October 23, 2017
By Peter Harris
Warren Buffet once famously warned “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
While the quote may be more than a decade old, the sentiment, and advice, couldn’t be more relevant today. Except that with social media and an “always-on” 24×7 newscycle and citizen journalists, 5 minutes are more like 5 seconds.
It seems like every day there’s another company or organization dealing with a reputation issue. Uber, United Airlines, Equifax are the latest, but the list goes on and on. And while those companies arguably created their own crises, the fact remains: a bad reputation can cause long-term irreparable harm to CEOS and their organizations.
Just last month, after taking the reins at Uber, new CEO Dara Khosrowshahi admitted to employees that “there’s a high cost to a bad reputation.”
That cost? Lack of loyalty and trust among employees, drivers, customers, investors and government decision makers. Several members of Uber’s leadership team have resigned; the company is in London court to preserve its business, and according to reports, the boardroom drama at Uber cost the company nearly $10 Billion in valuation. For United, the day that the passenger was infamously dragged from airplane, and the company CEO issued a heartless response, the airline’s valuation was down nearly half-billion dollars.
So what can we learn from all of this? Whether you’re a startup technology company or a Fortune 500 global power, it’s the same roadmap: Reputation is shaped not merely by what you say. Equally important is who says it and whether it is communicated clearly, authentically, forcefully and quickly across the channels that matter most.
Fortune Magazine has forever gauged “The Most Admired” companies on nine key assets: Innovation, Financial Performance, People Management, Use of Corporate Assets, Social Responsibility, Quality of Management, Long-term investment value, Quality of products and Services, and Global competitiveness.
Who’s on the top of the Top 50 list: Apple, Amazon, Starbucks, Berkshire Hathaway and Disney. But more important is who’s off that list? Samsung, mostly due to the hit the company’s image took over the exploding phones, resulting recalls and FAA ban from flights.
Historically, companies with the strongest financial performance appeared at the top of the list. Coming out of the financial crisis, it shifted to strength of leadership team, competitiveness and treatment of employees. Today, to be “admired,” organizations must not only score high on Fortune’s assets, but express strong values and purpose, build a culture to attract and retain world-class talent, and reinforce CEO leadership by selectively and strategically taking a stand on key issues and policies.
To compete and be respected in this new world, CEOs and their companies must behave and communicate differently – both internally and externally – with employees, customers, partners, investors and government officials. Organizations must be genuine, empathetic and “human” in their words and actions.
In short, reputation management has never been more difficult – or more critical. It’s simply no longer enough for a company to generate profit. To the world, you are what your reputation says you are – week-to-week, day-to-day, minute-to-minute.
This post also appeared as an article in Tech Quarterly.
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