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Corporate reputation and risk management

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Presentation by David Geddes, evolve24, at Smart Content: The Content Analytics Conference, October 19, 2010, http://smartcontentconference.com

Presentation by David Geddes, evolve24, at Smart Content: The Content Analytics Conference, October 19, 2010, http://smartcontentconference.com

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  • Corporate reputation is a collective representation by stakeholder audiences of a firm’s past actions, results, and communications. Individuals and groups create, share, reinforce, and modify these representations … They are cultural constructs.Research shows that reputation has both cognitive and affective dimensions.Reputation encapsulates expectations by stakeholders about future behaviors of the corporation, and thus determines the relationships between the organization and its stakeholders. Corporations that routinely monitor, measure, and evaluate their reputation, risk, and the drivers of reputation and risk among specific stakeholder audiences will be able to identify opportunities and threats, develop action plans, and support the achievement of desired business outcomes.In a networked world, corporations must re-orient their listening in the competitive marketplace to be faster, smarter, and more stakeholder centric. By understanding, through content analytics, leading indicators of opinion trends towards a company, its brands, its products and services, and by understanding issues, topics, and market trends, companies can take steps to gain competitive advantage and protect themselves from risk.This presentation will look at applications of Smart Content.
  • A strong reputation becomes a capital asset, a resource, a competitive advantage, and an intangible that the firm can manage to support organizational goals.A small but compelling set of studies does show a statistical relationship between corporate reputation and business outcomes.Positively affects stock performanceImproves financial performanceAttracts investment and lowers long-term cost of capitalDampens riskHelps attract customers and support growthCommands a price premiumSupports stock price in times of uncertaintyAdds to stock price by capturing intangible assetsIntangibles lead to a sustainable competitive advantage
  • Agenda-setting theory is thescientifically-validated link between a company’s presence in the media and reputation.Agenda setting theory was developed by Maxwell McCombs and Donald Shaw in 1968General theory validated by over 400 field research studies around the world, primarily in political scienceValidated in experimental studiesExtended to corporate reputation
  • What is risk?Risk is a state of uncertainty where some of the possibilities involve a loss, catastrophe, or other undesirable outcome … with respect to issues and situations.Risk deals with the future … the unknown.Emotion comes into play.We worked with a team of academic neuropsychologists to develop a 19 dimension model of risk.
  • Problem: Significant net outflow the client company funds over six year period.Assumption: The management felt that fund performance drove investment in their funds.Was there a relationship between net flows and shifts in perception about the company or its fund managers?
  • Solution: A statistical evaluation to determine the potential contribution of Janus’ reputation into the investment decision of investors.
  • Result: Relationship between reputation and net flows was found and led to the launch of a successful communications and outreach program focused on trust, versus performance, resulting in largest gain in net flows in company history
  • Use content analytics to …Listen to stakeholdersOrganize and share information across the enterpriseUnderstand stakeholder opinionsCognitive messages and opinionsEmotions and risk factorsIdentify influencersOpportunities and threatsEngage and communicateFix the problem
  • Regulators and retailersHighly visible and positiveJournalistsHighly visible and negativeDoctorsPositive … but not visibleHealth groups, consumer groups, and parentsMore negative, but not highly engaged in the conversationOnce we know who is actively engaging in the discussion, we can turn to what these stakeholders were saying
  • We could identify what the stakeholders were talking about. These are the rational, cognitive elements of the communications landscape.
  • Vulnerability: A mommy blogger said: It is a sad commentary on our fast pace world that we can not even protect our innocent babes!Dread: An AP news story said: Worried parents have bombarded the maker of XYZ with phone calls and peppered Facebook and Twitter pages over fears about the top-selling [product] after millions of cans were recalled.Uncontrollability:A blogger said: “We were hitting with 3 to 4 devices and finally got through … Then after 8 to 10 minutes, we got a notice saying it’s been recalled.”Irreversibility: A new mother said on local TV news: "I was quite upset because we'd already fed him some milk from the powdered containers.”Untrustworthy: A father said on local TV news: "I'd say I've lost a little bit of faith in that brand. It was sold to us at the hospital when he was born.We were loyal to that product.”
  • UncertaintyBut, these kinds of emotions can have an impact on buying behaviors if they grow.

