Corporate reputation management is difficult for some people to really get their hands around because they think it's everything a company does. It really is when you think about it the way a company distinguish itself from its competitors and from its peers. The reason why we say competitors end peers is increasingly customers and others are looking at a company based upon an ideal.
If somebody can lower their their costs why can't you. If somebody can speed lines in a bank why can't you? So it's the way a company gets distinguished from others and from its competitors. Reputation management is really critical to most companies because really what it does is it helps you manage your financial needs against all the other stakeholders of the company and what we found is that companies with better reputations tend to do better financially when they're downturns in the market.
Even though everyone may go down, companies with good reputations bounce back more quickly. They tend to recruit and keep the best people. They tend to lower their cost of capital. So there's some real bottom line implications for a CEO or others of why reputation is really important. It's very difficult when people say well you can't control a reputation so why do you manage it?
There are a lot of things we can't control that we try to manage. We can't control having a fire but we try to do fire management so that if we do have a fire we minimize the damage. So reputation management's like this and what I usually say to people is control the things you can control which will minimize the risk of doing things wrong on the things you can't control.
Reputation can be managed, but it can't be controlled. What we can control are things like our brand which are our attributes and associations. How do we want to be perceived? How do we communicate? Where's the consistency in all the touch points that we we meet customers on whether it's a website at a trade show at the 1-800 number. Building consistency and those types of things we can control if we do those things really well we get a better reputation.
If you look at companies that have great reputations Johnson & Johnson, GE, companies of that nature, they also tend to have really strong brand management and as a result they're perceived better by their customers. I'm asked all the time what's the difference between a brand and a reputation and sometimes those terms are used interchangeably.
There are two things to keep in mind. One is that the way I define brand is brand to the things that you do, that you want to communicate out. They are the attributes. Association in the symbols your logo. The attributes you want your product or company can be known for, the association's that you hav,e who you want to be seen with, what partnerships you want to have. That's your brand. It's usually focused on one group and that's your customer.
Reputation really looks at all of your different stakeholders. It looks at not only your customers but your employees. It looks at if you're regulated company all the regulator's, the government, policymakers, the media, everyone involved in reputation. So reputation is like a vote as to whether or not your rep, your brand, resonates with key stakeholders.
Reputation and brand are increasingly getting talked about in companies and it's probably a newer thing than most people had heard in the past.
When I was coming up in my corporate career we really didn't talk much about brand and reputation and there were a couple of reasons why.
One is there wasn't as much competition in the marketplace so brand really wasn't that important. Brand becomes more important the more competitors you have because people have choices and brand is really a way to bring choice into the market and say my product or service is better than this product or service for the following reasons.
So brand gets talked about much more in a choice based economy particularly when you have more competition. Foreign competitio,n new entrants and whatever the power of brand can be seen for example an Apple computer. Apple has really taught the entire computer industry the importance of brand. Let me consider that you pay more for an apple than you do for a PC, but people are doing it all the time. Apple created stores that give you the brand experience that can community experience of the Apple.
Reputation's being talked about much more and an interesting statistic is a few years ago I think in 2007 a study was done and it found that CEOs around the world the number one concern they had to risk was their reputation. Risk because you blow that and everything's gone you lose good employees you lose customers you lose everything else and because we've had so many problems of companies with insider trading CEOs that have misused corporate funds and the litany of problems that everyone's familiar with we've lost trust.
Trust is a basic moving force it's really the currency of a market economy. If you don't trust, you don't invest, you don't buy, you don't do anything, and we're seeing that in our recession people sit on the sideline. So reputation is becoming much much more of a concern than it ever was before and it's a sad thing that when times get bad like in recessions reputation starts popping up. When times are good people don't care about their reputation anymore because as they say hi water right raises all boats. It's the companies that consistently care about their reputation that keep it moving over the long time and when things go bad like fire management they're well prepared.
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