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Transcript of RepIntel v3n2 Complete
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8/6/2019 RepIntel v3n2 Complete
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Editor-in-Chief
Dr. Charles Fombrun
Chairman
Editor at Large
Kasper Ulf NielsenExecutive Partner
Managing Editor
Seth KerkerManaging Director
Contributors
John Patterson
Senior Advisor
Joan Walker
Executive Vice President,
Allstate Insurance Company
Sally SusmanExecutive Vice President Policy,
External Affairs & Communications
Pfizer
Jesse Deutsch
Analyst
Advisory Board
Dr. Cees van Riel
Vice Chairman
Nicolas Georges Trad
Executive Partner
Anthony Johndrow
Managing Partner, United States
Dr. Leonard Ponzi
Managing Partner,
Research & Analytics
Dr. Matthew Pan
Managing Director, China
Dr. Ana Luisa Almeida
Managing Director, Brazil
William Pullen
Managing Director, Chile
Henrik Strier
Managing Director, Denmark
Dr. Dominik Heil
Managing Director, South Africa
Fernando Prado
Managing Director, Spain
Spencer Fox
Managing Director,
United Kingdom
Volume 3 Issue 2 Summer 2011
Reputation Institute Knowledge Center
Reputation Intelligence is published by Reputation Institutes Knowledge
Center. The Knowledge Centers mission is to bring together a global
network of practitioners and academics to leverage extensive research,
sophisticated analysis, and rigorous methodologies that strengthenrelationships with key stakeholders and add tangible value through
management, growth, and protection of corporate reputation.
The Knowledge Center addresses the proliferating demands by practitioners
for answers to questions about how reputations affect competitive
positioning, how to examine and value corporate reputations, and how
to build, maintain, and defend those reputations.
For more information on becoming a member of Reputation Institute,
please visit the Knowledge Center at www.reputationinstitute.com.
About Reputation Institute
Reputation Institute is the worlds leading reputation consulting firm.
As a pioneer in the field of brand and reputation management,
Reputation Institute helps companies unlock the power of reputation.
With a presence in 30 countries, Reputation Institute is dedicated to
advancing knowledge about reputation and shares best practices and
current research through client engagement, memberships, seminars,
conferences, and publications such as Corporate Reputation Review
and Reputation Intelligence.
ReputationIntelligence
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Dear Colleagues,Welcome back to Reputation Intelligence, Reputation Institutes quarterly thought leadership publication. This issues theme is
largely powered by the content and conversations that resulted from three days that 350 leaders of the reputation economy
spent together at RIs annual conference in New Orleans in May 2011: Reputation as a Leading Driver of Business Value.
The 15 years of RIs existence have seen a sea change in how companies approach both the historic art and emerging scienc
of reputation management. Most of the largest companies in the world have been exposed to the concept and importance
of corporate reputation by now, but it still takes an act of God, industry risk, or self-inflicted crisis for most companies to get
religion and take a systematic approach to understanding what stakeholders expect from them.
The reputation management journey breaks down into five phases:
Phase I: Exploration and discovery (50-60 percent of Forbes Global 2000 marketplace)Phase II: Reputation metrics linked to core business metrics (e.g. Net Promoter Score, Brand Equity, Employee
Engagement, Loyalty)20-25 percent of market
Phase III: Reputation seen as having specific, measurable business impact and built in to business planningprocess10-15 percent of market
Phase IV: Company leaders are responsible for specific reputation goals5-10 percent of marketPhase V: Reputation fully integrated into enterprise strategy and operationsthe elusive Holy Grail where no
organization anywhere in the world truly is today
With a nod to RIs academic roots and thriving network of educators and students around the world, think of Phases I and II as
undergraduate coursework (Reputation Management 101 and 201), Phases III and IV as graduate study (Reputation MBA), and
Phase V as post-doctoral work where only a handful of companies are in the early stages of writing their reputation theses.
This issue ofReputation Intelligence chronicles the journey from Phases II through IV for companies like: Allstate in the wak
of Hurricane Katrina; Pfizer and the pharmaceutical industrys ongoing reputational challenge; BBVA Compass and Itau afte
the global financial crisis; and Vestas in the aftermath of COP15 climate change disappointment and $100 oil. Each article an
sidebar also plays off the three key takeaways from the New Orleans conference:
Employees are emerging as the most important stakeholder group in the reputaton economyStakeholders know more about you than ever before. What do you know about their expectatons of you,
and what are you doing about it?
The best Chief Reputaton Officers are CEOsIn closing, let me invite you to share your thoughts about these issues with our growing reputation community through our
online discussion group on LinkedIn. If you are not yet a member of our group, please visit http://www.reputationinstitute.com
and navigate to the Community tab for quick and direct access. You can also e-mail us any comments you have at
[email protected] . Thanks for your support for RI onsite in New Orleans and every day through our
client and membership networkit means the world to us.
Best regards,
Anthony Johndrow
Managing Partner, RI North America
Issue Editor, Reputation Intelligence
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I.LESSONS LEARNED FROM NOLA: IN THE REPUTATIONECONOMY, ITS THE ENTERPRISE THAT MATTERS MOST
Horrific images of the crippled Fukushima Daiichi nuclear reactor in
Japan. The shuttering of News of The World, the largest English language
circulation newspaper in the world, in London. Hackers stealing personal
and financial information from millions of PlayStation 3 consumers in
North America and Europe. These recent events are perhaps the most
obvious signal that we no longer live in a world where brand promises and
product-centric marketing alone can weather the storms of the reputation
economy. In each case, Tokyo Electric Power, News Corporation, and Sony
respectively failed to convince internal and external stakeholders they
could be trusted at the enterprise level when faced with governance and
leadership crises. At the end of the day, perhaps a 1980s rock song says itbest: youve got to stand for something/or youre gonna fall for anything.1
In this brave new world, marketersstewards of the customer experience and a
tight link to sales in most organizationsare up against it to a greater extent than
communicators, who have traditionally been the default corporate storytellers and
crisis responders, though with much smaller armies and investments than their
marketing brethren.
On one hand, there is the new normal that digital media, 9/11, and the financial crisis
have brought to marketersincreasing the degree of difficulty of a Chief Marketing
Officers day job to levels unseen in the pre-Y2K world. Think democratization of
choice, the near-commoditization of many product/service categories, todaysinterconnected universe where we can access friend and neighbor opinion without
leaving our homes, the rise of green, an alarming lack of faith in big companies
and institutions, a precipitous decline of trust in advertising messages, etc. Its
pretty complicated for the 99 percent of todays underpaid, overworked marketing
professionals who dont have a World Cup or Olympics silver bullet ad in their budget.
Marketers Coming to Grips with Product versus Enterprise
Lets see if we can simplify things a bit for these beleaguered souls. Our marketplace
behavior is really only governed by two factors: our perceptions of the products or
services in question and our perceptions of the enterprise behind them. Marketers
have spent their careers (and virtually all of their ad budgets since World War II)
trying to influence the former, but evidence is mounting that the latter is not only
virgin territory, but also may actually be more influential than anyone thought.
