CORPORATE REPUTATION MANAGEMENT
“Bolstering Reputation through Overall Management”
NUNO COELHO MARTINS
March 2013
Introduction
Corporate Reputation Management (CorRM) is giving its first steps towards actually and
convincingly becoming a new insurmountable part of management philosophies. Its input should be
hold in high regard whenever taking decisions foreseen to have a strategic impact.
With the present document I will be defending the importance of Corporate Reputation
Management in the management of companies and its most important areas of action.
I present the Company Structure, the Top Management Team (TMT), Marketing and Crisis
Management teams as being the four areas which are ultimately responsible for the Corporate
Reputation through the strategies they choose to follow. I defend that nowadays good corporate
communication alone cannot create good reputation anymore. News travel fast and when a negative
event occurs fast reaction from Crisis Management Team behalf is required. Such reaction will
depend on how the company is structured and of who is part of the TMT. These two areas are
directly responsible for the creation of a Crisis Management Team.
On the end, this project defends that for companies to maximize their Corporate Reputation value,
and inherent benefits, they should embrace new managerial philosophies, such as: Agile & Scrum
Management (generally used for product development), Lean methodologies (for operational
management) and bring them together with the use of Crisis Management and Marketing with
Meaning ( MwM )concepts. All together, these are intended to cast influence across the structure, a
structure much leaner and flexible; with strong focus on strengthening its identity as much as its
image.
Keywords: corporate reputation, identity, image, Marketing with Meaning, MwM, structure, TMT,
Top Management Team
Abbreviations
CorRM – Corporate Reputation Management
CR – Corporate Reputation
CSR - Corporate Social Responsibility
HNWI – High Net Worth Individuals
LOI – Letter of Intent
MENA – Middle East and North Africa
MwM – Marketing with Meaning
PR – Public Relations
SAV – Savanza Inc
SEF – Savanza Educational Foundation
TMT – Top Management Team
TP – Technology Pioneers
WEF – World Economic Forum
Figures & Graphs list
Figures and graphs can be found as part of ANNEX a) under the denomination “Figure 1”, “Figure
2” and “Figure 3”.
FIGURE 1 - Graph taken from Corporate Reputation Management Master class group work
presentation. Case: “Research in Motion”. Complete work presented as ANNEX /b)
FIGURE 2 – The corporate Personality Scale (Davies et al., 2001)
FIGURE 3 – The Reputation Quotient (Fombrum et al., 2000)
FIGURE 4 – Stakeholders Theory ( Donaldson & Preston)
Theoretical framework
One wonders where problems germinate from when they do so. When in a company we are
expected to avoid them and if they sprout we are expected to minimize their damages. Minimizing
damages is not the only thing to be done as actions must be taken in order for the same problem not
to arise again in the future. Why is this? All problems affect the company’s image and when the
image is hurt, the business itself will bleed. The reputation of a company is one of its own most
important assets and as such proper Reputation Building and Management is critical.
Corporate Reputation Management (CorRM) is giving steady steps towards convincingly becoming
an integrant part in the decision making process, as its important input shades over and across the
whole structure of the organizations.
I am proposing that CorRM becomes an integral and critical part of any management philosophy
and operational procedures used by organizations.
I present 4 main pillars as the building blocks for running a company maximizing its Reputation
while pursuing their financial objectives; the Company Structure, the Top Management Team
(TMT), Crisis Management team and Marketing with Meaning (MwM) philosophy.
Nowadays, good communication alone cannot create a good reputation anymore. News travel fast
and when something disruptive happens the reaction of the Crisis Management Team must be fast.
Such reaction will depend both on how the company is structured and on who is part of the TMT.
These two areas are directly responsible for the existence of the Crisis Management Team.
For companies to maximize the value of their Corporate Reputation they should embrace new
operational management philosophies as: Agile & Scrum Management (generally used for product
development), Lean methodologies (for operational management) and bring them together with the
Crisis Management concept and MwM. Bringing these together we will be able to easily adapt and
implement new philosophies such as the latter one. All together, these cross-functional teams will
drive an organization’s reputation to grow on a sustainable way and to have its image strengthened
and revenue increased.
Corporate Reputation Management shall take on tasks such as; studying, analysing and acting upon
a number of cross-functional activities which are part of the company’s environment. It focuses
both on the “Costumer” perspective (“Image”) as well as the “Employee’s” vision (“Identity”).
Having a clear and bright image of both fields – Image & Identity - is very important for a company
strategy to be set and for Reputation to be strongly built.
On the Costumer perspective the main goal is centred around Increasing “Satisfaction”, “Loyalty”
and thus way “Revenue”, not forgetting about gaining leveraged positions with further external
stakeholders as being shareholders/investors and suppliers. On the other end, the concerns with
Employees fall within the inner need to keep them on acceptable levels of Satisfaction with the aim
of increasing the Retention rate. A good company Identity will as well help in attracting the best and
brightest (Recruitment).
