- John Dalton, Director of LSPR Worldwide REPUTATION MANAGEMENT: The business context May 20 th , 2005
REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide   Financial performance  and capital   Customer  be...
REPUTATION:  “ If we picture a company as a living organism, say a tree, then half of the mass or more of that tree is und...
REPUTATION: An Overview <ul><li>Hill and Knowlton’s Corporate Reputation Watch 2004 Survey: Some key findings </li></ul><u...
REPUTATION <ul><li>A firm is defined by its relationships and contracts: sustainability is the law </li></ul><ul><li>Need ...
The Blind Light of Success <ul><li>Most data available on reputation are about success – very little on failure </li></ul>...
Problem with Selection Bias <ul><li>Selection bias is inherent in most marketing and corporate strategic data </li></ul><u...
Reputation and the Market <ul><li>Of 500 companies originally making up the S & P 500 in 1957, only 74 remained on the lis...
Gales of Creative Destruction <ul><li>Behaviour in markets is not fixed; control and prediction of the system is simply no...
The Market Place Firms Capital Markets Emotion No Vision and leadership   No Assumption of continuity Discontinuity Corpor...
What is Needed? <ul><li>Develop an adaptive brand </li></ul><ul><li>Constant renewal: creative destruction </li></ul><ul><...
Who are the Survivors? <ul><li>J & J* </li></ul><ul><li>GE* </li></ul><ul><li>L ‘Oreal </li></ul><ul><li>Hewlett Packard <...
INTANGIBLES Market Capitalisation Brand Reputation IP Customers Employees Innovation Organisation structure Book value ___...
INTELLECTUAL CAPITAL MARKET VALUE REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide   Market Value Fi...
INTANGIBLES <ul><li>Market to book ratio:   </li></ul><ul><li>Dell – 17.5 </li></ul><ul><li>Pfizer – 18.2 </li></ul><ul><l...
PR AND REPUTATION PR REPUTATION Desired image Vehicle of promise Delivery of promise BRAND REPUTATION MANAGEMENT: The busi...
Traditional PR  <ul><li>Less strategic </li></ul><ul><li>Non-integrated </li></ul><ul><li>Focus - short-term </li></ul><ul...
The Business Case  for Reputation <ul><li>Links between reputation and financial performance are not easy to generalize ab...
Ocean Strategies <ul><li>Use of disruptive technologies and ocean strategies </li></ul><ul><li>Leverage something you know...
How to Develop  a Reputation <ul><li>Quality of products and services </li></ul><ul><li>Passion for brand </li></ul><ul><l...
How to Develop  a Reputation <ul><li>Innovation: incremental, substantive and transformative </li></ul><ul><li>Vision and ...
John Dalton, Director of LSPR Worldwide [email_address]
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John dalton

  1. 1. - John Dalton, Director of LSPR Worldwide REPUTATION MANAGEMENT: The business context May 20 th , 2005
  2. 2. REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide Financial performance and capital Customer benefits Tangible assets Intangible assets Human/Structural capital Stakeholder engagement Culture values Business processes Adapted from: Intangible Assets: J. Daum; Wiley, 1999
  3. 3. REPUTATION: “ If we picture a company as a living organism, say a tree, then half of the mass or more of that tree is underground in the root system. And whereas the flavour of the fruit and the colour of the leaves provides evidence of how healthy that tree is right now, understanding what is going on in the roots is a far more effective way to learn how healthy that tree will be in years to come” Leif Edvinsson and Michael S. Malone; Intellectual Capital REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  4. 4. REPUTATION: An Overview <ul><li>Hill and Knowlton’s Corporate Reputation Watch 2004 Survey: Some key findings </li></ul><ul><li>www. hillandknowlton .com </li></ul><ul><li>93% of senior executives believe that customers consider corporate reputation important or extremely important </li></ul><ul><li>79% of senior executives believe that investors and lenders consider CR either important or very important </li></ul><ul><li>The impact of corporate governance has increased dramatically since 5 years ago: now 40% of senior executives believe that strong corporate governance is a critical factor that potential investors consider before committing, whereas 5 years only 19% thought the same. </li></ul>REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  5. 5. REPUTATION <ul><li>A firm is defined by its relationships and contracts: sustainability is the law </li></ul><ul><li>Need to reaffirm the purpose of a firm – serve the customers’ needs and not just maximize shareholder returns </li></ul><ul><li>Key ingredient is reputation – asset in its own right </li></ul>REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  6. 6. The Blind Light of Success <ul><li>Most data available on reputation are about success – very little on failure </li></ul><ul><li>Failure is endemic and pervasive </li></ul><ul><li>Yet we can learn more from failure than success </li></ul><ul><li>Assumption of continuity – when we should appreciate the notion of discontinuity “ know your market ” </li></ul>REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  7. 7. Problem with Selection Bias <ul><li>Selection bias is inherent in most marketing and corporate strategic data </li></ul><ul><li>The issue of reverse causality </li></ul><ul><li>WWII Planes ! </li></ul>REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  8. 8. Reputation and the Market <ul><li>Of 500 companies originally making up the S & P 500 in 1957, only 74 remained on the list in 1997, and of these only 12 outperformed the S&P index </li></ul><ul><li>Companies are too busy focussing on operations, not innovation </li></ul><ul><li>Most corporations are absorbed, bought out or die </li></ul>REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  9. 