In our annual study of the reputation of the largest 150 U.S. companies with the
general public that Forbes published in spring 2011, Reputation Institute isolated
these two influences using the RepTrakTM model. Perceptions of products/services
and innovation belonged to product influence and perceptions of workplace
(financial performance, citizenship, governance, and leadership) covered the
enterprise category. RIs statisticians factored these variables (to ensure five versus
4 2011 Reputation Institute
1 Stand for Something, John Cougar Mellencamp. Scarecrow. Columbia Records, 1984
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two didnt give enterprise an undue advantage) so the unique influence of each
of these two variables on two kinds of supportive behavior could be isolated:
Purchase Considerationgetting commercialonly 39 percent of thedecision is based on product perceptions, while 61 percent is based on
perceptions of the company behind that product.
Advocacy/Recommendation securing advocacy in an interconnectedworldonly 42 percent of this critical behavior can be explained by product
perceptions, while 58 percent is explained by what they think of the
enterprisewhat they think the company stands for beyond the features
and benefits of its products.
This isnt only true at the macro level. In the pharmaceutical industry, a key
stakeholder group is the physicians who prescribe products to patients. In thishighly innovative and regulated industry across multiple client-specific deep-dive
research projects worldwide, ample evidence exists that enterprise perceptions
drive physician behavior much more than their perceptions of the products.
Another industry example of this phenomenon at work is financial services. While
BBVA Compass in the U.S. and Ita in Brazil are deploying different tactics to reach
skeptical stakeholders, both companies are competing on their internal cultures
and community-driven orientation. Product-centric marketing collateral is not the
key to banks regaining public trust, a fact not lost on either banks top management.
The key to post-financial crisis value creation for banks? Competing on values,
which comes down to making governance, leadership, citizenship, workplace, and
financial performance relevant to audiences who expect more than free checkingaccounts and the toaster oven promotions of the last century to stay loyal in the
reputation economy.
In terms of visual, top-of-mind marketplace examples to drive this point home,
take P&Gs decision last year to launch the P&G corporate brand through its
Vancouver Winter Olympics sponsorship advertising and point-of-sale campaigns.
The overwhelming positive reaction from multiple stakeholders (moms to opinion
elites) to the unleashing of this enterprise-wide narrative helped P&G dial it up
again around the Special Olympics in the fall of 2010. If the ultimate product brand
marketers are looking at using their enterprise story commercially, shouldnt you
consider investing in your corporate brand too?
Building Reputation Equity at a Time of ScarcityThe following organizations discussed how they are taking this new reality to heart
and shifting the conversation at RIs annual conference in New Orleans in May 2011:
Nancy Lintner, SVP Strategic Communications, PepsiCo gave an updateon year two of the Pepsi Refresh project, which provides grassroots funding
for up to 60 ideas each month that cluster around four categories (arts and
music, education, communities, and monthly Pepsi Challenge) at four grant
sizes (ranging from $5,000 to $50,000) following a simple four-step process
(idea generation, idea submission, idea promotion/voting, and idea funding)
Many of the early lead
of the Internet-fueled
innovation economy
of the mid-1990s and
the scandal-driven
governance revolution
of the early 2000s wer
not always the last on
standing in their peer
group as the global
financial crisis change
the rules of business
forever. So, it is premat
to declare victory or
anoint the winners of
the nascent reputationeconomy. Nonetheless
it is encouraging to se
so many organization
building reputational
endurance through
multistakeholder platfo
that are built to last.
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through social media. Under the stewardship of CEO Indra Nooyi, Pepsi Refresh goes beyond branding to
put some skin in the game when it comes to renewing American communities and simultaneously buildingreputation capital.
Ray Jordan, Corporate Vice President Public Affairs and Corporate Communications, Johnson& Johnson discussed the implementation of reputation management best practices throughout the
organization. However, it is J&Js more recent decision to sign up as a global sponsor of the 2014 FIFA World
Cup in Rio de Janeiro, Brazil, that perhaps speaks to the worlds most respected health care product and
pharmaceutical manufacturers desire to export its strong reputation in emerging markets by promoting its
corporate brand as a whole, which is greater than the sum of its hundreds of product brand parts.
Helen Clark from ChevronTexacos Corporate Marketing group chronicled how ChevronTexacosWe Agree branding campaign has given the oil giant white space in the aftermath of the BP Deepwater
Horizon spill in the Gulf of Mexico around societal issues once taboo to the energy industry. With bold
call-to-action statements like Oil companies should put their profits to good use, Oil companies should
support small business, Fighting AIDS should be corporate policy, and Its time oil companies get behind
the development of renewable energy, its easy to see why stakeholders are responding positively to candid
dialogue, rather than status quo rationale, from one of the super majors.
Christa Carone, Xeroxs Chief Marketing Officer detailed how Xeroxs Ready for Real Business campaignhelped transform the legendary document management company in the wake of its largest acquisition
ever (Affiliated Computer Systems) in 2010. Through its commitments to innovation, citizenship, and the
environment, Xerox is walking the walk and talking the talk with stakeholders who are now taking another
look at the iconic company.
Blair Christie, Ciscos Chief Marketing and Communications Officer explained how Ciscos founder andCEO John Chambers drives the companys reputation agenda and pushes internal and external stakeholdersalike to think differently about long-term value creation. By focusing on employee, environmental, and
social investments, Cisco is able to make the Human Network campaign more tangible to more people
than pure product or service-centric programming ever would. Refuting the Milton Friedman axiom that the
only purpose of business is to make a profit, Cisco believes in doing good for business and society, and its
Transforming Education initiatives as well as its innovative partnerships with NGOs like One Economy, Digital
Opportunity Trust, and Inveneo are the proof in the pudding.
Reputation Management is a Decathlon, not a Marathon or a Sprint!
At the end of the day, it is not about dropping your product or service focus entirelybut those leaders of the
reputation economy who are leading by example have found a way to deepen those connections with their
customers by letting them know whos behind the curtain. You have to give them faith that your company is and
will continue to behave in ways that make them feel okay about continuing to do business with you.
Many of the early leaders of the Internet-fueled innovation economy of the mid-1990s and the scandal-driven
governance revolution of the early 2000s were not always the last ones standing in their peer group as the
global financial crisis changed the rules of business forever. So, it is premature to declare victory or anoint the
winners of the nascent reputation economy. Nonetheless, it is encouraging to see so many organizations building
reputational endurance through multistakeholder platforms that are built to last.
Succeeding in the reputation economy is more like training and competing in the 10 events that make up
the Olympic decathlon, than a marathonor a sprint! Think of the seven dimensions of corporate reputation
(products and services, financial performance, innovation, citizenship, leadership, governance, and workplace)
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The 2011 Global RepTrak 100 Results
Dr. Peter Drucker famously said, What gets measured gets managed. No truer (and more important) has this been
than now. We live in a Reputation Economya market in which corporate reputations are, more than ever, linked
to stakeholder behavior. Trust, esteem, good feeling, and admiration for a company are now primary drivers of
supportive and ultimately purchasing behavior.