Corporate Reputation shall always be taken into account on any important strategic decision and for
such it will have to, on a wider or skewer extent, analyse and provide input or guidelines for several
different areas/departments as are: Governance, Corporate Social Responsibility (CSR), Marketing,
Sales and Quality Control.
CorRM should be an important part in the running of companies as is already in the running of
one’s personal life. How a crisis period can affect a company and how it should be dealt with, how
the TMT psychological traits affect a company and Lean management is driving companies towards
transparency. Such transparent management methods can only affect positively a company’s image
and identity and therefore, the Corporate Reputation.
Experience shows us that most companies do not have a Corporate Reputation Management
department, or even a clearly identified responsible person for the area on the company structure.
Some companies have executives whose functions revolve around reputation management, though
not usually understood as such as per their duties agreement. The World Economic Forum’s (WEF)
ex-COO was one of those cases that, besides his operational management obligations, was always
trying to improve some process or communication guideline in order for WEF’s reputation to be
constantly strengthened.
So it should be safe to say that organizations with professional management levels are doing this by
always morphing, allowing the company structure to constantly adapt to the ever changing market
conditions. Such assumption would, as a matter of fact, be wrong and the study "Does Management
Really Work?" - HBR, November 2012, Nicolas Bloom, Raffaela Sadum & John van Reenen)
backs it up. 8000 companies were analysed in 20 countries throughout 8 years to conclude that most
do not set "Targets", "Incentives" nor "Monitoring" procedures. These 3 procedures are an integral
part of the philosophies that I present as being the way for an organization to be managed through a
path that will lead to an optimization of the value of its own Reputation. Reputation is built from the
inner sphere of the company towards its stakeholders. Companies that were assessed by the HBR
team into using simple Lean methodologies had a 50% reduction in miss-development of product,
productivity increases of up to 20% and 10% increase in output.
Bearing such data on mind I present SCRUM management as a process which would minimize
“bad management” as the product/service/project development process would constantly find flaws
(from product characteristics to market characteristics), if existing, and correct them. Empirical
proofing will be generated by this process in order to constantly adapt work and operations of
teams.
SCRUM management is a form of organizing work by breaking it down in tasks, with closed loop
cycles with daily reporting in order to better control the achievements and obstacles. It all starts
with an idea…a request, in product development: “feature request”. It can be presented by a team
member, costumer or company executive. This request is submitted under a form in which it clearly
states: who will benefit from the feature, the feature and the benefit (eg: “As a ROLE I want
FEATURE so that BENEFIT”). If accepted it becomes known as a “user story” (USt) and the
collection of all USt is known a product Backlog.
The people taking this the task is comprised of: “Product owner”, “Scrum Master” (Team manager),
“Developers” and “Testers”. This structure is the ordinarily used under the model of IT product
development as SCRUM as not been adapted to a non-IT area, as I defend it can be done. For such,
we would always keep the top two levels and the bottom ones are the ones being adapted.
When the Product backlog is populated USt’s it is time to decide which will be part of the
RELEASE. We will have a smaller number of USt’s which will be prioritised and time to
accomplishment estimated. This RELEASE will be divided in several SPRINTS (from 2 to 12 in a
RELEASE cycle). Each SPRINT should be no shorter than 2 days and no longer than 45/60 days.
At the end of a SPRINT the FEATURES must be 100% tested and ship-ready.
This breaking down of tasks allows a tracking down of task completion called BURNDOWN
CHART which is daily updated by all who finish a USt (a FEATURE). That control will allow for
better estimates of velocity for completion for tasks ahead. Such system gives empirical proof of
project status at any time. All in all, this chart aggregates completed and remaining work data and
shows the amount of tasks and time remaining, visually.
Every day the SCRUM Master shall run a 15 minutes meeting to mainly discuss obstacles achieved
and the ones still on the way. This meeting should take place in the morning.
The present report will always have in mind an old saying by Will Rogers (comedian, writer and
one of the first Hollywood stars): “It takes a lifetime to build a good reputation, but you can lose it
in a minute”.
Keywords: corporate Reputation, Identity, Image, Marketing with Meaning, MwM, Structure, TMT,
Top Management, Team
Bolstering Reputation through Overall Management
Corporate Reputation (hence forward "CR") is the perception the market has of a company. That
perception is modelled throughout the various direct and indirect interactions the company has with
its stakeholders. Such being the case, Corporate Reputation Management (hence forward: CorRM)
has as a main goal analysing and advising at a strategic level in order for the company to better
control its image and identity on the environment in which it is hosted while pursuing its revenue
objectives.