9. Gales of Creative Destruction <ul><li>Behaviour in markets is not fixed; control and prediction of the system is simply not possible </li></ul><ul><li>Companies suffer both internal and external shocks </li></ul><ul><li>Need to destroy and create : </li></ul><ul><li>Monsanto - chemical to biotech </li></ul><ul><li>Duracell - private venture capital </li></ul><ul><li>IBM - Mainframes to business solutions </li></ul>REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  10. 10. The Market Place Firms Capital Markets Emotion No Vision and leadership No Assumption of continuity Discontinuity Corporate culture No Lock-in strategies No “ Visible hand” “Invisible hand” Need to understand the market place REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  11. 11. What is Needed? <ul><li>Develop an adaptive brand </li></ul><ul><li>Constant renewal: creative destruction </li></ul><ul><li>Less reliance on lock-in, military-like strategies </li></ul><ul><li>Innovation: incremental and transformative </li></ul><ul><li>Adoption of enterprise risk management (ERM) </li></ul><ul><li>Key people </li></ul><ul><li>Understand and exploit the values of intangibles </li></ul><ul><li>Control the Internet and technologies </li></ul><ul><li>A real understanding of stakeholders’ needs </li></ul>REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  12. 12. Who are the Survivors? <ul><li>J & J* </li></ul><ul><li>GE* </li></ul><ul><li>L ‘Oreal </li></ul><ul><li>Hewlett Packard </li></ul><ul><li>Pfizer* </li></ul><ul><li>UPS* </li></ul><ul><li>Exxon Mobile* </li></ul><ul><li>* Triple AAA rating on Moody’s and S&P 10 th May </li></ul>REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  13. 13. INTANGIBLES Market Capitalisation Brand Reputation IP Customers Employees Innovation Organisation structure Book value ___________ $ * The above would also be affected by other variables including macroeconomic factors, shareholder sentiment and market speculation REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  14. 14. INTELLECTUAL CAPITAL MARKET VALUE REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide Market Value Financial Capital Intellectual Capital Human Capital Structural Capital Customer Capital Organisational Capital
  15. 15. INTANGIBLES <ul><li>Market to book ratio: </li></ul><ul><li>Dell – 17.5 </li></ul><ul><li>Pfizer – 18.2 </li></ul><ul><li>Capital is now not just financial – it is anything that adds wealth and value </li></ul><ul><li>Back in 1999, only 6.6% of Coca-Cola’s market capitalization was reported as book value </li></ul>REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  16. 16. PR AND REPUTATION PR REPUTATION Desired image Vehicle of promise Delivery of promise BRAND REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  17. 17. Traditional PR <ul><li>Less strategic </li></ul><ul><li>Non-integrated </li></ul><ul><li>Focus - short-term </li></ul><ul><li>Key people involved </li></ul><ul><li>Aims to give the best possible image </li></ul><ul><li>Media relations focused </li></ul><ul><li>Focus on transactional stakeholders </li></ul><ul><li>Strategic in nature </li></ul><ul><li>More integrated </li></ul><ul><li>Holistic - long-term </li></ul><ul><li>Involves all employees </li></ul><ul><li>Aims to deliver an image and brand promise </li></ul><ul><li>Uses all forms and opportunities to communicate policy and values </li></ul><ul><li>Greater emphasis on multiple stakeholder relationships </li></ul>1980s, 1990s, 2000 2010 Reputational Management REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  18. 18. The Business Case for Reputation <ul><li>Links between reputation and financial performance are not easy to generalize about – evidence to date unclear and inconsistent </li></ul><ul><li>Question – how do you measure and what? </li></ul><ul><li>Mathematical co-relations do not necessarily demonstrate causality </li></ul><ul><li>The question is complicated and multidimensional </li></ul>REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  19. 19. Ocean Strategies <ul><li>Use of disruptive technologies and ocean strategies </li></ul><ul><li>Leverage something you know: develop and invest in the core </li></ul><ul><li>Embrace the notion of “creative destruction” </li></ul>REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  20. 20. How to Develop a Reputation <ul><li>Quality of products and services </li></ul><ul><li>Passion for brand </li></ul><ul><li>Customer relationship marketing </li></ul><ul><li>Strong corporate governance and compliance </li></ul><ul><li>Integrated risk and issue management </li></ul><ul><li>Crisis planning </li></ul><ul><li>Corporate responsibility (CR) </li></ul><ul><li>Strong brand values and communications </li></ul><ul><li>Organisational culture and structure </li></ul><ul><li>Contract fulfilment </li></ul><ul><li>Business presentation and conferences </li></ul><ul><li>Customer facing staff </li></ul>REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  21. 21. How to Develop a Reputation <ul><li>Innovation: incremental, substantive and transformative </li></ul><ul><li>Vision and leadership by CEO </li></ul><ul><li>Investor relations and public affairs </li></ul><ul><li>Intelligence gathering </li></ul><ul><li>Developing media profile </li></ul><ul><li>Adaptive and ability to reinvent </li></ul><ul><li>Community relations </li></ul><ul><li>CEO’s reputation </li></ul><ul><li>Core competencies </li></ul><ul><li>Establishing networks and alliances </li></ul><ul><li>Understand the market </li></ul><ul><li>Develop brand experience: “moments of truth” </li></ul>REPUTATION MANAGEMENT: The business context JOHN DALTON LSPR Worldwide
  22. 22. John Dalton, Director of LSPR Worldwide [email_address]

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