Reputation Institutes Global RepTrak studya cross-stakeholder survey conducted in 15 markets globallyis the
largest corporate reputation study worldwide. Through rigorously tested quantitative and qualitative methods, thestudy measures the trust, esteem, good feeling, and admiration relevant stakeholders have for companies around
the world.2 On an industry level, the best performers were Consumer Products (74.83), Electronics (73.15), and
Computers (70.28), all significantly above the 64.2 industry average. The worst performers were the usual suspects:
Tobacco (50.10), Utilities (59.04), and Telecommunications (59.77), all of which face deep-seated negative stigmas.
The best-of-the-best on a company level were those that managed to export their reputations both home and
abroadcaptured in a specialized study called the RepTrak 100. Google came out on top (79.99), followed by
Apple (79.77), The Walt Disney Company (79.51), BMW (79.42), LEGO (79.26), Sony (79.05)3, Daimler (79.03), Canon
(78.07), Intel (77.56), and Volkswagen (77.33). Google drew strength from strong positive perceptions about their
workplace (77.82), governance (74.23), and citizenship (74.42), while Apples scores were driven primarily by
innovation (83.91), performance (82.25), and leadership (80.56).
That the top two performing companies were driven by perceptions of their enterprises rather than their
products/services signals a shift in the Reputation Economy. To build and maintain robust reputations both
home and abroad, companies must respond to the changing tides of reputation measurement with strategic
management. To neglect the data is a risk not to be taken lightly.
the way decathletes have trained for the 100 meters, long jump, shot put, high jump, 400 meters, 110 meter
hurdles, discus throw, pole vault, javelin throw, and 1500 meters since the ancient Greeks. You cannot get on thepodium by being world-class at just the four running events or three jumping events or three throwing events any
more than you can build a strong reputation by spending most of your companys time, talent, and treasure telling
the world a lot about your products and too little about whats behind them.
2 Companies are rated on a scale of 100 and are adjusted across markets for bias. Scores above 80 are considered excellent/top
tier, from 70-79 strong/robust, from 60-69 average/moderate, from 40-59 weak/vulnerable, and below 40 poor/bottom tier.
Year to year, changes in score of +/- .5 are considered significant and cause for attention.3The first wave of survey data indicated that Sony, rather than Google, took first place. However, concerns about the companys
post-tsunami supply chain and negative attention surrounding its security practices after the recent PlayStation Network
hacker breach hurt its score in the second wave of collection. Cumulatively, the company dropped to 6th placea significant
drop but still very strong placement. This was a testament to the brands resilience in difficult times.
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How BBVA Compass Competes on Reputation in the Banking Industry
BBVA Compass ranks among the top 20 largest U.S. commercial banks based on deposit market share, operating716 branches in Alabama, Arizona, California, Colorado, Florida, New Mexico, and Texas. From a consumer awareness
standpoint, it is probably best known as the U.S. subsidiary of Grupo BBVA, one of the largest global financial services
groups and a leader throughout the Spanish speaking world, or because of its 2010 sponsorship of the National
Basketball Association as the official bank of the NBA.
However, from a differentiation standpoint, the global financial crisis of 2008-09 certainly made banks rethink the
bigger is better axiom, and sports sponsorships were hardly a game changer for AIG (English Premiere League
soccer), RBS (long-time association with golfing legend Jack Nicklaus) or UBS (Formula One auto racing) during
their respective fall from graces, reputationally speaking. How is BBVA Compass bucking the trend and improving
its reputation score with the U.S. general public over the last two years? By promoting what they stand for (their
enterprise story) instead of just what they sell (the product marketing view of the world).
One way they have accomplished this is through the formation of the BBVA Compass Corporate Responsibility and
Reputation (CRR) department, which reflects the comprehensive way the BBVA Group views its relationships with
the communities in which it has a presence. This holistic approach involves many aspects, including charitable giving,
volunteerism, environmental management, diversity and inclusion, and other areas that promote the well-being of
people where they live, work, and play. All of this activity is reported annually in both the BBVA Group and the BBVA
Compass Corporate Responsibility Reports, but this is more than report writingit is a Program Management Office
(PMO) approach that industrializes reputation management in everything BBVA does in the U.S.
Six offices exist within CRReach with specific goals and lines of delivery:
Community Giving
Employee Involvement
Financial Education Diversity and Inclusion
Environmental and Natural Resource
Responsible Practices
Take one example from the Responsible Practices CRR office, which monitors compliance with BBVA Group policies
and protocols, including those governing transparency, ethics, and responsible products and reports out on these
behaviors as an organization to promote transparency. BBVA says that its product development teams ensure that
our reputation as a good corporate citizen is considered in all that we do. This includes the First Time Home Buyer
Mortgage, which requires applicants to complete a module of the FDIC Money Smart curriculum, BBVA Compass
financial education program, in order to qualify for the loan.
CRRs offices serve to focus BBVA Compass efforts in the U.S. where they can make the most impact in order to excelas a corporate citizen and fulfill the Groups mission of working for a better future for people ... for all people.
One global program that also resonates locally in the U.S. is the BBVA Foundation Frontiers of Knowledge Awards,
which seek to recognize and encourage world-class research and artistic creation, prizing contributions of lasting
impact for their originality, theoretical significance, and ability to push back the frontiers of the known world.
These international awards span eight categories: Basic Sciences; Biomedicine; Ecology and Conservation Biology;
Information and Communication Technologies; Economics; Finance and Management; Contemporary Music; and
Climate Change and Development Cooperation.
It is for these reasons that BBVA Compass is standing out in the crowded and competitive U.S. banking marketplace
in the reputation economy of the 2010s.
2011 Reputation Institute8
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For many years, like coun
other companies, Allsta
focused on strategicall
managing our reputatio
through traditional issu
management, corpora
citizenship, and though
leadership programs. W
thought about reputation
something that would ta
care of itself as long as w
took care of our business
responsible and honest w
However, Katrina showed
that our reputation cou
be adversely affected b
events completely beyo
our control. It led us to a
ourselves if a more strate
focused, and proactive
approach to building
reputation leadership co
make our company stron
II.REPUTATION: FROM FIRE-FIGHTING TO FIRE-PROOFING
By Joan Walker, Executive Vice President, Corporate Relations
Allstate Insurance Company
Joan H. Walker is executive vice president, Corporate Relations, for Allstate
Insurance Company and a member of the Allstate senior leadership team.
She is responsible for external and internal communications for The
Allstate Corporation and its subsidiaries.
Prior to joining Allstate in November 2005, Walker was executive vice
president of Marketing and Communications for Qwest Communications
International. She was responsible for all external and internal
communications and corporate marketing. Her marketing responsibilitiesincluded advertising, brand management, market research, database
management, web marketing, and sales communications.
I would say this is probably the worst catastrophe or set of catastrophes certainly
that Im aware of in the history of the country. Michael Chertoff, Homeland Security
Secretary, September 3, 2005.
On Monday, August 29, 2005, at 6:10 a.m., one of the strongest hurricanes in history
slammed into the Louisiana coastline. Over the next 48 hours, Katrina pushed
water 12 miles inland in Mississippi. Her peak winds of 150 mph tossed cars, boats,
and houses aside like plastic toys. In New Orleans, the overloaded levees broke in
more than 50 places, flooding 80 percent of the city and neighboring parishes, and
causing the horrific scenes we saw on our television screens for weeks to come.