The “Reputation” in itself is one of the most important assets the brand possesses and as any other
asset it must be nurtured. It is part of the identity and it was known for being spontaneous and not
manageable as it would derive from unrelated interactions. Nowadays it is looked at in a different
way and though it is true that in most cases reputation ended up “just existing” out of the
uncontrolled development of day-to-day affairs ...in far lesser cases, reputation was the result of a
carefully crafted and relentless interaction with the different stakeholders at different levels. One
very good example is the World Economic Forum, an organization whose purpose is to create the
conditions for lobbying groups to be created and for “economically based” ideas and concepts to be
created and discussed under the flag of a better future for the world ( “Committed to improving the
State of the World”, World Economic Forum trademark). This organization communicates
relentlessly with its stakeholders and in order to establish a relationship that goes far beyond the
buyer-seller relationship. Such lead to the “unofficial” denomination “Davos Men”; people who
identified themselves with beliefs of the WEF and annually meet in the northern Swiss sky resort of
Davos every January. This is the result of a vision put to practice in 1971 (at that time still known as
European Management Forum).
As in the Natural world and society where “Reputation” is a fundamental instrument of and for
Social Order, in the business world it tends to help a company dominate its core market segment
just by its sheer presence which scares away prospective opponents.
The analysis of the CR should be broke into 2 distinct groups of stakeholders: the internal and
external. The first ones (Employees) feel repercussions which are measured through Employee
Satisfaction and Retention Rate analysis. In regards to the latter ones (Customer), the study is
centred around customer satisfaction, which will disembark on both customer loyalty and retention.
Exampling, reputation will also affect directly fields which might usually be let alone when
analysing this complex problem. are confluent with the latter two, as are: recruitment and some
stakeholders (eg: suppliers, prospective investors and legal entities).
The management of such a non-palpable asset is complex and throughout the years it has had a
change in the way it was looked at, perceived and approached. It is not just a PR trick as it was
handled in the past; now it is much more and it is looked at with bigger interest. It is something that
should be deeply engraved within the senior management concept of managing in order for it to be
communicated and affect the company behaviour transversally to its structure as it is not something
to be done by a single person on a specific role but by everyone on all operational areas.
As any other asset, this one can be used under different forms. As it was mentioned by some
scholars, It can be traded in for trust, used in legitimising a position of power and social recognition,
it might mean a “premium” value for goods and services, it might even mean safety for
shareholders at a time of crisis or for investors at the time of investing. Joachim Klewes and Robert
Wreschniok wrote it as follows: "Delivering functional and social expectations of the public on the
one hand and manage to build a unique identity on the other hand creates trust and this trust builds
the informal framework of a company. This framework provides "return in cooperation" and
produces reputation capital. A positive reputation will secure a company or organisation long-term
competitive advantages. The higher the Reputation Capital, the less the costs for supervising and
exercising control." (Wreschniok, 2010) With the previously mentioned we should now have it
clear that managing reputation depends strongly on managing the stakeholders. If this group of
entities (individual or plural) is duly controlled the reputation of the company will be good, and by
good I mean that it will be the reputation the management team aspires for the business. Once
again, reputation is what this group (stakeholders) decodes from the interactions that existed up to a
certain moment.
If it is true that reputation can be one of the main ingredients from which the Ego feeds itself it is
also true that the same is equally important to companies though these latter ones have only one
major principle to follow; the one of revenue.
“The selfish spirit of commerce knows no country, and feels no passion or principle that the one of
gain”. (Jefferson, 1809)
a/ Company Structure Reputation is not just about a huge amount of glitter anymore. Bad news travel fast ( c/ Crisis and
Reputation) and managing it with good PR is not enough anymore. Nowadays more than being
prepared for a Crisis period what a company must do is to avoid those happenings. Easier said than
done obviously but nowadays TMTs must abandon the vision by which “if bad news comes out we
will take care of it with PR, Marketing campaigns and by brain washing the market” to “we must
avoid situations that might give birth to bad news”.
For such to happen the company’s structure must follow some principles which are, in themselves,
good rules of conduct for individuals as well as organizations and which will be easier to implement
if the organization follows Lean principles.
As well, the organization must be always prepared for adapting its structure depending on the
characteristics of the evolving market and project needs. For the structure to be malleable its initial
formation should be based on the referred principle of Lean Management.
Lean management bases itself on 2 (two) main principles: continuous improvement and respect for
people.
Implementing Lean management allows a company to ascertain a sense of direction and set
corporate objectives. In doing so, the company will eliminate processes which do not create value
and will track improvements through a group of reliable metrics. With such a system, TMT and
decision makers in the company will have a clear picture of the processes flowing correctly and the
ones which are in need of correction.
Lean management comprises the eradication of waste by analysing processes and for relentlessly
pursuing the improvement of the all processes. We might say that Lean methodologies drink some
of the “water” from the Supply Chain Management. The Lean Enterprise Institute identifies 5 (five)
principles intrinsic to the implementation of lean techniques: Identifying value, value-stream
mapping, creating flow, establishing pull and seeking perfection.
People from the several departments should regularly be invited to look at single processes. Such
will allow a wider range of perspectives to find different solutions, helping to prevent the “this is
the way it has always been done” mind-set..
