOsis a completely new phenomenon in the reputation economy of the 2010s. Facing erce competition from Chinese upstarts and well-heeled global conglomerates in GE and Siemens, Vestas changed the rules of the game and ipped the script on the traditional corporate playbook with the launch of WindMade. Vestas saw competing on behalf of the entire global wind energy industry (currently providing less than ve percent of global energy consumption) to advocate for company and product-specic information about how green a product actually is as a way for its business and industrial customers to race to the top along the same lines that Walmarts Sustainable Value Networks (SVN) helped transform global supply chain purchasing behavior in the 2000s. Actually, Walmart (along with fellow corporate behemoths IKEA, Nissan, and Microsoft) is a member of the WindMade Sounding Board, which exists to guarantee qualied feedback on the standard and help iron out key issues before going public with the standard in September 2011. The idea of Walmart and Vestas ghting together for social justice and consumer choice would have been the realm of a COP15 fantasy just two short years ago, but thanks to the WindMade coalition of the willing, this is one NGO whose mission is to push civil society to catch up with its corporate parents. Welcome to the reputation economy, WindMade!

19

IV.
REPUTATION AND STRATEGIC RENEWAL
History tells us that so-called timeless corporate strategies are as much fable as farce. Companies rise and fall based on their ability to adapt to ckle and endlessly mutable markets. With a shifting landscape, corporate strategy must shift in tow. But this landscape can be vast; it is shaped by many forces cultural, social, political, and economicsome more predictable than others. When the market calls for a fresh strategic focus, some companies miss their chance to evolve gracefully. But evolve they must if they want to succeed.
Heeding the necessity for strategic renewal is perhaps only more difcult than actually driving a strategy shiftespecially if the shift is radical. Long-lived brands stand just as much for corporate values, goals, and strategies as their associated products and services. If a companys business focus is to change, then inevitably the brand must change with it. But redening a well-established brand is no easy task. Years or sometimes decades of stakeholder perceptions must be altered or even erased if brand renewal is to be taken seriously. And for this to happen, stakeholders must trust the company behind the brand to make the right strategic decisions, radical or otherwise. One of the key takeaways from Reputation Institutes 2011 annual conference was that reputation is a powerful asset in times of great change. It builds brands and gives them the credibility to rebuild from the ground up. Xeroxs Comeback Story Consider Xerox, for example. Its iconic printers and photocopiers were fuel for success for nearly a century. About 11 years ago, however, the company found itself stagnating in the face of strong competitors. They hoped to reinvigorate their products and corporate structurebut the change came too quickly. Their business rapidly unraveledrevenue and prots declined and debt mounted. After just a few months, Xerox found themselves on the brink of bankruptcy. Key employees started to leave. Customers and industry experts found the company to be increasingly distant and insensitive to suggestions. To make matters worse, the SEC discovered alleged widespread accounting irregularities at the company and a group of angry employees led a class-action discrimination lawsuit. Facing public disapproval and the possibility of extinction, Xerox needed a bold and ambitious turnaround plan. The companys leadership recognized the need for radical strategic renewal. But how could it be done without upsetting the stakeholders? Prior attempts proved unsuccessful and nearly catastrophic. They took a step back to evaluate their strengths and asked, What was core to Xerox, and what went wrong? The core, it seems, was their strong reputation. Xeroxs Chief Marketing Ofcer, Christa Carone, addressed RIs annual conference and said,We were known for our rm corporate values, we were known for our innovation, and we were known for creating a great workplace for our employees. Xerox had won the Malcolm Baldrige [National Quality] award not once, but twice, and we were known for a culture that was inclusive and really valued hard work and high performance. We knew that [our reputation] was in the bank to help see us through really challenging times. Stakeholders clearly trusted the brand. Their products had a dedicated consumer base who wanted Xerox to succeed even during its turbulent times. Carone continued, While we were being kicked by the press every day and we were sworn at by our investors at pretty much every hour, we realized we really had two aces in the hole. I know that this sounds so Pollyannaish, but for us it became part of our story,