In five short days, Katrina killed 1,836 people in seven states and caused more than
$80 billion in damages. Hurricane Katrina was a devastating event for the people
of the Caribbean and southern United States.
It was also a very difficult event for us and our industry. Our business is to help
people prepare for the unexpected. Insurance agents choose their careers because
they love interacting with people and helping them. They are people-people, and
deeply committed to the communities in which they live. But the devastation
caused by Katrina was so enormous and so profound that they wished they could
do more. Standard homeowner policies typically cover wind damage but not floods.
Flood insurance is a separate type of insurance policy that is underwritten by the
federal government.
Much of the damage caused by Katrina was due to flooding. Imagine the pain of
having your home destroyed with all your belongings, of having your photos and
memories washed away, and then being told that your homeowners insurance does
not cover it. Imagine if it is your best friends home and you are the agent delivering
the message. The devastation caused by Katrina went far beyond dollars and cents.
On the business front, not only was Katrina the costliest natural disaster in U.S.
history, but also it generated unprecedented levels of unfavorable press and
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unwarranted litigation. The insurance industry became a target of the media,
some politicians, and consumer advocacy groups. Responding to that challengemade us step back and think about Allstates reputation in a new light.
For many years, like countless other companies, Allstate focused on strategically
managing our reputation through traditional issues management, corporate
citizenship, and thought leadership programs. We thought about reputation as
something that would take care of itself as long as we took care of our business
in a responsible and honest way. However, Katrina showed us that our reputation
could be adversely affected by events completely beyond our control. It led us
to ask ourselves if a more strategic, focused and proactive approach to building
reputation leadership could make our company stronger.
Our Reputation Journey: Step One
Our reputation journey began in the fall of 2005. We started by asking three
strategic questions:
Is it possible to manage reputation proactively?What is the value of reputation to the business, and is the investment justified
in terms of dollars and effort?
How can a reputation strategy be operationalized so that it complementsand builds on other strategic efforts, such as branding, culture, and employee
engagement?
We then undertook a rigorous and structured program of research and analysis
to answer those questions. In a few months, we had completed the initialfact-finding phase.
The analysis proved it is indeed possible to manage the value of reputation
proactively; that the value created by a strong reputation is significant and
many times the investment required; and that a reputation strategy can not
only work in concert with other programs, but also it can magnify the impact of
those programs. The team was excited and encouraged by the results. But like
all large companies, Allstate has many good ideas competing for resources. To
be successful in putting in place an effective reputation leadership program,
we had to make the case not just to the senior leadership team, but to a broad
constituency of employees and agency owners across the company.
As we were completing the research, a milestone in our journey occurred.Tom Wilson became our new CEO. Tom was more than receptive to the idea
of reputation leadership. Intuitively he understood that reputation is important
to all businesses, but it is particularly important to a business like ours where
trust is so integral to the value proposition. After all, the product we sell is a
promise. Tom made two vital contributions to our reputation effort during
those critical early days.
llstate Ambassadors are a diverse
roup of 6,500 employees from around
he company who actively serve as
hampions for the Good Hands brand.
his successful grassroots movement
was launched nearly two years ago as
way to engage employees in Allstates
eputation efforts.
he Ambassador movement has
rown organically and enabled
llstate to tap into some of its most
ngaged, informed, and passionate
mployees to help build Allstates
eputation. For Ambassadors, the
movement is an opportunity to
emonstrate leadership skills,
etwork, and help reinvent Allstate.
he role of Allstate Ambassadors
ncludes the following:
REFER colleagues, family, and friends
to Allstate and help grow Allstates
business.
ADVOCATE for Allstate with customers
and other stakeholders.
VOLUNTEER in community events
to support Allstate and local agency
owner initiatives.
IMPROVE processes to enhance
Allstates reputation, drive innovation,
and support growth.
RECRUIT new Ambassadors to engage
employees in improving Allstates
reputation.
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First, he made sure reputation leadership received a thorough hearing across the senior leadership team. Having
the opportunity to make the case and making the most of that opportunity was key. By proving the role reputation
plays in the purchase cycle at both the top of the sales funnel by driving consideration and the bottom of the
funnel in retaining and cross-selling customers, we made the business case for reputation leadership. We were then
able to build broad internal support for the strategy and justify the investment by quantifying the upside.
But another effort led by Tom made an even greater contribution to the reputation effort. As one of his firstinitiatives as CEO, Tom engaged the senior leadership team in developing Our Shared Visiona roadmap for making
the essence of our brand come to life through our employees and agency owners. Our Shared Vision provided
both a touchstone for the reputation strategy in terms of defining what we wanted our reputation to be, as well as
providing the overall context for where reputation fits within the corporate purpose and operating principles.
Once we built support among the senior leadership team, we laid out a program focused on protecting our
reputation with customers and consumers. (We define consumers as those people who should be our customers,
but arent yet.) Our notion was that every Allstater from the CEO to the front-line employee to the agency owner
should have the knowledge and tools to make better decisions on behalf of our customers and consumers. And, we
wanted to instill clear accountability for keeping and improving our corporate reputation. To help accomplish this,
we developed Conscious Choice a decision-making model that helps employees at every level of the company
evaluate both the intended and unintended consequences of our decisions and actions.
We then created metrics to measure the satisfaction of our customers and tied the results to our 401K contribution.
It is an incentive model that rewards every employee and holds them accountable for our reputation with
customers and consumers.
With the initial program a success, we knew we had the commitment of our employees and agency owners tobroaden the way we viewed reputation and become more ambitious with the outcomes we wanted to achieve.
Our Reputation Journey: Step Two
We needed to do more than just protect our existing reputation; we wanted to build a stronger reputation. This
required addressing a broader set of stakeholders and thinking of reputation leadership not as a program, but
rather as an organizational capability that we could deploy to create a competitive advantage in the marketplace.
We started with governance, establishing the Reputation Leadership Council (RLC) to govern and oversee our
reputation strategy. The RLC is a team of our most senior executives focused on embedding a reputation focus
It takes many good deeds to build a good reputation, and only
one bad one to lose it.Benjamin Franklin
Repetition makes reputation and reputation makes customers.
Elizabeth Arden
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and accountability across the enterprise. Next, we incorporated reputation risk into our enterprise risk management
functionwhich reports quarterly to our Board of Directors. We now consider our reputation risk alongside financial
and legal risks.
We then partnered with Reputation Institute to design a more systematic research approach to understand our
position with all of our stakeholders and what drives reputation for each group. This research helped us develop
a proprietary reputation metric. Our Allstate Reputation Scorecard provides a more consistent approach for every
employee to understand and apply stakeholder expectations and perceptions to their work. The Scorecard informs
our messaging and communications, our business strategy development and our day-to-day decision making. Mostimportantly, the Scorecard allows us to assign individual accountability for each stakeholder group. Members of
the senior leadership team have each accepted personal responsibility for meeting reputation goals with a specific
stakeholder audience.