This methodology can help eliminate defects as part of the process of streamlining production
involves using more “pull” than “push”. That implies that later production phases dictate how
earlier ones should be structured, instead of the opposite.
Not following lean methodologies, a company might eventually find itself wasting valuable
resources on initial production phase and push it to the next phase without testing. When such
happens, a defective development might not be discovered until many hours of work were used
(time is money) and eventually raw materials spent, giving place to waste. With a lean system,
flaws are found sooner in the processes and production can be halted, adapted and resumed with
lesser amounts of waste.
One very good example of a company which did not use such a management system and made a
huge management error was Accenture Spain. In 2007 Accenture’s management allowed a double
hiring request system entry to slip through their control mechanisms and by the Human Resources
department. This department, due to company specifications by the business development unit, gave
entry to 600 hiring requests in the system which was doubled to 1200 as the IT system had recently
been updated while the old one was still running. They only realized they had hired 600 extra
people by the end of the year when they could not understand why there were so many workers
placed at “Staff” (which is the denomination of the people waiting to be placed in a project). Many
were left forgotten in “Staff” for over 6 weeks. Truth be told, all Accenture’s management system
started collapsing at that moment. In 2007 Accenture Spain had roughly 10,000 workers, their aim
was to get to 14000 people and nowadays they are little over 7000. No lean management system, no
closed loop control in intermediate phases and problems will only arise at very late stages when
turning things round is extremely more complicated. This happened on/to a company who “sells”
management consultancy.
One of the main focuses of lean management is eliminating waste and, to do so an organization
must identify areas where such waste is originating fronm. Mary Poppendieck established 7 (seven)
potential waste areas: overproduction, inventory, exta processing steps, motion, defects, waiting and
transportation (Poppendieck, 2002). Workers involved in the field of Lean management should start
by examining processes in the referred areas as well as having a through look into Supply Chain
Management techniques and tools.
This management system promotes transparency across all management levels of a company. All
decision making processes will gain from these closed loop cycles be it in production or
development. Mistakes are found early into their life, responsibilities are easily tracked and TMT
will have access to reports which show clearly what is being done, when and by whom. Such
transparency helps managing and helps in reacting to market changes. Speed is crucial these days as
is to give the consumer what he wants before he changes to a substitute product.
Having the consumer in mind all the time and reacting fast will allow the company to increase
revenue by giving the market what it wants when it wants, instead of pushing it to him. Such system
will promote a better service and as such the retention rate will be higher, which is part of the
Reputation Management objectives.
Workers will as well come out benefited as their input will be taken into consideration,
responsibility increased and if the revenue of the company is higher so will the bonuses be at the
end of the year.
So the 5 principles to take in consideration are: eliminate waste, empower workers (obtaining
feedback from front-line workers), immediate costumer order fulfilment (delivering early rather
than late), optimize value chain and foster employee loyalty. (Devaraja, 2011)
Lean promotes happier workers and client satisfaction and that is Corporate Reputation
Management at its best.
b/ Top Management Teams Top Management Teams are always considered as good and applauded while revenue keeps
growing and structure is not touched by awkward happenings which glitch its own seriousness; as a
team, as a structure and as a corporation. While the sea is flat and the gentle breeze hits the sales,
anyone can be considered as being a good captain. It is only when the company, for one reason or
another, finds itself on any of the four quadrants of Figure 1 (Annex a) that the TMT skills come to
play and actually play an important part in the survival of the animal that the corporation can be
compared to. It must feed from the market (sell and make profit) and grow…once hurt, it must find
its own medicine and take the chosen remedies (TMT decisions) to recover from its ailments.
Like a storm can rock a boat into a small scare or into sinking, a moment of crisis can damage or
kill a company. That difference in outcome will be a direct consequence of the TMTs ability to react
to the abnormal situation. For such to happen the TMT should have in place a crisis management
plan.
When the company’s survival is at stake and the TMT did not drive the company towards safe seas,
shareholders often opt to change its composition. It is true that the CEO is usually the first fatality
but more often than not that is not the only position to be changed. When this happens, shareholders
are left with one out of two options: either to substitute with internal people or to go externally to
find a suitable candidate.
Such has been thoroughly studied, which option is the best: the internal or the external alternative?
As per various studies compiled by Lorkhe in 2004, an internal alternative has shown to be a more
accurate choice in small disruptions as are the cyclical problems with which companies might
eventually be hit with as being problems relating directly to market cycles. On the other hand, when
the turn-around is an imperative of greater proportions due to bad results coming from bad options
by TMT which lead to positions veering towards bankruptcy the choices with the best average
results were the ones when an external person was brought in to lead the way.
