News & Ideas


On reputation: The value in the shadow

In questioning focus on reputation, The Economist presents a false choice

How often does one’s favourite magazine launch a broadside at one’s profession? That’s what awaited me as this week’s edition of The Economist presented a thought-provoking but flawed argument against ‘reputation management.’

The article’s core argument is that companies should worry less about their reputations and more about producing the best possible products and services. This is a false choice. Few would argue that the reality is more important than the reputation. But it does not follow that the latter is unimportant. As the title of this blog suggests, the key is to align the two – or at least to narrow the gap.

In reviewing fresh research from the Reputation Institute, the authors do make some valid points:

  1. It is true that some companies with poor reputations – they cite tobacco companies, low-cost airlines and tabloid newspapers as examples — can be very profitable. True. But how well do such companies fare when they face a serious external threat such as government regulation of tobacco, or ethical scandals in journalism? Just ask Rupert and James Murdoch or those who worked for them at News of the World.
  2. Successful companies focus on their core businesses, not on ‘fancy marketing.’ Also true. But surely there is value in ensuring audiences have an accurate understanding of how well the organization pursues its core business? It’s not accidental that intangibles such as reputation and brand now account for vast portions of many companies’ market value.
  3. Reputations are hard to measure, and there remains little consistency in approaches to measurement in the consulting industry. The fact that the industry is still developing does not invalidate the need for research and analysis into reputational measures that seem appropriate to a company’s board, management, staff and stakeholders. And as the industry grows, we see more and more attempts to achieve consensus on measurement and evaluation.

It is curious that both critics and champions of reputation management like to cite Abraham Lincoln’s words: Character is like a tree and reputation like its shadow. The shadow is what we think of it; the tree is the real thing.

No one can credibly argue that the shadow is more important than the tree. That is one reason why I see the phrase ‘reputation management’ as a misnomer; the key is to manage the business and influence the reputation – simultaneously.

That is why critics may want to consider another of Lincoln’s memorable axioms: Public sentiment is everything. With public sentiment, nothing can fail. Without it, nothing can succeed.


April 23rd, 2012 | Posted in Ideas | 0 Comments

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