We broadened the program in terms of stakeholders, but we also broadened the program in terms of employee
involvement, engaging employees from around the company to take personal accountability for Allstates reputation
through a grass-roots employee movement. Today, more than 6,500 Allstate Ambassadors actively serve as champions
for the Good Hands brand and these champions grow in number and impact by the day.
Finally, to help ensure that reputation leadership is a capability and not just a program, we created a Reputation
Leadership function, which resides in Corporate Relations. This team of strategic business advisors provides
stakeholder research, best practices, and ideas to build our reputation to the enterprise.We have now built a solid foundation that is making a positive impact on how we run our business.
For example, our research says that personal experience is a significant driver of our reputation with consumers.
Last year, we created the Good HandsSM Roadside Assistance program. The program provides assistance in the case of
an accident, flat tire, or other problem on the road and is open to anyone. It provides the opportunity to experience
Allstate even if you are not a customer.
Creating a reputation leadership capability
is, like all enterprise-wide efforts, a challenge,
but our experience is that succeeding
creates real value for the enterprise; both
in short-term returns and in longer term
strategic capability-building.
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Different Views on the Reputation Journey
Skillful pilots gain their reputation from storms and tempests.
Epictetus
Changes in institutional
reputation in business
education can make
the difference between
employers choosing your
students or somebody
elses. Or alumni writing
an endowment check,
or finding an excuse to
skip donating this year.Or faculty choosing one
school versus another. It
is serious business, and
one that Tulane has taken
seriously since Hurricane
Katrina changed many
peoples perceptions about
New Orleans forever.
Angelo DiNisi,Tulane University
Reputation management
is not about a catchy
slogan or waging a
political campaign
treating stakeholders
as voters. Rather, Novo
Nordisk approaches
corporate reputation
as a set of stakeholder
behaviors that canbe quantified that add
up to business results.
The only way we can
change diabetes is to
invest our reputation
capital wisely.
Nick Adams,Novo Nordisk
Competing on culture is
one of the few ways to truly
differentiate yourself from
the pack. Corporate culture
is the connective tissue
between the brand image
and values you project
to the market and the
legacy you leave behind
to future generations. Likereputation, culture cant
be bought or soldit must
be built and earned, one
relationship at a time.
Bill Margaritis,FedEx
We manage our reputation
in a similar fashion to our
market capitalization: from
the top, we communicate
our strategic vision,
our execution against
those goals, and update
stakeholders on our
progress on a regular basis.
Our founder and CEO is abig believer in the power of
corporate reputation, and
invests in the programs
and initiatives to build and
protect Ciscos reputation
as a result.
Blair Christie,Cisco Systems
Another example is around community involvement. The research says that awareness of Allstates involvement in
the community has a significant influence on our positive reputation. Many of our employees and agency owners
are already active in their communitiesserving on nonprofit boards, acting as advocates for our public policy
work, and serving in industry and trade organizations. We also offer incentives for employees and agency owners
to volunteer for causes that matter to them. In order to expand these good works and capitalize on the goodwill
they generate, Allstate has now increased community grant funding for Allstate agency owners to personally use
with nonprofit organizations in the communities where they live and work. (Continued)
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That is particularly true in our business, where the frequency and severity of bad weather has increased in recent
years. Following particularly high levels of tornadoes across the United States and Canada, Allstate and itsdedicated employees were there helping to restore the lives of our customers.
Recently, though, we did make a significant change in how we handle catastrophic weather. A key driver of our
reputation with investors is transparency. So this year, for the first time, we issued a news release announcing
our estimated catastrophe losses for the month. We went further by communicating that in the future, we would
report monthly estimates for catastrophe losses expected to exceed $150 million.
These are things we might have done differently if not for our commitment to reputation leadership. Reputation
now permeates our thinking, our strategies, and our day-to-day activities.
Our Reputation Journey: Step Three
What comes next? Weve made a great deal of progressweve moved from fire-fighting to fire-proofing.
Still, we believe our greatest opportunities are ahead of us.
Where might those opportunities lie? One of Allstates core competencies is our ability to accumulate, manage,
and mine large data sets. As our reputation data set grows, we are working on building reputation tools that will
help us predict more precisely the impact of our strategy and actions and more definitively draw the line of sight
between business results and reputation. In the future, we may even be able to mine the data to identify new
business opportunities, e.g., new product ideas, or new strategies, e.g., new markets or businesses.
Thats only one of many ideas we are working on today that will be part of our reputation story tomorrow. Of course,
we realize we will never reach the end of our journey. There is always a chance to be better, and we have set a high
standard for ourselves:
We continually ask ourselves what we might have done better or differently. The answer is we would not have
done a great deal differently, but we constantly strive to do things better. For others who find themselves in a
similar place to where we were five years ago, let me offer some lessons learned from our experience.
Lesson 1: Align your reputation goals with your business strategy. In our case, reputation fits seamlessly with both
Our Shared Vision and our business model. It is not a bolt-on effort.
Lesson 2: Research, research, research. Dont just say it; prove it with facts and numbers.
Lesson 3:Engage and spread accountabilities across the entire organization. Do not let reputation management
become the job of just a few people. Make certain your most senior executive is carrying the torch and your
leadership team is aligned.
Creating a reputation leadership capability is, like all enterprise-wide efforts, a challenge, but our experience is
that succeeding creates real value for the enterprise; both in short-term returns and in longer term strategic
capability-building.
Dont bother to be just better than your contemporaries or
predecessors. Try to be better than yourself.
William Faulkner
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III.WINNING THE REPUTATION CHALLENGE
By Sally Susman, Executive Vice President, Policy, External Affairs &
Communications, Pfizer Inc.
Sally Susman is Executive Vice President, Policy, External Affairs &
Communications for Pfizer Inc., the worlds largest biopharmaceutical
company whose diversified health care and consumer products are
sold around the world. She is a member of Pfizers Executive Leadership
Team, chairs Pfizers Political Action Committee, and is Vice Chair of
The Pfizer Foundation, which promotes access to quality health care,
nurtures innovation, and supports the community involvement of
Pfizers 100,000 employees.
Susman directs Pfizers global communications efforts, its interactions
with external and internal audiences, and its public affairs activities,
including relations with the governments of all nations in which the
company has operations or markets products. She also heads the firms
corporate responsibility group and plays a key role in shaping the
companys policy initiatives.
In a September 1962 speech at Rice University in Houston, President John F.
Kennedy challenged his country to accept the challenge of putting a man on the
moon before the end of the 1960sthis at a time when the Soviets were the clearleaders in manned spaceflight:
We choose to go to the moon. We choose to go to the moon in this decade and
do the other things, not because they are easy, but because they are hard, because
that goal will serve to organize and measure the best of our energies and skills,
because that challenge is one that we are willing to accept, one we are unwilling
to postpone, and one which we intend to win, and the others, too.
Pfizer and the pharmaceutical industry arent trying to put a man on the moon, but
the challenge to improve our reputation is almost as great as NASAs challenge
was in 1962. However, my company and our President and Chief Executive
Officer Ian Read see that challenge as one that we are willing to accept, one we
are unwilling to postpone, and one which we intend to winnot just for Pfizer,but for people everywhere who need medicine to stay healthy and alive. Think
about it this way: My company makes life-saving medicine and yet most people
dont like us. Working to improve Pfizers reputation is the hardest thing Ive ever
done and represents the professional challenge of a lifetime.