20

2011 Reputation Institute

and the wisdom is really in the simplicity of it. First was an incredibly loyal customer base that we knew wanted Xerox to survive. The second was an incredibly dedicated workforce, who we knew would do anything to help save the company. It is this more than anything, Xerox claims, which allowed the company to move forward with what might have appeared to be major strategic risks. They began by ring their accounting rm and appointing a new CEOsymbolic of a fresh start. In order to reconnect with consumers, they engaged directly with industry analysts, experts, customers, and employees, asking for honest feedback on both products and company practices. Perhaps boldest of all, they dipped their toes in the document services business, a signicant shift in the companys corporate strategy. To mark the transition, Ursula Burns, the rst African-American woman to lead a Fortune-500 company, took the reigns as CEO. In 2009, Xerox was a $15 billion business, with 75 percent of its revenue coming from its mature, products-focused operations. The company is now a $23 billion business, with 50 percent of its revenue coming from services. Xerox is no longer the Xerox of 10 years ago. In fact, the company ofcially discourages the branded verbiage with which it was canonized in popular culture; to Xerox is a relic of the past. Well on its way to growth, Xeroxs reputation remains strong. In Reputation Institutes 2011 RepTrak Study, the company scored 74.31among the most robust reputations in the United States. Stakeholders have remained loyaldespite nearly a decade of nancial and strategic difculties and a drastic shift in its supply chain and strategic focus. Loyalty, trust, and goodwill. These are corporate fundamentals too commonly lost in the bottom-line obsession. Even the most nancially able companies are prone to crisesand market prescience, it seems, is a rare gift. Traditional crisis management can only do so much. Reputationthe willingness to give a company the benet of the doubtcan keep business going in spite of market missteps. Kodaks Return to Prominence Kodak is another great example. Its reputation was a powerful anchor when the 130-year-old company nearly became completely irrelevant in a once Kodakdominated market. For much of the companys history, lm, its sole product, was a gold mine. Gross margins were close to 70 percent. With Kodak as the undisputed global king of the lm space, the company was enormously prosperous. But lm sales began to plummet going into the year 2000 without much warning. The digital cameratechnology that Kodak itself had invented in 1975 but stored away in fear of losing its prots from lmbegan to pick up speed in the marketplace. Competitors quickly outpaced their once formidable rivalcausing Kodak to admit defeat on what was for nearly a century its own space. Gerard Meuchner, Director of Communications & Public Affairs and Kodaks Vice President, commented during his conference presentation,If you make your money on one product for so long, it becomes like a narcotic. He continued with,we allowed others into the digital camera business when we could have completely owned it for ourselves. When you sell one product for so long you really lose your perspective on the tidal wave of change thats coming at you because you cant imagine leaving all that behind. The companys extensive digital photography patent portfolio, he admitted, is the only reason they were able to remain aoat nancially.

Loyalty, trust, and goodwill. These are corporate fundamentals too commonly lost in the bottom-line obsession. Even the most nancially able companies are prone to crisesand market prescience, it seems, is a rare gift. Traditional crisis management can only do so much. Reputation the willingness to give a company the benet of the doubtcan keep business going in spite of market missteps.

21

It was clear to both Kodak and its consumers that catch-up in the digital lm space was not a viable future. Strategic decisions needed to be made to shift the companys focus. But, like Xerox, Kodak was more than brandit was an institution. More than a decade of representing a single, high-quality product made the brand practically synonymous with lm. The challenge was to maintain stakeholders trust to support a sweeping strategic renewal initiative. They began by modifying their time-honored logoKodak encompassed within a lm-shaped box. In 2006, they unveiled a new logo. It was almost identical but for one essential detail: it was liberated from the yellow lm box which characterized the brand for decades of its long history. The change coincided with the appointment of Kodaks new CEOAntonio M. Perezjust three years earlier. Perez was an icon for the companys new vision. He came from HP, where he spearheaded their lucrative inkjet business. If Kodak was to survive, they would take what they knew best, and apply it to a harshly inated premium ink market. Kodaks Meuchner admits that the company is far from a full recovery. He insists that its growing pains, however, have been assuaged by the enormous trust and goodwill toward the Kodak brand. Kodaks reputation, measured at 76.85 in 2011, is indeed strong. And with a strong reputation comes strong supportive behavior. Stakeholders are still willing to give Kodak the benet of the doubtwhich will no doubt be instrumental in its recovery. Kodak and Xerox are excellent examples of why strong reputations are powerful assets in the struggle for strategic renewal. Some companies, however, must handle the challenges of renewal while under re from its stakeholders.

Kodaks reputation, measured at 76.85 in 2011, is indeed strong. And with a strong reputation comes strong supportive behavior. Stakeholders are still willing to give Kodak the benet of the doubtwhich will no doubt be instrumental in its recovery.
McDonalds Responds to Changing Times McDonalds, arguably the worlds most pervasive brand, is such a company. Though they were almost universally vilied in the 1990s, they leveraged the power of strategic renewal to respond to critics and strengthen stakeholder relations. Uninformed change is always a risk. It might be best, then, to take some advice from McDonalds, who transformed themselves with great success. For years the company focused on quantity rather than quality. In the late 1990s, their resources had spread thin; their stock plummeted and their food was demonized. While people loved the foods taste, most didnt feel good about eating it. Some didnt believe it was real or that it could t into a nutritious diet. Customers also complained about poor service, despite claims that employees were the heart and soul of the organization. Employees werent happy and neither were customers. Their reputation was at serious riskand it was signicantly affecting their revenues. McDonalds identied what they saw as the major hurdle to restoring their reputation: there was a distinct gap between what they stood for and what they were known for. This was not just an issue of poor marketing or branding. They had lost touch with their stakeholders and, as McDonalds Neil Golden, Senior Vice President and Chief Marketing Ofcer remarked at the conference,were ghting irrelevance. Executives set out plans to reinvigorate the companys core values. Their reputation hinged on how well these values were maintained. Most important, they wanted stakeholders to be able count on them to always do the right thing; they wished to be known as a company with good judgmenta company that sticks to its morals and operates with its stakeholders best interests at heart. Second, they aimed to promote not only great products, but also the companys great character. These were not easy tasks. McDonalds approached the challenge with great care. They began by establishing a number of stakeholder engagement programs that still exist to this day. First came the Moms Table. They gathered moms from various demographics in an effort to discover what both parents and their kids found most important in food. Then came McJob, a nationwide hiring

