Monday, April 30, 2007

The Venom of Crowds (Paul Dunay)

Nastiness can erupt online and go global overnight. If' it's directed at you, "no comment" doesn't cut it anymore.

Most companies are totally unprepared to deal with the new e-nastiness. That's worrisome as the Web moves closer to being the prime advertising medium—and reputation conduit—of our time.

Trashing brands online can also be a sport. Witness the faux ads bashing the Chevy Tahoe as a gas-guzzling, global-warming monster. Millions of people watch this stuff then pile on. Is it any wonder companies lose control of the conversation?

When the Web turns against them, executives face the problem of how to manage the blowback. They have two choices: ignore the smaller furies and hope they won't metastasize, or respond outright to the attacks.

Companies such as Lenovo Group, Southwest Airlines, and Dell now have specialists dedicated to engaging or co-opting their critics. Other businesses hire firms such as BuzzMetrics or Cymfony. Those outfits use algorithms to analyze which bloggers and social media are driving the conversation around issues that matter to marketers. (Trackback to my podcast interview with Jim Nail of Cymfony)

New premium service providers claim they can promote the info you want and suppress the news you don't. Some say they can make information disappear altogether!

But we know better, of course. The Web is like Whac-A-Mole. For every proactive move, another crisis can flare up elsewhere.

Where is all this headed? I believe anyone's 15 minutes of infamy is no longer something that gets buried in the sands of time. Google changes all that, and "ruined for life" becomes a very real possibility. Even if you can rebuild your reputation, missteps cost plenty and take a heavy toll on individuals and businesses.

To learn more listen to my podcast with Chief Strategy Officer of iCrossing Adam Lavelle coming up later this week.

Tuesday, April 24, 2007

Brand Trust Was Missing from Friedman's Playbook (Jarvis)

We find Andrew Zolli one of the more interesting and relevant futurists out there these days. He recently wrote a great piece in Fast Company (here) that kicked off with a quote from renown free-marketeer Milton Friedman:

“There is one and only one social responsibility of business”, Friedman wrote back in 1970, and that is to “engage in activities designed to increase profits.”

As soon as we read this quote here in the Garage, we knew that Zolli had nailed it: Friedman’s pronouncement marked a watershed moment for global business, a tipping point for the guiding principal of the era: profitable self-interest would prove to be the only reliable endgame.

And everyone knows how things played out with the help of Friedman’s compass. The rise of the activist shareholder movement. Reagan-era deregulation. Michael Douglas’ declaration that “Greed is Good” in the movie Wall Street. The tearing down of the Berlin Wall. The creation of the Jack Welch rules of management.

All of this and more helped companies achieve higher performance throughout the 80s and 90s. “Mr. Market” surged, helped along by a long-term decline in interest rates and a speculative bubble or two. A lot of executives (and shareholders) grew rich.

Greed took a victory lap. Capitalistic self-interest flourished. Customers got better and cheaper products. All in, Friedman’s playbook worked.

Of course, playbooks rarely cover all the bases equally well. Which brings us to another quote, this one from advertising icon David Ogilvy:

“The customer is not an idiot, she is your wife.”

The point Ogilvy was making is that you can’t pull the wool over your customers’ eyes. They notice everything and apply their observations with keen self-interest. And today, with only 13% trust levels in business, the customer seems to be saying: “Yes, yes we get it. Big companies have improved performance greatly, but they are not in the game primarily to benefit us." And this means that companies live in a world where the customer may buy from them, but probably doesn't trust them and may not like them. And the key point for management? Low trust changes the nature of virtually every transaction -- for the worse. Just ask Michael Dell. It's a headwind you have to take into account as you steer the business.

All of this brings us back to Andrew Zolli and the title of his Fast Company piece: “Business 3.0: The oblivious Capitalist’s Days Are Numbered.” In this case he casts his eye to the future and the environment and concludes that a host of global forces will force a remake of the playbook for business success. Business will profit by driving a wider social agenda and “the clinical, value-neutral capitalism of old” will fall by the wayside.

We agree. Long-term growth has always come down to this: finding and keeping customers at a profit. And the playbook now requires companies to place greater attention on building trust and reputational performance. GE, Toyota and other leaders are already well on their way towards profiting from the wider social agenda.

As one example, product value propositions are being stretched by companies of all kinds to appeal to the LOHAS segment (i.e. customers who focus on lifestyles of health and sustainability.) These folks do yoga, buy Energy Star appliances, drive hybrids and read books by Andrew Weil. And guess what? There are some 50 million of them out there paying a premium for products. They make up an estimated $228 billion market and are growing.