At Pfizer, measuremen
everything. When it come
science and medicine, we
to be a data-driven comp
We also apply that same r
to reputation managem
Weve done a great deal
research around the worl
what drives reputation a
how we can manage and
our reputation as a tool
meet our business goal
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Perception versus Reality: Connecting the Dots at Pfizer
Each of Pfizers four business imperatives for 2011 includes a reputation component:
Fix the companys innovative core. Generate medicines that profoundlyimpact health.
Make the right capital allocation decisions that will maximize value for Pfizerand create enhanced shareholder return.
Be respected by society.Be a great place to work where we all give our best every day.
One of the reasons that building a better reputation is so difficult for pharmaceutical
companies is that the public does not understand all that we do as a company. When
asked which group makes the greatest contribution to developing important newmedicines, U.S. consumers are much more likely to say universities or the National
Institutes of Health than pharmaceutical companies (43 percent versus 30 percent).
Yet in reality, pharmaceutical companies develop the vast majority of new medicines.
Another perception gap is that Pfizer is just another drug company. There is very
low awareness of the vast array of programs, public health efforts, and other things
Pfizer does to improve health more broadly. Perhaps the hardest perception to shake
with the general public is about governance and transparency. Only 29 percent
of the public say Pfizer is transparentvery few people are aware of our efforts
to publicly disclose the details regarding our interactions with physicians and the
medical community. Few people are aware that we publicly post the results of every
clinical trial, good or bad.
Here are a few other things people dont know about us:
Pfizer has more scientific researchers on staff than the faculty at Harvard, Yale,Johns Hopkins, and Stanford combined;
Over the next 25 years, pharmaceuticals will prevent nine million cases of heartdisease and save more than five million lives;
On average, it takes $1 billion to develop a new medicine;Only one in 10,000 compounds is ever approved by the U.S. Food & Drug
Administration; and
It takes an average of 12-15 years from discovery of a promising molecule toFDA approval of a medicine.
This is tough work.
Despite these challenging headlines, theres genuine excitement at Pfizer about our
four business imperatives. The emphasis on respect and trust right now is critical
because of the increasing pressures on the health care system. Respect for medicine
is critical to Pfizer because we need to obtain and maintain patent protection for
6
For Pfizer and thepharmaceutical industry
overall, actions must
peak louder than
words. Managing our
eputation is about doing
he right thing in the first
place. Its about doing
business responsibly
and with accountability
and about conducting
ourselves with the highest
degree of integrity. Our
corporate voiceand our
ndividual onesmust
be above reproach, and
must exemplify good
udgment and integrity
o that we have the moral
authority to advocate for
what is right.
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navigate the daily challenges and crises. But what we really need to do differently and better is manage our
reputation over the long-term, in a more holistic and sustainable way. In other words, we are moving beyondtreating the symptoms to curing the disease.
Our research shows common themes and some clear gaps that we need to address to improve our reputation.
Pfizer devotes more resources than any other entity in the world to research, develop, and provide medicines to
people who need them. Our medicines help people feel better and our vaccines prevent them from getting sick in
the first place. But few people connect those dots. Thats why one of our challenges and one of our goals is to open
a conversation about the value of innovative, new medicines to society and to public health.
But there is good news. Our research also shows just as clearly that the more people hear about Pfizer and learn
about our programs and what we do, the more supportive they are. Simply put, the better people know us, the
better they like us. Thats why we are recasting our approach. We are:
Activating 100,000 employees around the world as Pfizers ambassadors. Our own employees are our bestadvocates.
Engaging more and more smartly with the mediaboth traditional and social. Weve stepped out ofthe proverbial bunker and invited journalists to visit our locations to meet our scientists, doctors, and
executives. We are also using digital and social media, once taboo for pharmaceuticals because of strong
regulatory oversight.
Conducting a top-to-bottom review of Pfizers clinical trials process to ensure we have the highest standardsof quality and compliance in clinical development.
Continuing our historic focus on safety and quality.Winning the Reputational Challenge of the 2010s for Pfizer and PharmaFor Pfizer and the pharmaceutical industry overall, actions must speak louder than words. Managing our reputation
is about doing the right thing in the first place. Its about doing business responsibly and with accountability and
about conducting ourselves with the highest degree of integrity. Our corporate voiceand our individual ones
must be above reproach, and must exemplify good judgment and integrity so that we have the moral authority
to advocate for what is right.
As the governance dimension of reputation is now the #2 driver of reputation with the U.S. general public (and it
is a top-three driver in almost every country Pfizer operates in), what Pfizer stands for has become as important as
what we make and sell. It is Pfizers hope that our focus on wellness and health and innovative products will make
a difference to peoples lives, and that they will support us. Stakeholders will decide if they believe companies
like Pfizer are part of the problem or the solution. The reputation challenge is quite simple: Should governments
legislate health care outcomes and use the pharmaceutical industry as a means to that end? Or can Pfizer continueto innovate and explore the outer reaches of human knowledge in order to save and extend lives by co-creating
those solutions with the concerns of civil society and regulators in mind?
When the pharmaceutical industrys license to operate is moral, not financial, and Pfizers purpose is properly
understood and respected by all of our stakeholders, we will have moved beyond treating the symptoms and will
have found the reputational cure.
8 2011 Reputation Institute
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What if a Corporation Created an NGO and Gave it Back toCivil Society?
At the 2011 World Economic Forum annual meeting in Davos, WindMade, the first global consumer label for
companies using wind energy, was launched. Pioneered by Vestas Wind Systems, the WindMade initiative was
founded with cooperation between the Global Wind Energy Council, World Wildlife Federation, Vestas, LEGO,
the UN Global Compact, PricewaterhouseCoopers, and Bloomberg.
In the first half of 2011, a legal entity of the non-profit organization was established in Brussels and an Executive
Director (Henrik Kuffner) was recruited with extensive experience developing and operating consumer labels.
In addition, a WindMade Technical Committee was formed to oversee the development of the standard, and a
membership recruitment strategy was also launched to begin to engage global brands in helping finalize thestandard and pioneer the label.
Whats interesting about this developing story is the pioneering role of Vestas, the worlds largest wind turbine
manufacturer, in the creation of WindMade. Plenty of non-governmental organizations (NGOs) have been
launched since the early 20th century around the world, with the support of some aspect of civil society first.
The role of corporations as agents of social changeto do more than checkbook diplomacy when it comes to
partnering or co-creating with NGOsis a completely new phenomenon in the reputation economy of the 2010s.
Facing fierce competition from Chinese upstarts and well-heeled global conglomerates in GE and Siemens, Vestas
changed the rules of the game and flipped the script on the traditional corporate playbook with the launch of
WindMade. Vestas saw competing on behalf of the entire global wind energy industry (currently providing less
than five percent of global energy consumption) to advocate for company and product-specific information about
how green a product actually is as a way for its business and industrial customers to race to the top along thesame lines that Walmarts Sustainable Value Networks (SVN) helped transform global supply chain purchasing
behavior in the 2000s. Actually, Walmart (along with fellow corporate behemoths IKEA, Nissan, and Microsoft) is a
member of the WindMade Sounding Board, which exists to guarantee qualified feedback on the standard and help
iron out key issues before going public with the standard in September 2011.