22

2011 Reputation Institute

The Civilian Side of Reputation: What Happened to Rochester, NY? Some say that a citys corporate institutions help shape its character. Nowhere is this truer than Rochester, NY a 19th century boomtown turned 20th century manufacturing haven. For many years it has been home to some of the titans of U.S. manufacturing: Kodak, Bausch + Lomb, and Xerox to name only some. As such, it is a corporate city through and through. In 2000, manufacturing was in various capacities responsible for nearly half of Rochesters economy. Its largest corporations were fundamental to both its lifestyle and image; the monolithic Xerox tower still sets the aesthetic tone of the city as an icon of its skyline (even though Xerox ofcially relocated its corporate headquarters from Rochester, NY in 1969!). Over the past 10 years, however, Rochester has struggled to maintain its economic esteemand with it, its reputation as an attractive center of commerce. The woes of its corporate mainstays played the largest part in this. Kodak suffering from declining lm salesshed 70 percent of its local employees from 2000 to 2010; Xerox followed suit as it reduced local positions by 50 percent; over the same period Bausch + Lomb, a multi-billion dollar healthcare company, eliminated over one-third of its local positions. This constituted over 22,000 lost jobs in the city from these three companies alone.1 Throughout the last decade, Kodak and Xerox have struggled to maintain their reputations vis--vis their investors, customers, and even their own employees. But both companies seem to have found a relatively sturdy foothold; and now theyre rearing their heads in what looks to be a return to form. Reputation Institutes Global RepTrak Pulse found that Kodak and Xerox now have robust reputation platformsscoring 76.85 and 74.31 respectively. This newfound strength is in part driven by Rochesters political champions, who realize that corporate reputation is not just corporate. It impacts more than business results, but local economies and residents. For example, the local government touts Xeroxs efforts to reduce the citys printing costs, allowing an extra $2 million for community service funding. Even further, Kodaks CEO served as superintendent for Rochester Citys Schools for a day. He also works closely with senators in Washington to help create local jobs, support small businesses, and develop city infrastructure. Cities like Rochester have a unique responsibility. They must maintain the reputations of their local businesses, for the strength of the citys reputationtheir ability to attract people to live and to visitis only as strong as their corporate foundation.
1

Source: http://www.policy-wonk.org/kent-gardner/nys-must-rework-relationship-with-unions/ Other Rochester-based companies that reduced local positions include: Seneca Foods Corp. (57 percent), IEC Electronics Corp. (52 percent), Gleason Corp. (40 percent), Garlock Sealing Technologies LLC (33 percent), Pactiv Inc. (30 percent), and Hickey-Freeman Co. Inc. (21 percent).

day intended to connect employee experiences to the companys reputation. McDonalds wanted its applicants to see the good of McJob and the good of McDonalds, both directly supporting the U.S.s economic recovery. These programs, among others, helped McDonalds reinvigorate its business strategy with newfound condence. They focused on better service, better employee treatment, better accessibility (expanded operations and hours), renovating stores, re-doing the menus, and, more generally, better tting consumers needs. In 2002, the company launched more than 50 products, many of which were intended as healthier alternatives to its core products. In the same year, they also launched the Dollar Menu, which provided less expensive options tailor made for recession budgets. The company even transformed its ad campaignsfocusing not on products but on hope, friendship, wistful nostalgia, and the excitement of eating with others. The advertisements express what the company stands for, not just what it serves. McDonalds is now enjoying one of the longest consecutive periods of growth in its historyand this growth is not just nancial. McDonalds took an informed risk to refocus its strategy. This is a decision which paid off in spades. Its reputation is stronger than ever. There are a number of valuable lessons to be learned from our 2011 conference in New Orleans; the most surprising, and ultimately the most important is that reputation is the number-one driver of corporate value. But reputation equity is a resource companies would do well not to neglect. From strategic renewal to crisis management, a strong reputation is a powerful tool. It might even be the difference between extinction and a bright new beginning.

23

For more information on how to unlock the power of your reputation, please email:
info@reputationinstitute.com

Reputation Institute Network


Australia Belgium Bolivia Brazil Chile China Colombia Denmark Finland France Germany Greece India Ireland Italy Japan Malaysia Netherlands Norway Peru Portugal Russia South Africa Spain Sweden Switzerland Turkey Ukraine United Arab Emirates United Kingdom United States www.ReputationInstitute.com
2011 Reputation Institute