According to a survey by Deloitte 87% of executives rate reputational risk as more important than other strategic risks.1 Despite this fact, both awareness and active reputation management are still vastly misrepresented in corporate environments, especially in medium-size enterprises. Reputational realities, hence, are not yet there where they actually belong to. Manners Make the Brand Rep? The internal culture, value systems and specific organizational and of course historic context up the perceived and actual comportment of a company. A positive or a negative reputation strongly depends on the behaviour of an organization. It is, therefore, reasonable to assume that good behaviour equals good reputation. Manners make the brand rep. However, as in the words of Prof. Einstein: “Everything should be made as simple as possible, but not simpler.” Especially when it comes to such complex systems as corporate reputation. “So as much as reputation management by today can be called a science, it, unfortunately, still is not an exact one.” There are plenty of precedents in economic history that have taught us that reputation is indeed made up of non-linear, highly complex corporate fabric. The conundrum here is despite a company doing its best to behave well, reputational crisis can hit even those corporations that deserve it the least. A Living Organism Given that a corporation is, in many ways, a living organism it is very analogical to the human body with its complex structure. Even those of us who take care of their body, eat well, exercise regularly and live a healthy lifestyle can still get severely ill. How is it that some people who had lived a very healthy way of life actually die younger than those who had smoked, drunk and eaten carelessly so often? The medical explanation for the suffering of those who don’t deserve to suffer lies at least partially in their predisposition towards certain diseases. The same explanation applies to today’s corporations and indeed entire industries. Some have a particular reputational predisposition that others don’t have. If a corporation has a predisposition to reputational crisis, does it mean that whatever move it makes its investments in reputation building will fall short? Not quite. There are tried and tested ways of overcoming difficult situations. What are the measures to take before and after a crisis? How can communications professionals reduce reputational complexities to a minimum? “No matter how complex an issue appears to be at first sight, there is always a solution.” Reputational realities In some cases, the predisposition is not even inherent in the corporation itself but in the industry the company is in. Take the banking industry as an example. How many industries do you know which are described with such terms as ‘cartel’, ‘led to the global economic recession’ or ‘shadow system’ in legitimate academic textbooks? Despite the banks’ efforts to manage their reputation during the post-recession period, the ‘banking image’ began falling again in 2018 - after years of rebuilding and recovering from the 2008 financial crisis.2 The priority should be in being pro-active rather than reactive. Bad reputation management tends to react in turbulent times and overreact to almost every other thing good reputational management start in good times, prepares and when needed, responds adequately. The returns on investment will increase if all communication that affects reputation is crafted in a way that it appeals not only to customers but also to the other stakeholders (i.e. employees, shareholders, partners etc.). It is important to remember that corporate reputation gains and retains strength only when it is applied holistically. In other words, along with the corporate communications department, all other departments such as HR, IT, board of directors, and C-Suite need to be held responsible for possible reputational realities. Culture drives integrity – especially present within long-term, often family and value-oriented companies. Almost half of the top ten brands with high reputation are from the luxury industry.3 Return On Integrity Overcoming reputational crisis might require taking a risk to build trust. Leader and decision-makers in charge to prevent or solve problems related to reputational risk need to adopt lateral thinking. If it is not a common reputational reality then it requires uncommon sense. Integrity in this context is about making the right decision to take the right step. ROI here stands for Return On Integrity. If you are interested in learning more about reputational realities and how your company can prepare better, get in touch with us. References “[email protected] | Deloitte | Survey, Global, Reputation, Risk.” Deloitte, 30 Oct. 2018, www2.deloitte.com/global/en/pages/governance-risk-and-compliance/articles/reputation-at-risk.html. Garver, Rob. “Bank Reputations Fall for First Time in Five Years: 2018 Survey.” American Banker, 28 June 2018, www.americanbanker.com/news/bank-reputation-survey. “3 Surveys Summarised: Reputation Institute, Watson Helsby and Vuelio.” PR Measured, 18 Apr. 2016, prmeasured.com/3-surveys-summarised-reputation-institute/.