The idea of Walmart and Vestas fighting together for social justice and consumer choice would have been the
realm of a COP15 fantasy just two short years ago, but thanks to the WindMade coalition of the willing, this is one
NGO whose mission is to push civil society to catch up with its corporate parents.
Welcome to the reputation economy, WindMade!
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IV.REPUTATION AND STRATEGIC RENEWAL
History tells us that so-called timeless corporate strategies are as much fable
as farce. Companies rise and fall based on their ability to adapt to fickle andendlessly mutable markets. With a shifting landscape, corporate strategy
must shift in tow. But this landscape can be vast; it is shaped by many forces
cultural, social, political, and economicsome more predictable than others.
When the market calls for a fresh strategic focus, some companies miss their
chance to evolve gracefully. But evolve they must if they want to succeed.
Heeding the necessity for strategic renewal is perhaps only more difficult than actually
driving a strategy shiftespecially if the shift is radical. Long-lived brands stand just
as much for corporate values, goals, and strategies as their associated products and
services. If a companys business focus is to change, then inevitably the brand must
change with it. But redefining a well-established brand is no easy task. Years orsometimes decades of stakeholder perceptions must be altered or even erased if brand
renewal is to be taken seriously. And for this to happen, stakeholders must trust the
company behind the brand to make the right strategic decisions, radical or otherwise.
One of the key takeaways from Reputation Institutes 2011 annual conference was that
reputation is a powerful asset in times of great change. It builds brands and gives them
the credibility to rebuild from the ground up.
Xeroxs Comeback Story
Consider Xerox, for example. Its iconic printers and photocopiers were fuel for success
for nearly a century. About 11 years ago, however, the company found itself stagnating in
the face of strong competitors. They hoped to reinvigorate their products and corporate
structurebut the change came too quickly. Their business rapidly unraveledrevenue
and profits declined and debt mounted. After just a few months, Xerox found themselves
on the brink of bankruptcy. Key employees started to leave. Customers and industry
experts found the company to be increasingly distant and insensitive to suggestions.
To make matters worse, the SEC discovered alleged widespread accounting irregularities
at the company and a group of angry employees filed a class-action discrimination
lawsuit. Facing public disapproval and the possibility of extinction, Xerox needed a bold
and ambitious turnaround plan.
The companys leadership recognized the need for radical strategic renewal. But how
could it be done without upsetting the stakeholders? Prior attempts proved unsuccessful
and nearly catastrophic. They took a step back to evaluate their strengths and asked,
What was core to Xerox, and what went wrong? The core, it seems, was their strong
reputation. Xeroxs Chief Marketing Officer, Christa Carone, addressed RIs annual
conference and said, We were known for our firm corporate values, we were known for
our innovation, and we were known for creating a great workplace for our employees.
Xerox had won the Malcolm Baldrige [National Quality] award not once, but twice, and
we were known for a culture that was inclusive and really valued hard work and high
performance. We knew that [our reputation] was in the bank to help see us through
really challenging times. Stakeholders clearly trusted the brand. Their products had a
dedicated consumer base who wanted Xerox to succeed even during its turbulent times.
Carone continued, While we were being kicked by the press every day and we were
sworn at by our investors at pretty much every hour, we realized we really had two aces
in the hole. I know that this sounds so Pollyannaish, but for us it became part of our story,
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and the wisdom is really in the simplicity of it. First was an incredibly loyal customer
base that we knew wanted Xerox to survive. The second was an incredibly dedicatedworkforce, who we knew would do anything to help save the company.
It is this more than anything, Xerox claims, which allowed the company to move
forward with what might have appeared to be major strategic risks. They began by
firing their accounting firm and appointing a new CEOsymbolic of a fresh start.
In order to reconnect with consumers, they engaged directly with industry analysts,
experts, customers, and employees, asking for honest feedback on both products and
company practices. Perhaps boldest of all, they dipped their toes in the document
services business, a significant shift in the companys corporate strategy. To mark
the transition, Ursula Burns, the first African-American woman to lead a Fortune-500
company, took the reigns as CEO.
In 2009, Xerox was a $15 billion business, with 75 percent of its revenue coming from
its mature, products-focused operations. The company is now a $23 billion business,
with 50 percent of its revenue coming from services. Xerox is no longer the Xerox of 10
years ago. In fact, the company officially discourages the branded verbiage with which
it was canonized in popular culture; to Xerox is a relic of the past.
Well on its way to growth, Xeroxs reputation remains strong. In Reputation Institutes
2011 RepTrak Study, the company scored 74.31among the most robust reputations
in the United States. Stakeholders have remained loyaldespite nearly a decade of
financial and strategic difficulties and a drastic shift in its supply chain and strategic focus.
Loyalty, trust, and goodwill. These are corporate fundamentals too commonly lost in
the bottom-line obsession. Even the most financially able companies are prone tocrisesand market prescience, it seems, is a rare gift. Traditional crisis management
can only do so much. Reputationthe willingness to give a company the benefit of
the doubtcan keep business going in spite of market missteps.
Kodaks Return to Prominence
Kodak is another great example. Its reputation was a powerful anchor when the
130-year-old company nearly became completely irrelevant in a once Kodak-
dominated market. For much of the companys history, film, its sole product, was a
gold mine. Gross margins were close to 70 percent. With Kodak as the undisputed
global king of the film space, the company was enormously prosperous. But film
sales began to plummet going into the year 2000 without much warning. The digital
cameratechnology that Kodak itself had invented in 1975 but stored away in fear
of losing its profits from filmbegan to pick up speed in the marketplace.
Competitors quickly outpaced their once formidable rivalcausing Kodak to admit
defeat on what was for nearly a century its own space. Gerard Meuchner, Director
of Communications & Public Affairs and Kodaks Vice President, commented during
his conference presentation, If you make your money on one product for so long, it
becomes like a narcotic. He continued with, we allowed others into the digital camera
business when we could have completely owned it for ourselves. When you sell one
product for so long you really lose your perspective on the tidal wave of change thats
coming at you because you cant imagine leaving all that behind. The companys
extensive digital photography patent portfolio, he admitted, is the only reason they
were able to remain afloat financially.
Loyalty, trust, and
goodwill. These are
corporate fundament
too commonly lost in
bottom-line obsession
Even the most financia
able companies are pr
to crisesand market
prescience, it seems, is
rare gift. Traditional c
management can on
do so much. Reputatio
the willingness to give
a company the benefi
of the doubtcan kee
business going in spite
market missteps.
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It was clear to both Kodak and its consumers that catch-up in the digital film space was not a viable future. Strategic
decisions needed to be made to shift the companys focus. But, like Xerox, Kodak was more than brandit was an
institution. More than a decade of representing a single, high-quality product made the brand practically synonymous
with film. The challenge was to maintain stakeholders trust to support a sweeping strategic renewal initiative.