Still, old studies generally centred around the profound change on both decision making and
structure change, while new studies base themselves on cost related appreciation. My experience
merges these two positions, old and new. I believe that tighter financial control together with leaner
structures (decision making structures) is the way out from the darker scenarios. A start-up company
based in Geneva, Switzerland (Museeka S.A. – www.museeka.com) failed to present a product to
market after 3 years of development. Shareholders decided to cut its head and to re-structure the
TMT and, eventually, its business. One of the big problems this company was facing was the
personality traits of all 3 founders who were at the top of the company as CEO, CTO and CFO. All
of them with major personality traits tending to the mania which then, as business started going
awkward led them to absolute and profound delusion. For the last year they were pitching the
product as being ready to ship and as if the market was ready to buy it when, actually, the product
was not ready and the market did not want the product. That attitude passed on to the team which
believed that that product was the next big thing to hit the market, refusing to acknowledge that
companies like Spotify, Pandora, Soundcloud and others as such had taken the market by storm a
couple of years before. They were all launched roughly at the same time but only the well-organized
ones got to be winners.
This example goes in accordance to what Lorhke presented and defended. TMT psychological traits
will affect the decision making and decision making process of an organization. Such will surely
resonate in the overall strategy and will pass on to the team and in the end, all those actions will be
decoded by all stakeholders. At Museeka’s reputation was worse than inexistent: it was bad.
Expenditure had to be cut and a new decision making process had to be adapted crafted to save the
company. The company needed, desperately, to put an ear to the ground and give stakeholders what
they wanted and not what the TMT thought they wanted.
This said, Museeka’s Reputation Quotient - Annex a), Figure 3 - was failing to comply with its most
basic ideas as product was not presented to market, the financial performance was catastrophic,
there was no emotional appeal and the vision and leadership were not in sync with the market.
As well, the Corporate Personality Scale (Annex a), Figure 2) helps us discover that the CEO
personality traits were absorbed by Museeka as per osmosis. The company was seen by service
providers, shareholders and 3 partners (one of which RonOrp, probably the most important
publication for live art events in Switzerland) as a very “machista” company (only men worked
there and from around 100 channels of music, none had been done thinking on the female
audience), as a ruthless company (all founders came from big companies and were doing business
as if Museeka was as big as their previous employers) and besides all these, Museeka also failed
miserably in what concerned to being looked at as a chic product (prestige).
Shareholders are a part of the stakeholders group and this group is ultimately the one responsible for
decoding all interactions into “Reputation”. If a turnaround is needed it means that the company
started affecting negatively its stakeholders. The ones feeling it in their pockets are usually the
suppliers and the shareholders. Shareholders are the ones who have the power to directly intervene.
In this case they did so by dissolving the Board of Directors and hiring external help. With such a
decision they expected for one special kind of suffering to be put an end to: losing money.
Though slashing costs in the name of a better performance does not affect directly their financial
situation on the short term, it carries with it a subconscious message of relief whenever they see that
the company is spending less to achieve more. They are the first target of the new TMT (on this
specific case) and they will be the first group to start raising the reputation profile of Museeka
again, so that then they have reasons to re-invest and the company will have money to pay the
suppliers. The later, when paid, will themselves have a better and raised perception of the
company’s reputation. With the suppliers (Music providers) in such a better position Museeka will
start to give its clients, again, what they expected: Music. After the clients are given access to what
they paid for the Media will be addressed to. This will complete the cycle of reputation awareness
rising that shareholders were waiting for after having decided to advance for a turn-around. All this
said, in this specific case this company is still pending on a very important decision which is to
either maintain the brand or to do an asset relocation and for the (slightly changed) product to be
launched under a different brand (for legal reasons).
As a note, the intervention on Museeka was made bearing in mind 2 very important principles: Lean
Management methodology and Scrum project Management for product development and
adaptation. These two were integrated after a new vision for product development arose when the
business model was readdressed by following Osterwalder’s business model canvas (Osterwalder is
an acquaintance of Bernino Lind, with whom I worked and to whom I address to at the Thank You
section). The result: we managed to change the product from music on request to a radio model and
the addressed market was changed from Europe and North America to being MENA region.
c/ Crisis Management There are several happenings which might put one’s reputation at stake. Those threats can arise
internally or externally and can be technical or socially originated - Annex a) Figure 1- . I will be
calling these; crisis moments.
A crisis moment can generally give rise to three different threats: 1) Public Safety, 2) Financial Loss
and 3)Reputation loss. (W. Timothy Coombs, 2007)
Analysing or anticipating those critical moments which will affect a company’s reputation is not
always easy or possible (eg: a Natural disaster is seldom predictable). Still, such events are
generally divided into 5 different elements which might help avoiding future problems of the same
Nature as the one affecting a company at a given moment. These five elements are: Signal
Detection, Preparation/Prevention, Containment, Recovery and Learning. Depending on the kind of
crisis and its origin the “Signal Detection” can either be a succession of happenings which can arise
months prior to the crisis explosion or it can be the explosion in itself (as it happens with Natural
disasters). “Preparation and Prevention” are two sides of a same coin which go hand-in-hand and
can be, factually, the first step into recovery.