Turning a Reputational Crisis Into a Movement Most leaders in the business world know both what reputational crisis’s and movements are. A crisis on its own doesn’t lead to a movement, though, and only few know how to turn a reputational crisis into a movement. Recent political and social dynamics have once again shown, how a crisis turns into a movement: Black Lives Matter. While this might be one of the most important movements ever, history teaches us that there are three ways on how such reactions can be triggered. The protagonist from Wag the Dog who knows a thing or two about movements tried to explain emphatically saying: “We remember the slogans; we can't even remember the wars. (…) Naked girl covered in Napalm. 'V for Victory'. Five Marines raising the flag, Mt. Suribachi. You remember the picture 50 years from now, you'll have forgotten the war.”1 In many ways the protagonist of the film was right. The historical course of events, reasons or details of those wars are almost forgotten by the majority, whereas the impact of the movement triggered by these symbols is eternal. When we analyze history, we find that all those crisis-to-movement developments can be assigned to either of three typologies: Type A: turning an own reputational crisis into a movement Type B: turning a general reputational crisis into a movement Type C: the reverse effect (turning a movement into a crisis) Type A: turning an own reputational crisis into a movement Throughout history, there are examples of how not just a general crisis but also an organization’s own crisis can be turned into a movement. Movements need not necessarily be global. They can be local, too. Case in point: Globe Air in Basel, Switzerland, one of the world’s art capitals. In April 1967, a disaster befell on Switzerland’s biggest charter airline at the time, Globe Air. One of their airplanes crashed in a thunderstorm close to Nicosia, Cyprus. As a result, 126, mostly Swiss, passengers died. One of the pilots had insufficient training on the aircraft and both of the pilots had violated the limits on operating hours. The owners of the airline – who were connected to Basel – were sued severely but they didn’t have enough insurance to pay the victims. The only way to pay was through selling their art. When word got out about the art being sold urgently to new owners outside of Basel in order to fund the claims, the people of Basel became deeply proprietary about it. The city took the decision to let the people vote about the rising tension over letting go of many valued pieces of art. As Simon de Pury, the Swiss auctioneer, wrote: “What followed was one of the most colorful campaigns in history. Politicians dressed as harlequins to get out the vote. There were huge street fairs. (…) bands played “All You Need is Picasso,” to the Beatles’ “All You Need is Love.” People wore “I Like Pablo” badges, evoking the “I Like Ike” buttons of the Eisenhower presidential campaigns in America. (…) It was the first time in democratic history that a city had voted for art in this way. This was Basel’s finest hour.”4 The movement resonated strongly. Even Picasso himself was so touched by the spirit of the locals that he donated four more paintings to the Kunstmuseum. It then inspired avid patrons of the art to make donations, too. As a result of all of this, the Globe Air tragedy was turned into a triumphant movement for the history of Basel. It wasn’t a general crisis but an organization’s own financial and reputational crisis that was transformed into a movement. This is a typical example of Type A. Type B: turning a general reputational crisis into a movement Black Lives Matter, for example, may be the largest movement in US history. Recent polls suggest that about 15 million to 26 million people in the U.S. have participated in recent protests.2 Black Lives Matter was founded back in 2013 and yet the majority of the world didn’t know about it until very recently - when it became a global movement. The moment of crisis was triggered by the lethal police brutality against African American George Floyd. However, the moment when the movement began was after those black screens were posted all over social media and even more so by the image of the huge graffiti art that went viral all over the world. Songs, video clips, documentaries, articles, posters were spread... “I can’t breathe!” were his last words that will never be forgotten. This is a typical example of Type B. The Reverse Effect: Type C (turning a movement into a crisis) We all witnessed how Black Lives Matter turned the on-going crisis in the US into a global movement beyond the US. The reverse effect (Type C) demonstrates how the very movement turned into a potential crisis for brands. Today, brands such as Adidas, Nike, YouTube, Amazon and Netflix have been expressing solidarity with the Black Lives Matter movement. Johnson & Johnson has announced it is to stop selling its skin-whitening Clean & Clear Fairness line of products, which are marketed in India, Reuters reports. Quaker Oats says it will change the branding and name of its Aunt Jemima pancake. Colgate-Palmolive is the latest brand to announce change, saying it will review the name of its toothpaste Darlie – labelled “Darkie” up until 1989 – which in Chinese means “Black People Toothpaste”.3 Cass Business School, a university in London, is changing its name because of its associations with Sir John Cass, a 17th Century merchant and proponent of slavery. These are typical examples of Type C. Key Takeaways A crisis usually doesn’t turn into a movement by itself. The missing link is the collective, perhaps even creative, response to a crisis – this is what turns or spins it into a movement. Monitoring and Observation Any organization (business, state or government) should have adequate monitoring systems in place in order to rapidly grasp dynamics. These generally include a combination of active media monitoring, social media listening tools and semantic tools to analyze tonality and direction of an evolving crisis Agility and Scenario Preparation No reality is ever as planned. But having a plan, a structure and the capability in place that allows an organization to deal with an evolving situation rapidly and in the most efficient manner possible. Developing an awareness of how reputational strategies are pro-actively built over time is an important steppingstone. Leadership Development Not every crisis is avoidable, and not for every crisis is there a positive net effect for an organization. However, the outcome and resilience (i.e. the ability to ‘bounce back’) are very closely correlated to how a crisis is managed in the first place and this, in turn, is something that should feature in every leader's curriculum. If you would like to learn more about what chances and threats your company may have in the current situation please get in touch with our team, we are happy to help you. References: “Wag the Dog.” IMDb, IMDb.com, 9 Jan. 1998, www.imdb.com/title/tt0120885/. Buchanan, Larry, et al. “Black Lives Matter May Be the Largest Movement in U.S. History.” The New York Times, The New York Times, 3 July 2020, www.nytimes.com/interactive/2020/07/03/us/george-floyd-protests-crowd-size.html. “Black Lives Matter Movement Forces Brands' Marketing Review.” WARC, www.warc.com/newsandopinion/news/black-lives-matter-movement-forces-brands-marketing-review/43762. “Artopolis.” The Auctioneer Adventures in the Art Trade, by Simon De Pury and William Stadiem, St. Martin's Press, 2016.