They began by modifying their time-honored logoKodak encompassed within a film-shaped box. In 2006, they
unveiled a new logo. It was almost identical but for one essential detail: it was liberated from the yellow film box whichcharacterized the brand for decades of its long history. The change coincided with the appointment of Kodaks new
CEOAntonio M. Perezjust three years earlier. Perez was an icon for the companys new vision. He came from HP,
where he spearheaded their lucrative inkjet business. If Kodak was to survive, they would take what they knew best,
and apply it to a harshly inflated premium ink market.
Kodaks Meuchner admits that the company is far from a full recovery. He insists that its growing pains, however, have
been assuaged by the enormous trust and goodwill toward the Kodak brand. Kodaks reputation, measured at 76.85 in
2011, is indeed strong. And with a strong reputation comes strong supportive behavior. Stakeholders are still willing to
give Kodak the benefit of the doubtwhich will no doubt be instrumental in its recovery.
Kodak and Xerox are excellent examples of why strong reputations are powerful assets in the struggle for strategic
renewal. Some companies, however, must handle the challenges of renewal while under fire from its stakeholders.
McDonalds Responds to Changing Times
McDonalds, arguably the worlds most pervasive brand, is such a company. Though they were almost universally vilified
in the 1990s, they leveraged the power of strategic renewal to respond to critics and strengthen stakeholder relations.Uninformed change is always a risk. It might be best, then, to take some advice from McDonalds, who transformed
themselves with great success.
For years the company focused on quantity rather than quality. In the late 1990s, their resources had spread thin; their
stock plummeted and their food was demonized. While people loved the foods taste, most didnt feel good about eating
it. Some didnt believe it was real or that it could fit into a nutritious diet. Customers also complained about poor service,
despite claims that employees were the heart and soul of the organization. Employees werent happy and neither were
customers. Their reputation was at serious riskand it was significantly affecting their revenues.
McDonalds identified what they saw as the major hurdle to restoring their reputation: there was a distinct gap between
what they stood for and what they were known for. This was not just an issue of poor marketing or branding. They had
lost touch with their stakeholders and, as McDonalds Neil Golden, Senior Vice President and Chief Marketing Officer
remarked at the conference, were fighting irrelevance.
Executives set out plans to reinvigorate the companys core values. Their reputation hinged on how well these values
were maintained. Most important, they wanted stakeholders to be able count on them to always do the right thing;
they wished to be known as a company with good judgmenta company that sticks to its morals and operates with
its stakeholders best interests at heart. Second, they aimed to promote not only great products, but also the companys
great character. These were not easy tasks.
McDonalds approached the challenge with great care. They began by establishing a number of stakeholder engagement
programs that still exist to this day. First came the Moms Table. They gathered moms from various demographics in an
effort to discover what both parents and their kids found most important in food. Then came McJob, a nationwide hiring
2011 Reputation Institute
Kodaks reputation, measured at 76.85 in 2011, is indeed strong.
And with a strong reputation comes strong supportive behavior.
Stakeholders are still willing to give Kodak the benefit of the
doubtwhich will no doubt be instrumental in its recovery.
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The Civilian Side of Reputation: What Happened to Rochester, NY?
Some say that a city s corporate institutions help shape its character. Nowhere is this truer than Rochester, NY
a 19th century boomtown turned 20th century manufacturing haven. For many years it has been home to some
of the titans of U.S. manufacturing: Kodak, Bausch + Lomb, and Xerox to name only some. As such, it is a corporate
city through and through. In 2000, manufacturing was in various capacities responsible for nearly half of Rochesters
economy. Its largest corporations were fundamental to both its lifestyle and image; the monolithic Xerox tower
still sets the aesthetic tone of the city as an icon of its skyline (even though Xerox officially relocated its corporateheadquarters from Rochester, NY in 1969!).
Over the past 10 years, however, Rochester has struggled to maintain its economic esteemand with it, its reputation
as an attractive center of commerce. The woes of its corporate mainstays played the largest part in this. Kodak
suffering from declining film salesshed 70 percent of its local employees from 2000 to 2010; Xerox followed suit
as it reduced local positions by 50 percent; over the same period Bausch + Lomb, a multi-billion dollar healthcare
company, eliminated over one-third of its local positions. This constituted over 22,000 lost jobs in the city from
these three companies alone.1
Throughout the last decade, Kodak and Xerox have struggled to maintain their reputations vis--vis their investors,
customers, and even their own employees. But both companies seem to have found a relatively sturdy foothold; and
now theyre rearing their heads in what looks to be a return to form. Reputation Institutes Global RepTrak Pulse found
that Kodak and Xerox now have robust reputation platformsscoring 76.85 and 74.31 respectively. This newfoundstrength is in part driven by Rochesters political champions, who realize that corporate reputation is not just corporate.
It impacts more than business results, but local economies and residents. For example, the local government touts
Xeroxs efforts to reduce the citys printing costs, allowing an extra $2 million for community service funding. Even
further, Kodaks CEO served as superintendent for Rochester Citys Schools for a day. He also works closely with
senators in Washington to help create local jobs, support small businesses, and develop city infrastructure.
Cities like Rochester have a unique responsibility. They must maintain the reputations of their local businesses, for
the strength of the citys reputationtheir ability to attract people to live and to visitis only as strong as their
corporate foundation.
1 Source: http://www.policy-wonk.org/kent-gardner/nys-must-rework-relationship-with-unions/
Other Rochester-based companies that reduced local positions include: Seneca Foods Corp. (57 percent), IEC Electronics Corp.
(52 percent), Gleason Corp. (40 percent), Garlock Sealing Technologies LLC (33 percent), Pactiv Inc. (30 percent), andHickey-Freeman Co. Inc. (21 percent).
day intended to connect employee experiences to the companys reputation. McDonalds wanted its applicants to
see the good of McJob and the good of McDonalds, both directly supporting the U.S.s economic recovery.
These programs, among others, helped McDonalds reinvigorate its business strategy with newfound confidence.
They focused on better service, better employee treatment, better accessibility (expanded operations and hours),
renovating stores, re-doing the menus, and, more generally, better fitting consumers needs. In 2002, the company
launched more than 50 products, many of which were intended as healthier alternatives to its core products. In the
same year, they also launched the Dollar Menu, which provided less expensive options tailor made for recession
budgets. The company even transformed its ad campaignsfocusing not on products but on hope, friendship,wistful nostalgia, and the excitement of eating with others. The advertisements express what the company stands
for, not just what it serves.
McDonalds is now enjoying one of the longest consecutive periods of growth in its historyand this growth is not
just financial. McDonalds took an informed risk to refocus its strategy. This is a decision which paid off in spades. Its
reputation is stronger than ever.
There are a number of valuable lessons to be learned from our 2011 conference in New Orleans; the most surprising,
and ultimately the most important is that reputation is the number-one driver of corporate value. But reputation
equity is a resource companies would do well not to neglect. From strategic renewal to crisis management, a strong
reputation is a powerful tool. It might even be the difference between extinction and a bright new beginning.
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