These five steps are no more than an adaptation to Mitroff and Coombs crisis management. As per
the later one, crisis management implies a 3 step approach: 1) Pre-crisis, 2) Crisis response, and 3)
Post-crisis. The pre-crisis phase encloses prevention and preparation. The crisis response phase is
when management must actually respond to a crisis. The post-crisis phase analysis what was the
crisis and how it was dealt with in order to better prepare for the next crisis (W. Timothy Coombs,
2007). Besides the event in itself that is the crisis moment, the following moments are as important
or even more important for the reputation of the company. The Media can perpetuate the disaster
hitting with each word a reputation which took much effort to be built. Media containment is
probably one of the most important factors in managing a crisis. It is the media that takes it to the
larger group of people and it is the larger group of people who, collectively, are responsible for
making an evaluation and “drawing” the company’s image. On the short term it will probably hit
the company on its revenue and on the long term, besides the revenue, the reputation will have a big
dent taken out of it. As such, much of the work on how to prepare for a crisis is based on scenario
envisaging and preparing a step-by-step reaction for such possibilities.
With the previously stated what I intend to show is that an important first step for correctly
managing Corporate Reputation is to have a very well designed and thought through flow chart for
crisis management. For such plan not to be a one-time only preparation, it should follow these rules:
1) have a crisis management plan and update it at least annually, 2) Have a designated crisis
management team that is properly trained, 3) Conduct and annual exercise to test the plan and the
team in charge and 4) Pre-draft select crisis management messages including content for dark web
sites and templates for crisis statements. Have the legal department review and pre-approve these
messages. (W. Timothy Coombs, 2007)
As stated by G.Abatecola: “Crises are times of emotion. A purely rational response may not be
enough to protect a reputation. Going what appears to be one step TOO far may be the only way to
respond to emotive aspects of a crisis” as nowadays’ convergence of globalization has any
wrongdoing on the spotlight “nano-seconds” after the happening. I am referring to both the
professional media as to the online citizen-journalism. Nowadays there are daily attacks on
companies and corporations. There are no companies above that risk and there is barely a way to
keep an attack from seeing the day light; it is the reaction to it that will make the difference between
“just” being attacked or falling into a crisis.
While I was working for the WEF as Manager of the Community of Technology Pioneers the world
market crashed with a starting point that was very “dear” to me: Lehman Brothers filing for chapter
11. Lehman Brothers was one of the main Strategic Partners of the WEF and we were days away
from opening the Annual Meeting of Global Champions in Tianjin (China) when phones started
ringing relentlessly, literally 24 hours a day, as constituents of my community were from all over
the World. These were the C-levels from companies such as Mint.com (Aaron Patzer), Mozilla
Foundation (Mitchel Baker), 23&Me (Linda Avey), Calvin Chin (Qifang Inc) and many more
worried about how such events would affect the their chance of finding investors throughout the 10
days of closed doors meetings. BusinessWeek, Time, WSJ, Financial Times, Seed Magazine and
much more, contacting me asking how would the start-ups that I represented be affected by the fear
that was installing itself among the investors and partners that would be present at the meeting.
At that moment Andre Schneider called for an emergency meeting for Community managers and
showed us the plan he had prepared in advance for the eventuality of a world economic crisis and
for which all of us had contributed, each of the managers having to think and adapt the plan to its
own community. He showed us the Annual Report prepared by the WEF (that we all had) and told
us that we only had to explain to our constituents that on the last 2 annual reports, the WEF had
already tried to draw the attention to a big crisis that was just about to happen. We had to show them
that we had a contingency plan on which we worked every 3 months. We had an extensive agenda
ready to be implemented on the first big meeting following a possible crash. This being transmitted
to us, I only had to communicate “my companies” that they should not be scared of fleeing
investors and that they should definitely attend the meeting as the new “after crisis” agenda would
throw to the table many discussions whose topic would be catered around new shifts of economical
power and new ways to invest to the usual discussion panels, round tables and presentations.
As incredible as it might seem, the WEF came out of the crisis with a stronger image due to its
COO readiness to face a huge moment of crises, much more than the CEO (the honourable Prof.
Klaus Schwab). His envisaging of the scenario and managing the team of managers into preparing
for it made people look at the WEF as a place where economical content was generated with much
more precision than previously accepted and the Annual reports started being discussed by
stakeholders rather than going straight to a shelve whenever they got them delivered to a partner’s
office.
This external originated crisis was well dealt with because the World Economic Forum had a very
strong TMT which had never stopped preparing for a situation of crisis. Its flat structure (not
Lean...but flat) made it easy for us to discuss and prepare the reaction and the media team guided
each and every one of us (community managers) throughout the media contacts. Heading this team
both Mark Adams (nowadays International Olympic Committee spokesperson) and Matthias
Luefkens (nowadays head of media relations at BursonM) coached us to perfection.
