Of reputation, roller coasters, and Wilde Rides on Wall St.
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The document discusses the significance of corporate reputation and its impact on financial performance, emphasizing that reputations are easily damaged yet crucial for fostering consumer loyalty and support. It outlines key lessons on building and maintaining a reputation, such as the emotional bond through trust and the necessity of consistency in corporate messaging. Additionally, it highlights that successful companies require strong governance, innovation, and ethical practices to enhance their reputations and achieve better market value.
Of reputation, roller coasters, and Wilde Rides on Wall St.
- 1. Of Reputations, Roller Coasters, and Wild Rides on Wall St. Dr. Charles Fombrun Chairman, Reputation Institute Madrid, Spain 7 May 2010
- 2. Huge Centripetal Economic Forces are Pulling Us Apart Copyright © 2010 Reputation Institute. All rights reserved. 2
- 3. While Geological Forces are Taking their Toll Copyright © 2010 Reputation Institute. All rights reserved. 3
- 4. Contributing to a Wild Ride in the Financial Markets Copyright © 2010 Reputation Institute. All rights reserved. 4
- 5. Copyright © 2010 Reputation Institute. All rights reserved. 5
- 6. And Putting “Reputation” On Everyone’s Mind Copyright © 2010 Reputation Institute. All rights reserved. 6
- 7. Toyota is Reeling from Unintended Effects of Cost-Cutting Copyright © 2010 Reputation Institute. All rights reserved. 7
- 8. BP is Reeling from a Huge Oil Spill in the Gulf of Mexico Copyright © 2010 Reputation Institute. All rights reserved. 8
- 9. Clearly Reputations are Always at Risk "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.” 'll d thi diff tl ” Warren Buffett Copyright © 2010 Reputation Institute. All rights reserved. 9
- 10. RI has conducted Global Reputation Studies since 2000 34 Countries & 24 Industries –65,000 Consumers Airlines & Aerospace • Automotive • Beverage • Chemicals • Computer • Conglomerate • Construction & Engineering • Consumer Products • Electrical & Electronics • Energy • Financial – Bank • Financial – Diversified Services • Financial – Insurance • Food Manufacturing • Industrial Products • Information & Media • Pharmaceuticals • Raw Materials • Retail – Food • Retail – General • Services • Telecommunications • Transport & Logistics • Utilities Copyright © 2010 Reputation Institute. All rights reserved. 10
- 11. Lesson #1: A Corporate Reputation is an Emotional Bond …and built on 7 Pillars Copyright © 2010 Reputation Institute. All rights reserved. 11
- 12. Lesson #2: Reputation Operates “Below the Line” Strategic Goals Business Corporate Results Initiatives Supportive Perceptions Behaviors of Company Copyright © 2010 Reputation Institute. All rights reserved. 12
- 13. Lesson # 3: Improving Alignment Increases Reputation What Companies Inconsistency Say Inconsistency How Companies are Perceived What Inconsistency Companies C i Do Copyright © 2010 Reputation Institute. All rights reserved. 13
- 14. Lesson #4: Improving Reputation Increases Support Improve Reputation by 10% – Increase Support by 10% 80 72 64 ndents who Would Recommend 56 R 48 40 % Respon 32 24 16 8 26 36 46 56 66 76 86 2 U.S. Pulse Score Adj-R = 0.889 Source: 2010 Global Reputation Pulse (U.S. Results) Copyright © 2010 Reputation Institute. All rights reserved. 14
- 15. Lesson #5: …and creates Financial Value Top 30 in Bottom 30 in Reputation Reputation Ratio of Market Value 3.79 1.42 to Book Value % Change in Market Value = 1.3 * % Change in Reputation So, on average: 13% 10% Improvement Improvement in Market in Reputation Value Copyright © 2010 Reputation Institute. All rights reserved. 15
- 16. Lesson #6: So that Investing in Higher Reputation Firms Can Pay Off Cumulative Returns HIGH REPUTATION PORTFOLIO 4 0 .0 0 % 2 0 .0 0 % S&P 500 0 .0 0 % -2 0 .0 0 % -4 0 .0 0 % -6 0 .0 0 % Ju 00 Ju 01 Ju 02 Ju 03 Ju 04 Ju 05 Ju 06 A -0 0 J a -0 0 A -0 1 J a -0 1 A -0 2 J a -0 2 A -0 3 J a -0 3 A -0 4 J a -0 4 A -0 5 J a -0 5 A -0 6 6 O -0 0 O -0 1 O -0 2 O -0 3 O -0 4 O -0 5 O -0 6 -0 - - - - - - - pr pr pr pr pr pr pr ct ct ct ct ct ct ct l l l l l l l n n n n n n n Ja Copyright © 2010 Reputation Institute. All rights reserved. 16
- 17. Lesson # 7: But Reputation Requires Vision & Governance Energy gy Auto Tobacco Banking Copyright © 2010 Reputation Institute. All rights reserved. 17
- 18. Lesson #8: And a Focus on Products & Innovation Copyright © 2010 Reputation Institute. All rights reserved. 18
- 19. Lesson #9: Companies have to Do the Right Thing “You can make money without doing evil You evil” Is Google a great place to work because its stock is at $483, or is its stock at $483 because it's a great place to work? --Business --Business Week, January 22, 2007 Copyright © 2010 Reputation Institute. All rights reserved. 19
- 20. Lesson #10: As Well as Do Things Right Copyright © 2010 Reputation Institute. All rights reserved. 20
- 21. So a Mind-Shift is Taking Place From Brand to Reputation Brand Reputation The promise a company makes The degree to which the company to its stakeholders fulfills its promises “Owned” by the company Owned “Owned” by stakeholders Owned A brand is a promise… when you li up to that promise you build R h live t th t i b ild Reputation t ti Copyright © 2010 Reputation Institute. All rights reserved. 2121
- 22. Reputation Pulse 2010 Copyright © 2010 Reputation Institute. All rights reserved. 22
- 23. The World’s Best Corporate Reputations (2010) Copyright © 2010 Reputation Institute. All rights reserved. 23
- 24. Corporate Reputations in Spain? Copyright © 2010 Reputation Institute. All rights reserved. 24