Corporate reputation and risk management Corporate reputation and risk management Presentation Transcript

  • Corporate reputation andrisk management
    David Geddes, Ph.D.
    Vice President, Research & Development
    evolve24, a Maritz Research Company
    Saint Louis, Missouri
    New York, New York
    October 19, 2010
  • About evolve24
    Global market intelligence through integrated analysis of traditional and social media
    Integrated enterprise platform
    Real-time document aggregation
    Smart Content through advanced processing and analytics
    Deep understanding of audience segments
    Leading indicators of market shifts, risks and opportunities
  • Approach
    Document aggregation
    Data processing
    Analytics and rich tagging
    • Sentiment
    • Reputation
    • Risk
    • Topics and issues
    Insights
    Strategy and tactics
  • Visualization of SmartContent
  • What is corporate reputation?
    Collective representation
    Past behaviors
    Expectations
    Relationships
    • Networked world
    Sources: Duncan J. Watts & Peter S. Dodds (2007). Influentials, networks, and public opinion formation. Journal of Consumer Research, 34 and Communications Executive Council (2010). Influencing stakeholders in a networked environment.
  • Where does reputation come from?
    Actions
    What they do
    Customer experience
    Reputation
    Words
    What they say
    What is said about them
  • Where does reputation come from?
    Corporate actions
    Mainstream media
    Stakeholder impact
    Social / WOM
    Customer experience
    Mainstream media
    Exchange Relationships
    • Stakeholders
    • Publics
    Reputation
    • Cognitive & substantive
    • Affective & evaluative
    Business outcomes
    Customer impact
    Social / WOM
    Media
    Mainstream media
    Social / WOM
  • Why does reputation matter?
    Resource
    Capital asset
    Organizational goals
    Sustainable competitive advantage
    Intangible
  • What links Smart Content and reputation?
    Agenda-setting theory
    Scientifically-validated
    > 400 research studies
    Experimental studies
    Corporate reputation
  • What is risk?
    State of uncertainty
    Some of the possibilities involve a loss, catastrophe, or other undesirable outcome
    Psychometric emotional risk model
  • How do we manage using Smart Content?
  • reputation Management and Mutual fund cash flows
    Smart Content Case Study
  • Situation
    Leading mutual fund company
    Cash flows
    • Industry peers
    • Client company
    Management assumptions
    Investment drivers
  • Approach
    Regression analysis of cash flows on financial variables and reputation
    Sector $ inflows
    Fund reputation
    Fund $ inflows
  • Result
    Primary drivers are financial
    Significant role for reputation (R = .74)
  • Application
    • Communications and outreach program
    • Trust
    • Performance
    • Largest gain in net flows in company history
  • Reputation management in pharmaceuticals
    Smart Content Case Study
  • Situation
    PharmCo, a major pharma company
    FDA-ordered recall
    Branded nutritional product
  • Challenge
    Listen
    Organize and share
    Understand stakeholder opinions
    Cognitive
    Emotions and risk factors
    Messages
    Identify
    Engage
    Fix
  • Who was in the discussion?
    Parents
    Sentiment
    Visibility
    Doctors
    Retailers
    Consumer groups
    Regulators
    Journalists
    Health orgs.
  • What were stakeholders saying?
  • What were the emotional risk factors?
    Emotional risk in product recall discussions
    Tuesday
    Wednesday
    Thursday
    Friday
    Saturday
    Sunday
  • What were social moms saying?
    • Small reputation impact
    • Emotion drivers
    • Uncertainty
    • Irreversibility
    • Vulnerability
  • Risk Management and Alternative energy
    Smart Content Case Study
  • Situation
    Global manufacturer
    European Union 20/20 alternative energy initiative
    Corporate strategy and policy teams
    European fiscal crisis
    Political winds
    Where to invest?
  • Challenge
    Monitor
    Organize information
    Gauge opinion
    Weak signals
    Threats
    Anticipate
    Reach out
  • Political risk analysis by energy source
    Risk score
    Volume
    Events
    Weekly risk
  • Political risk analysis: Wind by country
    Risk score
    Volume
  • Political risk analysis: Topics and issues
    Offshore wind
    Wind & economy
    Energy & jobs
    Wind opposition
    Wind & jobs
    Risk score
    Risk contribution by topic
  • Influencers
    Influence
    Companies & organizations
    People
  • Political risk analysis: Wind summary
    • Increased discourse
    • Wind
    • Renewables
    • Wind
    • More negativity
    • Energy and financial crisis
    • France, Spain
    • UK, Ireland, Greece, Bulgaria
    • Offshore vs. onshore
    • Debate
    • Polarization
  • SumMary
  • Questions?
    Thank you