Reputation vs. Reality: Bridging the Gap for Business Success

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This edition is long-ish. Approximately 1536 words, 6 minutes and 36 seconds of reading.

Let's get into it.

Recently, reputation and risk have been on my mind. Why? Well, a few reasons. First, I spent some time reading up on the UK’s Thames Water Crisis — It's been all over the news. Second, I've been interviewing with companies and you can't help reading about them too.

It reminded me of my time working for the Police. Why I chose to work there. To get my own understanding of the people who worked there.

From the outside (and depending on where you are in the world) policing can be a little on the negative side.

History sides the 'Police' institution on both sides of judgement. While there, I managed crises, reputations, and risks under the watchful eye of the public.

Any way...

... Policing is always under the microscope.

This got me thinking. About businesses in general and how they manage reputation and risk.

Most businesses do a poor job of managing their reputation and risks associated.

The internet graveyard is filled with businesses that failed to manage their reputations.

As a business owner or employee, you can take a long time to earn the trust of the many people involved. You can also lose it in a heartbeat.

And get this ...

Reputation is a matter of perception.

It is a balancing act.

A strong and positive reputation satisfies all stakeholders. It's not an easy thing to do. It includes investors, customers, suppliers, employees, and regulators. Politicians, NGOs, communities the company operates in, and the quality of the product.

A positive reputation inspires customer loyalty and drives significant revenue and growth. It is even more important now as we spend a significant part of our time online.

Conversations about businesses are the norm. Did you know that 77% of consumers read reviews when they're browsing local businesses?

If a customer has a very positive experience — it creates a strong brand for you and your business. Earning you reputation and many forms of trust.

Both things drive value creation for shareholders.

But, a negative reputation is a risk. It comes when performance does not match expectations. This can be damaging to sales and customer retention.

Many things determine and can damage a company's reputation leading to negative perceptions:

1. Weak internal coordination (Poor coordination between different business units and functions).

2. Financial performance (Caught manipulating performance or making reckless financial decisions).

3. Quality of Product and Service ( Those related to safety, health, and the environment).

4. Ethics and Integrity (Such as fraud, bribery, and corruption).

5. Innovation (Security risks, including both physical and cyber breaches).

6. Third-party relationships (Companies made accountable for the actions of their suppliers and vendors).

As business grows, communication gets complicated. Friction builds up and we begin to cut corners.

If you (the business) fail to live up to expectations, your reputation will decline. Until it matches the true reality of your product or service. This is called the 'reputation-reality' gap.

But all is not lost.

You can manage a business reputation a few ways:

1. Assess your company’s reputation among stakeholders

2. Check your company’s real character

3. Close reputation-reality gaps

4. Track changing beliefs and expectations

5. Elect a person to be in charge of all reputation worries.

And as easy (or not) as this sounds, most businesses, fail to manage their reputations. Their focus usually is on handling threats that have already surfaced.

Assessing your company’s reputation among stakeholders

There are plenty of resources to assess a company’s reputation with stakeholders. And when I say stakeholders I don't mean only the profit seekers.

A popular brand that’s doing this well is Nike.

Nike keeps an open line focused on responding to customers in need of help. @NikeService is there to process complaints and questions into a single support hub.

Nike gives their customers satisfaction by listening while also gaining valuable insight.

Understanding how all stakeholders (customers, employees, community and society) see your business is important. Media analysis, surveys of stakeholders, focus groups, public opinion polls and much more.

The most useful analysis comes from the media. They shape the perception and expectations of all stakeholders.

Research the media and get a detailed picture of how they perceive you. Collect headlines, quotes and mentions of your company from newspapers, magazines, TV, radio, and blogs.

Check your company’s real character

A company should maintain at least 20% of positive stories in the media to sustain its reputation.

Every stakeholder working in and with your business is your representative. Treat them as such. They are a few clicks away from the online media.

Positive stories help keep the business above any changing media perceptions. However, if a company receives more than 10% negative perception, it risks gaining a bad reputation.

Combat this by varying your company’s external communication as often as possible. If it is all the same topic, there is a risk of gaining a negative reputation.

In late 2018 and early 2019, Boeing was in the headlines around the world. Two of its 737 Max 8 aircrafts suffered fatal crashes in less than six months.

Countries and airlines responded by grounding that Boeing model for over 20 months. Boeing's reputation on safety was questioned after they denied any involvement in the incidents.

Many PR experts considered the company’s management of that crisis a textbook example of what not to do.

As for Boeing, taking responsibility and being courageous to take precautions would have guaranteed a better outcome. They seem to be doing the right thing now in earning stakeholder trust once again.

Close the reputation-reality gap

Due to supplier issues, KFC ran out of chicken in 2018. The company had to shut down half of its restaurants in the UK. Their reputation was in question for sure.

It was up to them to manage and match their reputation and deliver on customer expectations. They used social media to manage the crisis by keeping customers informed at every stage.

They took ownership, apologised and addressed any questions and concerns. KFC's response was to turn a negative story into a positive PR campaign, which helped preserve the brand’s reputation.

The gap between meeting or underperforming is big. In this gap, companies have to meet customer expectations, reduce them or promise less.

Check changing beliefs and expectations

It goes without saying that beliefs and expectations change daily. Keeping track of what is now acceptable is not an easy task. But you can measure these creeping changes.

There are ways to develop a picture over time. Speak to employees, customers and other stakeholders. Gather insight into what others think. Sometimes even seek outside advice from experts in the field or different demographics.

Be accountable for reviewing changes. They reveal issues that may not have appeared on your radar just yet.

Following major company layoffs due to the economic recession in the 90s, Patagonia made an unusual move for companies in crisis. Yvon Chouinard, the company's founder wrote a manifesto: The Next 100 Years in which Patagonia vowed to change their responsibility on sustainability and stewardship.

Ever since Patagonia has been talking the talk and walking the walk.

Put someone in charge of all reputation worries

All these suggestions mentioned above should fall into the hands of one person or team.

Yes, you love being the captain of the ship. Yes, you want to control everything. But it shouldn't be you. You are too close to the inner workings. Hire someone whose job will be to manage reputation.

The improvements in decision-making will result in a better-run company. Choosing to neglect it can cost you a lot.

What I've learnt from this is the old age saying "Prevention is often better than risk". How businesses handle reputations can turn any event into the worst or best outcome.

Now that you've gained valuable insights into the world of reputation management, it's time to take action.

Remember, your reputation is one of your most valuable assets. Building and safeguarding it should be an ongoing priority for your business. Don't hesitate to reach out if you have questions or need further guidance.

A solid reputation management strategy will create the best foundation for crisis management—when "shit hits the fan".

That's all from me.

Until next time.

Hatibu