Seizing the Reputational Narrative Case Study Carlos Ghosn Facing a critical situation or a crisis in the business world often means to be one step behind the action and to only “react” rather than to “act”. And letting other people – say journalists – write your story is not what you are looking for. If you find yourself in the lucky position to “own” the story, the reputational damage can be limited. Seizing the reputational narrative, therefore, can be massively helpful in restoring your reputation starting at time zero. Here is a best-case scenario. When Prof. Umberto Eco was asked why he doesn’t just write within the fiction genre instead of writing in the historical fiction genre, his answer was clear: Real life has more imagination in it than fantasy or fiction. Right after his answer, he developed his point further with the following rhetorical question of his: Could you invent a character like Silvio Berlusconi?1 Just like Berlusconi or Prof. Eco, Carlos Ghosn too did not forget this literary dimension of reality. The escape operation of Mr Ghosn was all over the news not only because it is sensational but also because it is cinematic and stranger than fiction as if straight out of the movie Ocean’s 11. What does Carlos Ghosn’s cinematic escape teach us about owning the strategic narrative in modern reputation management? What has he done right thus far? Lessons on Reputation Management Firstly, Carlos Ghosn was very well aware that the name of the reputational game is chess and not checkers. Secondly, despite the very mighty budgets of the Japanese corporate world and intelligent minds of their decision-makers, Ghosn avoided falling into the trap of a dead-end street. Even in a “many against one” scenario but, he knew that there is always a solution as long as one doesn’t focus on the negative spiral. Deciding to keep his integrity was what he did right. Elizabeth Ortega wrote in Law360: “Carlos Ghosn, the former Nissan Motor Company executive, recently gave new meaning to “thinking outside of the box” when he reportedly used a perforated box to escape from house arrest in Tokyo to a safe perch in Beirut.”2 The escape was the beginning of the new story. Metaphorically, the novel epos has taken over the place of the big old myth. After the escape, he found a way of re-organizing the unorganized series of negative events surrounding him to his advantage. The story was now reframed. Moreover, he did it in such a way that in the final analysis he comes out as the one who fundamentally owns the strategic narrative. In other words, it wasn’t a matter of controlling the narrative for him anymore. It was a matter of seizing it as early as possible. A Hero, Not a Victim In a press conference held in Beirut, Mr Ghosn said he would not victimize himself but would use his position to bring light onto a system that violates the basic tenants of humanity.3 As Stephen Mugo Weru wrote: “By choosing to go on the offensive, Ghosn arguably cemented his legacy as a crusader against a harsh justice system. (…) His escape has earned him newfound notoriety. Rather than being the CEO who escaped prison, he’s the man who triumphed over adversity.”4 Mr Ghosn acknowledges that he has a long way to go in restoring his sullied reputation. Unquestionably, more time is needed to reclaim some of the statures he had before the reputational crisis began. It’s still too to jump into making conclusions. Nevertheless, the cinematic case of Carlos Ghosn’s escape and his strategic chess moves do teach the world valuable lessons on modern-day reputation management. If you, too, could use a hand in framing your reputational narrative, get in touch with us. References: HOLDENGRÄBER, PAUL. “Interview with Prof. Umberto Eco.” http://Www.intelligencesquared.com , Intelligence Squared, 2011, www.youtube.com/watch?v=DuGpw0-B9-s&t=4685s. “Nissan Ex-CEO Illustrates Do's And Don'ts Of Image Repair.” Law360, www.law360.com/articles/1236521/nissan-ex-ceo-illustrates-do-s-and-don-ts-of-image-repair. Ghosn, Carlos. “Carlos Ghosn Blames Nissan Conspiracy and Japanese Prosecutors in Press Conference.” Guardian News, 8 Jan. 2020, www.youtube.com/watch?v=s-eJ0AJV-w8. Weru, Stephen Mugo. “4 Lessons From Carlos Ghosn's Great Escape.” Benzinga, Benzinga, 2 Feb. 2020, www.benzinga.com/general/psychology/20/02/15212093/4-lessons-from-carlos-ghosns-great-escape.
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