“Crisis is an opportunity riding the dangerous wind.” Chinese proverb.
d) Marketing with Meaning - MwM
Nowadays consumers can choose not to watch/see most of the advertisements which are published
(aired or printed). Evolution on TV technology (TiVO) allows people to go from series to show
without having to sit through commercials, add and popup blockers filter out banners and links. It is
getting harder and harder to get the consumers attention and marketeers are confronted to new
challenges inherent to technology development.
We are living in a market whose consumers can choose to avoid business communication Marketing
has as a challenge to find alternatives. One alternative is to create the conditions for the consumer
himself to feel engaged with the brand and opt to engage with it. This is the point where MwM
comes in. “Marketing with meaning is about improving customers’ lives through marketing itself”
(Bob Gilbreath, The Next Evolution of Marketing (31), 2010).
This discipline defends that there is an antidote to costumers “opt-out” attitude. Marketing should
add value to people’s lives not regarding the person having to buy the product. Should the consumer
feel that the company/product improved his/her life before having to spend money, it is more likely
to turn him into a long-term costumer.
Bob Gilbreath created a new marketing model which is based on Maslow’s pyramid of necessities.
It is called the “Hierarchy of Meaningful Marketing” and it is also a pyramid but divided in 3
levels: “Solution”, “Connection” and “Achievement” (bottom to top). This pyramid is the result of
the cross -over of Maslow’s pyramid with Brand Equity Hierarchy.
After deciding on the goal a company must find what is it that makes the consumer’s heart to
pound, what is it that motivates him daily so that then, and only then, it addresses the problem.
Addressing the problem is helping people – prospective costumers – solve any day-to-day problem
they have. MwM is an ever studying and adapting concept. No initial project is considered
immutable, if anything…the absolute opposite. It is intended to control the results relentlessly and
adapt towards a better service to the costumer.
Marketing is not about pushing products to the consumer, it is about understanding costumers,
people…the community. In doing so, its image will come out stronger as the impact is much larger
than just the moment and delight of product consumption. If the impact the company is having is
positive in people’s lives, both by serving them better as to contributing for a better lifestyle, it will
be decoded by the public as a strong and positive Image.
This discipline has been gaining up momentum as companies reach out for their communities in
order to change people’s perception of their business or operations. Nowadays companies want and
need to be likable as such will have a direct repercussion on the financial results.
There are many case studies which show us different approaches and different reasons for each of
the companies to follow the path of Corporate Responsibility. Though this discipline started being
exploited by companies who had a negative image, nowadays we have companies who start
developing their Social Responsibility programs without the intention of hiding some shady action
on their operations. The intention is showing that the company is more concerned with its own
impact in the society from which it “feeds”. If the impact is a positive one the company will surely
see it reflected in the balance sheet by the end of the month.
Social responsibility should be on the top of the head of all TMTs whenever taking a decision of
strategic significance because, whichever decision makes to the newspapers and ears of people is a
decision which will be decoded either as good or bad. If it is bad, the company’s image is dented
and to recover it there will be a long way to walk. It is easy to lose a good image but very hard to
build a good and strong one.
TMTs should have present that Corporate Social Responsibility is no more than respecting the
people and the area in which its operations take place. It is all about business ethics. There are
various reasons for such tendency to have sprouted and spread, being that the main ones are:
globalization, internationalization, internet, new trends in the dynamics of consumption and the
media. (Michelini, 2012).
On a theoretical basis there are several explanations for why a company does it or why one should
follow CSR but on the end it is the Stakeholders Theory by Donaldson and Preston - Annex a)
Figure 4- the one all TMTs should have as a reference.
A company is not expected to stop having profit, such would go against the company’s true nature
but this being said the European Commission published a definition of what this multi-stakeholder
approach is. In 2001 they defined it as “A concept whereby companies integrate social and
environmental concerns in their business operations and in their interaction with their stakeholders
on a voluntary basis”. This definition was recently replaced (in 2011) by a shorter one: “the
responsibility of enterprises for their impacts on societies”.
Market with Meaning gives the company the opportunity to develop Social Responsibility programs
integrated in the overall marketing strategy. Such symbiotic relation will prove itself as the best
advertising for any organization.
7/ CONCLUSION Much more than managing a reputation, one creates a reputation. It is the relentless day-to-day
activity that creates the conditions for interactions to be decoded as “reputation”. Still, there are
moments in which, rather than creating you are indeed managing it, namely on crisis moments.
Crisis moments can always sprout out of the blue, especially if and when they are originated by
external factors. Internal factors can and should be well controlled in order to minimize the
possibility of crisis situation outbreak.
