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Reputation, reputation...


This has been an interesting week for anyone obsessed with reputations, as I am. 

First there are clumsy and careless corporations who seem to have lost touch completely with the way their consumers think or behave. This is an age when online privacy and social network rights are way up the agenda, when so much can be so easily misunderstood, misinterpreted and spread around the world like wildfire. So how on earth could Instagram misjudge its market so so badly? Did anyone there not think about the way a whole set of new terms and conditions might be received and what risks they might pose to its reputation? Did anyone do a 'what if' exercise and assess the worst possible impact of being misunderstood? Isn't this what every responsible corporation does? Co-founder Kevin Systrom did a mea culpa yesterday, but much much ground has been lost and trust (already shortly lacking as far as Instagram's new owner Facebook is concerned) is severely shaken.

Second there are corporations that are so powerful, that think their presence in a market so indispensable that they forget about those key ingredients - responsibility, contribution, participation and communication. I am of course thinking about Starbucks, Amazon and Google and their recent taxation reputation crisis. It's always important to remember that these corporations have not broken any laws - international taxation is complex (see ftalphaville and tax splits) and corporations do have a responsibility to deliver the best return for shareholders. But where were their rational, easily digested narrative and community-spirited messages for a market which communicates with each other at the press of a key, whose loyalty and trust can turn on a small coin? Starbucks' effort to recover this position by offering £20m over two years was bittersweet - seen as too small for the overall profit levels and too arrogant in the way it was announced and seemingly, unilaterally decided.

 The BBC lost its top place as most trusted organisation by losing direction in a maze of organisation complexity, leadership complacency and arrogance.

 On the upside, there are corporations which take positive steps in line with what they and their customers believe in. Cerberus Capital Investment moved to get out of the gun business days after the Sandy Hook massacre. Dick's Sporting Goods removed all guns from its store nearest to Newtown and is suspending the sale of certain kinds of semi-automatic rifles from its chains nationwide. Others are following suit. Pressure groups such as OneMillionMomsForGunControl will push for legislators and the corporate world to make real change.

 Two things come to mind at times like this. Language and behaviour. Corporate language is a foreign language as far as consumer communities are concerned and corporations insist on speaking their own language at their peril. So easily resolved but so often overlooked.

 Corporate behaviour is an altogether bigger issue. Getting to grips with this takes much more time. It needs engaging with communities of stakeholders to understand their concerns better - and engaging means listening, being present where they are (and this includes the digital world), getting to know what concerns them, empathising, sympathising. It needs careful thought and an agreed set of values which answer key questions: how do we want to behave as an organisation, what will our value system be and how can we make sure with live through it? Intellectually and emotionally, how does this impact our business and our customers? Businesses are bound by legal constraints (tax, employment law, transactions and others) but they are also bound by ethical constraints and behavioural constraints. For many organisations, these are new considerations so some humility, questioning attitude and self inspection will be needed. Behaving responsibly and ethically increases shareholder value.

 Corporate leaders need to be more courageous. Leadership teams have to be totally aligned on corporate values and need to live them in thought, deed and language. Sometimes it feels like a period of corporate cleansing is needed - strong leadership teams who go through this exercise find that like any other cleansing, it's incredibly rewarding, relatively easy to do when the will is there, and in every case, quite profitable. Now there's a thought to take to the Board...

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