Phil Knight chairman and CEO of Nike, who has an astonishing record of building up the company from zero in 1962 to US$ 9.9 billion by 2002, once famously stated:
“The experience of the shopper, from the moment they see the Nike commercial on TV, to the point where they are wearing the shoes when they come out of the store, should be completely seamless.” When he said that he was probably right, but today the rules have changed. People are better informed, better connected and dig deeper. When someone discovered 11-year-old children making Nike product in a factory in Indonesia, not surprisingly, all hell broke loose and Nike stood accused. One result was the 1998 annual report themed on the whole question of child labor, reprinting extracts from the letters of protest and censure that poured in, together with letters that were supportive: “I don’t agree with everything you do but I have to admit, I buy your shoes.”
Not often does a chairman begin his statement: “Dear Shareholders, this year produced considerable pain” but then go on to address the issues and not fudge them (although admitting that the labor practice issues would take many chairman letters to cover). By 1999 the issue had cooled a little, but Nike still chose to address it rather than sweep it under the carpet. They had also developed a mission for corporate responsibility: “To lead in corporate citizenship through programs that reflect caring for the family of Nike, our team mates, our consumers, and those who provide services to Nike.”
Reputation is about everything a company does, wherever and whenever it does it. It is projected by all messages emanating from that company, its associates and all of its staff.
Reputation is a little like perception, it might not be true, but it is in the eye of the beholder. And just as people have personalities so do companies. When a company works in many different countries, with many different people from different cultures representing the company, it is important to establish and maintain a consistent personality, without becoming boring.
Richard Branson has a reputation for poking fun, mischievous behavior, David versus Goliath situations, and owning lots of things that carry the Virgin branding. Whether you love him or hate him, Branson has built a personal wealth estimated at US$ 2.6 billion, with majority stakes in 224 companies.
Branson is certainly not boring and his philosophy threads through all his endeavors: “I don’t think of work as work, and play as play. It’s all living.” Yet his organization is rooted in a vision: “To be the people’s champion”, a mission: “To bust cartels and support the underdog,” and values: “Fun, entertainment, irrelevance and innovation.” So wherever Virgin is to be found, it is measured against these words (or its “platform”).
Reputation is about both functional and emotional aspects, and one will either negate or enhance the other. Many companies concentrate on the function and the figures, while ignoring the rest. Management guru Peter Drucker said: “The only thing that matters is how you touch people. Have you given anyone insight? That’s what I want to have done. Insight lasts; theories don’t.” Henry Ford offered this view: “Business must be run at a profit, else it will die. But when anyone tries to run a business solely for profit… then also the business must die, for it no longer has a reason for existence”.
All the examples mentioned so far are from outside South Africa. In recent years we have had unfortunate situations involving reputation: Leisurenet, Fedsure, Fidelity Bank, CorpCapital, while abrupt changes at the top of SAA, Nedcor and Sanlam have unsettled the markets. Behind these companies lie phalanxes of professional advisers who have all had cameo roles to a lesser or greater degree at mending the reputation.
Never to be underestimated is that the role of leadership in a company’s reputation. On the day that Christopher Galvin, grandson of the founder of Motorola, stepped down as CEO share price jumped 10 percent. And I can’t help thinking that part of the success of LastMinute.com, a dotcom survivor, part founded by a South African, can be found in chairman Allan Leighton who previously ran the Wal-Mart subsidiary Asda. (He also chairs the British Royal Mail, so he obviously relishes a challenge.)
Global corporate affairs group Hill & Knowlton did some interesting research in 2003 on the subject of reputation, concluding that 39 percent of a company’s reputation in the UK rests directly with the CEO, rising to 46 percent in the US. In other words, the CEO often personifies an organization.
But building a reputation does not stop with the CEO; it is the responsibility of every staffer -- a reason why today some companies spend more on internal marketing than external. And the responsibility of reputation is not something to be ghettoized in the PR department. It is all part of building a total brand experience. Reputation, trust and integrity have never been more important.
(Previously published in IoD Magazine.)