Scrum management is one good approach to managing a company in a way which both internal and
external factors are constantly controlled by using a closed loop cycle in the development of
product or business. Always having a closed loop circuit in checking both product development and
market circumstances should alone minimize the chances of a crisis to arise in the inner sphere of
the organization. For such a management system to be put in place the TMT shall be open minded
and rely on the workforce “under it” as it (workforce) is crucial for the constant “do- check-
improve” that the theory is all about.
If lean methodology is correctly implemented and there is a defined Crisis Management Team
which regularly meets to envisage new crisis scenarios, whenever a crisis sprouts all the company
structure will be ready to react and such a fast reaction will surely lead to a fast lane out of troubled
waters. Should this reaction be an action of perfect anticipation prepared and envisaged by the crisis
team, more often than not, the company’s image will come out stronger and its identity will be
carved deeper into its workers.
With all the previously stated, if lean methodology is implemented correctly it means that the TMT
will probably be more flexible and more reliant on its workforce than most TMTs (on most big
companies) and crisis situations will also be managed on a swifter way with the participation of all
useful brain cells the company has had working for. Lean Thinking businesses respond immediately
to customer requests and optimize across the value chain. Today businesses in diverse industries
have adopted the smart business practices of Lean Thinking. These principles are beneficial to small
businesses as well as to global corporations.
All in all, what is demonstrated by the present dissertation is that Corporate Reputation
Management is a lot more than a couple of PR tricks and it should constantly be considered by all
overall management procedures and philosophies. If product development, production and
marketing are transparent, checked and adapted, it will find equilibrium on both inner and outer
organizational spheres, and will do so for the long term. Such a balance means that all stakeholders
needs are being answered to ...and happy stakeholders is all what Reputation Management is all
about!
So, if a company has a Lean corporate structure with open minded top management team it means
that the structure will be ready to react to market changes immediately. Reacting fast to the market
is, simply, being fast to give the market what the market expects/wants. If a company achieves this
balance (selling what it produces with minimum waste) the vast majority of stakeholders will be
happy. Being on such a spot, the company just has to be careful on the paths it chooses to follow in
order to achieve its purposes. Shall it produce in China and explore under aged? Having the
headquarters in a tax-free country? Bonuses for TMTs? etc... As all decisions are, one way or the
other, messages that will be decoded by stakeholders, all strategic decisions shall be pondered upon
before taken. It is this pondering that is crucial part of the crisis management team input. In the
referred situation such anticipation would mostly cover crisis situations arising from the inner
sphere of the company. This mentioned; the same team will have to envisage situations which can
arise externally as well.
Good and effective Corporate Reputation Management is only possible when: an organization has a
structure where responsibilities are easily attributed (simple rather than complex organizational
structures – Flat and Lean management); when the Top Management Team is correctly adapted to
Lean(er) and Flat(er) Principles; when Marketing with Meaning is implemented and when the Crisis
Management Team is active and part of the strategic decision making process as this team is the one
better prepared to envisage problems in the future.
A strong and good reputation will lay a path heading for profits as well as it will be responsible for
the company’s valuation increase through a higher “goodwill”.
In a nutshell: a company who has a TMT whose principles are based on a flat structure, Lean
principles, Marketing with Meaning (and Social responsibility acumen) and has a well-rounded
Crisis Management Team which is directly connected to all decision making processes...is a
company which has all the tools in place to one with a strong and long-lasting reputation.
8/ Bibliography
Coomb, W. Timothy “Crisis Management and Communications”
http://www.instituteforpr.org/topics/crisis-management-and-communications/
Devaraja, T.S. (2011) “Electronic Supply Chain Management and Model Development –
Global Perspective”
http://sibresearch.org/uploads/2/7/9/9/2799227/sibr_-_working_paper_-_scm_final.pdf
Gilbreath, Bob, “The Next Evolution in Marketing”
Klewes, Joachim and Wreschniok, Robert (2010).”Reputation Capital: Building and
Maintaining Trust in the 21st Century” (small extracts found online)
Lean Enterprise Institute
Lohrke, Franz T; Bedeian, Arthur G. and Palmer, Timothy B., “The role of top management
teams in formulating and implementing turnaround strategies:
a review and research agenda”
http://www.bus.lsu.edu/bedeian/articles/tmtijmr%2004.pdf
Michelini, Lara (ISCEM master class material 2012)
Osterwalder. Alexander and Pigneur, Yves; “Business Model Generation” (2011)
Poppendieck, Mary, “Principles of Lean Thinking” (2002)
http://meidling.jvpwien.at/uploads/media/LeanThinking.pdf
Annexes
Annex a)
FIGURE 1
- Crisis origins
(Graph taken from Corporate Reputation Management Master class group work presentation. Case:
“Research in Motion”. Complete work presented as ANNEX /b)
FIGURE 2
(Graph: Corporate Personality Scale by Davis, 2001)
FIGURE 3
(Graph: The reputation Quotient by Fombrum, 2000)
FIGURE 4
(Graph: Stakeholders Theory by Donaldson and Preston 1995)
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