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Page 1: Bolstering Corporate Reputation

CORPORATE REPUTATION MANAGEMENT

“Bolstering Reputation through Overall Management”

NUNO COELHO MARTINS

March 2013

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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

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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)

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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

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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

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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

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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

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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?

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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

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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)

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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

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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

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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

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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

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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)