In the LOHAS market, the reputational performance of the company you do business with matters. Further evidence that for aspiring corporate trustmeisters, it’s time once again to reinvent the playbook. After all, that’s why we’re here in the Garage, isn’t it?

Saturday, April 14, 2007

Saturday Extra: Daily Show Post

We got some emails regarding yesterday's post on the problems of Messrs. Imus and Wolfowitz. One reader wanted to know what Daily Show segment we were referring to. Hey, this is professional blog! Then again it's Saturday -- a time when the trustmeisters here in the Garage turn up the boom box and kick back a little.

So here's the Daily Show piece. Enjoy!

Friday, April 13, 2007

So Don't Do That! (Jarvis)

It’s easy to grow callous over the daily scandal sheet. On this week’s critical-care list: World Bank President Paul Wolfowitz. And for shock jock Don Imus, the lights have now officially gone out.

But so what? While Wolfowitz and Imus are clearly victims of their own bad judgment, the learning for the reputation-minded can be summed up in an old Marx Brothers bit:

“Doctor, it hurts when I do this.” (Gesturing with arm.)
“So don’t do that!”

At first blush, the cases appear quite different. Radio's famous bad boy Imus was dethroned by his notoriously noxious tongue – a thoughtless joke, he says, gone terribly wrong. The Daily Show had some fun, saying Imus offered up an excuse for his remark: he doesn’t have a PR agent.

PR can’t help much once the genie is out of the bottle.

To other matters, Wolfie, as our President likes to call him, may also lose his job - in this case over more than a slip. Indeed, a series of bad decisions could send him packing.

A quick recap of the Wolfowitz case: boss gets girlfriend generous pay package and transfer. Boss claims he got approval for his actions from the ethics committee. That claim is later called into question. Boss apologies for the mistake. Board deliberates boss’ future.

Both “trust events” will cost plenty. The Imus show brought in an estimated $20 million in revenue to CBS last year. That's gone poof. And then there’s the issue of management distraction. The growing controversy at the World Bank has overshadowed major development meetings taking place this weekend. And it has also caused further turmoil among staff, who have called for Wolfowitz’s resignation.

According to the Financial Times, the scandal has jeopardized the one asset the President of the World Bank has: his credibility. Indeed, Wolfowitz has been mistrusted by many both inside and outside the bank since his appointment. All this makes it harder for the World Bank to do what it's supposed to do: fight global poverty and raise the world’s living standards.

The take from this Garage “trustmeister” is that Groucho’s advice is sound. Don’t do that. Reputational risk is real and companies need to find effective ways to mitigate poor decision-making. Large organizations are especially vulnerable to dangerously myopic judgment. What’s often missing is a zoom out lens. In other words a mechanism to help companies look out from the point of decision and understand its impact on brand reputation.

It’s a necessary practice, whether your talking about a brand, a company, a CEO, or a shock jock.

Saturday, April 07, 2007

Why we started the Reputation Garage (Jarvis)

The world’s business community has reached, well, let’s just call it a low point: Practically nobody trusts big business. (In the U.S. the number who say they trust big companies and brands hovers around 13%)

So the intent behind this blog is as simple as it is ambitious: We're an experienced group of professionals who want to help change the dismally low worldview of business. We are pushing for a new era of business performance - where companies and their brands are trusted more than they are today. (Along the way, we also expect to see continuing seismic shifts in marketing practices as we know them.)

Our merry band of “trustmeisters" includes yours truly, a consultant and former big company CMO who is known for his thinking on this topic; a U.S. ad agency chairman who questions the efficacy of many traditional marketing programs and practices; a corporate social responsibility expert and U.K. native who has also served as co-head of the U.S. branding practice for a global communications firm; and a leading thinker at the intersection of marketing and technology whose day job happens to be at one of the world's leading consulting firms. We'll be adding more trustmeisters as we go along.

Are we out to change the world? No, but if trust matters, then a lot of organizations are not supported by strong footings. More importantly, a majority of customers and employees around the world are expressing unhappiness with the current state of affairs. That doesn't exactly spell brand power or, to use the catch phrase of the moment, employee engagement. Because traditional practices have failed to prevent or solve these problems, new ideas and actions are called for here.

So for the record, trust matters. Indeed, if you’ve attended any of the last several World Economic Forum meetings in Davos over the past few years, you know that there is significant hand-wringing taking place over this issue. When trust declines, the nature of virtually every exchange and transaction is altered. Brands, which are built on trust, lose value. Sales become harder to generate. Customers defect, as loyalty deteriorates. Employees disengage from their jobs and the company mission.

So where's the fix for organizations looking to improve upon this sorry state of affairs? Join us here in the Garage as we uncover, evaluate and share emerging new ideas and solutions for what may be the most important marketing issue for our times.